Can someone explain how the Grace Period works under a FSA plan? And how to correct monies that have been forfeited if the prior years forfeitures were never used due to employer misunderstanding of the grace period.

- My understanding was if you made an election for example of $2,500 under Health for 2012. You can submit claims until March 15th of 2013 BUT the claims would have to be dated during the 2012 plan year. In other words you still have time after the close of the plan year to submit but the bills/claims must be attributable to 2012. I now understand this is incorrect....

- Under the grace period if your election was $2,500 in 2012 and you only submitted $1,500 in claims, you still have $1,000 BUT you can have claims which are dated in the new year (2013) until 3/15 which can use up the $1,000. Is this the correct???

We were allowing employees to use up any amount that was left as of 12.31 until 3/15 of the next year however we informed them that the claims have occurred during the plan year it applied too. If this is incorrect what do we do with the monies that were forfeited from the prior plan year? Can we pay it out to the participants?

So for a regular 409A Deferred Comp Plan, participants must elect the timing and form of distribution before the beginning of the applicable taxable year - any similar requirement for a 457 Plan? Or can the participant decide upon the form of distribution after becoming eligible for a distribution?

I am working on a DB plan with a business owner and one staff person. My software is indicating the the plan is not passing the participation test because the staff person didn't benefit in 2012. In fact, she didn't work 1000 hours in 2012 (and that's why she didn't benefit). Is her not having worked 1000 hours a reason for the plan to fail the participation test?

Any thought would be appreciated!

The available rates to use are 7.5% to 8.5%.

We've always used 8.5%

Is there ever a situation where a lower interest rate would yield better results?

401k plan with age 21 and no service requirement for employee deferrals. Entry date is first day of the month coinciding or next following date requirement met. If an employee was hired on December 2nd (which was a Monday) would they enter the plan Dec. 2nd or Jan 1st? I am thinking they would enter Dec. 2nd because that was the first business day of the month. Thoughts?

Suppose a traditional DB plan provides nhces a benefit of .5% of average salary. The employer also sponsors a 401(k) plan.

Could the 401(k) plan provide nhces with a 6.5% mandatory employer contribution in the 401(k) plan and meet the minimum gateway?

It seems that a DB benefit is generally worth more than twice a DC contribution. The logic being a 5% top heavy minimum in a DC plan is equivalent to a 2% top heavy minimum benefit in a DB plan.

Thanks

We have a client who has failed to withhold deferral payments on bonuses for several years. The affected participants will also be due a match contribution on the missed deferrals. This affected both HCEs and NHCEs and will be corrected under VCP.

A question is coming up as to what happens with the prior ADP/ACP tests. This plan has never used the ADP/ACP safe harbor. They did fail testing a couple of times in the years affected and a few passes that were close to the limit (based on testing where bonuses were not counted for deferrals and match). Are we reading the EPCRS procedure (section 6.02(2)(d) pasted below) correctly to interpret it as requiring that the ADP/ACP tests must be rerun for each of the affected years (likely resulting in late ADP/ACP corrections for the prior years that will also need to be corrected under VCP)? We'd like an outside thought before we implement any corrections. Thanks.

(d) The correction method should not violate another applicable specific requirement of § 401(a) or 403(b) (for example, § 401(a)(4), 411(d)(6), or 403(b)(12), as applicable), 408(k) for SEPs, or 408(p) for SIMPLE IRA Plans, or a parallel requirement in Part 2 of Subtitle B of Title I of ERISA (for plans that are subject to Part 2 of Subtitle B of Title I of ERISA). If an additional failure is nevertheless created as a result of the use of a correction method in this revenue procedure, then that failure also must be corrected in conjunction with the use of that correction method and in accordance with the requirements of this revenue procedure.

There is a 90 year old participant in a new plan of ours. He retired from the company 20 years ago and he cannot be located but has over $20k in his account and requires an RMD. Please let me know how you have dealt with these types of situations. Thank you.

This is a 401(a) defined contribution plan which is funded solely by the voluntary contributions of the public-sector workers in New Jersey. It started in 1963 with a single investment choice---a common stock portfolio. It has never expanded its investment menu. Are the Trustees in breach of their fiduciary duty?

What are people yusing to securely xfer files to clients? We send our clients 2, maybe 3 files a year. We currently use Sharefile, but 90% of the time the client writes back and says "I forgot the password." Why they won't click the forgot password link is beyond me, but it is what it is. sometimes they do and the password reset ends up in spam. Secure file transfer has become more than a small part of our existence.

I'm wondering how well Drop Box works in this kind of environment. We have a couple of payroll vendors sending us files each pay-period using Drop Box which is nice because there is no log in process. On the downside, we are constantly adding new recipients, and as such an email based solution is quite preferable.

Anyway, I'd be curious to know if there is a better mousetrap.

Plan offers a loan provison-

Payroll deduction set up for loan payments

Employee A takes a loan and the amortization is set up for bi weekly payments.

The employee is a commission only and for the month was not paid any commission therefore no loan payments were made to the plan.

The employee is not paid a base salary.

Although the plan require loan payments via payroll deduction, if the employee is commission only, then doesn't he have to issue a check to the plan each payroll period for the loan amount. Or issue one check for the outstanding loan payments prior to the end of the cure period?

thanks

Employee is on unpaid LOA, declined continuation coverage so there is a break in coverage. Normally upon return to active payroll status, benefits and 125 elections pick up where they left off.

During LOA, employee gets married. Wants to add spouse to coverage. Plan allows 60 days to make election changes, but employee does not return to active payroll and benefits status until 100 days after marriage.

Do you allow the employee to add spouse upon return from LOA even though it is 100 days after the qualifying marriage event? Or, do you REQUIRE the employee to notify you of the marriage within the normal 60 day window in order to be able to add spouse upon return?

We have a small 403(b) plan that covers non-resident aliens. An individual worked for the business, entered the plan, has an account balance in the plan, and has now left. The individual is resident of the Israel but not the USA and the owner does not believe she has a SS number. How can we pay this individual out if they have no SS#?

Any comments are appreciated.

I'm sure this has been asked before but I keep coming up with different answers. Clarity please. Have a not for profit plan. Firm has a B plan and a K plan. For 402(g) purposes, is it one limit and for 415 purposes, is the limit per plan?

Thank You.

Ppt. could have started collecting in 2005, but is now starting to collect an annuity in 2013. What interest rate is used to accumulate the missed payments to now - interest rate from 2005, or current rate? Or just a "reasonable" rate?

Non-owner participant is age 89 and retiring this week. He has money in 401(k) and IRAs.

1) After separation from service, must he start RMD from his 401(k) in 2013 or 2014?

2) Can he take some of his IRA RMD from the 401(k)?

Here is the scenario:

A client has a one participant overfunded DB plan, no 2013 contributions needed or made. He wants to terminate effective in 2013 and transfer excess assets to a DC plan escrow account, but the actual transfer won't happen until 2014.

The question is, can he release from escrow for 2013 (up to his DC annual addition)?

My presumption is yes, since aside from the lack of a deducation, it is little different from an accrued contribution. I would think that the termination resolution should specify the intent to accrue the transfer for 2013

The 5500 instructions for Schedule A indicate that individual policies of the same carrier may be grouped as a unit and filed under one Schedule A. My question is - does this refer to individual as in one person policies? or if an employer has different sets of employees under different plans with the same medical carrier, for instance, but with different id numbers, can those policies be grouped on one Schedule A, or better off listed separately?

PS wouldnt it be swell to have a 5500 message board section under Health & Welfare Plan separate from the other 5500 section?

Here is the scenario:

The plan sponsor would like to remove a fund from the plan line up due to poor performance (the advisor has suggested this). This fund holds no assets. We would like to remove it immediately without providing a mapping notice. The vendor will not remove the fund without waiting 30 days.

My understanding is that the notice is only required to obtain 404c protection. In this case, I don't care about 404c since there is no money in the fund being removed. I have told the vendor this and they say a notice is required (period) and they will not do anything until we provide a mapping notice.

Am I wrong in thinking that a notice is not a requirement? Any reason to provide a mapping notice in this scenario?

Thank you

I am working on a DB plan with a business owner and three staff people that was effective 1/1/2006. Although the business owner's accrual percentage was much higher than the the staff people's accrual percentage, it passed non-discrimination by being tested in combination with a profit sharing plan. Also, top-heavy minimums were satisfied through the profit sharing plan. The profit sharing plan was terminated 12/31/2010 and, therefore, the defined benefit plan was frozen 1/1/2011. Now the DB plan is overfunded. The business owner would like to unfreeze the plan to absorb the surplus, and to create an A + B benefit using a new, general tested, formula. All four people have been participants since 1/1/2006. It seems logical to me that I would need to provide a top-heavy minimum only for the 2013 accrual and not for all 6 years of top-heavy service (2006 - 2010 and 2013). Am I thinking about this correctly?

Any help would be appreciated!