Given: Combined DB/DC plan

DB and DC service Eligibility = 1,000 hours

Condition for DC allocation = 1,000 hours

DC is a 3% Safe Harbor 401(k) Profit Sharing Plan

Participant has 1,500 hours in 2011 and 800 hours in 2012

Since participant satisfies 1,000 hours in 2011, he must get 3% safe harbor in 2012 even with less than 1,000 hours.

Question: In 2012, should participant also receive the excess DC allocation to satisfy the gateway/401(a)(4) requirement even with less than 1,000 hours?

Thanks.

If the 2012 5500 audit for a multiple employer plan is complete, and one of the plan adopters declares a 2012 employer contribution after its audit is finalized, can the employer deduction be included on the 2013 5500 even if the employer takes the deduction for 2012, or must the employer deduction be the same year for the 5500 and the corporate tax year? (assume both calendar year).

The Plan Administrator did not want to go through the hassle of appending the audit report.

A participant in a 401(k) plan has $6,000 in his deferral account and $50,000 in his profit sharing account for a total of $56,000. He is fully vested. The plan allows loans but only from the deferral source. Is the 50% limit based on his entire account balance or just the deferral account balance? If on his total balance, the maximum loan amount would be $28,000 but then limited to the $6,000 in his deferral account. If on his deferral account only, he could only borrow $3,000. Thanks.

Does the still employed father of the sole owner get an RMD at age 70.5? The father was once the owner. Not sure if the family attribution rules would still apply to the father here.

Employer has a particularly difficult employee whose English is spotty, and who is determined to take "all of my money" from the profit sharing plan when he leaves the company next month.

Does anyone know of an explanation of the mandatory withholding rules in Spanish?

Employer failed to withhold on Group Term Life Insurance Premiums. The definition of compensation under the plan is W-2 and the client has stated that these amounts are included in each persons W-2. The plan is an enhanced safe harbor match 100% up to 5%

1. Based on our understanding of EPCRS the employer is required to fund a QNEC for 50% of each participant's election percentage. However the safe harbor match for the missed deferral amount should be based on their entire election percentage and not on the corrective QNEC amount. Is this correct?

2. The client has not included this compensation for 7 years going back to 2007, based on our research you can only self correct going back 2 years. However there is a section that we read that states if the mistake is insignificant you can go back more years. The GTL amounts that the client wasn't including as part of comp were very small amounts. The most would be $300 for a participant, therefore the QNEC and match that would be funded would be minimal amounts. Do you agree that this is considered an insignificant error and the plan could self correct all 7 years and not go to VCP?

I have recently worked on two different plans for the first time, and in previous years, neither one included the officers earning over the comp limit as key. Am I missing something?

For the top paid group calculation, are the officers earning over 165,000 considered highly compensated employees if their comp does not fall into the top 20%? More than 1% owners are considered HCE's if their comp isn't in the top 20%, but are officers treated the same for the top paid group? That would make them Key but not HCE? Is that possible?

I have been presented with the opportunity to purchase the TPA firm that I currently oversee. I have the advantage of knowing the firm inside and out since I have run it for the last 6 years. I have a good crew of people; all credentialed long term employees.

Unfortunately, I do not have the funds for an outright purchase, so an "owner finance" deal is the only option. Any suggestions or options I may be overlooking? Should it be a stock or asset purchase? Really not sure what questions to ask at this point. We've just started talks, so any pointers would be appreciated!

Company A, B, C are all owned by one individual. Companies A and B are in the same state. C is in another. They more or less all have the same principal business activity. It has been established that they are in fact a controlled group.

Companies A and B really are not profitable, while company C shows good numbers. The current 401(k) covers all 3 companies and just went to "large" status.

The owner would like to reward the employees of Company C since they provide the greatest earnings. Their new CPA wanted to create 3 separate plans but I don't think the regs or QSLOB would allow that.

Would a non-qualified deferred comp plan be the only option for C?

We have a 5500-EZ filer under IRS audit. She is indicating that the failure of the Trustee to obtain independent appraisals for the real estate parcels in the plan is a failure to follow the terms of the document and sanctions will be imposed. There are no real issues involved here. The only other participant was the owner's spouse who was paid out of the plan based on assumingly higher than market values. None of the participants are old enough for RMD's. Additionally, the plan document does not use the term "independent third party appraisal". It simply says the Trustee shall appraise all securities, property, etc. each year at the then fair market value for each asset. The 5500-EZ does not contain any questions about the valuation of non-liquid assets (and rightfully so since this is really a DOL issue anyway!).

Has anyone else had experience with this in dealing with the IRS?

It appears to me that she is working outside her jurisdiction. This is a DOL issue. No one was harmed other than the owner who is stuck with the real estate parcels purchased at the height of the market. The 5500-EZ was filed correctly; no changes are necessary. And, the plan document does not contain language specifying "independent third party appraisal". Real estate is worth whatever a buyer and seller agree upon. Seems to me that an argument could be made that since he was not willing to sell them at the bottom of the market, he has a valid reason for continuing to value them at cost....at least until a REAL issue arose within the plan such as RMD requirements.

Does anyone disagree with me and agree with the IRS' position?

Since SIMPLE plans are subject to the controlled group rules (i.e. all members of the controlled group are treated as a single employer for qualified plan requirements), would it be correct to say that there can not be a SIMPLE sponsored by one controlled group member and a 401(k) sponsored by the other controlled group member in the same year?

Thanks.

What vendors do folks use and recommend for health plan documents and SPDs that are ERISA compliant?

I know SunGard offers a "wrap" plan package but doesn't offer the underlying plan doc

Thanks

In determining whether an large employer offers insurance with minimum essential coverage to at least 95% of full-time employees, is there any exclusion for employees who will not qualify for either the premium tax credit or the cost-sharing reduction. I'm thinking of employers where at least 6% of the full-time workforce is composed of young adults or teenagers who are still claimed as dependents of their parents Form 1040. It's my understanding those young adults and teenagers would not qualify for either the tax credit or cost-sharing reduction because they are dependents. So, it seemed to me unfair that counting these young people would cause the employer to fail the 95% test and be thrown in a possible 4980H tax situation when the young people would never get a tax credit or cost-sharing reduction. But I couldn't find any authority for excluding them from the FTE count. Thoughts?

Ken

We have been looking at this for a while and I am just not sure.

12-31-2011 SHNEC and discretionary non-elective were missed.

I think we have to put in the SHNEC. Does anyone know off the top of your head if this has to be VCP filed?

I think we cannot put in the discretionary non-elective. But here is my problem. All employees received statements showing they would get this contribution.....that it was a receivable.

Situation - plan (not our document, but appears to be Sungard language/format) is currently a standardized 401(k). The definition of allowable hardship is the safe harbor definition.

Employer is selling corporation to two employees (husband and wife) in an asset sale. Part of the purchase price was to have come from a distribution from the plan. Since the soon-to-be new owners wish to assume the assets and liabilities of the plan and continue it, there is no severance of employment, so no distributable event. Neither is purchasing a business considered a safe-harbor hardship, nor are they 59-1/2 so they can't do an in-service of the deferrals.

Here's my question - if they amend the plan to a volume submitter and utilize a non-safe harbor hardship definition, and then make a determination that the purchase of a business (either by themselves or any other employee) constitutes an acceptable "hardship" do you see any problem with this? While admittedly self-serving, it seems to me to be the only way to simultaneously accomplish all their goals.

Would appreciate any thoughts.

For a plan with an end of year valuation date, would the:

1) funding target be end of year present value of the BOY liability?

2) target normal cost be the end of year present value of the accrual during the year?

3) AFTAP include the funding target and the target normal cost in the denominator?

I saw an SB that included the funding target and the target normal cost in the denominator for the AFTAP, but not for the FTAP. Is this a mistake?

Any help would be appreciated!

I am working on a 1/1/2012 valuation for a frozen plan. A few of the actives seem to be getting a target normal cost due to the fact that the 415 dollar limit is not as reduced at the end of the year, as they are closer to age 62. Is that possible? Moreover, I assume that none of them should be getting a TNC due to the increase in the dollar limit from $200,000 to $205,000, since, for the TNC, the same BOY dollar limit would be used at the end of the year. Is that correct?

Thanks very much for your help!

The recent DOL FAB (#2013-02) announced their temporary no enforcement action if a Plan Sponsor does not provide the Investment Comparative Chart by August 25, 2013 (assuming a Calendar Year plan).

Some of the Recordkept 404(a)-5 disclosures contain other information in addition to the Investment Comparative Chart.

Has the disclosure of this information been extended as well?

Hi,

I have to start taking RMD's from my 401k this year. Does anyone know if I can count after tax money towards the RMD's? Thank you!

Instructions to line 6 of the Form 5500:

2. Retired or separated participants receiving benefits (i.e., individuals who are retired or separated from employment covered by the plan and who are receiving benefits under the plan). This does not include any individual to whom an insurance company has made an irrevocable commitment to pay all the benefits to which the individual is entitled under the plan.

Anyone see a problem with applying this to a defined contribution plan funded with insurance contracts exclusively (i.e., no Trust).