A covered defined benefit plan was frozen in 2005. The plan is now failing the prior benefit structure test of 401(a)26 with current participants. The plan does not have sufficient assets to pay benefits given 417(e) rates.

An exception applies for an under-funded plan. This exception is all about not forcing a plan with insufficient assets to terminate just to comply with 401(a)26.

Problem is this exception only applies if the schedule SB indicates the plan does not have sufficient assets to pay benefits. The MAP-21 rates indicate this plan is just over 100% funded although in reality it is about 82% funded when applying the 417(e) rates. It seems that with most issues in life you get at least a random 50/50 chance of a positive outcome. With DB plans, you have an 85% chance of the worst possible outcome even with the greatest of care.

Apparently, we can go back before the plan was frozen and add former participants to prove the prior benefit structure meets the 40% threshold. So I guess we can go back to 1988 and add former participants. This should work as all participants accrued at least 2% of pay before the plan was frozen.

Anyone see a problem with this?

Thanks.

Pooled profit sharing account valued annually on 12/31. The plan's written policy calls for an interim valuation if the balance of the participant's account to be distributed equals or exceeds 5% of the total of the plan's pooled assets. Can the interim valuation be used for the exclusive benefit of participant X, the individual for whom the valuation was performed? Let's say an interim valuation will be done on 7/31/14. Participant Z terminated on 5/1/13 and his account was valued on 12/31/13. He has a small balance and has not been paid out. If a distribution is made to participant Z between 8/1/14 and 12/30/14, can we still pay out based on the 12/31/13 valuation or are we obligated to pay based on the interim valuation? It seems like you can make a case for using the 12/31/13 amount since the interim valuation was only intended for a specific individual.

Companies A, B & C form a controlled group. A & B sponsor one 401(k) plan and C sponsors a separate 401(k) plan. Participant Doe worked for C and has a large account balance in C's plan ($45,000). He was recently transferred to Company A and is now contributing to A & B's plan (Account balance = $1,500). Doe has requested a loan from Company C's plan. The plan document only allows for loans to be repaid via payroll deduction (checks are only permitted for prepayment). He is no longer receiving a pay check from Company C. He is only being paid by Company A. Can he take a loan from Company C's plan if he cannot repay it using compensation from Company C? Would he be able to transfer his account balance from Company C's plan to A & B's plan? (He has not incurred a distributable event. He only terminated employment w/ Company C but he's still employed within the controlled group.)

Thoughts?

Plan has 6 year graded vesting schedule.

Employee terminates employment with 4 years of service for vesting purposes and is thus 60% vested in his account.

Employee does not request a distribution of his account balance.

Later, the plan is amended to shorten the vesting schedule to 4 years.

The effective date of this amendment is after the employee's date of termination.

The now former-employee claims he is now 100% vested because he has 4 years of vesting service and wants a distribution of his entire account.

Is former employee correct?

Does it matter whether former employee had incurred 5 consecutive one year breaks in service before the effective date of the amended vesting schedule?

Working on a conversion with a plan sponsor who merged their MP plan into their 401k Profit Sharing plan 14 years ago. The receiving vendor doesn't support annuities, so they can only accept the 401k assets. We explored a partial plan transfer of the k-assets only, but the other vendor won't liquidate by source. Can the plan sponsor and/or participants remove the J&S from the MP assets therefore removing the protected benefit?

Rerunning 2011 ADP for a plan due to issues with ownership changes we weren't aware of. Long story, but ERISA attorney has advised we are to split plan into 4 separate ADP tests. 1 of the ADP tests is failing, other 3 are passing. However, I performed the testing by disaggregating the otherwise excludable nonHCEs. Obviously, corrections are being made more than 12 months after plan year-end. EPCRS states that plan may not be disaggregated into component plans for determining the correction for failure. ERISA Outline Book indicates the prohibition against restructuring is because the IRS doesn't want employer to reduce the amount of corrective distributions to HCEs and thus the amount of the one-to-one contribution for nonHCEs. QUESTION: Is the EPCRS saying that it is OK to disaggregate to run the tests, but if the test fails then I have to add back the disaggregated nonHCEs before I determine the refunds for the test that is failing (which is what I have always thought was the case...)? Or am I to understand that I can't disaggregate at all when I run the tests in the first place?

Thanks!!

Hi, All - My plan was terminated by the PBGC in 2013, and all assets were transferred back to the PBGC at the time of termination. I have categorized the assets as a transfer from the plan, but I get an error message when trying to file the Schedule H with the transfer of assets since I do not have a plan EIN for a transferee plan. I have spoken with the IRS, who tells me to check with the PBGC (for a 5500 instruction??). The PBGC basically laughed at me, as expected, since this pertains to the 5500. No answer from either of them. Has anyone had to file a 5500 Schedule H for a plan terminated by the PBGC? If so, how did you categorize the transfer of assets to the PBGC? Thanks!

We have a university client with professors who are eligible to participate in a 457(f) plan. The professors work on a 9 month contract, but may elect to be paid over a 12 month period. The university has historically required the professors who elect to particpate inthe 457(f) plan to be paid over a 9 month period instead of 12 months. They indicate that this is a 457 regulation requirement. Can someone please provide me with guidance as to whether this is an actual requirement, or simply university policy?

Can a QLAC be issued by a public Defined Benefit plan?

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.