Hi, All:

I need a sanity check, please. I have a 401(k) which failed their 2013 ADP test. They've chosen to make a QNEC to correct the test. They plan to make the QNEC deposit when they make a PS deposit (prior to their business filing deadline). My questions:

1. Should the QNEC be included as an employer contribution in the Maximum Employer Contribution Deductibility test?

2. Where can I find this in the regs?

Many thanks!

PuffMama

Just notified that plan was terminated as of 10/1/2013. Company has recently been doing very well. Why would employer terminate ESOP plan? Greed? ( I'm sure it is financial.)

Fairly small company, less than 100 employees. Maybe 20 % of the 100 are fully vested. Vesting is vary "top-heavy", if that matters.

Still offering 401k plan.

Thanks for any input.

Running across situations with cash balance plans having less than 40% of participants accruing a benefit for 2013 less than .5% of compensation because of the use of low interest rates such as 30 year treasuries.

How are others handling this? Amending, ignoring?

Opinions please.

When the plan defines compensation as W-2 comp, the payroll division of our company is including everything that goes on a W-2 in the contribution deposits that they make for the clients. Unfortunately, that includes the taxable company paid health insurance premiums that are added to the taxable compensation for the greater than 2% shareholders of S corporations. They are now asking me for proof that it is not supposed to be included, and I'm having trouble finding it. Where should I be looking?

Profit Sharing plan's trust is in a pooled account.

Balance forward valuation.

Plan Sponsor now wants to take plan expenses from the trust. The expenses are justified and eligible to be paid from the assets.

What kind of notification (if any) is due to the participants?

We had a client fail to file a PBGC form, and apparently received notices for a while that they ignored, and now have received a bill for $45,000 in penalties! The plan had one participant and less than that amount in assets! Is there any way to get relief after they've already sent the penalty invoice with threat to refer the debt to the Treasury by the end of the month?

If a plan was started in 2013, no past-service is credited, and the beginning of year assets are $0, is the 2013 AFTAP 0% or 100%? Is there official guidance on this? Would it make a difference if the valuation date was 12/31/2013?

Thanks!

We had a call from a terminated participant that elected to take his distribution from a 401k plan in the form of a rollover to an IRA. The check was made payable to his IRA institution fbo participant name and was sent to the institution (per his instructions on the distribution paperwork). This occurred in 2013. The call from the participant came in a couple of days ago and he tells us that the money was not put into the IRA account, but rather into his checking account. We have already prepared the 1099-R with a code G and submitted the info to the IRS (figures he would call the day after we submitted our filing to the IRS). Do we complete a corrected 1099-R to indicate a lump sum cash distribution with no withholding? Does this create an issue for us as the submitter of the withholdings? What is our exposure? Any replies are welcome!

We have a defined benefit plan that wants to terminate. The plan has only allowed lump sum payments of less than $5,000. There are over 100 Retirees who are currently receiving monthly payments from the Plan. The client would like to offer lump sum payments to as many of the Participants as possible. We told them that this is no problem for Actives and Deferred Vested Participants but that we generally advise them to purchase an annuity for the Retiree group.

Is there any regulation that prohibits us from providing the lump sum option to a Retiree? I am especially concerned about the expense of purchasing annuities for elderly Retirees with small monthly benefits. The current lump sum value for several of the Retirees is less than $5,000.

Thanks

If employee participates in 401k with company A for 5 years from 1989 to 1994 and is fully vested in the plan. Then works for company B (which resulted from a merger of company A and 2 other companies) for a period of 3 1/2 years from 2010-2013. company B's plan had 5 year vesting @ 20% / year. Company B claims employee is only 60% vested.

Question: would employee be fully vested due to service with predecessor (company A), or does the 16 year break somehow disqualify the prior service?

A month ago, a participant receives a large participant loan and uses the funds to purchase a principal residence. However, the participant did not apply for the 15-year home loan exception, so the loan was set up with a standard 5-year amortization. Apparently, the participant was unaware of the option, even though it's clearly stated on the loan appication. Anyway, now the participant wants to reduce the monthly payments by switching to a 15-year amortization.

In looking through things, it seems like the only option here (besides telling him "no") would be for the participant to refinance the loan and since the original loan was in fact used for the home purchase, it should be allowable. But I'm not completely sure on this. Any thoughts or concerns?

Thanks.

BTH

Can plan assets be used to pay litigation costs incurred to defend a trust against bogus allegations (not concerning breach of fiduciary duty or ERISA)?

But can someone explain to mean the purpose of this 8822b form? Why the #$@# can't the IRS just reference who signed the 5500 as plan administrator?

http://www.winston.com/en/benefits-blast/deadline-looms-to-file-form-8822-b-to-report-a-change-in-your.html

[secretly, I don't think I'm the idiot ]

Has anyone seen any guidance from the DOL on what "financial records" means as it relates to item 3) in the DOL bulletin on independence?

http://www.gpo.gov/fdsys/pkg/CFR-2011-title29-vol9/pdf/CFR-2011-title29-vol9-sec2509-75-9.pdf

I've been reading some of the material here:

http://www.aicpa.org/interestareas/employeebenefitplanauditquality/resources/accountingandauditingresourcecenters/auditorindependence/pages/auditorindependenceresource%20center.aspx

and it seems the AICPA might take a rather narrow view of what financial records means. But I am not a CPA, so maybe this is typical?

A plan is looking to bid out its TPA services, and one of the companies submitting a proposal is the CPA firm that provides the IQPA services for the plan since it is audit sized. The plan is wondering if it is a problem that the auditing firm would also be the firm to provide administration services. The TPA firm has clarified that they would not be providing recording keeping, just things like 5500 preparation, compliance testing, distribution assistance, etc.

Maybe I am over thinking this. but I was wondering if I could get people's thoughts since in my experience small TPA firms shy away from providing audit services and small CPA firms shy away from providing TPA services on plans that they audit, because it violates the DOL rules.

Can anyone clarify?

Under a MEWA (or what this forum is calling a "Coalition"?), each member employer can establish their own set of eligibility criteria.. right?

For example:

Employer A says a full time employee is eligible for benefits after 1 month and a full time employee is defined as an employee working at least 25 hours a week

Employer B says a full time employee is eligible for benefits after 2 months and a full time employee is defined as an employee working at least 30 hours a week

This can occur in a MEWA, correct?

Under a MEWA, each member employer can estabilsh their own set of eligibility criteria.. right?

For example:

Employer A says a full time employee is eligible for benefits after 1 month and a full time employee is defined as an employee working at least 25 hours a week

Employer B says a full time employee is eligible for benefits after 2 months and a full time employee is defined as an employee working at least 30 hours a week

This can occur in a MEWA, correct?

Maybe there is a simple answer, but, if so, I cannot find it.

Excluded employee that is a former employee.

Does the money they are owed go into the plan and then you notify them that they can take the money out or roll it over, or do you simply send them a check and notify them that they have 60 days to roll over or the distribution will be suject to tax?

We have a client (s-corp) who contributed and deducted on their tax return approximately $6,000 more than the 404 limit allows them to do on their 401k ? In addition to filing form 5330 and paying the excise tax, do we have to amend their tax returns?

I just took over a plan with an enhanced safe-harbor match - 150% on the dollar up to 6% of compensation. In looking at the prior year allocation, the match allcoated to the HCEs was $22,500 - the same as their 401k deferrals. In limiting the SHM to 6%, would the 2012 compensation cap of $250,000 not have limited the SHM to the HCEs at $15,000? ($250,000 at 6%) The rest of the document is pretty straight forward. Thanks for any plan design guidance I've missed.

Has anyone else noticed that line 21f - total assets does not include the employer securities in the latest revision (12/13).

In the prior revision (04/06) this was line 20f. It consisted of summing 20a, 20b(6), 20c(14), 20d(1), 20d(2), and 20e. In the new 12/13 revision, 21d(1) is not listed on the form for 21f as one of the parts of the asset calculation.

21f shows sum of 21a, 21b(6), 21c(14), 21d(2), and 20e. Does anyone know of a ruling that says to not include the employer securities anymore? Is this possibly an IRS mistake on the form?

Thank you.