Let's say a year ago a Plan purchases an annuity contract from a life insurance company for a monthly pension that exceeds the PBGC guaranteed benefit. Now, the Plan is terminating in a distress situation and the PBGC takes over.

How or does the PBGC work with the insurer to reduce benefits and receive compensation?

We are having difficulties with an accountant on Accountant's Opinion and Schedule H for calendar year 2013 plan year.

Basically, the last payroll date with contributions was 12/20/2013. These deferrals were physically deposited in early January. (Question is not on deposit timing.) These deferral were reported on 2013 W-2 Forms. Obviously, these contributions are reported on the 2013 Schedule H, which we prepare on an accrual basis. That is not the problem.

We have a payroll period the runs from 12/23/2013 to 1/3/2014. These contributions will be reported on 2014 Form W-2. It is this period that we are having trouble with the accountant. Accountant believes that since a portion of this pay period was in 2013, we must include on 2013 Schedule H!

As I recall from ASPPA Exams, ect.. this was long settled as you use the amounts for the year in which Form W-2 records these contribution. In effect, none of this period is reported in 2013. Reporting is in 2014. Does anyone have a cite or reference that I can use for this purpose?

Thanks in advance for assistance!

I have a plan that had deferrals taken from an ineligible compensation (overtime).

One correction under consideration is refunding the overages (plus investment experience). This would be considered an excess deferral. This happened in 2013.

Because we are past April 15, how is the distribution taxed? Is it earnings in 2014 and excess in 2013 AND 2014?

Or did things change and everything is taxable in 2014?

When an uncashed participant distribution check is returned to the plan and placed in the forfeiture account, Where should that be shown on the 5500?

I have a client that has operated a Simple IRA plan for the past 14 years. He would like to take advantage of larger deferral opportunities and other perks of a Safe Harbor 401(k).

Can the simple IRA be converted to a Safe Harbor Plan?

Can dollars currently held if the Simple IRA be rolled over to the SH Plan without restrictions (since it's been in operation for 14 years)?

Can the safe harbor plan start at any point or is there a deadline?

Thanks in advance!

In the new world of age-based rates for each individual covered by a small group plan does anyone disagree with the proposition that the employer violates ADEA if it says "I'll pay $XXX/month towards your premium and you pay the balance" (a so-called defined contribution approach)?

I know that ADEA permits the employer to pay a percentage of the age-based premium, it just prohibits the employer from paying a fixed amount.

Thanks

Hello.

A new client has come to us. The client has a 401k plan and a 403b plan. The 401k plan was established in 1999 and was funded until the employer got its

501 © (3) designation at which point it established a 403b plan and just stopped contributions to the 401k plan. The cleint is telling us that the 401k plan is 'frozen'. I have not heard this term used for a 401k plan.

The client told us that they wanted to terminate the 401k plan. My question is: can we not just merge the 401k plan into the 403b plan? What issues would arise? I would suggest that merging the plans will eliminate the need to restate the 401k plan for PPA.

Employee's child is being incarcerated so employee wants to drop child from coverage. Jail is located within plan service area.

Would you consider this a qualifying event and allow the employee to drop the dependent's coverage? While sympathetic, I'm not sure I see it...

Our client filed an extension back in July, but just discovered that they mistakenly requested an extension until 9-15-14 instead of 10-15-14 like they intended.

Now they're technically 9 days late. Any ideas how they need to rectify this? Can they 'amend' their 5558?

the employer will provide notification to the participants that the SIMPLE IRA will cease effective January 1.

Effective January 1, they will implement a 401(k) Plan. Many of the SIMPLE IRA participants have more than 2 years participation and will roll their funds to the 401(k) Plan.

If a participant only has 1 year as of 12/31/2014 could he roll this SIMPLE IRA to the 401(k) after 12/31/2015 - that would be two years in the SIMPLE PLAN? Or since the plan is terminated, participants with less than 2 years will NEVER be able to roll to the 401(k)??

Thank You

We've assisted an employer with a VCP submission for his Safe Harbor 401(k) plan. He's made his employees whole and we're hoping the IRS will say good job, you're done. But of course, no one can assume that. We suggested that the employer not terminate the plan until the IRS review is done. We haven't even received the Acknowledgement Letter yet, so we're a long way from the end. In the submission, we've asked the IRS to allow the employer to only make a Safe Harbor contribution for half of 2014. I've explained to the employer that that might not get approved, but we had to at least ask. The employer really wants to terminate the plan now. I suppose if the IRS requires adjustments, we could get it done somehow even with a terminated plan, but I'd rather not. What would you do? Allow him to terminate, or make him wait?

It seems that the tax free donation of RMDs from IRAs to qualified charities has been extended a couple of times, but I'm not sure that it's safe to say that it's a fixture. It is discussed in the 2013 version of Pub. 590. I don't see reference to there being a deadline in that publication, but before I pass on any information to a client about doing it for 2014, does anybody have a definitive answer as to whether it's available this year, and for the foreseeable future?

The IRS released 2 new qualifying event provisions for Section 125 plans that are optional for employers to add into their existing plans. As a TPA can we take the approach that all plans in our book of business get this update or should we be giving clients the option to include these new provisions?

From our internal discussions it seems like this should have just been an addition to the qualifying event definitions rather than an optional provision to be amended on the plan.

On another note, does anyone know if the deadline to update the Sect. 125 documents will be extended? Our document provider is not expected to release the updated documents until the end of Oct. during our busiest time of year.

If a defined benefit plan does not specifically prohibit an AP from being a QJSA 100% beneficiary, and a QDRO directs a participant to select the QJSA form of benefit with the AP as the 100% survivor beneficiary, for what reason(s) might a plan administrator claim the AP cannot be such a beneficiary (to the extent of the 100% survivor benefit)?

Assume for the above that:

-- the plan's standard QJSA is 50%,

-- it also offers a 100% QJSA survivor option,

-- the unmarried participant has retired and

-- is ready to commence benefit recept, and

-- the survivor benefit is fully subsidized by the plan.

Any/all conjecture welcome, please.

A 1 participant DB will have excess assets of $50,000 (above his 415 limit).

Can:

1. A 1 participant corporation establish a qualified replacement plan (QRP)? The allocation(s) would only be made to the 1 participant of the DB who remains an employee of the corporation.

2. If #1 is possible, is there any time frame in establishing and transferring assets to the QRP? Would like to have him take an in-service distribution now (he is age 62) and leave the excess $50,000 in the DB for a few months until a QRP can be established.

Our understanding is that at least 25% and up to 100% of the excess can be transferred to the QRP. Then it must be either allocated in the same year transferred or over up to 7 years.

If #1 is possible, he may be able to take a $50,000 salary and allocate $50,000 in a profit sharing plan to himself and be done. No deductible problem as it is not deductible anyway and no 415 problem as up to 100% of salary can be allocated.

Thanks.

I'm looking at a potential 401k takeover, but I'm not sure I want it. The employees are all invested in a group annuity contract with insurance company X. But the owner uses a brokerage account to access more investment choices for himself. I know in general the employees must have the same investment choices as the owner. And I know the brokerage company can have a minimum threshhold to be able to use their product. But this owner has put forth a higher threshhold to keep the employees from using this option. I'm pretty sure that's not allowed. Can someone point me to the right code section to research these rules? Or which chapter in the ERISA Outline Book? Thanks.

A participant terminates from a 401(k) plan on 6/30/2014.

The participant is paid their final paycheck on their date of termination, 6/30/2014.

The paycheck includes their final hours of service, plus 6 months severance pay.

Assuming total gross compensation is used for plan purposes, is the 6 months severance pay included for plan purposes since it is technically not paid post-severance?

Thank you.

A plan sponsor was able to make a contribution totaling less than $500 under SCP in order to satisfy a missed deferral opportunity for deferrals not withheld from some OT paid to a few participants. The contribution included the missed match and a very small amount of earnings. NO 415 violations were discovered either. The missed deferral opportunity was discovered after the close of the plan year, but prior to filing the 5500. Should the contribution be included on the 5500 for the plan year it represents or the current plan year and can the whole contribution be deposited into the deferral account? It is a safe harbor matching plan and in some instances the missed deferral opportunity amounted to a few dollars or even less.

Thanks

Original QDRO drafter is deceased, I in turn would appreciate board members' thoughts on the following:

DBP, plan admin-qualified QDRO; QDRO uses standard coverture formula, assigns AP 50% of marital portion as retirement benefit with separate interest approach, marital portion being 54% of whole pension. QDRO has 'poison pill' provision -- neither can do anything to derogate the other's rights or things get very expensive. QDRO defines scope of 'Survivor Share' as 100% of the marital portion, includes QPSA for pre-retirement protection, and for post retirement uses the following language:
- - -
...AP shall be treated as surviving spouse for the purpose of receiving her Survivor Share of the QJSA .... Upon retirement Participant shall be required to elect a form of benefit of the type and to the extent necessary to name and provide AP with her Survivor Share of the QJSA or its actuarial equivalent .... Participant may select any alternative form of benefit as long as his choice leaves intact the actuarial equivalent of a QJSA for the AP to the extent of her above-assigned interest.
- - -
Participant retires unmarried in early 2014 and reviewing benefit statement realizes calculation is off and will detrimentally affect AP, so he calls AP and together they learn from admin's counsel that admin calculated AP's survivor share as 50% based on admin's interpretation of QDRO and 1055(d)(2)(B) as applying to limit AP's survivor benefit to 50%. Admin's counsel also says participant can't name AP as 100% beneficiary (though plan doesn't appear to prevent this), and actuarial dept's benefit statement gives him a 100% survivor option. So due to poison pill provision he's stuck not being able to commence benefits until matter is resolved, with AP also on the verge of commencing her standard benefit, and admin won't budge.

Participant and AP are friendly and decide to amend the QDRO to address their intent in another way to achieve their unchanged goals in dividing the pension, and before they do are seeking input.

Assumptions (help me out here, math isn't my strong point):

original whole: $300,000
marital part: $162,000
non-marital part: $138,000

Participant's remaining pension after AP's standard benefit is carved out is 46% of original whole plus half the marital portion of 54%, or 73% of the original whole. Since the admin would calculate the survivor benefit on the 73%, with a survivor benefit limited to 50% of that, AP's survivor benefit as calculated by the admin is 36.5% of whole, when by the parties' intent in the QDRO it is to be 100% of the 54%.

What is the correct approach to the math?
Thoughts on the parties' ability to achieve original intent?

___

* edited to add survivor benefit is fully subsidized

*** edited again to fix math & add info on drafter

Is a 204(h) notice required when a money purchase plan is merged into a profit sharing/401(k) plan involving 2 different plan sponsors? For example, Plan A is the money purchase plan and the plan sponsor is Employer A. Plan B is the 401(k) /profit sharing plan and the plan sponsor is Employer B. Plan A will be merged into Plan B. Does a 204 (h) notice need to be sent to the participants in Plan A? Any help would be appreciated.