Is anyone familiar with software used to calculate the Sole Prop? I'd like to license a version, but am having trouble finding vendors.

I had an interesting question from a client today on the new PPA rule where a participant can request a hardship for a designated beneficiary.

The participant wants to designate two primary beneficiaries to get his death benefit. He want to designate 99% of his death benefit to his spouse and, with spouse consent, he wants to designate 1% to his son-in-law. Hw wants to do this to be able to gat a hardship distribution out of the plan to help pay his son-in-law's medical bills.

IRS Notice 2007-07, III Section 826 of PPA '06 defines a primary beneficiary as an individual who is named as a beneficiary under the plan and has an unconditional right to all "or a portion" of the participant's account balance under the plan upon the death of a participant.

While it does not appear to be kosher, it looks like this can be done.

Any opinions??

Thanks.

A plan that were are taking over administrative responsibility for is a 401(k) safe harbor plan. It provides for the 3% nonelective ADP contribution and a required match of 100% on the first 5% of compensation deferred. The match has no accrual requirements but is subject to a vesting schedule.

The current TPA has not been performing the ACP test, noting in the year-end reports that it is automatically passed due to the safe harbor status of the plan. I know that a discretionary match, to avoid the ACP test, must be limited to 4% of compensation.

1) Since this is a required match and under 6% compensation with no accrual requirements, is the ACP test thus automatically satisfied?

2) Is the vesting schedule on safe harbor match permissible?

Thanks.

My client wants to set up a phantom stock plan that would allow cash bonuses to be converted to phantom awards and then they are eligible to take 20% of their awards in cash 5 years after the initial award. If they don't take it they can defer but if they leave for any other reason than death, disability or retirement they forfeit any awards they haven't converted. It is also nonelective. It seems to me that they can decide to defer 12 months prior to the scheduled payment for 5 years. During that 5 year period if they were to die, become disabled or retire, they would get their awards in their account but otherwise it would continue to be subject to the substantial risk of forfeiture. If they leave during that 5 year period of subsequent deferral they would lose everything. Does anyone see a problem with my analysis or compliance with 409A?

I ERISA 407 includes "marketable obligations" as a qualifying employer security.

IRC 409(l), which applies to ESOPs, defines "employer securities" to include common stock.

Does that mean an ESOP cannot hold a marketable obligation as a "qualifying employer security?"

is anyone familiar with the substantial business hardship exception for terminating the safe harbor nonelective contribution portion of the plan? client had would like to keep the 401(k) portion of the plan going but in order to do so would need to qualify for the substantial business hardship. there are several factors listed in the code but the list is not inclusive of all factors. i am wondering if there is other guidance. ie. if you use the definition of substantial business hardship in 412 do you also need service approval?

A collective bargaining agreement requires an employer match for that employee group. The employer stops making the match.

The HR manager testifies that ERISA prohibits the company from making the match for that employee group unless it makes a match for all employees in the plan.

I know of no such provision, do you?

Is the employer retention of the match money a prohibited transaction?

Your thoughts and comments are greatly appreciated. Thank you.

An employer excluded many temporary employees for a number of years. If the employer filed a VCP application and corrected by making corrective contributions the cost of such corrective contributions would be extremely expensive and beyond the company's means. In addition, the company is reluctant to make such corrective contributions because the employees would not likely have participated if given the opportunity.

Has anyone proposed an alternative correction method, under VCP, for the failure to include eligible employees?

Any ideas would be great!

Thank you.

Our client has a prevailing wage element in the 401k plan. The plan also has a discretionary match. They have some unofficial 'it seems so' guidance that the match can be counted against the prevailing wage contributions, as long as they are fully vested.

The VS document we use is somewhat vague, silent and otherwise unhelpful in making the call. The client has provided a 6/29/1990 Field Operations Hanbook and cited Sec 15f13 as some sort of support.

As the match is discretionary and non-vested I believe the Davis-Bacon deposits can't be offset.

But this is a rare circumstance and I hope someone out there wants to take a shot at the answer.

Thanks

If a plan provides for the continuation of healthcare coverage for employees who experience a COBRA qualifying event for the duration of the applicable maximum coverage period (for example, an employee who terminates employment would continue coverage for 18 months following the termination date with employer paying the premums)- thereby not having an obligation to offer COBRA since the event didn't result in a loss of coverage prior to the end of COBRA's maximum coveage period - Should the plans' SPD still provide information on COBRA coverage since it is a group health plan or can it be silent on the COBRA issue. Please assume that the plan would be drafted to account for all COBRA scenerios, divorce, disability, etc. and extend coverage to the participant/dependents accordingly. Also kindly assume that the plan cannot be talked out of doing it this way! Any comments would be appreciated.

Does anyone know anything about the abatement of withdrawal liability and reentering a plan? Employer withdrew from a plan in one city and later became signatory with another plan in another city. However, the employer will be doing work in the original city using union employees from both cities and so will have to contribute to the original plan. Can this amount to reentering the plan under the abatement requirements? Does the employer have to be signatory to the original plan to qualify for abatement?

thanks

Accounting for Roth 401k contributions must be separate from that of pre-tax elective deferrals, but do the actual contributions have to be in separate accounts? We have several Roth/401ks that are self-directed but pooled (don't ask:), and therefore all plan monies - roth, 401k, PS, match, etc - are held in 1 place. I believe that as long as their is separate accounting for all the different money types, that is sufficient.

Also, Roth 401k contributions were initially set to expire when EGTRRA sunset in 2011. Was this obstacle for Roth 401k contributions removed when the other sunset provisions were eliminated last year?n

Thanks

Does anyone have any insight as to when in March the final 409A regs will be issued? Thanks!

Corporation of 2 employees/ 50% shareholders has a 401k plan. Both Shareholders receive W-2 income. Both Shareholders also individually receive 1099 income separate from the Corporation. One shareholder wants to stop the 401k plan. The other shareholder wants to have his own 401k plan.

Would it be better to amend and rename the Corp plan to the one individual or would it be better to start a separate 401k outside the Company for the one individual and then terminate or merge the Corp 401k plan?

A 457(b) plan provides that the employer will make an employer contribution to the plan in addition to the employee's elective deferrals. The employer's contributions will be subject to a three year cliff vesting schedule. If the employee terminates prior to becoming fully vesting, the nonvested monies will be returned to the employer.

ERISA Section 403©(1) requires that once an amount is contributed to a plan, it is a plan asset and cannot be returned to the employer. Are government plans subject to this restriction?

We have a US parent that just incorporated a US subsidiary that will be conducting business in Canada. The sub is going to be physically located in Canada and will be employing Canadian residents, whose work will be confined to Canada.

The sub would like to include the Canadian residents in the 401(k) plan. I have looked at the US-Canada tax treaty, and everything checks out with that. However, here are my concerns:

1) How does an EE from Canada, on Canadian payroll, make an elective deferral of his/her Canadian salary to a US 401(k) plan? Can a Canadian company withhold Canadian compensation nd contribute it to a US 401(k) plan; and

2) If a Canadian EE does elect to contribute to the 401(k) plan, how could they do so on a pre-tax basis (presumably the Canadian treasury is going to tax it at Canadian rates since it would not be a "pre-tax contribution" for Canadian tax law purposes)?

Does anyone have any thoughts or experience with this kind of thing?

401(k) Plan provided with a blackout notice for a change in TPA's. The blackout Notice expired on Feb 27, an extension has not been provided and the funds have not been converted. With the 6-7% drop in the market, is there any liability for the provider of the blackout notice?

Have a client that merged a mp into a 401k PS plan. The MP vesting schedule is being maintained under the 401(k) PS plan. I need to allocate some unvested MP money. The 401(k) PS says to pay expenses first. How do you allocate the remaining forfeitures?

The only thing I found was an EP Determination Bulletin which references Rev Rul 2002-42 and cautions that before the MP Plan is merged, the plan should be amended to allocate forfeitures under a specific formula. That was apparently not not done and I do not have the old MP Doc. Current plan doc says that forfeitures should be used to pay expenses then allocated to ee's. Remaining NEC's should be allocated on the basis of comp.

How do I allocate the remianing forfeitures? Do I allocate on the basis of comp or allocate to only those employees with a MP balance?

Are there any legal ramifications of an employer converting an employee's 401k account to a a new class of stock that is placed in an ESOP? Upon the company's dissolution, the distribution that the employee received from the ESOP account was much less than the value of the employee's 401k account at the time of the conversion.

Thank you.

the plan is a safe harbor nonelective plan. is it necessary to give a 30 day notice prior to terminating a safe harbor plan mid year? the regs seem to imply you follow the same rules for terminating a SH match but they are not clear to me.