a participant (under age 59.5) wants to have 30% withheld from their distribution. Do they just elect this on the Benefit Payment Election Form and/or does a Form W-9P need to be completed?

We have a plan that for 2012 transitioned from small to large plan (now @ 130+ participants). Due to miscommunication, the sponsor has not yet obtained an auditor's opinion and the filing deadline is days away.

Any experience in filing Schedule H and checking NO to question 3d (Did the accountant perform a limited scope audit).

I have a llc with 4 members. 2 of the members are trusts. I want to open a self employed 401k. the are no other employees. will the trust be able to participate? will it be an issue if they cannot? any help would be greatly appreciated.

Is the explanation that a plan is 404© and the fiduciaries may be relieved of liability for any investment losses that the participants may occur required to be in the SPD, or can it go out in another communication?

We have a 403b client who tells us that they provide a fixed dollar benefit to each employee with the stipulation that the employee can either use the funds to pay their company sponsored health insurance premiums, or have them deposited to the 403b plan. If they choose not to do either of those two things, they do not receive the benefit.

Is that allowed? What would such an arrangement be called?

Hi. We are about to implement a spousal surcharge. The biggest issue that we are looking for guidance is regarding open enrollment periods that don't align. We are unsure how to handle the situation where the employee's spouse's employer's health plan has its open enrollment at a different time of the year than we do.

Here is what we would like to do, if possible: if an employee has a working spouse that elects to be covered on our plan during our open enrollment period, we will apply the surcharge. But if that spouse's employer has open enrollment later in the year, and the spouse wants to drop coverage under our plan, we want to allow that drop of coverage so the spouse can then enter their employer's plan during that employer's open enrollment. We realize that this would not be a traditional event that allows a drop in coverage. But can we allow a drop for this reason? Does the law prevent this?

Using a Sungard Relius prototype document we have a plan that is setup for SH Match of $1 for $1 up to 4% deferral. Recently it was brought to our attention that two employees, one being an HCE, have been receiving more SH match than they should be. The NHCE was deferring 4% up until 7/2011 where he switched to 2%, however, the payroll company continued giving him a 4% Employer match and has been to this date. (we have put a notice out to the payroll company to correct it going forward). The HCE was doing 4% up until 2/2012 when he switched to 2% as well but the payroll company still left his match at 4%. The NHCE has been over-matched about $1545 and the HCE has been over matched by $2261. I am wondering what the correction needs to be based on the document setup. I am thinking we can possibly leave the NHCE $ in, but have to take out the HCE money? Any advice would be great. Thanks!

We have a plan that has 2 employers (A&B). On 4/1, Employer B spun-out and created a new plan. On 7/1, Employer B was sold and Employer A & B were no longer related.

For testing, we would like to test the Employer A plan from 1/1-12/31 including Employer B contributions from 1/1/-6/30 (Q1 made under plan A and Q2 made under plan B). Then test Employer B as a separate, unrelated plan from 7/1/-12/31. Is this reasonable?

If yes, how would you handle compensation for those very high paid HCEs. For example: Employer B employee earns $300,000 from 1/1-6/30 and contributes $10,000. Then from 7/1-12/31 earns another $300,000 and contributes $7,500. Can I apply the $255,000 comp limit separately for each plan and test the contributions as if contributed to two unrelated plans (A: 10,000/255,000 & B: 7,500/255,000)?

Do I need to worry about HCE mandatory aggregation post 7/1?

Any thoughts would be greatly appreciated!

Have a client whose 401(k) plan is currently being terminated as part of a bankruptcy proceeding. I was brought into the mix a bit late. The plan began the process to formally terminate using Form 5310 but has now opted not to formally terminate. Instead, they notified all participants and are moving to distribute the assets. This is where I enter the scene. I've now realized that the plan is currently under some sort of an audit by the DOL and the DOL seems to be aware that we are terminating the plan. Due to the furlough I'm not quite sure the extent of the audit and where it is at because obviously can't discuss this with the investigator (it appears to have been limited in scope but I don't believe it has formally closed so I expect that it could be expanded at any time). I've also noticed that the plan is delinquent in filing last year's Form 5500. My plan is to file the delinquent 5500 ASAP and stop all plan termination distributions until I get a chance to discuss things with the investigator. My guess is that she's going to strongly suggest against an informal termination and urge us to pursue a FDL. Any thoughts on whether the plan has any chance of pursuing an informal termination process?

I need a bit of help with completing the Form 5330 regarding late deferrals. We have a plan we've taken over a plan where the auditors have determined that several payrolls (going back to 2008 ) were late. The Form 5330 was not done for the prior years so we are trying to catchup.

I have calculated the missing earnings on the applicable payrolls however I need a bit of help correctly reporting this information on the Form 5330.

Here are some of the applicable payrolls. The DOL VFCP calculator was used to calculate the lost earnings and interest.

Loss Date

Recovery Date

Final Payment Date

Amount Due

10/28/2008

1/29/2009

9/30/2011

346.26

1/6/2010

1/21/2010

9/30/2011

40.20

2/24/2011

3/3/2011

9/23/2012

23.79

My 1st thought is that I will need to do a Form 5330 for each tax year (2008, 2009, 2010, 2011, 2012) and report the amount involved each tax year until it is corrected. Meaning that the 10/28/2008 loss of 346.26 would be reported on the 2008, 2009, 2010, and 2011 tax form? If this is the case then they would pay the 15% penalty for each year until the loss is corrected?

Or do I report is once, and then report on Form 5330 Schedule C #5 in the appropriate tax year when it is corrected?

I hope this was clear. Let me know if I need to explain further.

Can anyone recommend software that would enable us to import participant data into Form 8955-SSA from an Excel spreadsheet? We are a large employer with multiple plans and many hundreds of terminated vesteds each year, and the mecahnics of filing these forms are very burdensome. if anyone has any advice to offer I'd be grateful.

My understanding is that if you have two separate 401(k) Plans in the same controlled group and they separately pass 410(b) coverage testing, then they can also be tested separately for ADP/ACP testing. Does anyone have citations for this position?

As you all know, guidance (and enforcement) is forthcoming for fully-insured plans on nondiscrimination. Notice 2011-1 indicates that a fully insured plan that discriminates against non-highly compensated employees will be subject to civil monetary penalties of $100/day multiplied by each non-highly compensated employee that was discriminated against.

For self-insured plans, however, violating 105(h) only results in the HCEs losing a tax benefit. Or so I thought.

The BNA Benefits Guide states:

Self-insured health benefits plans that discriminate in favor of HCEs are subject to a less onerous tax regime. Such plans that violate tax code Section 105(h) must pay a $100 excise tax per day on each beneficiary who receives discriminatory benefits in their favor, rather than the $100 per day penalty that applies to an insured plan for each individual discriminated against.

Is this correct? I can't find any supporting authority for it and there's no citation. I thought loss of tax benefits was the only consequence for fully funded plans.

I have a calendar year safe harbor plan that contains the elective deferrals and the safe harbor match. The eligiblity and entry date for the elective deferrals are immediate and on DOH. The eligibility and entry date for the safe harbor match is 1 Year of Service (1,000 hours via actual hours counting) and semi-annual entry dates. The main question revolves around the ADP testing and the determination of the statutory employees and the otherwise excludable employees. In the vast majority of these types of cases, I have determined that if a parrticipant does not completed the YOS using the hours counting, then they would be considered otherwise excludable employees for all purposes until the do meet the YOS requirement.

Recently, I had a discussion with a colleague who says that the determination of statutory employees and the otherwise excludable employees is done on a source by source basis, based on the eligibility and entry date requirements for each source. So, in my example above, the colleague is saying that for the 401(k) portion, the YOS would be determined on an elasped time basis and the SH match portion, the YOS would be determined on an hours counting (1,000) basis. If this is the case, I would then have a problem testing as I would have a group of participants who meet the YOS on an elapsed time basis for the 401(k) and never meet the YOS for the SH match source. This would lead to the problem where you would have statutory employees for the 401(k) who do not receive the SH match. So, would I have to run an ADP test for only the statutory employees who meet the statutory employee defintion for the 401(k) but do not meet the requirements for the SH match? I see no basis for this.

I disagree with his thought process, but I am unable to find a detailed explination regarding how the statutory employee group and the otherwise excludable employee group are defined under the plan rules. Can anyone assist?

i have a client with both a 401(k) plan and a 457 plan. The contributions to the 457 plan are only employer contributions that are reported on the participant's W-2. The 401(k) plan defines compensation as wages, tips and other income reported on the W-2 (W-2 compensation). It is my contention that the employer contributions to the 457 plan should be included as compensation when determining contributions under the 401(k) plan. The client does not think it is should be included. Who is right?

An employer currently pays advisory fees for all participants in their 401(k) Plan. The plan assets are held at brokerage firm A. The advisory company and the employer have some common ownership so the plan is not allowed to pay the advisory fee expense. Would it be permissible to move the accounts of the terminated participants to brokerage firm B (unrelated to the employer or advisory company) so the employer can discontinue paying the advisory fees for the terminated participants? This may encourage the terminated employees to roll over their accounts to IRAs

Based on the Advisory Opinion that was published on 5/25/12 that open multiple employer plans are separate ERISA plans, we are now doing a Form 5500 for each adopting employer of the multiple employer plan and not just one as we have done in the past.

Issue: We filed one extension on behalf of our multiple employer plan for 2012. We completed the Form 5558 using the Plan Sponsor's EIN under the FIler's identifying number. We are now reading the instructions for the Form 5558 that seem to indicate that the Employer's EIN should have been used and we should have filed 15 different Form 5558 and not one.

Did anyone else file multiple Form 5500s for their Multiple Employer Plans? Did you file extensions? And if so, did you file one or more extension?

Please advise.

Hi. Our plan document says that we provide our employer match and non-elective contributions on a per payroll basis, BUT, we do not match our employee catch-up contributions until year-end. (our system allows for employees to have two separate employee contributions withheld on a payroll basis- regular employee deferrals and catch-up deferrals).

We obviously do a true-up contribution at year-end to make sure that everyone received the appropriate match and non-elective contributions, but how would we do the true-up contribution if we changed our match formula mid-year? (for example, the current matching formula is 50% up to 6% of compensation and lets say it was to be changed during the year to 50% up to 4%)

Would we do two separate true-ups based on the two different formulas in effect during the two portions of the year? Thank you!

A participant in a 401(k) plan has elected to defer 2% of pay - however they have a separate election to defer 10% of any bonus pay. They get paid bi-weekly and receive a bonus every quarter. They probably defer around 4% if you average everything out.

On 10/1 the plan is amended to auto-enroll current participants at 5%. The plan does not allow auto-enrollment to apply separately to bonus - so this participant is now set to defer 5% of all his pay (including bonuses).

Can the employer take the 10% bonus election and put that back into play - thus superseding the 5% auto-enroll on bonuses? Or does the participant need to make another affirmative election for bonus pay?

Hypothetical: Employee is covered under employer's self-insured group health plan (providing affordable and minimum value coverage). Employee doesn't know better and goes to the Marketplace and obtains coverage for himself.

Are there any specific/special coordination of benefits rules to use to coordinate the two coverages? Or are the general individual policy vs. group plan coverage rules used?