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).

A PBGC covered defined benefit plan was terminated effective December 31, 2012. The plan has already been submitted to both the PBGC and IRS. The PBGC 60 day review period has expired but we may wait for IRS approval before assets are distributed.

The plan is underfunded and the 2 majority owners intend to forgo receipt of a portion of their benefits to the extend necessary to make plan assets sufficient. The plan sponsor intends to contribute at least the minimum required contribution to the plan prior to the September 15, 2013 funding deadline. The contributions made prior to September 15, 2013 will be deducted on the 2012 corporate tax return.

Can the plan sponsor make additional contributions to the plan after September 15, 2013 and deduct these amounts on the 2013 corporate tax return? I'm uncertain since the plan terminated effective December 31, 2012 and there is no valuation required for the 2013 plan year.

New spin on the old question.

NRA is 62. Small plan was frozen when participant was 52 years old in 2003 with 10+ years of service and participation. Given the IRS position that 415 applies to the accrued benefit and there was no special language in the freeze amendment, the final annual accrued benefits are $160,000 (2003 $415 limit). Plan is terminating now in 2013, and participant is 62 years old.

What is his allowable lumpsum?

Step 1: Calculate lump sum under the plan's assumtions (417 October rates for prior year)

160,000 x 14.7734 = 2,363,744

Step 2: Under 1.415(b)-1©(3) the actuarially equivalent straight life annuity benefit is the greatest of:

a) 2,363,444/14.7734 = 160,000 (plan's rate)

b) 2,363,444/12.4228 = 190,251 (5.5% rate)

a) > b) = 190,251

Step 3: Verify whether 190,251 is above or below $415 limit to confirm if I can pay 2,363,744 lump sum. Question is if I am still stuck with 160,000 limit, and therefore lump sum is limited. Or I can use $205,000 for this purposes since it has nothing to do with the accrued benefit, and therefore lump sum is NOT limited.

I am representing a public university in connection with their 403(b) plan. One of the issues the IRS is looking into is the aggregation of limits of the university's 403(b) plan with outside plans controlled by employees of the university. The IRS wants the university to inquire of certain employees information on their outside businesses even to the point of how much contributions have been made to the plans of these unrelated businesses. I strongly believe that our delving into matters on behalf of the IRS outside the scope of these employees' university employment is inappropriate. Has anyone had any experience with this issue and, if so, how did you handle?

In 2012, an employer permitted an employee to roll assets over from her previous employer's plan. Somebody just realized that the plan document does not permit rollovers. My initial thought was that this can be self corrected under EPCRS by amending the plan. But after reading Rev. Proc. 2013-12, Section 4.05(2), rollovers are not mentioned in Section 2.07 of Appendix B which means that the employer must go through the VCP correction program. Does anyone else think that this is a bit extreme for this type of error?

We have a new client that has filed a 5500 every year, but has never prepared or distributed a SAR in the past. I'm trying to research what the penalties are for this, if any, and how to rectify the situation, but haven't been able to find anything. We'll of course have them start to do it this year, but is there anything they can/should do for the past SARs?

So we have a plan that currently states if a terminated participant's vested balance is under $5k, they can take the withdrawal immediately. If over $5k, they can't take it until they've incurred 1 Break-In-Service. They want to change the provisions to say only terminated people with vested balances under $1k can take their withdrawal immediately. If over $1k, they have to wait until the close of the first full year that they've been credited with less than 500 work hours (i.e., exclude vacation time and/or sick time hours that were paid)...so not a true "Break-In-Service" by definition.

Does anyone see any issues with making such a change? Could any of this constitute a removal of a protected benefit??