Working on a takeover case and couldn't figure out which officer at the company had been signing the 5500 for the last 3 years......turns out it was the former TPA! Apparently, the practice at that firm was to have the client sign a POA (Form 2848) at the time the Annual Request letter goes out. I've never seen that practice before and just wondering if this creates a huge potential liability for the TPA. Anyone ever seen this before?

We have a 401k Plan that previously had no HCE contributions, though the document specified prior-year testing. The client would like to restate the plan to Safe-Harbor status (using the non-elective contribution) for this year so the 2 owners can max out their 401k contributions for 2007. Can this restatement be done still for this year? Would the effective date be 1/1/07 or 10/1/07? When does the notice need to be distributed to participants by? Having trouble locating timing requirements for notice... all info we have found has addressed plans amended with "current-year" testing, not prior-year - does this really matter since no testing was ever required at all?

When SIMPLE IRA assets are invested in an investment that has a surrender charge (an early withdrawal penalty), upon withdrawal the surrender charges may or may not be deducted based on the type of SIMPLE plan:

 Surrender charges would be applicable if the SIMPLE plan was a Form 5304-SIMPLE (non-DFI SIMPLE – a plan in which each employee designates the financial institution for which new contributions are directed to).

 Surrender charges would not be applicable if the SIMPLE plan was a Form 5305-SIMPLE (DFI SIMPLE – a plan in which the employer designates the financial institution for which new contributions are directed to).

What if the SIMPLE plan changes from a 5304 to a 5305?

 A Form 5304-SIMPLE plan is established by an employer.

 Bob, an employee, directs a total of $5,000 to the “High Cost Trustee. Inc.” (a designated financial institution chosen by Bob).

 Bob invests in the “High Cost Fund” which is subject to a 7% surrender charge if funds are withdrawn in the first 3 years.

 A year later the employer decides to change to a Form 5305-SIMPLE plan and the employer selects the “High Cost Trustee. Inc.” as the designated financial institution.

 An additional $5,000 in SIMPLE contributions are directed to the same account (Bob’s SIMPLE account at “High Cost Trustee. Inc.” invested in the “High Cost Fund”).

1) Bob decides to transfer his entire SIMPLE IRA to another SIMPLE IRA at a new financial institution. Is Bob subject to any surrender charges (or just surrender charges on the portion that was invested when the plan was a 5304-SIMPLE) and who keeps track of each contribution – the trustee?

What if the SIMPLE plan changes from a 5305 to a 5304?

 A Form 5305-SIMPLE plan is established by an employer.

 Bob, an employee, directs a total of $5,000 to the “High Cost Trustee. Inc.” (a designated financial institution chosen by the employer)

 Bob invests in the “High Cost Fund” which is subject to a 7% surrender charge if funds are withdrawn in the first 3 years.

 A year later the employer decides to change to a Form 5304-SIMPLE plan and Bob tells his employer he to keep sending the new contributions to the “High Cost Trustee. Inc.” as the designated financial institution.

 An additional $5,000 in SIMPLE contributions are directed to the same account (Bob’s SIMPLE account at “High Cost Trustee. Inc.” invested in the “High Cost Fund”).

2) Bob decides to transfer his entire SIMPLE IRA to another SIMPLE IRA as a new financial institution. Is Bob subject to surrender charges on the entire account (or just surrender charges on the portion that was invested when the plan was a 5304-SIMPLE) and who keeps track of each contribution – the trustee?

I know that a SIMPLE(k) can be amended to revoke the SIMPLE election, but I'm having trouble finding any kind of citation to this effect. If anyone can point me in the right direction, I'd appreciate it.

Thanks!

Northwestern Mutual has been removed from the employer's approved list of product vendors.

Does this constitute under the Regs a plan termination with Northwestern Mutual so that an eligible rollover distribution may be made by the employer? I believe that just the removal from the approved list is not enough under the regs. I am of the opinion that the employer must first adopt a written 403b plan and list NW as one of the product providers and then formally terminate/remove NW from the Plan Document. What say you?

Joel

I am unable to find any cite regarding the calculation of the 415 immediate annuity value at attained age under the following scenario.

Plan has AE which has different pre and post retirement interest rates. No early retirement.

Assuming a normal retirement age of 65 and a participant 55. The maximum lump sum payable is based on 5.5% interest and GAR 94. However, what is the benefit at 55? Is it ratioed down from 62 to 55 using pre or post interest rates?

Thanks for any and all responses.

Hello experts. Just a plan sponsor here with a question.

We have historically segregated funds into a plan account the date before payday, and invested the funds in participants accounts on the actual payday. This past pay period, we funded on the Monday following pay day, (ie. one business day later than normal) though we still segregated the funds on the day prior to payday.

I've search past threads for hours, and read 29 CFR 2510.3-102, and Rev Proc 27, which seem to be the most relevant.

I've heard of not breaking your pattern of deposit and once you've proven you can do it within a particular time frame, you have shown that this is your reasonable date.

We really pull out all the stops to meet our current timing, and sometimes we come close to not making it.

So, is breaking your pattern by one day a prohibited transaction? I think we met our requirements by segregating the money when we did.

Thanks for any help, and maybe any links to bulletins, announcements that provide more guidance than I've found.

Individually designed program has a determination letter covering GUST, GATT, CRT, TRA, SBJPA, etc. but it does not cover EGTRRA.

Plan sponsor wants to a significant self-correction (we are w/in the two years) but I noticed the favorable letter requirement in the Rev Proc released in 2006 (2006-27) for doing significant SCP.

Can the plan do a self correction that is a significant SCP (without submission) when it has a favorable letter that does not include EGTRRA?

Hello,

In Relius, under Reporter Writer, I am able to print a hard copy of the participant certificate that has detailed information that employees would also like to view on the Corbel web page. Can someone guide me on the set up in Relius so that this information is accessible on the web?

Thank you.

I have a participant who is over age 50 and went over the 2006 402(g) limit.

His EE deferrals were $23,282.25, which includes a $5,000 catch up contribution. He is over the 2006 402(g) limit of $20,000 by $3,282.25.

Obviously, I missed the 4/15/07 deadline to correct the excess deferral plus earnings. Can I still do the correction now?

org wants to have a plan with nonelective employer contributions. would this plan be subject to 457(f) as well as 409A?

Does anyone know of the PLR (issued within the last 10 years maybe?) that permitted retired teachers to return to work and earn compensation while continuing to receive pension benefits?

If an ESOP has participants with 415 excesses, 404(j) limits the amount of the contribution subject to the 404 limit (and therefore deductible) by reducing the contribution by the 415 excesses. However, in the case of a C Corp. ESOP, 404(a)(9) says there is a 25% of comp. limit on the principal payments and no limit on interest. Therefore, assuming the interest paid at least equals the 415 excesses, is there any reason why the 415 excesses can't be deemed to be interest payments and therefore deductible in spite of 404(j)?

Seems too good to be true. Any help would be appreciated.

We have a participant who is requesting reimbursement for overnight camp expenses. The camp has already provided a breakdown of expenses between "day" and "night" expenses, and the amount reimbursable is less than 1/2 the amount of the total expense.

The participant has now been told by her accountant that none of the expense is reimbursable under a DCAP. In the past, I believe we have reimbursed if the participant was able to provide a breakdown of the expenses.

Any thoughts/guidance is appreciated.

We are discussing the possibility of buying another TPA firm (owners looking to retire), but we have never done this before. We are looking at two TPA firms, each is about 1/4 our current size (we are a TPA firm). When all is done, if these both work out, we would have about 1200 small plans. We have retained competent legal counsel to help us along the way. However, we would like to hear from anyone else out there about good ideas that worked well, or ideas that turned out bad that we should avoid.

Thank you.

If a portion of an ADP failure is recharacterized as catch-up, does the employer pay the 10% excise tax on the full testing failure, including the catch-up contributions, or only on the actual ADP refunds that are required to be distributed?

An ER with more than 20 but fewer than 100 EEs has a few former EEs that have elected and currently are on COBRA continuation. The group health policy year is going to end on 9/30, and the ER is shopping for quotes for the next policy year. One of the COBRA continuees is refusing to provide the info required by health insurers before they will issue quotes. Can the ER send this obstinate COBRA contiuee a notice explaining that if she does not provide the info in a timely manner, that her COBRA continuation coverage will end due to failure to cooperate?

3 separate employers -

Corporation 1 - 300+ employees, 100% of stock owned by John

Corporation 2 - 5 employees, 100% of stock owned by John

John's Sole Proprietorship - 4 employees

In the past the two corporations have shared benefit plans. For example, on the self-insured dental plan, Corp 2 is listed as a Participating Employer. Same with the 401(k) plan. I am not sure how the insured medical plan was set up, since it has been in place for like 25 years, so perhaps it was not done properly at the time, but I believe it was, and that the insurer was aware that there were 2 separate corps involved in the plan.

Now we are asking about adding the 3rd company to the plans and being told we cannot do that, they would have to have their own small plan. Is this correct? Is there any way to have these 3 plans all together for all benefit purposes? Do we have any options?

Is is just me or did the final Sectin 409A regulations significantly curtail the short-term deferral exception?

As stated in the proposed regulations the exception applied whenever, absent an election by the employee, deferred compensation was "actually or constructively received by the [employee] by the later of the 15th day of the third month following the [employee's] first taxable year in which the amount is no longer subject to a substantial risk of forfeiture or the 15th day of the third month following the end of of the [employer's] first taxable year in which the amount is no longer subject to a substantial risk of forfeiture."

Under the final regulations, there is an additional requirement: in addition to the "timely receipt" requirement above, the deferred compensation plan may not "provide for a deferred payment" - i.e., it may not state that any payment will be made or completed on or after any date, or upon or after the occurence of any event [such as a separation from service or change in control] that will or may occur later than the end of the applicalbe 2 1/2 month period."

Example 6 in the Final Regulations (Section 1.401-1(b)(4)(iii)) describes a situation that would qualify for the short-term deferral exception under the Proposed Regs, but not the Final Regs: On November 1, 2008, employee obtains a LBR to severance pay on a separation from service. The example states: "Because the separation from service is an event that may occur after the applicable 2 1/2 month period, the bonus plan provides for a deferred payment and therefore provicdes for a deferral of compensation. Accordingly, the bonus plan will not qualify as a short-term deferral regardless of whether Employee F separates from service and the bonus is paid or maid available on or before March 15, 2009."

Any comments appreciated.

We recently took over a plan that has a deceased participant. The participant has been deceased for 10 years.

The client informs me that they have, on several occasions, tried to get the parents (bene's) to take the money out of the plan.

Can we either treat this participant as a "missing participant" and forfeit the money until such a date when a claim is made, or force the parents (bene's) to take the money?

Had this been addressed YEARS ago it would be a non-issue since the threshold was $5,000 back then. However, the vested balance is just over $2,000 and the plan has a "force out" threshold of $1,000. Other than amending the plan to change the threshold and do a rollover, what are our options?

Thanks so much!