Plan fails ADP and needs 2% to pass. Plan also fails 401(m) coverage due to a 1000hr+ last day requirement. The ratio is 38%.

Question, is there one correction/contribution that can be made to satisfy both the 401(m) coverage failure and the the ADP failure?

First, I want to state that I "inherited" this plan!!! This is also my first plan disqualification.

A client maintained a DBPP that the IRS has determined failed to meet the requirements of Code Section 401(a)(26) and 410(b). The client only contributed $210,000 to the DBPP for the two years in question. However, the PVAB for the husband and wife for the two years in question is close to $425,000.

This is the case as the client accrued large benefits due to high compensation during the two years in question. However, after the second year in question and prior to the funding deadline for the second year in question, the client realized that they could not make commensurate contributions, so the actuary used assumptions to limit projected benefits and limit current funding levels to address this issue.

Any thoughts on how to deal with this?

Say the company contributed $200,000 to the DBPP.

PVABs for husband and wife are $400,000

Trust earned $50,000.

Is this what happens:

$200,000 treated as a compensation expenses rather than a DBPP contribution.

Husband and wife have additional income of another $400,000

Trust has income of $50,000

Under this senario, husband and wife get double-taxed on the first $200,000 of their PVAB and an additional $200,000 as the PVAB is $200,000 more than amount contributed to DBPP.

Is this correct?

Thanks in advance for your thoughts.

Ed

I don't really have much information, but it appears an employer wants to put some money into certain people's health FSAs and not others. I feel like I must be missing something, but all I can think of is that it would only be a problem if the people whose FSAs the employer is contributing to are HCEs, where it would screw up discrimination testing. Is there any issue with doing this on just a "pick-and-choose" basis?

A QDRO was submitted to a large company pension plan some time ago.

The pension was divided under the "separate interest" method as the participant's spouse commenced receipt of her pension prior to the participant retiring and receiving his pension.

The marital portion accrued benefit subject to division was an accrued benefit of $1,000, where 50% of such portion was allocated to the former spouse.

The spouse commenced the pension at age 62 and the terms of the plan provided for an early commencement factor (for alternate payees) of 0.8. If a plan participant retires at age 62 he receives 100% of his accrued benefit, but such subsidy was not provided to the alternate payee.

The plan does not allow the alternate payee to have a beneficiary, so the alternate payee is receiving her portion as a life annuity.

My expectation would have been that the alternate payee would have received a pension of:

= $1,000 * 0.5 (50% to alternate payee) * 0.8 (early commencemtn factor) = $400 per month

However, the plan further reduced the pension as follows:

= $400 * 0.95 = $380

The plan stated that the benefit was reduced 5% for a survivor annuity reduction factor.

I do not understand this reduction.

Anyone know of what I might be missing?

Thanks.

We're generally taking the same steps that everyone else is to protect sensitive data. However a particpant is making waves that putting their SSN on a participant statement that is mailed to their home is a violation of HIPAA.

I have been unable to find any specific reference to to this point or the application to retirement plans.

Does anyone know if HIPAA prohibits putting an ssn on a statement?

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."

Any comments appreciated.

Big problem!!!!! My retirement plan is a defined benefit plan. I am now retired (on disability) and divorced.

My attorney drafted the dro of which my plan administrator approved. The QDRO was signed by all including the judge and attorneys. My ex, after almost 3 years of receiving his share of my retirement, is now trying to get more money from me. His portion is considerably less than he expected. The judge now agrees with my ex and wants me to pay out of my pocket the difference of what the QDRO approved for him and what I get. I was not old enough to retire with full benefits, plus the QDRO was based upon the date of separation. The date was set by my ex. I was 47 yrs. old at that time and was only 51 when I retired. As you probably already can seen the distributions for both of us is much less. Can a QDRO be modified after distributions begin? I can't find anything on the web to answer any of my questions. I am now appealing the judge's decision. I think he (the judge) is feeling sorry for my ex. Aren't his emotions suppose to remain neutral. By the way, the separation agreement did not allow for my ex to receive any, raises, supplements, survivor benefits, etc.

Help!!!!!

This may be a dumb question, but I'll ask it anyway --

How is a Roth IRA permitted to accept a Roth 401(k) rollover before 2008? Although 402A©(3) provides for this type of rollover, under 408A©(6) a Roth IRA may only accept qualified rollover contributions, which are defined in 408A(e) as contributions from another Roth IRA or from a traditional IRA. How does 408A shoehorn in these rollovers?

It is clear a non-spouse beneficiary does not require 20% mandatory federal withholding even though they may otherwise rollover.

Is a lump-sum payment to the spouse beneficiary subject to 20% mandatory withholding?

Does it matter if the spouse bene is the sole beneficiary or not?

I have a Roth IRA that I've contributed 6k to, well over 5 years ago. It's worth almost 8k now. (Bad investment decisions in the late 90's) The thing is I have no record of making those contributions, and I've transferred this account between many online brokers since then, so they don't have paperwork either. I've had a recent financial reversal and need to take a distribution.

I've read that the contributions aren't taxable because they came from after tax dollars:

1) Is that true?

2) Do they get hit with the 10% penalty?

3) Even if used for law school expenses?

4) Without any paperwork, how do I prove to the IRS that I've just taken out the 6k in contributions?

Thanks in Advance!

I recently opened my own TPA firm, and am now building relationships with the various 401(k) wholesalers, which like to tell me that they offer "incentives" for bringing them business.

With all the stink about transparency of fees, and only charging reasonable fees for services rendered. I'm wondering what your opinions are about accepting these incentives.

My services are outlined in my engagement letter along with fees associated for those services, and I agree that if I receive money from the investment company, they should be disclosed to the clients.

How do you justify receiving these fees? My thought is that these fees will allow me to provide additional "handholding" services for the client. Rather than start the billing clock every time I pick up the phone, or talk with the broker, CPA, etc., I can feel good about accepting the fees. But then, I feel like I need to track the time anyway to justify the fee just in case the client challenges it.

Would anyone be willing to share how they are handling this?

Thanks!

ok - here is my question. What is a plan document allows an employer to termate the plan in connection with a change in control, etc....but the employer does not have sufficient assets (or will not receive sufficient assets in the deal) to pay all benefits due under the plan. Under the exception in the final regs. allowing termination of a plan in connection with a change in control, all amounts under the plan must be paid with 12 months, etc. In a perfect world, this would not be a problem. But we live in an imperfect world. There is another provision of the regs. that says there is no 409A violation when an employer doesn't pay provided that the employees basically sue the employer. What if the individuals entitled to the benefits make up the board, etc. Any thoughts?

A contributing employer has been making contributions on behalf of an employee who does not perform bargaining unit work. It's believed that the employer has an agreement with the individual to contribute so that the employee will receive welfare benefits. This individual used to be a contributing employer but the company has stopped operating.

I'm wondering if anyone has any experience with this type of situation or case law to consider. The contributions will be returned to the employer and the employee is going to be notified of his ineligibility to participate. However, I'm undecided as to whether this employee should have 180 days to appeal this (as is required in the claims regs for adverse determinations) or since this individual was never a participant in the first place, he would not have ERISA rights and therefore provide him at least 30 days to appeal.

An employee elected to have their health insurance premiums for Employee+One deducted pre-tax under the Cafeteria Plan. In 2005, the employee changed from Employee + One to Employee Only. The employer changed the type of coverage with the insurance provider, but failed to make the change in payroll and has continued deducting Employee + One. The Employer has just realized this in 2007. Total amount over withheld is about $4,500. What options or obligations does the employer have? What is the proper method to correct?

I am doing 2006 Plan Year ADP Testing.

I have a participant who is over age 50 and deferred $23,282.25 in total for 2006. He is over the 402(g) limit by $3,282.25.

When I am doing the ADP test, do I use his the full deferral of $23,282.25 or only $20,000 when I calcuate this participants ADP %?

Thank you.

An Individual who elected cobra, whose coverage terminated 7/31 intends to pay premium in a week's time is scheduled for surgery before the premium will be paid. This is a self insured plan. As hospital will not do the surgery (heart surgery, non emergent), does the plan have to guarantee benefits prior to payment or can it advise the medical provider that if the premium is paid there will be coverage but if the premium is not paid, then the procedure will not be covered???

I know this is a DB board, but no one responded to this on the VEBA or helath and welfare boards.

See below

A client has a VEBA.

The plan year-end and the cient's corporate tax year-end are both 8/31/07.

When must they make their employer contribution to the trust in order for it to be deductible for the 8/31/07 fiscal year?

By 8/31/07? Within 2 1/2 months of 8/31? Due date of tax return with extensions?

I believe a 419 welfare plan must make their contribution by 8/31/07 (assuming tax year end is 8/31/07) to be deductible, unless they use accrual employer accunting and then they have unti 2 1/2 months after tax year-end to make contribution.

Thanks.

the client has a 401(k). took investment elections from the plan participants but never implemented them. the money was invested in money market and has remained there since. i would imagine that they would be required to give the participants lost earnings. do you use the dol fiduciary correction program for this?

two questions - 1) how do you make the check payable? i believe you must indicate it is an inherited IRA

2) must the plan inform the accepting custodian that the beneficiary has 5 years to receive the money? (5 year rule applies here)

The EE has been court ordered to pay 65% of all unreimbursed medical expenses for his ex wife and children. Are their expenses eligible under his FSA plan?