I have a client with several seasonal pilots. The client tracks 'pilot days'.

"Their daily wage is based on a 14 hour duty day as that is the maximum number of hours they can be on site. If they work 4 hours and we cancel flights due to weather, they are paid a full days wage. Sometimes, they will be here 8-10 hours and other times 14 hours."

What would you use to estimate hours? My client was thinking that 10 hours per pilot day sounds fair but I was wondering if there was some guidance I could follow.

Thank you!

quite a big jump from last month (Feb) to this month (Mar) released figure, from 234.781 to 236.293.

If that figure holds through Sept then everything jumps to the next level (including catch up contributions)

Can a DRO that says a participant's spouse will receive no benefits (and will not be considered a former spouse or surviving spouse) be a QDRO, assuming all the other requirements are met (e.g., name of alternate payee, address, name of plan, etc.)? The idea is to allow the participant to name a different beneficiary before the divorce is final.

I think I know the answer to this but I wanted to see if anyone had any other input. Defined benefit plan with 5 year cliff vesting. The Plan is in some trouble financially, mostly due to the fact that retirees currently receiving benefits are receiving very high monthly payments. This is due to a high accrual rate in the 90s and early 2000s.

I have had a number of people ask me if we can ask the retirees to voluntarily reduce their benefits in order to stave off PBGC involvement (which will be happening within the next 10-15 years if things stay the way they are).

26 CFR 1.411(d)-4 Q&A # 2 states "A plan is not permitted to be amended to eliminate or reduce a section 411(d)(6) protected benefit that has already accrued, except as provided in 1.411(d)-3 or this section. This is generally the case even if such elimination or reduction is contingent upon the employee's consent."

Seems to me that it's clear that we cannot ask the retirees (or anyone with an accrued benefit) to voluntarily reduce their benefits. But, when I've said this to other professionals, I sometimes get a look like I'm crazy.

Thoughts? Thanks.

I have always been of the opinion that the IRS's approach to this has been (to their credit), if you have the wherewithal to come in and admit you have sinned and are willing to pay the fees, that they will more or less "rubber stamp" your correction methods, especially if they are the sanctioned correction methods.

So I have a client (business owner) who during a transition from one vendor to another did not re-establish her loan payments. We just took over as TPA and discovered the error. Obviously, one of the principals for correction is that it has to be Employer Error. Have people had good luck with submitting these corrections? I know the hurdle is higher than it is with respect to employees. Again I come back to the fact that my employer just wants to do the right thing. Would you do an anonymous VCP in this scenario considering the tax implications if it is denied?

I will begin by saying, I have NEVER worked with a Top Hat Plan, so a little patience please...

my client called and stated they had a Top Hat Plan for one employee ( we never new about this) who is currently receiving payment from the plan.

the CEO stated they were suppose to file Form 5500 and never did.

My research shows, if they filed a simple statement with the DOL within 120 days after the adoption of the plan, disclosing specific information, no 5500 is filed EVER on the Plan.

However, if they did not file the notice with the DOL, they are required to file the 5500 each plan year.

Is this correct?

If in fact they never filed the notice with the DOL, can I use the Delinquent Filer Program to correct the past 5500 filings?

Thanks for our help...

An employer owns company A and B (they consist a controlled group). Each company has its own 401(k) plan. Both plans have the same plan year end (1/1-12/31), same testing method, and same provisions.

Company B was sold (asset sale) to a unrelated company, which resulted the employment termination for all employees as of May 1, 2013. Company B's Plan Year for 2013 would still be 1/1/2013-12/31/2013 as the assets were not distributed during 2013 (no short plan year for 2013).

Can company A and B be permissively aggregated for the ADP and ACT test for the 2013 Plan Year end?

I have no issue passing the coverage testing with/without the permissive aggregation for both plans, however, I would like to permissively aggregate for the ADP and ACP purpose. I am concerned that company B was only active for 4 months of the year (even though the Plan Year for the Form 5500 would still say 1/1/2013-12/31/2013).

Thank you.

A 5% owner sponsoring a one person defined benefit plan began taking required minimum distributions upon attaining 70 1/2 in 2011. The participant elected to receive the RMD in annual intervals. As such, the annual RMD was always taken in March of the subsequent year. For example, the 2011 RMD was taken in March 2012, the 2012 RMD was taken in March 2013 and the 2013 RMD was taken in March 2014. Let's assume the participant's monthly accrued benefit is $5,000 and furthermore assume the participant's high 3-year average annual salary is $60,000. The annual RMD paid for each year in March 2012, March 2013 and March 2014 equaled $60,000.

The plan is terminated effective 4/30/2014 with an assumed distribution date of 6/30/2014. The 5% owner will elect to take the remaining benefit in a single lump sum and rollover the distribution into an IRA. What is the RMD for 2014 that is not eligible for rollover? Note that the plan is slightly overfunded so the goal is to avoid use of the account balance method. The objective is to distribute the greatest amount possible to the participant.

Can $60,000 be paid to the participant in order to satisfy the 2014 RMD? If so, will the payment of $60,000 reduce the remaining lump sum as of 6/30/2014 or can the remaining lump sum as of 6/30/2014 be calculated as the PVAB of the unreduced $5,000 monthly accrued benefit using the 2014 applicable mortality table at 5.5%?

Please also suggest any other methods that would be deemed reasonable. Thank you.

ok - I KNOW this is very basic, but I'm old and tired....

Son owns 60% of Company

Dad owns 40% of Company

Mom works there as well. Does Mom have attribution from both husband and son for a total of 100%?

It is not impacting anything with the Plan; just want to have them all coded correctly.

Thanks in advance.

So I'm having a hard time finding anything that allows (or disallows) a plan to not allocate any interest to employee contributions if the participant terms before becoming vested? Would this be discriminatory?

Interesting question from a college. They have some employees who might take one or two classes a semester. Our Corbel 403b document says:

© Student Employees. If the Employer elects in its Adoption

Agreement to exclude Student Employees, the exclusion applies

to students performing services described in Code §3121(b)(10).

§3121(b)(10) says:

(10) service performed in the employ of—

(A) a school, college, or university, or

(B) doesn’t apply

if such service is performed by a student who is enrolled and regularly attending classes at such school, college, or university;

Would it be unreasonable to have a policy that those taking one or two classes a semester do not regularly attend? It just seems like such a common situation that someone must have come up with a workaround!

A single employer 401(k) plan is changing its plan year end from 11/30/XX to 12/31/XX. I was wondering if there was any guidance or examples of financial statements in conformity with the provisions DOL regulations 29 CFR 2520.104-50 for short plan years, deferral of accountant's examination and report.

These are some variables to keep in mind.

• Prior year required an audit & current year will as well.
• Audit is a DOL Limited Scope Audit.
• Prior years Financial Statements were dual year
• Plan's trustee & Administrator will remain the same

A not-for-profit non-governmental employer sponsors a 457(b) plan for their Executive Director. Only employer contributions are made to the plan. They recently learned that the Executive Director should have been paying FICA and Medicare Taxes on his employer contributions. The plan has been inexistence for at least 10 years and this is the first they are hearing about (I have no idea how it came up). Because they were never aware of this, they want to know if the laws changed recently to apply FICA and Medicare taxes to these Employer Contributions. They have also asked other non-profits who sponsor 457(b) plans to see if they withhold FICA and Medicare Taxes to the employer contributions and those plan sponsors were not aware of it. Is this a common misconception? Is there a way to fix it?

Plan Sponsor offers a 401k plan and has J&S and life time options for distribution. Attorney drafted document and I am not sure why this provision was never removed. There is no MP money in the plan.

The client wants to eliminate the spousal consent for Hardships and Loans. My thought this is an all or nothing election. If they remove spousal consent for loans and hardships, then they have to remove it for distributions to a terminated participant.

do you agree?

Also does anyone know where I could get some statistics on DC plans that still require spousal consent ( using J&S) for distributions??

Thanks

Corporation has two owners, they are not married. Other than owners, there are no employees. Two late deposits (about 2 weeks late). Is there any leeway? Or are they late, reported on 5500, 5300, etc?

I saw a webcast a while ago in which the speaker stated that a cash balance plan that uses the projected accrued benefit as the basis for an annuity option must be careful to avoid having the QJSA be less than the most valuable benefit.

Example, participant retires at age 55 and NRA is age 65. The plan says that the accrued benefit equals the current balance projected to NRA with credited interest (e.g. assume 4.5%). For payment at age 55 the benefit payable is the actuarial equivalent of the age 65 benefit.

If actuarial equivalence was computed at 5.5% and the interest crediting rate is 4.5% this results in a QJSA lower than the value of the account balance and is prohibited.

The speaker said to avoid this, either the monthly benefit must be computed directly from the current cash balance, or the actuarial equivalency rate must be not more than the interest crediting rate.

Agree? Disagree?

Would the answer be different if the interest crediting rate was variable?

An employer wants to amend their existing profit sharing plan into a safe harbor 401(k) plan mid year - is this permissible? With the recent law changes that now allow 401(k) plans to remove their safe harbor provisions mid year and the fact that the first year of a 401(k) plan is not required to be 12 months long, it seems implied that such an amendment would be OK but I first wanted to see if anything was being overlooked.

Also, is it accurate to say that neither the 415© or 401(a)(17) limits need to be prorated in this situation for the portion of the year the 401(k) provisions are in place, as both the plan year and limitation year will not be changing?

This is probably a silly question, and I always assumed the answer, but as I look through the regulations I have not yet found anything to confirm the answer.

Let's assume you have a DB Plan and a DC Plan, each satisfying 410(b) via ratio percentage. Therefore, they do not NEED to be aggregated for 410(b). However, while one plan satisfies 401(a)(4) on its own, the other does not. If they are aggregated, the aggregated DB/DC plan satisfies 401(a)(4). The 1.401(a)(4)-9 regulation says you can aggregate two plans for 401(a)(4) testing if those plans are permissively aggregated and treated as a single plan under 1.410(b)-7(d), and 1.410(b)-7(d) contemplates, naturally, that the two plans will be permissively aggregated only if necessary to satisfy coverage. As I said there is no need to permissively aggregate these plans for 410(b), but can they still be aggregated for 401(a)(4) testing? Am I reading too much into the language of the regulation?

Have a very unusual scenario.

A prospective sole proprietor client sponsors a traditional DB plan with 3 participants. His girlfriend is also a sole proprietor (in the same field) and sponsors her own traditional DB plan. Believe it or not, they just got married and she now merged her business with his.

Apparently, when they met some years ago they each set up a prototype DB plan at a fund company.

Is it possible to merge the traditional DB plans?

Just wondered if anyone has had problems in future years after suspending filing, using a code 4R, when the participant count drops below 100? Is the DOL system sufficiently advanced so that this causes no problems, or does it generate one of those stupid "where are your forms for 2011" letters at some future date? If it generates those damned letters, it may be easier just to file!