Client has had a matching SIMPLE IRA plan for many years now.

They have hit a really big hole for their business in the last three months.

This has resulted in layoffs, pay cuts, benefit reductions, etc. and even with these they may not make it.

They are telling me that they cannot in any way continue to make matching contributions to the SIMPLE.

If they stop the employer match they are wondering if the can let employee keep deferring until they can turn things around or they are out of business.

What can I say to them under these circumstances ?

Thank you

Employer sponsored a 401k plan. In the early 2000s one of the investment funds was "re-priced" causing a loss in the fund. Thereafter, the plan switched investment providers. In 2005 the plan sponsor filed bankruptcy. All participants have received distributions and there are no assets remaining in the plan. In 2008 the plan sponsor receives a check from the former investment provider representing the recovery of a portion of the fund's losses (in excess of $20,000). There are no current participants in the plan, the plan sponsor is not operating and has no employees. The bankruptcy is still open and the plan has not been terminated (that we know of). We have also been told that the records need to allocate the recovery funds (if that is what is required) no longer exist. The bankruptcy trustee is seeking guidance on what to do with the recovery funds. Any suggestions?

Employer sponsored a 401k plan. In the early 2000s one of the investment funds was "re-priced" causing a loss in the fund. Thereafter, the plan switched investment providers. In 2005 the plan sponsor filed bankruptcy. All participants have received distributions and there are no assets remaining in the plan. In 2008 the plan sponsor receives a check from the former investment provider representing the recovery of a portion of the fund's losses (in excess of $20,000). There are no current participants in the plan, the plan sponsor is not operating and has no employees. The bankruptcy is still open and the plan has not been terminated (that we know of). We have also been told that the records need to allocate the recovery funds (if that is what is required) no longer exist. The bankruptcy trustee is seeking guidance on what to do with the recovery funds. Any suggestions?

A self funded major medical plan subject to PPACA and ERISA covering 1,000 employees on average typically has 2,350 covered dependents for a total of 3,350 covered lives. Hence, the contribution payable to HHS for transitional reinsurance is $211,050 ($63-3,350)

One of the alternate Form 5500 methods allows the plan sponsor to add the beginning and ending Form 5500 participant counts.. Assuming they add to 2,000, the alternative contribution is only $126,000 ($63-2,000).

The resulting savings is $85,050 ($211,050 - $126,000). Is this a correct interpretation of the HHS final regulations published in the Federal Regiister on March 11, 2013?

Finally, who knows anything about a count reporting form to be made available at www.pay.gov for purposes of giving HHS the data needs to bill major medical plan sponsors?

Sole proprieter sponsored a retirement plan. She had no employees, so she was the only participant. She has not contributed since 2011, but has not terminated the plan. It is doubtful that her business will continue. She wants to keep the plan open and take a loan against her balance. I don't see that she can do that under the circumstances. Am I missing something?

Thanks in advance for any guidance.

Plan has over 120 as of 1/1/2014 and will need an audit for the 2014 5500. First time as large plan filer.

If the trustee terminates the plan during 2014 would the audit still be required?

If an audit is still required, could they terminate the plan 9/30/2015 so all assets can be distributed by 12/31/2015 to allow them to put max deferral contributions in for 2014 and 2015 and then forgo the audit for 2014 and have both plan years audited and include the auditors report with the final 5500?

Employee is a General Purpose HCFSA participant with HMO. Employee has a life event midyear and wants to choose HDHP and open an HSA. Is this permissible? I have seen several sources say that you cannot have both a General Purpose HCFSA and an HSA in the same year. I know you cant do them at the same time, but can you have both in the same year?

If a Key employee defers $5500 only, receives no match, would the sponsor still be required to make a T.H. contribution?

I have had the same Family HSA for years 2011, 2012, 2013 and have met all IRS testing and eligibility for those years.

I have the same Family HSA for 2014, but will be switching jobs where my employer will offer only an FSA.

I am over 55 and had planned on contributing the max $7550 for 2014:

$262.50 x 24 payrolls (Jan 15 - Dec 31, 2014) +

$250 employer bonus + $1000 my contribution (both in Jan 2014) = $7550

My old job will terminate Aug 3, 2014, with 2 more paychecks being paid to me thru Aug 31.

I will have total of $5450 thru August 31 contributed to my a/c via payroll deduction and other contrb noted above.

I will be enrolled in the FSA (not sure what type) effective Aug 4, 2014.

I have medical bills I would like to pay from my HSA which I will have incurred prior to Aug 4, and noting other posts on this site, I can still keep my HSA with the remaining balance and pay those bills, but I cannot add to my HSA after Aug 3.

Can I contribute the additional $2100 to my HSA from my own funds prior to Aug 3 while I am still with my old employer, and not be penalized for over funding the HSA because of the FSA signup on Aug 4?

If not, how do I calculate and what is the maximum amount I am allowed to contribute into my HSA for 2014, taking into consideration this job change and FSA starting in August?

I have not been able to find an answer to this particular question, and it seems like a common one!

Thanks for info and help!

When hiring a vendor to search for the rightful owners of abandoned checks, I understand if the fee is reasonable it can be passed on to the participant. However, when a threshhold is established to determine if the administrative costs that would be assessed to the participant/former participant on the cost to reissue the check if the participant is found (i.e $25) and the cost for the vendor's search services (i.e $4), is it reasonable to take these funds as income (fully disclosed to plan/participants) to the plan administrator/tpa/recordkeeper (one insitution). If the participant did try and claim the funds the balance would go to the fees assessed for the administrative costs mentioned above and the participant would not receive anything. What are others doing in regard to the funds that fall below the threshhold?

The participant did not designate a beneficiary so the surviving spouse is granted non-forfeitable right equal to 100% of the total value of the Partipant's account as of the date of the participant's death. The spouse dies one day later without designating beneficiaries. The problem is the estate of the spouse is being left to his stepchildren (participant's children) specifically denying his own children any interest. Should the spouse be treated as a participant in this case and the default beneficiaries be his children or should the 100% interest go to his estate where his stepchildren will get the interest at that time.

If a Governmental organization has a "grandfathered" deferred compensation plan still in effect, if a modifcation to the terms change, would it then become subject to 457 rules? If so, could the assets then become part of a funded 457(b) Governmental Plan where the assets are now held in Trust? Or, if could only become part of an unfunded 457 plan, would it all become taxable since can not set up an unfunded 457(b) plan except for possibly a 457(f) plan?

Hi gang,

I've been asked to make a presentation in early August, and here's the description:

"Listen to ... Dave Baker ... share his thoughts on where the retirement industry has been and how technology will impact our work lives in the future. This is intended to be an interactive session so be sure to collect your thoughts and questions beforehand."

I'm having some trouble getting traction on the project.

What would be most useful to you as a practitioner? A list of new technology products and services that you could implement now, in order to improve business processes and your bottom line? Other angles?

Plan has last day entry for PS no age, no other service.

Plan does not require employment on the last day of the PY to receive PS allocation.

Participant hired 7/8/13 and terminates 10/15/13.

The person is therefore not employed on 12/31/13 which is the entry date.

However, they are employed during the PY and therefore meet the requirement to receive an allocation of PS.

Does not being employed last day then prevent them from entering the plan and thus no allocation.

My thought is if they're not employed on the entry date, they don't enter the plan and therefore no allocation.

Any other observations would be welcome. thanks

A plan has immediate eligibility and only allows deferrals. One job type is excluded which consists of NHCEs (normally about 18% of their workforce). The size of that group doubled in 2013, making them become about 36% of the workforce.

There is only one HCE. The HCE did not defer last year.

Can the plan test the deferral portion of the plan for coverage by using the average benefits percentage test?

All of the NHCEs are benefitting at the same rate or higher as the HCE (HCE rate is zero) - this seems too good to be true - what am I missing?

1/1/14 Pension Expense calculated using a 4.5% discount rate. Settlement threshold based on 1/1/14 Pension Expense is $1.0M. Lump Sum of $1.2M paid effective 6/1. Plan sponsor performs settlement accounting as of 6/1 rather than end of year. As part of settlement accounting, obligations are re-measured at a 4.00% discount rate. A few questions:

1. Is pension expense re-measured as of 6/1/14 at 4.00%? Is the resulting total year Pension Expense a combination of 5/12 of the Pension Expense determined at beginning of year at 4.50% plus 7/12 of the Pension Expense determined at 6/1/14 at 4.00%?
2. After the settlement accounting, does every subsequent lump sum trigger settlement accounting (because the threshold for the year has been crossed) or is the slate wiped clean and the plan sponsor starts building anew toward meeting a new threshold and a second settlement accounting for the year is performed only if subsequent lump sums exceed the new threshold? What is the new threshold? Is it based on the Service Cost and Interest Cost at 4.00%? And is it full year amounts or pro-rated amounts for 7/12 of the year?

Thanks in advance for all responses.

I have a nuts and bolts type of question: Does a 401k plan need a broker dealer? Does the size of the plan matter?

Thanks - Mike

We have quite a few pooled profit sharing plans with monthly broker statements that do not calculate the gain/loss. How important is it to go through the statements and calculate the realized and unrealized gain/loss? I go through each monthly statement and look for anything unusual, pick out the deposits and withdrawals, fees charged and the rest is income. The plan files the 5500 SF. It is very time consuming to go through the statements and record every sale and purchase to calculate the gain/loss.

So, I'm just wondering if there is a reason to go through all that to calculate the gain/loss? If so, is there an easy way to do it? some plans have 100's of buys and sells throughout the plan year.

Thanks for your input.

Supposedly, a plan or plans that fail the general test can provide contributions or benefits to current participants or provide contributions or benefits to those who are not yet eligible as long as the contribution or benefit has substance.

I have always been a little uneasy about the order of this.

For example, suppose you are testing a DB and PSP and the PSP has a last day requirement and a current NHCE participant terminates employment 4 days before the plan year end and the plans fail 401(a)4. However, the employer has 4 new employees who have yet to meet the eligibility requirements. If the youngest of the 4 is brought in and given a 10% of salary contribution, the plans easily pass.

With the few of these we have done, we always had some criteria such as the ineligible employee with the most / least hours is chosen, or all those hired before a certain date.

Is it possible to simply cherry pick?

Any comments / agreements / disagreements on this?

Assume the following:

(i) a QDRO for defined benefit assigns 100% of the participant’s accrued benefit to the alternate payee,

(ii) the DB plan provides as a death benefit the qualified preretirement survivor annuity but no ancillary death benefit,

(iii) the QDRO fails to treat the alternate payee as the participant’s surviving spouse, but it does provide that the death of the participant will not have any affect on the alternate payee’s assigned interest, and

(iv) the participant dies before benefits commence to be paid to the alternate payee.

Is the alternate payee entitled to anything (i.e., that is, doesn’t the alternate payee forfeit the assigned interest because only the survivor portion of the QPSA is now available to be paid as a benefit and the alternate payee failure to be treated as the participant’s surviving spouse leaves the alternate payee with no right to the survivor benefit)?

If the alternate payee is entitled to something, is it the entire accrued benefit (which doesn't seem right because if they were still married, the alternate payee would only be entitled to the survivor benefit under the QPSA) or the actuarial equivalent of the survivor portion of the QPSA?