Hi - We have a plan which gave a loan out to an employee who promptly did not make one payment. So the loan is now in default. When do the earnings stop accruing? At the end of the cure period or do we continue to accrue intil we deem the distribution? Thanks for any insight/direction!

Currently, our office administers health/dependent care fsa accounts.

The Department of Insurance (DOI) does not require that we be licensed, however, for another state in which we do business, we are required to be licensed - part of the procedure requires a home state certification, which of course, requires us to be licensed in our home state.

A small portion of our health FSA business is non-ERISA plans and the DOI requires a bond equal to the greater of $100,000 or 10% of funds administered for non-ERISA plans that are not in a trust. The DOI doesn't care that the money is part of the general assets of the Employer - the bond is still required.

For those of you that administer health FSAs, if you have any ideas on how to get past this issue, please let us know.

Thanks.

In preparing a valuation are we allowed to assume the compensation limit will increase?

Hello, all. Some of my colleagues are telling me that I'm going way overboard with mandatory HIPAA training. We have self-funded plans and have been considering enrollment and dis-enrollment data to be PHI to the point that we're requiring our IT employees and payroll employees to complete the mandatory trainings. The only data that these people see are participants' plan elections and the resulting payroll deductions--nothing more.

Are we going overboard? What are you doing? Thanks!

A question came up to regarding a hardship distribution. The participant already took a loan. The participant has cumulative deferrals of $7900. The 401(k) source account has $8400 in the plan, which includes a loan balance of $1700. The plan only allows hardships from the 401(k) contributions. Some of us said that the most he could take for a hardship is $6700 (8400 - 1700 loan balance). Others said he could take all of the $7900 because the loan is not a distribution. The arguement that the people who said he could only take $6700 is because when they liquidate the funds in the 401(k) source account he only has $6700, and that they couldn't take it from another source because that would could trigger an audit.

I couldn't find anything in the regs that said that the participant could not take the $7900, even if some of it is being distributed from another contribution source.

What is the correct answer?

John Mak

The plan meets ADP and ACP safe harbor with 3% non-elective safe harbor contribution.

The plan also has a mandatory 15% match on the 1st 6% deferred. Can this match have a last day requirement and still meet ACP safe harbor with the 3% non-elective contribution.

Thanks.

I'm not an auditor, I'm not involved in retirement plan audits, but I have had someone looking to me for guidance ask a question that I can't answer.

This non qual has over 100 participants and is not in a Rabbi trust, but instead part of a secular trust. The plan is meant to operate very simialr to the company's 401(k) plan. The provisions are very similar. The questions is are we going down a path where ERISA has some hooks into this type of plan? A respected person my little world has said that they should file a 5500 and be audited. That sounds crazy to me.

I don't know all of the details, but imagine a 401(k) plan that excludes HCE because of ADP issues. Then imagine a non qualified plan that is put in place for these HCE that operates basically the same as the 401(k).

Any thoughts?

A couple of points I am going to present and would like either verification or difference of opinion if any exist. I'll try to keep things straight forward.

Background

Law firm has a 401k only plan for associate attorneys and a

401k, 401m and profit sharing plan for the partners and rank and file employees. Only NHCEs receive a 401m match.

It is intended that the partners' plan passes without aggregation.

We'll assume that the partners plan by itself is top heavy.

1. Regarding the ADP test, my understanding is that we include all non excludable employees in the company for the coverage ratio test, but only include the non excludable employees in the partners plan when performing the ADP test?

2. The partners plan passed the rate group non discrimination testing by means of the average benefit test. While the ABT is based on rates for all non excludable employees in order to test for the average benefit percentage portion of the test, it is still not deemed a required aggregation for purposes of providing top heavy allocations for the associates, thus associates would not be required to receive a TH allocation?

3. And finally, while the partners plan is being tested on a cross tested basis, the assoicates plan should not be required to receive a gateway minimum? The ABT uses cross testing for the associates plan as well of course.

4. To make a long story short, meeting coverage and/or non discrimination by means of the ABT does not warrant required aggregation as far as I can see? Otherwise it appears that the partners plan is being tested as a separate and distinct plan.

Thank you.

Looking for comments on pros and cons of commercial software available for cash balance administration and testing. Looking for user friendly menu driven system. The system would not have to handle non-CB plans. Thanks for any help.

The preamble and the regulatios are clear that separation payments made upon an involuntary termination of employment (or a voluntarytermination that is deemed to be involuntary) and qualify for the 2 year/200% of compensation exception are not subject to the 6-month delay for specified employees. What about separation payments that exceed the 200% cap on compensation but are made in a lump sum on the date of an executive's involuntary termination (or qualifying voluntary termination). If I am reading the regulations correctly, that payment is subject to a substantial risk of forfeiture and vesting occurs on the date of the involuntary termination. Thus, this payment qualifies for the short-term deferral exception and can be made without the 6-month delay. Am I reading this right? I have read several commentaries. Very few mention this (Deloitte's does) and several say that the 6-month delay is not available if a severance payment exceeds the 200% cap even if it imade within the 2 and 1/2 month extension. Thoughts are appreciated.

Along the same lines, please confirm that the 6-month extension applies to distributions to specified employees who terminate employment voluntarily when the voluntary termination is not deemed to be an involuntary termination. Plan says that employee can elect to terminate his employment anytime within one year beginning on the happening of an event. Payments are made in a lump sum on the date of termination.

thanks.

Participant has 2 loans outstanding. Plan only allows for 2 loans at any one time.

Loan 1 has 1 year remaining

Loan 2 has 18 year remaining on loan whose purpose was to buy property and build a home.

Participant is at final stages of refinancing the original bank loan from a building loan to a home loan. However, builder is now requiring payment of amount owed to him by end of month and refinancing won't be completed in time. If participant fails to pay the builder then she'll get a credit ding which will cause her refinancing to fall apart (evidently her low rate is contingent on no late payments on her credit report). Participant inquired about refinancing loan #2 to add the 6k that she still owes. Account balance is sufficient to add the additional 6k.

Can I refinance the 401k loan over the remaining loan period to pay this obligation on the original home?

Has the IRS changed their mailing address for Form 5310 filings?

The instructions to the form say to use P. O. Box 192, Covington, KY 41012-0192.

I use the United States Postal Service website for my mailing and mailing labels. When I enter the above address it keeps telling me the address is invalid. Anybody have a different address?

If I have a participant that died in 2001 and the nonspousal beneficiary has been taking the RMD under the life expectancy rule, with the passage of PPA, can that beneficiary rollover the balance in the plan (minus the 2007 RMD) to an inherited IRA? Thanks!

Judge Shabaz, WD Wisconsin, has dismissed the case brought against Deere & Co and Fidelity.

Here is the Memorandum and Order.

Hecker_v_Deere.pdf

I currently work for a publicly traded company who funds their employer 401(k) contribution with a 50% match in company stock. My company is currently evaluating the feasibility of enrolling in an HR outsourcing service that will include the transfer of our existing 401(k) to the plan provided by the outsourced service.

This new organization who will no longer allow the match to be funded via company stock and has recommended a plan where they will accept the stock match, sell it for a fee of about .05%, and then transfer the proceeds into each respect employee's accounts.

Does this sound like a very bad idea to anyone else?

Is there someone out there that could help me to understand the goods and the bads of this type of arrangement before we jump into a potentially bad situation????

HELP!

Company is owed by two peole; they decide to seperate and one of them is going to keep the plan. They did this as of 3/31/07 and changed the company name to reflect this. Four of the eleven plan participants were let go as a result (including the one owner). The remaining owner and employees are keeping the plan.

So, I have to do an amendment to change the company name, plan name, and remove one of the trustees. Doesn't a particial termination require an amendment, or do we just generate the distribution packets when the time comes? It's been a long time shince I have done a partial termination, so I apreciate the insight...

I am wondering what would be a reasonable rate to charge for consultancy fees

Does it matter the job and level of complexity? or should I just charge one flat fee?

I plan to charge per hour for projects that take five hours or less, and per-day for projects that take more than five hours.

My consultation services on on IRAs and DC plans, and usually involve providing techincal assistance and training

Guidance appreciated

Is anyone using the web based paperless loan feature?

I am interested in finding out how the promissory note is handled. Is it a part of the check? Is this really paperless or simply less paper?

To qualify for this credit, the employer must not have had within the last three years another qualified plan covering similiar ee's. I've read some commentary that "qualifed plan" for these purposes means any plan such as those that aren't "qualified" under ERISA like SEP's.

What exactly does "qualified" mean here? I have a new 401k plan, effectively that replaced the old SARSEP. Same ee's covered. Can this client take the Form 8881 credit or does the SARSEP knock them out?

Thanks for any help.

the participant had an outstanding loan for 10k and he dies. he has 100K in his account. who do you issue the the 1099 to? due to the default, i think you issue a 1099 to the deceased participant for 10K and the beneficiaries (if they take a distribution) for 90K... anyone know whether this is correct.