Hi everyone!

I have recently decided to leave a company with which I have a 401K worth approximately $16,500. I will be in between jobs for a while, not having the option of investing in a new employer's plan. I am considering rolling this 401k over to a traditional IRA, however, I already have a Roth Ira, which I have had for several years. I have the Roth invested in a Target Retirement fund, which I am happy with. Does anyone know of any disadvantages to having both types of IRA's at the same time? Assuming I were to do this, is it best to start splitting my yearly contribution between the two IRA's or to just continue to max out my Roth which I have always done and leave the new traditional IRA alone. Any feedback would be greatly appreciated. Thanks, Gracey

Bill, the 50% owner of the corporation, buys the other 50% from his sister Mary in mid-2009. He does not have enough cash to do this, so his sister holds a promissory note (more on this later). The company has a calendar year 401(k) plan. Mary is an employee and is still an HCE in 2010 due to her prior ownership.

Mary did not retain any repurchase rights, but she held liens/collateral interest in her company shares, the building, some land, etc. as security for the promissory note from her brother since he did not have the cash to pay for her shares outright.

Mary's wages have always been only about $50,000 per year so she is not an HCE due to wages.

Is Mary an HCE in 2011?

Is Mary an HCE in 2012?

Just met with a client who has a 401k plan. One of the owners should have started taking RMDs in 2010 or 2011, but did not. I am helping them correct this. I know, under Self Correction, they can correct this. However, if I am reading correctly, we will need to go through VCP for a waiver of the 50% excise tax. Is that correct?

Should they go ahead and process all prior RMDs before the end of the year or wait until the VCP submission to do the prior year distributions and just do the current year distribution in 2013?

Thanks so much for your thoughts.

Anyone know of any good resources for learning Crystal Reports for Relius Admin? Other than flying to Jacksonville for a few days?

Calendar Year Plan's service requirement for entry is 1 year of service. Entry date is defined as 1st day of month coincident or next following completion of eligibility requirement. Full time employee is hired on 1/2/13. Would the entry date be 1/1/14 or 2/1/14? Thanks.

I'm not entirely sure where to put this, so if you think there is a better forum, please let me know.

We are preparing an anonymous VCP submission for non-amender failures (will be using Schedule 2). The final submission will include a concurrent determination letter application. I am wondering if the timing of the notice to interested parties is impacted by this process.

Assuming the answer is no, the standard notification period is 10-24 days prior to filing, however, we will have 21 days to provide the submission to the IRS once an agreement is reached. Assuming it takes a week for us to actually receive notification an agreement has been reached, we have a fairly short window to provide the ntip. Perhaps just a couple of days.

I want to verify this is correct so I can warn the plan sponsor they will need to be ready to pull the trigger on the notification asap.

TIA!

We have 2 related companies, both have deferral only plans. The HCEs are all in 1 plan. The plan features are identical in each plan. Both plans pass ADP independently, but if we combine the plans and run 1 ADP test, it fails. If we disaggregate for coverage, one plan is below 70% coverage. Of course, if we combine the plans for coverage, it passes, but then we would need to combine for ADP testing, and ADP would fail.

Any comments?

Thanks in advance for your thoughts.

Our pension plan custodian provides a quarterly outstanding check list to us to keep our plan clean. We were notified by the custodian with the past report that they realized that over the years they switched computer systems and the outstanding checks on the prior computer system were never reported to us. Reviewing this current report, there are outstanding checks that are anywhere from 6 years old to 13 years old. Many of these are outstanding monthly annuity amounts. To further complicate the issue, many of the payees are now deceased.

Obviously, we will attempt to contact the payee's family if we can locate the individual that originally called to report their death so that the payment can be made to the Estate.

Our main concern is from a fiduciary standpoint. Does interest need to be paid on these outstanding amounts? Are we liable for anything since the checks sat for so long with no attempts to locate the payee?

Thanks again for your thoughts.

How does IRC 318 apply to a partnership in that the spouse of a partner in a partnership are treated as having the same capital or profit interests?

Is it IRC 416(i)(1)(B)(iii)(II) " in the case of any employer which is not a corporation, ownership in such employer shall be determined in accordance with regulations prescribed by the Secretary which shall be based on principles similar to the principles of section 318(as modified by subclause (I))."?

And if it is, what does it mean when it says "as modified by subclause (I)?

Thanks in advance!

A client asked me if they could start a HRSA or HSRA (I can't remember which) and wanted to know if I had ever heard of it. Basically this "HRSA" is a HSA and HDHP coupled with a deductible reimbursement from the employer.

1) I don't think this is permitted. Wouldn't this really just be an HRA coupled with an HSA/HDHP which would make the participants ineligible for the HSA?

2) Has anyone ever heard of this? Am I completely missing something?

We have a client that currently has a 401(k) plan with a 3% safe harbor with us.

They are interested in setting up a separate ESOP Plan. Unfortunately we do not administer ESOP plans so they will be setting up the ESOP plan with a different TPA effective 1/1/2014 and leaving the 401k with us.

Here's the question, they want to fund the 3% safe harbor non-elective contribution to the ESOP plan instead of the 401(k) (starting 2014 and going forward). Is this permissible?? and if so will this still exclude the 401(k) from non-discrimination testing and count towards a top heavy contribution for the 401k if applicable?

Is there a deadline for starting a 401(k) plan other than a safe harbor plan?

This ERISA Money Purchase Pension Plan is funded solely by the participating employer and has for decades invested solely in treasuries. Is this investment policy a breach of the Fiduciary Standard/Prudent Man Rule?

Upon retirement the participant may not take a lump-sum settlement but is limited to a maximum monthly withdrawal of $2,500 until the account is depleted. There are no other options. Can this be successfully challenged in Court?

Plan has recently been terminated. Forfeiture allows for the payment of expenses. If 2014 expenses are currently billed, can the trust pay these expenses in advance of the performance of these services?

We have a governmental 401(a) plan with a pick-up feature, and an employer nonelective contribution subject to a vesting schedule. The plan states that service with the employer will not be counted during the time the employee failed or refused to make a contribution to the plan.

Can the plan exclude service while a participant failed or refused to make a contribution required under the terms of the plan?

I have a 403b document ("widely" used by a lot of 403b's) that states in black and white - "Forfeitures shall revert to the Employer."

Thoughts? When I saw this, the first thing that occurred to me is that the following is in 401(a)(2) (OK, I had to look for the exact reference!) which would not apply to a 403b plan--hence, it WOULD be possible.

(2) if under the trust instrument it is impossible, at any time prior to the satisfaction of all liabilities with respect to employees and their beneficiaries under the trust, for any part of the corpus or income to be (within the taxable year or thereafter) used for, or diverted to, purposes other than for the exclusive benefit of his employees or their beneficiaries

Just curious to know if anyone has seen this.

SH Match plan has an initial auto deferral of 0%. The autoescalation is 2% each year. Other than defying the logic of having an ACA in the first year of participation, can the autodefrral rate be 0%? Thanks.

The profit sharing plan I'm working on has forfeitures. The plan document states that forfeitures are to be used in the year following to reduce the employer contribution. If the sponsor is not making a contribution what should be done with the forfeitures. Should they be reallocated using the contribution formula? The plan is top-heavy and the contribution formula is non-integrated.

Thanks for the help.

Hi all,

I have a situation where company is owned 100% by A. A's mother worked at the company, terminated 3 years ago, has not take a distribution. Is mom's account balance included with A's in determining whether plan is top heavy?

Thanks much for any help with this issue!

Other than paying taxes, I do not provide actuarial services in behalf of any government entity. Nevertheless, I'm curious how actuaries might approach the "13th check" that Detroit General Retirement System paid its retirees. As I understand (and please correct if off-base), liabilities were valued assuming say an 8% r.o.i. target. In years when investments outperformed the target, some portion of the "excess" earnings were distributed to retirees. Thus, because good year's investment performance was not there to offset bad year's investment performance, the investment target % could not be met. In short, there was a failure to understand or pay attention to what long-term rate of return meant.

Clearly, what was done in practice would be acceptable if the excess earnings were determined by comparing plan assets with the liabilities evaluated at a conservatively lower target rate, such as 3% and then distributing part of the excess, if any.

Has anyone out there seen this approach used or in addition to Detroit, does the rest of the world not behave so rationally either?