dmwe

The root of the question is whether or not this would be some sort of prohibited transaction or run afoul of any distribution rules.

Gift cards are all from one company/store.

This would be balance over $5,000 that they want out of the Plan to get their numbers down. It appears that they've been offered a $250 gift card incentive to move out of the Plan.

Participants pay administration fees but I think the Company pays for the 5500 audit so it's in their best interest to get below 100 employees and avoid an audit.

Would it be in violation of any rules to offer a gift card to former employees who still have money in the Plan incenting them to roll out so that Plan participant count drops below 100 and they can avoid an audit?

I'm working with a new client who has the following allocation groups defined in the adoption agreement - HCE Managers, HCE Non-managers (spouses), and Staff. In the past they've not given the spouse group the Nonelective Safe Harbor contribution or any profit sharing. Can you really exclude a group from the Safe Harbor Nonelective contribution? I thought everyone had to get the Safe Harbor. Thanks

Thanks all for your advice.

I'm trying to assist an alternate payee on a QDRO who had distribution check made out to her current employer plan and now needs the money and wants the check reissued to her. She wants to avoid the 10% penalty and can't roll it in and out of her employer retirement plan without incurring the penalty. Fidelity refuses to reissue her check stating that the distribution has already been reported to the IRS. I think that's a bunch of BS. Fidelity hasn't issued 1099Rs yet so participants should have the ability to change their mind on a distribution, don't you think? I'm trying to lodge a complaint with the IRS but don't have any good contacts there or phone numbers and have been sitting on hold for 20 minutes. Any suggestions?

Not a cite exactly, just a reference to the Rev. Proc.

I'm a TPA working with a governmental plan that's been restated on a new individually designed document. Their lawyer is saying the per Rev Proc. 2007-44 they are required to file for a determination letter. I'm not sure if this is greed or ignorance. Surely no one is required to file for a determination letter are they? Especially governmental plans. Thanks in advance for clarification.

A participant in a governmental plan wants to remove a disabled spouse as primary beneficiary and name the children. Since the spouse is disabled and the participant is the durable power of attorney for the spouse, can the participant change the beneficiary to the children and where it provides for spousal consent, sign with the POA designation where the spouse would typically consent to the change? Or, as a governmental plan, is the spouse's consent not required? Thanks

The Put Option form clearly states that it is the current market value as of the last valuation date so I'm not sure how the client thinks he can use the book value instead.

I've got a client with a C Corp ESOP that is struggling. The Plan holds Preferred Stock and very little cash. Any sizeable distributions over the last couple of years have involved the participants Putting the stock back to the Company for a 5-year note. Printed on the back of the stock certificate is that the price per share will be the most recently audited fully diluted book value at the prior November 30. The certified appraised value is just over $8 but the book value is negative. The client thinks that participants Putting the stock to the Company at this point get nothing because the book value is negative. That can't be right can it?

I think it might have to do with auto escalation of his deferral percentage. He was autoenrolled at 3% but it was supposed to go up 1% each year. They just finally bumped him to 6% so I think maybe the QNEC was a correction for the missed increase to 4% and then to 5%. That's why I don't like annual auto escalation. It sounds good for participants but it can be an administrative nightmare.

My son works for a large grocery store chain, was full-time and now part-time, and I took a look at his participant statement and it showed a QNEC of almost $900. Given his small salary I assume they must've really screwed something up. The plan does have auto enrollment and auto escalation. I can only figure that maybe they didn't escalate him when they should've or something like that. Do you think if he'd ask them for the reason behind the QNEC and the calculation of his contribution, that they have any obligation to share that with him? Thanks

Thanks. It's actually plan counsel that says make the payout. I cite the distribution policy but he blows that off. I guess it's on him now.

In the document the timing of distributions refers to the Distribution Policy which states that the Plan will set a "distribution date" and make distributions once a year. In this case we completed year-end work in May, made the distributions we had direction for in early June and then another one showed up in late June. We held onto that one for payment next year and am now told that this was incorrect by their legal counsel and plan document provider. I'm not sure we were wrong in holding onto that one.

For a calendar year plan, say 12/31/11, we typically get the stock price in June and do the annual recordkeeping. The Distribution Policy states that the Plan will designate a distribution date and make distributions once per year following the annual valuation. If a participant terminates employment subsequent to 12/31/11, and submits his distribution request at approximately the same time as the "distribution date", would that person be paid out on his 12/31/11 value or since he terminated in the new plan year, have to wait until the 12/31/12 valuation is done? Is there ever a time period or deadline where someone is made to wait until the following year? Say if someone terminates 12/20/12. Can he get his distribution request in and get paid on the 12/31/11 value even though it's past the "distribution date". Or what about July, August or September? Thanks

Does anyone have, or can point me to, an administrative checklist for Trustees to make sure each year, when it comes time to do the annual recordkeeping and you have the new stock value, that shows all the steps the Trustee should take procedurally to protect themselves in the whole process. Thanks

I'm not sure of her ability to work. It appears that she's in need of some financial assistance and retired at age 58 so it could be health related. Thanks to everyone for you comments and suggestions.

A retiree started taking monthly pension payments out of the DB plan at age 58 when she retired. Now that small amount of income is precluding her from receiving some low income assistance. She'd like to suspend payments but the plan document doesn't really contemplate that situation. Is she stuck because her election is irrevocable, or is there some rule out there that would allow her to halt monthly payouts until a future date? Thanks

The new 401k plan is plan #002. The sponsor has decided to try and get a quick audit on the closed MPPP. Maybe we'll get the requested extension to the Oct. 15th deadline. Otherwise the accountant will be scrambling. Thanks

A large plan money purchase pension plan was merged into a new 401k profit sharing plan. There will of course be an audit report for the profit sharing plan, but does there need to be a final audit report for the terminated and merged money purchase plan? The mppp was merged in March of 2010.

Thank you for all of your insights. I think my bank will pass on this opportunity, but maybe he can find someone else to help him out.

I received an inquiry about whether or not we (I work at a bank) know of anywhere someone can open an IRA and use their funds to invest in cattle from a cattle feeder. I've been pondering the custodial aspects of such an investment but since it would be a short-term, 90-120 day type of investment, I'm not sure what requirements the regulations might specify. Has anyone heard of this type of investment being held in an IRA, or do you know of anyone who would accept a custodial arrangement for cattle?