The plan has 3 months eligibility for deferrals and 1 year for the safe harbor match. The plan consists soley of deferrals and safe harbor match. The plan is top heavy, is it deemed not to be top heavy since it has the safe harbor match, or would top heavy minimums be required for the new hires that aren't eligible for the match?

What about the ADP testing. would you have to test the new hires ie the otherwise excludables. Not a big issue since HCE's are rarely in theis group.

Thanks!

Is a TPA required to prepare a Form 5498 for a traditional IRA Rollover into a 401k plan? I ask this because I am becoming aware that we have participants who make this request with their IRA Custodian but the Custodian will only issue the check directly to the participant - unless a TOA request is made in advance (in this case it was not). I gather that the participant will have a taxable event and no 5498 to offset the timely rollover into the 401k.

Thanks for your response.

I am trying to determine whether a clause in a change in control severance agreement is a common one for publicly-traded companies. The agreement provides that an executive will be considered to have terminated employment and be eligible for the severance benefit if he/she is reassigned to substantial duties that are materially inconsistent with his/her duties, responsibilities and status prior to a change in control. OK so far. In the same paragraph, the agreement further provides that the "reassignment" provision will not apply if the company is no longer publicly-traded and the executive no longer has duties and responsibilities associated exclusively with a publicly-traded company, such as SEC reporting, stock exchange reporting, etc. I'm being asked whether this exception is a common provision.

My sense is that such a provision is not unusual, but I don't have much hands-on experience with this type of agreement. What is your experience?

Thanks!

Does severance pay generate hours of service in a DB plan?

Subtly sarcastic example.

Basically bland example.

Candidly critical example.

A client maintains a self-funded plan that covers independent directors. As I read the definition at 3(40) of ERISA, this makes them a MEWA. I realize that the DOL does not require a Form M-1 in this instance. However, nothing I have found so far takes them out of the definition of a MEWA.

My impression is that many companies cover their independent directors without considering their plan to be a MEWA - and just do not worry about this issue. Does anyone have any thoughts/comments? Am I missing something?

I am looking for some independent thoughts on a feature of an existing long-term incentive plan that has resulted in many 409A group discussions.

This award has a performance-based stock option component where the number of options that will eventually vest can range from none to 140% of a target number detailed in the agreement. The determining performance achievement levels will be measured at the end of a 3-year period.

The feature that is causing robust debate is the provision that sets the ultimate exercise price at the fair market value (fmv) of the underlying stock at the time the award was granted.

As an example: In 2004, 100 performance options were awarded with an exercise price of $4.00 which equaled the fmv of the stock on the grant date. Based on a 140% performance achievement level, the employee received 140 vested options at the end of the 3-year performance period with the grant date exercise price of $4.00. The employee will have 7 years to exercise the options.

Question: At the end of the period, the stock value is $10.00. How do you think the provisions of 409A would look at the spread between the vest date fair market value of $10.00 and the grant date based exercise price of $4.00?

Would the spread be immediately recognized as income or would the income be recognized when the employee chose to exercise? This is a performance based plan and these are non-qualified options.

I would provide my guess, but I would rather read the feedback.

I am wondering if the 30% limit under 1.401-10©(3)(i) still applies. It states that "If a self-employed individual is engaged in a trade or business in which capital is a material income producing factor, then, under section 911(b), his earned income is only that portion of the net profits from the trade or business which constitues a resonable allowance as compensation for personal services actually rendered. However, such individual's earned income cannot exceed 30 percent of the net profits of such trade or business. The net profits of the trade or business is not necessarily the same as the net earnings from self-employment derived from such trade or business."

For example, assume a business generates $1,000,000 in income. Does this mean than only $300,000 could reasonably be considered as constituting earned income.

What about situations where a business pays an owner a management fee that exceeds 30% of the entity's income?

Thanks in advance.

Ed

OK - Maybe it's a stupid question, but.

Anyone know how to structure a 401(a) plan distribution due to disability that will afford the employee to receive the monies on an income tax-free basis?

I thought the general rule is tax treatment of disability benefits atbrutable to employer contributions that were not includible in the gross income of the employee or contributions made by the employee on a pre-tax basis are always subject to income taxation, (perhaps excepting a few types of insurances).

Thanks.

The headline shows it all. This is a failure to follow the terms of the plan that has been ongoing for several years. Plan provides for in-kind distributions, but the plan has just been making lump sum distributions in cash.

Calendar year safe harbor plan. They currently exclude division A employee's from participating. They want to allow them to participate beginning Sept. 1. I can't see any reason why would this would jeopardize safe harbor, but I want to make sure I'm not missing anything.

Thanks in advance for any guidance.

I am working with a client who works for Stony Brook University and he contributes to a 403b plan with TIAA-CREF. He also has a 414h plan through SUNY and is periodically transferring assets from TIAA-CREF to the 414h. Has anyone ever heard of this? If so, what would the advantages be? I had no idea that this type of transfer was allowed. Thanks for any help with this.

Is there any basis on which to exempt from COBRA coverage a hospital's employee assistance plan in which 1) the counseling is provided by hospital staff to all employees and 2) under the terms of the Plan, coverage can continue for 5 visits even after termination? It has been suggested that "internal" programs may be viewed differently than programs using external providers.

What should we do if an employee’s paycheck (after tax withholding, garnishments and health plan premiums) isn’t big enough to make his or her deferral election? Should we make as much of deferral as we can? I thought there was a government opinion that said the election is invalid, so no deferrals should be taken out.

Hi there,

Can anyone please help me with this situation? This is the scenario: male employee A has a live-in girlfriend. They have a child together. The child is on employee A's health insurance and employee A also has a Dependent Care FSA for this new child. The girlfriend is not on the employee's health insurance. If the girlfriend loses/voluntarily leaves her job so that she can stay at home, would this be considered a qualifying event so that employee A can decrease his Dependent Care FSA?

I know that this would be a qualifying event if they were married, but how does the IRS view live-in girlfriend/boyfriends?

Any help would be greatly appreciated. Thank you!!!

The employer is in the process of changing to a new trustee for the company's 401(k) plan. Prior to this change, employees were investing all over the map. For the most part, they've been able to transfer things over without too much difficulty, but there's one investment that the new trustee says they won't take on.

There are significant penalties if the participant liquidates the investment now. I suppose we could set up a separate trust for that investment, but I'm wondering if the participant can be forced to sell.

I log into my company computer system from home using a remote desktop connection. I am able to log onto Relius Admin and Govt. Forms without any trouble but I have problems with Relius Documents. I was wondering if anyone else logs into Relius this way and would be willing to answer some questions.

The auditor of our health plan insists they need claims info. to complete the Form 5500. Accordingly, we asked them to sign a BAA, but they are only willing to sign a confidentiality agreement (which doesn't meet the requirements of a BAA). Has anyone run into this problem? I can't think of an exception to HIPAA for an auditor. Thank you in advance.

Can the state legislature take money that a university contributes for optional retirement plan participants to help fund those in the defined benefit plan? This is occurring because the defined benefit plan now has expected unfunded future liabilities. I thought that the fiduciary duty would be to all employees and this would be a violation of IRS code 401(a)(2), exclusive benefit rule and 401(a)(4), requirement that plan benefits not discriminate in favor of certain employees.

If so, would I take the case to the attorney general or could I start a class action suit as well?

One of the attorneys we (a TPA) do business with is telling his clients that they may take participant loans with an interest rate equal to the current "applicable federal interest rate" that is used by the IRS for imputing interest on an interest-free loan. This concerns me because that rate, for a five year loan, would be approximately 3.85% at present. That seems kinda low, doesn't it?