For DB / CB plan 408b2 disclosures - do the mutual funds need to be listed in the 408b2 disclosure with net expense ratio, 12b-1, etc.? - we have been including the current funds in which the plan is invested in our 408b2's, but since these are not directed plans and thus there are no designated investment alternatives, i don't think we need to list the funds out... thanks!

Yet another example of why not to allow life insurance in qualified plans.

Former employee/participant left behind a life insurance policy and then had the nerve to die.

Since the policy was a special asset our platform recordkeeper wants nothing to do with it.

Proceeds about $200K and CSV about $40,000 so we think the death beneficiary pays tax (or rolls over) the $40K and gets the $160K as tax free life insurance.

Our questions are:

1. Do we issue one 1099-R for just the taxable amount or one 1099-R for the entire amount and just show the $40K as taxable or issue two 1099-Rs for the taxable and non-taxable portions?

2. What IRS codes on whatever 1099-Rs are required?

Thanks.

Have a plan that began in February of 2013. They are just a tad over 100 eligible participants. The IRS website says that "Pension plans with fewer than 100 participants at the beginning of the plan year are eligible for a wavier if they meet the conditions for an audit waiver under 29 CFR." Then right below that it also says "Under the 80 to 120 Participant Rule, if the number of participants covered under the plan as of the beginning of the plan year is between 80 and 120, and a small plan annual report was filed for the prior year, the plan administrator may elect to continue to file as a small plan." The plan did not file in the previous year so does that mean that an audit is required or do you still get a waiver because you have not crossed the 120 participant threshold? A little confusing any direction is greatly appreciated.

Thanks,

Hal

I heard in a seminar that the DOL is now concentrating efforts and rather than randomly targeting plans for audit, they are going after TPA firms they know have problems and auditing their clients.

My question is, what authority, if any, does the DOL have over TPA firms. Should they chose to target a particular TPA firm, how would they be able to find out who its clients are. Can they demand a client list?

Hi All.

I have been strictly DC admin for 15 years, and am now offering Cafeteria Plan administration. What have you all experienced in this regard? Am I crazy, or smart?!

Thanks!!

I have a situation where a 401k plan merged into a 401(a) plan in 2013. Before the 401k plan merged, it was a safe harbor, We suspended the safe harbor match, and then merged the plan 6/30. How do we run the ADP and ACP test - is compensation pro-rated? Can compensation be limited to period eligible? And what happens to 415 limit since the plan merged and a merger is a continuation?

Likewise, the 401a plan froze on 6/30 but is the survivor plan and is still alive but no more contributions after 6/30 - do we pro-rate the limits?

Thanks!

Anyone else seen a bunch of penalty letters for late 5500s with a 12/2/13 date? Got three last week. All were filed on time with extensions.

Joe is a 10% owner of a partnership. He gets paid $300,000 per year from the partnership (on a K-1). The partnership has non-highly-compensated employees. Joe wants to establish a pension plan for just himself. My initial response is NO.

Joe asks if it makes a difference if his $300,000 is paid to an LLC that he'll set up rather than to him directly. His hope is that this other entity, that has no employees, can establish a plan for just him. My response is still NO.

Joe asks, "What if I get paid $0 on my K-1 as a passive partner, and then the partnership pays me $300,000 on a 1099 for the actual work I do; can I set up a plan for just me with this 1099 income as an independent contractor?" "Or what if I get paid $0 on my K-1 as a passive partner, and then the partnership pays $300,000 to my newly established LLC for the actual work I do; can the LLC then establish a plan for just me?"

None of these pass the smell test to me, but after a while my head starts spinning. Is there some way to set this up so that Joe's plan doesn't have coverage issues?

Association sponsoring fully insured medical plan for its member companies is terminating the plan & each company will have its own plan starting 1/1/14. Association failed to file 12/31/11 and 12/31/12 5500.To what extent should they file under dfvc and could they risk penalty if not? They are balking at $4000 for a plan no longer existing. thoughts?

A calander year plan currently utilizes the safe harbor non elective plan where they contribute 3% to all eligible participants. They would like to amend the plan to a safe harbor match formula. What type of notification is sent to participants and is there a certain time of year they have to do this? (i.e. 30 days before beginning of next plan year, etc.)

Am I correct that IRS Notice 2013-54 basically prohibits continued sponsorship of a stand-alone medical reimbursement plan that is sponsored by a very small employer that does not offer any group medical coverage? In essence, the plan has simply provided for the reimbursement of qualified medical expenses up to a maximum of $2,000 per year. In essence, it is the equivalent of a health FSA that is funded solely by employer contributions and does not meet the preventive services mandates and obviously caps coverage for such items with the annual reimbursement amount, etc. Based on 2013-54, I'm not seeing any way that can be continued.

I am for some reason having difficulty definitely determining if below is either an ASG either through an A-Org or B-Org:

Actuarial Services, Inc is a one owner company (Ted) and provides actuarial services to only two companies. Ted owns 8% of National Retirement (TPA) and 25% of Distribution Mailing (distribution and loan processing company). 35% of Distribution Mailing comes from providing distribution and loan processing services for National Retirement.

Can anyone point me in the right direction? Thanks.

I know this question is probably overdone, but I hope you will indulge...

Safe Harbor 401(k) uses basic match. ER rarely makes a profit sharing contribution, but this year they are considering.

The HCEs are Owner, Owner's recently divorced spouse, two Owner's children (in 20s), and one non-Key HCE.

Only the Owner is being targeted, and non-Key will receive top heavy minimum.

PS is allocated by putting each ee in their own class.

HCEs do not receive safe harbor contribution, however the two children deferred a lot in relation to their compensation.

ABT is not passing by a wide margin due to the deferrals of the Owner's children.

Am I correct that, even if the plan was restructured into component plans in which the children were in their own plan, and would not need to rely on the ABT since they are not benefiting under 401(a) to pass 401(a), because the other component plan would need to rely on the ABT, that the ABT would include the contributions of both component plans?

That is to say that, regardless of the number of component plans, if one component plan requires the ABT to pass 401(a), then the ABT includes everyone's contributions?

Thanks for the help.

Many years ago a small employer established a SIMPLE IRA plan for its employees, and it has been operating nicely. However, over the past couple of years, the employer has been expanding and adding employees to the extent that they may exceed 100 employees in the next couple of years.

What happens when the employer hits 100 employees? Must the SIMPLE plan cease operations? I have looked through my various answer books and can't seem to find an answer. Thanks for any replies!

Hello,

I obtained ERPA during May of 2013. My prorated required CE requirements for this cycle (2011-2013) are 16 credits. I understand I must have 2 credits related to Ethics every year.

Does 2 Ethics credits included in the required 16, or do I need to do 16 and then 2 additional so the total of 18?

Thank you,

Miyeon

We currently have $/$ up to 4% match per pay period with 3% profit sharing annually. We're thinking about going to a flat $/$ up to 8% match with no profit sharing. We also match on catch up contributions and that will continue.

The problem I'm having is for our under age 50 who make over the IRS comp limit (technically over $218,750). They would be limited to an effective deferral rate of 6.7% ($17,500/$260,000 for 2014) so they wouldn't be getting the full 8% match and they would be getting less than our current program of total DC ER contribution of 7%.

Has anyone had any experience with this or know a solution that would help these participants get the full 8%? We can't write a true up rule that says "if you make $218,750 or more, you will get a true up match" because we'll fail the BRF test.

When cross testing, I know that you cannot imputed disparity if you have a SHNEC. Can you Impute disparity if you have a SHMAC?

My understanding is that a lender that makes loans to leverage an ESOP should not also serve as that ESOP's trustee. There is a DOL ruling about this, but it doesn't seem to be listed on the EBSA website. Does anyone know where the ruling can be found?

Active Participant will attain 70 1/2 in 2014. He currently owns more than 5% of profits interest, but he will reduce his ownership by 12/31/13 to not more than 5%. Plan Year = Calendar Year. No RMD for 2014 if he continues working.

Suppose in 2015 he continues working, but increases ownership to greater than 5%? Literal reading of 1.401(a)(9)-2 Q&A 2© says no required minimum distribution as long as he continues to work because the ownership test is done in the year of attaining 70 1/2.

"© For purposes of section 401(a)(9), a 5-percent owner is an employee who is a 5-percent owner (as defined in section 416) with respect to the plan year ending in the calendar year in which the employee attains age 70 1/2. "

Agree that if he isn't a 5% owner in 2014, becoming a 5% owner later won't matter for RMD purposes?

Does anyone know of a way to obtain 1 ce credit? I know it is required for 20 a year and right now I am at 19. Or even 1-3 credits without necessarily going to a class? Thanks!