Does anyone know if the DOL's DFVC program applies to Forms M-1? If so, what's the authority?

Thanks.

A 401(k) plan wants to add safe harbor match for 2006. The current eligibility for deferrals is 3 months, they would like to have the eligibility at 1 year for the safe harbor match.

Transamerica is telling the client that the entire population of employees must be ACP tested if there are different eligibility requirements for deferrals and safe harbor.

My thoughts are you would ADP/ACP test the otherwise excludable group who does not receive the safe harbor match. This would always pass since no HCE's would be in the OE group.

Top heavy will never be an issue.

Thoughts?

This is the first year that I am doing the 5500 for this client. A separated employee took a full (or so they thought!) distribution last year for which she received a 1099R, and was included as a 'code D' on the 2004 SSA. For whatever reason, the distribution was short by two cents. It appears that the Plan just sort of wrote off this two cents -- is that okay? It would seem silly to pay the employee the $.02, do another 1099R, amend the SSA, show her as a participant receiving a benefit, etc., but I don't want to have any trouble down the line. Is it okay for me to just ignore this oversight in payment?

Any care to share their two cents on this topic

I have one more question about this topic. The Plan, an annuity-only 412(i) plan, had a termination date of July 15, 2006, and the proposed distribution date is September 15, 2006. The insurance company has provided me with the asset values as of July 15, 2006, but there is a 60-day wait for PBGC purposes. This moves the actual date of asset distribution back to Sept 15, 2006.

Question: Must the interest that accrues between 7/15/2006 and 9/15/2005 be distributed to the participants? Or, assuming the plan permits it, can this be an asset reversion to the plan sponsor, a not-for-profit entity? Would the non-profit entity be subject to the 50% excise tax on reversion (25% if there is a successor qualified plan)?

Any thoughts or remarks would be appreciated. Thanks! Carol

This has happened before, but this one for some reason pushed me over the edge.

Our union employee has been participating in a multiemployer 401(k) plan. She is promoted to a supervisory position, and is no longer eligible for the multiemployer plan. But she is now eligible for the corporate single employer plan.

So she goes to the plan administrator for the multiemployer plan, asking to roll her account to her new plan. Plan administrator says, "sure, you can do that (after a 90 day wait)'.

Assuming that she is not age 59 1/2, where is the distributable event? She is still employed by the same employer--not retired, dead, termed, etc.

Second question. If the multiemployer plan makes a distribution to her, we are not responsibile for reviewing that plan for operational compliance, and its a lump sum distribution from a qualified plan. So we accept the rollover?

Review of new client's plan documentation shows that they did not restate document for GUST or any subsequent legislation. Any thoughts on actions that should be taken?

I'm very new to this, and preparing a 5500 for a small pension plan. I have a question regarding whether a participant loan was a deemed distribution and whether it should be taxable. The administrator sent me information that one participant requested "the maximum withdrawal allowable under the plan for use with her down payment on the purchase of a primary residence." The plan provided the participant with a 1099R showing an amount of slightly more than $5,000 as the gross distribution and fed tax of approximately $1,000 withheld.

I've looked at 72(p), and it appears that this meets the exception in 72(p)(2) and therefore would not be considered a distribution. If it is not a distribution, was a 1099 and tax withholding necessary?

If the 1099 and tax withholding were not necessary, is there anything that the plan needs to do to "correct" this?

Has anyone else been seeing Social Security Notices for people who never worked for the Company they say owes them a pension benefit?

I have a client that has received letters from two different people in the last few months; each enclosed a copy of the SSA notice with the clients EIN, Plan Name, Plan Number stating that the person should contact them for their pension benefit. The problem is they never worked for the company. They have both been resolved quickly with a phone call to the person. Both admitted they were surprised to get the notice and agreed that they never worked for them.

Both Notices stated they were based on a 2004 SSA filing. Anyone else having a problem? Maybe someone filed an SSA back in 94 with the wrong EIN and they all got attached to our client. It just seems a bit strange, once I can understand, but now this is two in two months.

ok, here you go, more 'missing persons'. One group of 8 are all child actors (boys). sorry about that ladies, that is all I have found for now.

Hey, I actually knew a couple of the 24.

I believe I have managed to set this up so you can type in the names in the yellow boxes and the spreadsheet will tell you if you are correct.

We have a recently terminated EE who completed an enrollment form for our 401k in 2000. She selected one fund and indicated she wanted to defer 6% of salary. HR completed on-line enrollment at the Principal website and Principal has a record of this. But the form was never processed by our Accounting dept. and no funds were ever deferred from her paychecks over the years. She would have been eligible for a 3% match immediately upon enrollment because she had been employed since 1998. I have consulted a benefits attorney and Principal (the TPA0 and I am still confused over what we should do to correct this error. Without knowing about the error, we have put processes in place in HR and Accounting over the past few years that should keep this from happening again. To correct its error, the company is willing to deposit 50% of EE's missed deferral amounts (even tho she never actually deferred anything), plus the match on what would have been her full deferral amount, plus any gain that the fund she selected would have earned over the years (hoping to calculate the gains/losses quarterly to reduce the effort involved). (Assuming deposit of 50% of the deferrals, the total amount involved is around $5000 because this was not a highly paid EE and she only worked part time.)

Yes, the EE should have noticed at some point in the past 6 years by looking at her paycheck stub that no deferrals were being made but oh well....

Do I need to file any formal paperwork with DOL or IRS in order to correct this error by depositing the amount suggested above? Or can I just make the deposit and document how I corrected the problem and go on?

Thanks,

carol

The company I work for is looking at administrating flex for a large corporation that has mulitple office through out the United States. I am wondering if we need a TPA license in any of these states to be able to administer flex. I am not sure where to find the answer to this question. Any help would be appreciated. I am mainly concerned with NY, IL, CA.

Thanks

When calculating an employee's average benefit percentage, must the employer include the employee's elective deferrals under a 401(k) plan? According to § 1.410(b)-5(d)(2), "only employer-provided contributions and benefits are taken into account in determining employee benefit percentages . . . employee contributions . . . are not taken into account."

The 401(k) Regs say, of course, that employee elective deferrals are treated as employer contributions. § 1.401(k)-1(a)(ii). So, does "employer-provided benefit" always equal "employer contribution"? I'm hunting for an explanation of any difference between these terms, but no luck so far.

Interestingly, the cited 401(k) Reg includes a non-exhaustive list of Code sections to which the "treatment-as-employer-contribution" rule applies: 401(a), 401(k), 402, 404, 409, 411, 412, 415, 416, and 417. This list doesn't include 410 (the section I'm concerned about), and does incude section 411 (vesting rules), under which elective deferrals are always 100% vested (i.e., the rule really shouldn't apply under 411).

Thanks for any ideas.

I'm really hoping someone can point me to something I'm missing, otherwise we've got a big problem. We have a small employer customer which we are cancelling because the group committed fraud. HIPAA clearly allows us to terminate for fraud. However, the guarantee issue portion of HIPAA does NOT reference fraud as one of the few reasons that we would not have to quote a group. So, we could terminate them and they could turn right around and apply to us for coverage the next day and we would have to issue it. Am I missing something in the law or regs that we say we don't have to quote this group? (FYI, the state law appears to mirror HIPAA.)

This is a pretty elementary question, but I seem to have a brain freeze. A plan bacame top heavy as of 12/31/2005 and is subjected to minimum contribuitons in 2006. It is a 401k voluntary only plan. Assuming the key employees do not make any 401k contributions in 2006, can I assume there is no Top heavy minimum for 2006. The 401k contributed by key employees in 2005 is irrelevant--correct?

Client and client plans all operate on fiscal year basis (10/1 through 9/30).

Client sold a division of business 7/15/05 that had constituted one of three separate line of business (QSLOB) for which Form 5310-A had previously been filed. If client now wants to file another Form 5310-A to modify the prior filing to remove this particular QSLOB, would this filing be modifying the 2004 testing year or the 2005 testing year?

Testing year is defined as the calendar year.

The sale of the QSLOB obviously occurs during the 2004 testing year and during the plan year beginning 10/1/2004. However, for part of the 2004 testing year and the 2004 plan year, the prior election would still be valid (i.e., the QSLOB had not yet been sold).

Anyone encounter this issue?

Our FSA has an experience gain from last year (2005) that is great enough to offset the plan's administrative expenses for the year and then some. The plan sponsor wishes to return the remainder to plan participants in the form of a per capita premium reduction for the 2006 plan year. But, what do you do when the participants in the plan this year are not the same as those that were in the plan last year? (i.e. several new employees have joined the company and several have left the company) Should participants who joined the plan this year still receive part of the refund or should it be limited to current employees who participated in the plan during the year the gain was incurred?

I have termination / rollover to a Company (like Fidelity) IRA paperwork from a participant who is in both the ( Non-Erisa) and (Erisa) plans. The participant has recently re-married and has a pre-nuptial agreement stating that all retirement accounts are to be kept separately from the spouse. Therefore, the participant did not have the spousal consent section of the termination form completed but had forwarded a copy of her prenuptial agreement. Would a prenuptial agreement override the spousal consent for a distribution?

Would anyone be willing to share what kind of cover letter they are planning to attach to the new Funding Notices that need to go out this year for multiemployer plans?

The notice requires disclosure of the funded ratio based on RPA Current Liability and Actuarial Value of Assets. This can be terribly misleading, especially in the multi-employer area.

I was planning on attaching a cover letter explaining that the notice can be misleading, that it is required, and stating the funded ratios based on market value and a more reasonable interest assumption. I assume that others aren't just sending the notice out blind, and was hoping someone might want to share how they handled it.

Can a plan sponsor can terminate their SAR-SEP and establish a 401(k) plan within the same calendar year? This has been a deferral only SAR-SEP (no employer contributions). Form 5305A-SEP states that the plan sponsor cannot maintain another qualified plan. What it doesn't say is if they can terminate the SAR-SEP and then establish a qualified plan. I understand that the 402(g) limit would apply to participants and any deferrals made into the SAR-SEP would count towards the 2006 limit. Any thoughts would be greatly appreciated.

What count we report in Line 7i for Separated participants with deferred vested benefits - Only Code A participants are reported or we include Code B, C and D participants too in the count reported?