Is there a way to correct an operational error in which a distribution was made to someone who was not eligible to receive the distribution?

I have a situation in which a participant received distribution from a 401(k) plan but there was no distribution event under the plan. The participant has since rolled the distribution to an IRA. The participant is willing to roll the money back to the plan but I have my doubts whether this will "fix" the problem or something else must be done.

Any ideas?

can anyone lend me insight re the following:

Corp A= john 25 %; pam 37%; and mary 38%

Corp B= john 15; pam 15; mary 15; joe 55

Corp C= john 33.3; pam 33.3; and mary 33.3

when applying section 1563's brother-sister controlled group analysis, do you apply the test on a one-on-one basis or as a group?

for example: would you look at corp A and corp B. corp A and corp C

and then corp B and corp A. corp B and corp C.

and then corp c and A. corp C and B?

OR

do you look at all three together and see if the 50-80% tests apply to them as a group of three companies?

thanks in advance for your help.

Please advise if my thought process is correct or not...

Participant dies 12/31/2005

Participant's DOB 12/20/1924

Participant was receiving RMD's prior to death

There are multiple beneficiaries (not an estate)

The company changed investment companies in 2005, and no 2005 RMD was prepared (new plan to me in 2006).

To calculate the RMD for the beneficiaries, I would need the oldest beneficiary's DOB correct?

I would then use the beneficiary's age to get my life expectancy factor, correct?

To calculate the RMD, I would then divide the 2004 ending balance by the factor to get the 2005 RMD, correct?

Since the participant died in 2005, I would need to provide the first RMD to the bene's by 12/31/2006, correct? I would also need to calculate the 2006 RMD...and both would be distributed before 12/31/2006, correct?

Thank you so much for any advice you can provide.

The owner of a PEO (Co. A) started a multiple employer plan several years ago. 5500s were never filed. He also owns one of the companies (Co. B) participating in the plan. He is in the process of selling Co. B. However, the buyer is withholding a substantial sum of money until the 5500s are filed. The owner would like to pull Co. B out of the group and file 5500s just for that plan. He knows he is obligated to take care of the 5500 filings for the multiple employer group, but says he needs to get his other company (Co. B) taken care of first because of all the money that's being withheld from the sale.

This sounds unethical to me, but not illegal. I'm hoping to get some thoughts from other practitioners.

I am running discrimination testing on a plan who has not had testing done all year (we just aquired them- unfortunately). Their plan ends on Dec. 31st and they are failing the 25% tests for elections, contributions and reimbursements.

How do I go about fixing this? Should I tell the employer they need to bump up the key employees pay to cover the 25% they would have saved with this plan, have them pay taxes on their full annual elections or what!????? HELP!

Can anyone tell me whether true-up matching contributions (under a plan that provides for matching contributions on a payroll by payroll basis) that have a last day of the year requirement have to be tested as a benefit, right or feature (i.e., different rate of match)?

A plan provides for early retirement at age 55 for all employees

The plan provides that early reduction factors are 1/15th for the first five years, 1/30th for the next five

The plan further provides that the benefit for Employee A, an HCE, is unreduced at 55

Clearly, this will impact A's most valuable accrual rate and I am not concerned about that, the general test is readily passed

One of the other actuaries in my office is arguing that the unreduced benefit is a Benefit Right or Feature subject to testing and automaticallyfails since only an HCE gets it

I disagree and believe that 1.401(a)(4)-4 is clear that using more than one actuarial assumption set for converting to other forms of benefits creates separate optional forms, but the amount of the benefit payable in the Normal form and corresponding QJSA are tested in the general test and not as BeRF's

Thoughts?

New to the HSA world, so my apologies on what I am sure is a basic question...

What types of funding mechanisms are available for HSAs. Must they be funded entirely through payroll deductions (If offered by ER)? Can I make a lump sum contribution with after tax savings? Do I have the ability to rollover funds from a rollover IRA (all pre tax funds) directly to the HSA?

Any insight would be appreciated!

Our volume submitter provider is recommending that all of our clients sign the Form 8905 by 1/31/2007. Don't have a problem with that, as they have provided a Word version of the form via their website. The info actually entered on the form is relatively trivial (plan name, EIN, plan number, and plan sponsor).

However, in order to produce these forms using their document software, we have to open up each plan, update it to the newest version of the language, and then build and print the form. Seems pretty time consuming for 800 plans, especially for what is essentially a nonbillable item.

My thought last night was to print out a raft of the partially prepared 8905s, and then using our existing database prepare a blank report page with the items lined up on the form. Then just a matter of loading the printed out forms, and then printing the database job. Estimate this would take a 2 week process down to about 2 hours (from experience of updating 500 SH 401(k) plans in November to generate the new SH notice).

My only question is that the form itself has those annoying boxes to individually enter each letter. I am not inclined to parse each item character by character to exactly line up; rather just align with the start of the line and let the characters fall where they lay (I've got better things to do with my time around the end of the year). Given that these are just retained forms, not sent to the IRS, does anyone think it a big deal if the characters don't perfectly line up on the 8905?

The Employer wants to buy back some shares from the ESOP. All shares are currently allocated to participants. Under what circumstances can the company come along and decide they want to buy back shares from the ESOP?

I have a plan where the participant named her spouse as (partial) beneficiary of plan benefits. The participant died (before her required beginning date). The spouse died a month or so later, before taking any benefits.

Spousal benes can roll to an IRA, and in 2007 non-spousal beneficiaries can roll to an IRA. In this case, we'd love to be able to roll the benefits out somehow, but I don't see how it's possible...the spouse is the named bene for purposes of RMDs, but the estate is effectively the beneficiary for purposes of actually making the payments, and the estate can't do a rollover.

Can anyone convince me of some way that we can get this money out of the plan in some kind of a rollover?

I've read that the "Highly Compensated Employee" status is based on prior year compensation. Is that still true if my company uses the current year testing method for nondiscrimination testing? In other words, will they use my compensation from 2006 instead of 2005 to determine whether I am an HCE for 2006?

EGTRRA changed the 409(o)(1)©(ii) limit to $800,000. Was this required to be incorporated in the EGTRRA good faith amendment?

We use access and outlook for my palm and for a database to do mailmerges. When we mailmerge a letter, we save a paper copy in each client file. Does anyone have a decent way to save a copy electronically?

The all new edition of the Governmental Plans Answer Book has now been released!

This book takes the reader step by step through the various laws that govern such plans. For those practitioners with private plan experience who wish to work with governmental plans, it compares the regulation of the two types of plans. The authors' systematic answers to hundreds of questions will provide an invaluable reference for investment advisors, plan administrators, attorneys, actuaries, and accountants. It will also serve those institutions that promote, market, service, or provide technical support to retirement plans, products, and related services.

Highlights of the Second Edition

The Second Edition of the Governmental Plans Answer Book (November 22, 2006) gives subscribers the most relevant, current, and practice-oriented answers to the issues faced daily by plan administrators, attorneys, actuaries, consultants, accountants, and other pension professionals as they navigate the requirements and procedures involved in administering their plans. The Second Edition has been revised to include the most up-to-date developments in the area.

New features include:

• Pension Protection Act of 2006 provisions affecting governmental plans.
  
• All new surveys of practices of state retirement systems.
  
• New staggered cycle for requesting IRS determination letters on qualified plans.
  
• Automatic rollover requirements in the absence of a participant election.
  
• New regulations under the Uniformed Services Employment and Reemployment Rights Act ("USERRA").
  
• New requirements for annuities involving cost-of-living changes or other payments that vary over time.
  
• New flexibility to allow for terminations of tax-sheltered annuity or custodial account (403(b)) plans.
  
• Options for governmental plans that have not been timely amended for legislative changes.
  

For more information on this book, written by Carol V. Calhoun, Cynthia L. Moore, Keith Brainard, you can use the following links:

• Description
  
• Table of Contents
  
• Purchase
  

What is considered an Affiliated Service Group for retirement plan issues.

The all new edition of the Governmental Plans Answer Book has now been released!

This book takes the reader step by step through the various laws that govern such plans. For those practitioners with private plan experience who wish to work with governmental plans, it compares the regulation of the two types of plans. The authors' systematic answers to hundreds of questions will provide an invaluable reference for investment advisors, plan administrators, attorneys, actuaries, and accountants. It will also serve those institutions that promote, market, service, or provide technical support to retirement plans, products, and related services.

Highlights of the Second Edition

The Second Edition of the Governmental Plans Answer Book (November 22, 2006) gives subscribers the most relevant, current, and practice-oriented answers to the issues faced daily by plan administrators, attorneys, actuaries, consultants, accountants, and other pension professionals as they navigate the requirements and procedures involved in administering their plans. The Second Edition has been revised to include the most up-to-date developments in the area.

New features include:

• Pension Protection Act of 2006 provisions affecting governmental plans.
  
• All new surveys of practices of state retirement systems.
  
• New staggered cycle for requesting IRS determination letters on qualified plans.
  
• Automatic rollover requirements in the absence of a participant election.
  
• New regulations under the Uniformed Services Employment and Reemployment Rights Act ("USERRA").
  
• New requirements for annuities involving cost-of-living changes or other payments that vary over time.
  
• New flexibility to allow for terminations of tax-sheltered annuity or custodial account (403(b)) plans.
  
• Options for governmental plans that have not been timely amended for legislative changes.
  

For more information on this book, written by Carol V. Calhoun, Cynthia L. Moore, Keith Brainard, you can use the following links:

• Description
  
• Table of Contents
  
• Purchase
  

This is requesting a quick answer(I know it is late in the year), for a situation where there is:

1)W2 income with a 401k that gets contributed maximally with matching by employer

2)K1 income that is subject to SE tax from an LLC partnership due to a consulting agreement...equal partners only. No employees.

3) 1099 income outside the LLC

All for the same person...

Want to know if the 1099 and K1 incomes can be pooled to make a larger DB plan contribution. This is the first year we will be doing a DB plan

I have a 401(k) cross-tested plan that has immediate eligibility for all division with respect to employee deferrals, however excludes certain divisions from any employer contributions.

The plan passes coverage testing using the ratio test. Working on my 401(a)(4) test. Do I exclude these excluded divisions from my 401(a)(4) test since I pass coverage? If I need to rely on the general test to pass each rate group, are they also excluded from the average benefits percentage test even though they are eligible for deferrals?

Thanks!

I was asked to look at a DB plan that is overfunded by approximately $1 million. Two participants are in the plan. One is 73, the other is 80. Both are beyond NRA and their accrued benefits are at 415. It was suggested that life insurance be purchased to reduce the excess assets. Has anyone ever seen this in a plan? Are there any other suggestions to avoid the costly reversion? Thanks.