Client asked for an amendment adding Roth. HR person specifically asked when it should be effective and was told immediately. After the amendment was written (effective June 30) and signed on June 25, their only programmer announced that due to other priorities, it may be several months before he is able to make the necessary changes to the payroll system.

Any suggestion about what might be a reasonable administrative delay for implementing such an amendment?

A frozen underfunded defined benefit plan has met the requirements to be deemed as satisfying 401(a)(26) and the prior benefit structure test under the special exception.

One of the requirements for the exception is that the plan does not have sufficient assets to pay all benefits as evidenced by the schedule SB. The liabilities on the schedule SB can be considerably lower than what actual benefit liabilities are if all benefits were distributed (especially with a MAP election). It appears this requirement only applies to the liabilities as reflected on the schedule SB.

Anyone agree? Disagree?

I am working with a 501©(3) that sponsors both a 401(k) and a non-ERISA 403(b). The 401(k) is having ADP testing issues. The plan's recordkeeper is proposing that in December of each year, a quick ADP test is performed, and any amounts that would cause the ADP test to fail is "transferred" to the 403(b) and treated as elective deferrals. This seems bizarre -- has anyone seen anything like this?

Crunch time! Due by Friday!

80% done.

when filling out a 5330 for a failure to meet the minimum funding requirements

for plan year x(i.e., 4971 tax),and assuming plan year =tax year=calendar year,

do we enter tax and plan year x on the 5330 or year x+1?

Several unrelated colleges contribute money to a trust to pay for health insurance benefits. Each college has its own plan document and contract with the insurance company. They each file 5500s separately. They pay a funding rate into the "consortium's" trust account, and claims and expenses are paid from the trust. They also maintain a reserve in the trust account. A single TPA handles claims for the consortium.

Is this a MEWA that requires filing of the Form M-1? Does the consortium itself (as opposed to each college) have to file a form 5500?

Any thoughts would be appreciated!

Does anyone have a 4204 bond document that they can share? I am looking for boilerplate with respect to terms to include (i.e., terms in the actual bond document - not the sale agreement) that would trigger the payment under the Seller's 4204 bond.

A plan sponsor decided to reinstate their company match in 2013 after a period of a few years without the company match. Today the plan sponsor asked me to run the non discrimination testing to see if the HCE's were projected to have any excess contributions. Since the plan document currently states to use prior year NHCE ADP/ACP values the ACP test fails because the NHCE for 2012 was 0 since there was no match. Because of this, all the HCE's would need to receive a corrective distribution. Are there any special rules about ACP testing when a match is reinstated that would allow the HCE's to receive a match for the year?

Thanks

When writing our Plan Document / setting eligibility criteria, can we make the following stipulation: If you are eligible for and enroll for medical benefits through any other entity, then you will be ineligible for benefits under this medical benefits Plan.

Can we do that?

Is an insurance agency considered a Professional Service Employer for PBGC purposes? I have a 401k client with 20 employees that is considering adding a DB plan. It's an insurance agency. Would PBGC coverage be required?

Here is another twist on the EZs not being filed. We had a husband and wife plan for which we last prepared a 5500-EZ for 2004 (approx. $70k). Despite our efforts, they provided us with no information since then, and we finally gave up and dropped them.

The husband recently contacted us asking for our help. They now want to terminate the plan and rollover to IRAs, and they have had their broker speak with me. Fortunately, the plan still has only around $80k, so there were never any reports to be filed. They are prepared to file a final report.

However; The plan is a Money Purchase (contribution is 25%). They probably didn't make any contribution at least for most of the 8 missing years, and if and when they did, you can bet it wasn't in the right amount (Sole Proprietor).

It is highly likely that to have done everything properly with the plan, there would have had to be amendments for years they made other than 25% contributions, including a probably amendment to freeze the plan. Or alternatively, they would have had to start a Profit Sharing plan, and then merge the 2 plans. Or yet another alternative would be to just forget the whole thing and perhaps prepare the 5500EZs for their records. Obviously, making up the documentation now or not addressing the problem at all would not be strictly Kosher.

1. What are thoughts about this qualifying for EPCRS?
2. Any other brilliant ideas for handling this?

I look forward to feedback.

Can anyone point to a good definition of "management functions" for purposes of section 414(m)(5)?

hello,

a plan wants to amend their plan to add automatic enrollment to newly eligible employees effective the beginning of the next plan year. Can the plan limit the amendment to just newly eligible employees or do current eligible employees have to be subject to the amendment as well?

A company who's plan we administer just bought (asset acquisition) 100% of another company who has a 401k plan. The owner of the business would like the acquired employees to be immediately eligible to participate and to receive matching contributions and for the acquired business's plan to be merged into the existing company plan. Is this appropriate and allowed?

Thanks

Plan doc wording says that for a ppt who meets the service but not age requirement for an ER benefit, he may receive an ER benefit based on a table of ER factors in the doc that starts at age 50 once the age requirement is met. The ppt in question would be eligible at age 49 based on the wording in the doc. Does the fact that the referenced table starts at age 50 trump the apparent eligibility at age 49? Or would we extrapolate (I guess) back to age 49?

Thanks

Employer contributions made to the Plan to make up for qualified plan limits. Contributions are 100% vested. If the contribution is $10,000 is it necessary to run $10,000 through payroll in order to pay the necessary FICA (but not Federal/State) income taxes?

401(k) Vendor is covering the cost for the Plan Sponsor to visit the vendor's home office and see how things operate. This includes, flight, hotel and meals.

The question came up is this a prohibited transaction.

Any thoughts???

Hello, all,

I am currently working with an IRS VCP examiner to correct some improper plan distributions from a 401(k). The distributions were intended to be loans, but were not properly documented, amortized, etc.

IRS has approved correction, under the specific circumstances involved. Part of the correction, of course, is that the Plan will be repaid and made whole, with proper interest, etc.

What I'm puzzled about is this: In calculating the proper interest for the loans (taken out in 2011), I used Prime (3.25% in 2011) plus 2%. My understanding, per prior informal IRS guidance, was that this amount of interest would be "reasonable."

(Here's a prior discussion on IRS's informal position regarding this: http://www.irs.gov/pub/irs-tege/rne_win12.pdf )

The confusion comes in because the IRS VCP agent, by phone, is now telling me that IRS auditors, on exam, are now seeking "justification" for interest rates used on plan loans, and that we need to ensure that the rate used is what would have been commercially available. See, e.g., this mention of this topic in the IRS Retirement News for Employers - Winter 2012, that the examiner brought to my attention: http://www.irs.gov/pub/irs-tege/rne_win12.pdf )

The IRS VCP agent suggested that my clients were professionals, and I should check to see if 5.25% was the rate they would have gotten. My first thought was that she meant that 5.25% is TOO LOW.

On further reflection (and given recently low interest rates), I'm wondering if, instead, she is suggesting (albiet in code), that I should consider using a LOWER interest rate than 5.25% Because I'm thinking that an ACTUAL commercial loan would have been lower for that period. (Was she telling me that 5.25% interest was too high?!)

Hopefully and easy one, but I have never heard of this. We have a non-owner active participant who is age 74 with an outstanding loan balance in a 401(k) plan. The participant is terminating and wants to rollover their account to an IRA. They are aware that their 2013 RMD must be processed from their account prior to the rollover.

Question: Can we offset the actual RMD amount by the loan that will default?

It seems logically that you could since the tax consequences net to the same place, but we all know that logic doesn’t always rule.

Example: 2013 RMD is $6000 and participant has a $5000 loan balance that will default upon their termination in 2013. As such, I would give them a $1000 distribution and 1099 them for the entire $6000 with a tax code 7. Then allow her to rollover the remaining account to an IRA.

Thanks.

A recently deceased participant has a beneficiary on file from years ago that lists an old boyfriend as the sole beneficiary of the account. The family of the participant is looking for any out to prevent that individual from being the actual beneficiary.

Is there any way that a named beneficiary cannot be the actual beneficiary following the death of a participant? A way to prove that a beneficiary election is outdated?