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!

My husband and I are retired and we both have been rolling over our 401Ks to Roth accounts. We are both over 70 years of age.

My husband must have some expensive dental work. Can we BORROW the money from our Roth and then pay it back?

Would there be any advantage to borrowing from the 401K (not rolled over yet) or from the Roth?

Since we are no longer employed, we cannot add to these accounts and we want to retain the earning power of the Roth tax free.

Hi all, I am hoping for some guidance in this situation. Our client (OC) wants to sell his business to another company (AC). AC is not yet ready to buy OC but wants to test the waters by working on some projects together. If all goes well, AC will buy OC in a year or two. OC has a safe harbor 401(k) plan, AC has no plan. As of now there is no common ownership. They expect that about 50% of OCs business will be for contracts generated by AC, but OC will have some contracts independent of AC. OC and AC want to split each employee so that they work half time for OC and half for AC. They would like to continue to cover the employees 100% under OC's 401(k) plan. I was looking at Affiliated Service Group rules but get stuck because there is no shared ownership. Does anyone have any suggestions? Help?

Thank you in advance for any suggestions.

A client was notified by IRS that no 2011 and 2012 Forms 5500 had been filed for their 401(k) Plan. Due to an employee change within the client's company, the 5500s were not filed, although they had been prepared. Upon receipt of the IRS notice, client filed the delinquent 5500s. Then client calls us asking what can be done about IRS penalties assessed. Is it too late to use the DFVC Program to avoid the IRS penalties? Will the program now only relieve them of DOL penalties?

I've never given a thought about crossing state lines with my ERPA designation because everybody I've done work for is in NY, as am I. However, I was just filling out a 2848 for a client in another state, and suddenly I started wondering if there might be a problem. Am I limited to working with clients only in my state?

Loans from the 401k plan must be permitted on a reasonably equivalent basis... can the loan provision be temporarily relaxed for perhaps a period of 30 days and then "changed back"

here's the story:

Valued NHCE needs to get a loan to make a car purchase

Plan only permits hardship loans

Sponsor wants to give the car loan to just this one NHCE

Based on reasonably equivalent rules - the plan could / would be amended to temporarily allow the loan for anyone who needs a 'car loan' for the 30 day period - then amended back to require hardship

Does that seem kosher? (not what I'd recommend but is it ok within the framework of the rules)

I have a client who owns all or part of three companies.

Company 1: Three owners, Person A 1/3, Person B 1/3 and Person C 1/3.

Company 2: One owner, Person C 100%.

Company 3: Three owners, Person B 1/3, Person C 1/3 and Person D 1/3 (B is mother of D).

Is this a Control Group ?

Looking for your input.

Thanks

As a member of a professional development round-table (including planners, attorney's, and other members engaged in the divorce profession), every so often a benefits-related question surfaces and no one knows the answer. Such is the case with the question below. So I thought I would post it here in the hopes someone can enlighten me and I can share it with the group:

The question is if dad has a plan through work that is available to cover the children, if we give mom the deductions for the kids, and she is the one mandated to provide the insurance[via the divorce decree], and the kids are covered under dad's [employers] plan, and could continue to be covered, does that mean they have to stay on his plan? If he has the deductions, he gets no subsidy due to his high income. If mom gets the deductions, it's free insurance for her and the kids based on her low income. But does the availability of the dad's plan trump everything and mean they have to go with his high cost, high deductible plan? If so does mom get big subsidies as a result?

It seems to me this is the default situation we will face - low income custodial mom, high income dad with benefits.

Thank you for any insights or thoughts,

My company considers participants on long-term disability to be active employees who continue to accrue service credit and receive employer contributions to the DC plan based on salary before disability commenced. If a participant applies for disability with our carrier and the claim is denied, the participant is terminated if he does not return to work.

This happened to one participant early last year, but he appealed his claim denial and won. So now he is being retroactively placed on LTD and his termination of employment is being retroactively cancelled--over a year after his termination. We are retroactively calculating the employer contributions he would have received had he not been terminated. But of course nothing is ever easy--when he terminated he requested and received a lump sum distribution.

Clearly this is not a sham termination, but are there any potential legal/tax ramifications to either the Plan or the participant? He was already vested regardless of his disability status and we do not require repayment to have service restored to him. I think we are all in the clear but can anyone see any issues that I should discuss with outside counsel?

Company is assessed by recordkeeper a flat fee per participant for administration of 401k plan. Company in turn wants to charge this back to the plan as a flat fee per participant rather than proportionate to account balance. %age-wise, this can be significant (not reasonable) for a new participant who defers minimally based on NHCE wages to the plan. How is this generally approached?