austin3515

I would, but my client craves forfeiture dollars

What I don't like is not knowing with certainty how vested someone is, and then the possibility of doing a bunch of residual distributions.

I suppose I do see your point, but that doesn't mean I have to like it

We ran the test correctly - anyone eligible for the Plan.

I know what happened. The PRincipal person call center employee said "are you paid via a K-1? Yes? OK, then you have until April 15th." A tale as old as time... OR at least since they introduced s-corps...

As of 1/1/2012 company A has 100 eligible employees. On March 31, Company A lays off 21 eligible employees, or 21% of its work-force. Calendar year plan. The newish IRS standards suggest that we might not know if we have a partial termination until the end of the year. The Plan has a liberal eligiblity and if they hire even 2 or 3 people the %age drops below 20%, where there is a rebuttable presumption that there is NO partial termination. So how do I process distributions between now and the end of the Plan Year? What vesting do I use? I believe no matter which way I turn I have exposure, because I literally do not know what their vesting should be. And people who get laid off have a habit of wanting to take their money out of the Plan... Has anyone been in this situation before?

the EOB actually says to prorate. They say some argue you dont have to but it is labeled the "Agressive position." Apparently there was a Q&A in 2011 about this and the IRS reply was to prorate.

Authoritative guidance, thank you very much!!

Your INTERPRETATION is that there are three people. My question is, is that interpretation correct? Like I said, I like the interpretation. I'm just not convinced it is correct.

Big Co closes down small co it's wholly owned subsidiary on 4/30/12. The Plan (what's left of it) will be merged into Big Co's plan. Do I need to pro rate the comp limits?

DOL they had a rule On Expense Ratios Everyone, we thought it dumb Why expense ratios? A disclosure here, a disclosure there No one reads them cuz no one cares DOL they had a rule Its purpose no one knows

Unlike many other rules, I think this is one where you can call your client who recieved this letter, and when you tell them its because of a failure to report mutual fund expense ratios (or a subset thereof), their response will be "Are you kidding me???? That; is ridiculous!!" I mean it's nothing like the burning embarassment of forgetting to attach an extension and getting that letter (in the old days!). Derrin, you should post here more often Any chance you could record us a song on schedule C disclosures? Probably already have one though don't you? Can you send us link on youtube?

(2) Leased employee For purposes of paragraph (1), the term “leased employee” means any person [Person 1] who is not an employee of the recipient [person 2] and who provides services to the recipient if— http://' target="_blank">(A) such services are provided pursuant to an agreement between the recipient [person 2] and any other person [person 3] (in this subsection referred to as the “leasing organization”), I reallly really like the argument, a LOT that a third person could be implied. Here is my counter-argument though: The AGREEMENT is between two people - the recipient and ANY other person. Is the 1099 contractor NOT anoither person?? The word "any" has zero limitations, which one must presume was the intention. The words "other than the leased employee himself" would have been required to prevent my intepretation. Perhaps your counter to my counter (if I may) would be "yes, but Congress could have said "an agreement with any person" (leaving out the word other), in which case everyone would agree with me, I'm sure. They included the word "other." So why add this extra word? My counter to your counter to my counter would be, couldn't it just as easily be stating an obvious truth, which is that one cannot enter into an agreeement with ones self? And finally, if it really is this complex, shouldn't small employers just ere on the side of recognizing service if the primary direction and control objective is satisfied?

(A) such services are provided pursuant to an agreement between the recipient and any other person (in this subsection referred to as the "leasing organization"), Based on my reading, a leasing organization can be "any other person" - they are just "referred to as" a leasing organization. (2) Leased employee For purposes of paragraph (1), the term "leased employee" means any person who is not an employee of the recipient and who provides services to the recipient if— (A) such services are provided pursuant to an agreement between the recipient and any other person (in this subsection referred to as the "leasing organization"), (B) such person has performed such services for the recipient (or for the recipient and related persons) on a substantially full-time basis for a period of at least 1 year, and <A name=n_2_C> © such services are performed under primary direction or control by the recipient. If you look at just the bolded and focus on those words, I don't see how a 1099 contractor is exonerated from leased employee status. And here is the paragraph I was referring to regarding recongnizing eligiblity and vesting service: "In the case of a person who is an employee of the recipient (whether by reason of this subsection or otherwise), for purposes of the requirements listed in paragraph (3), years of service for the recipient shall be determined by taking into account any period for which such employee would have been a leased employee but for the requirements of paragraph (2)(B)." [2B being "substantially full-time for at least a year"] So these are the complete rules that I know of. How is my 1099 contractor who worked on-site on a project for the empoyer NOT considered a leased employee (except for 2B)? Let's assume that this 1099 contractor provided similar services for other clients, and based on that fact the employer in its judgment correctly concluded that this guy was not a true employee.

What is the difference between an indepenent contractor and a leased employee? Client called and said that an ee who was formerly a 1099 contractor is now a full-time employee. We're debating whether or not we need to recognize service for eligibilty and vesting under the leased employees rule the way we would, say if the employee first worked for a temp agency. How do we REALLY know the difference between a leased employee and a 1099-contractor? I think if: 1) The 1099 employee worked on a "project" for the recipient, they would have been under the primary direction and conrol of the recipient, and they would have been working pursuant to an agreement (i.e., you work and I'll pay). The third requirement (substantially full0time for at least a year) is expressly ignored for purposes of recognizing service. So in this situation, I WOULD recognize service. 2) Now if the employee happened to mow the lawn for the company on the weekends and happens to get hired in some other capacity then clearly, he would be a new hire with no service. Maybe I'm over-complicating this, and if so, please tell me.

I can appreciate that there are some very astute pension people on this site who probably have more expertise than I with respect to large plan 5500 issues (less than 10% of our plans fall into that category), but I had never heard anyone mention this (admittedly I did not study the volumes of new info coming out on these--shame on me). I have never heard from the open architecture providers that we work with that this type of disclosure was necessary, and they have provided us with extensive information on schedule C reporting. Now part of my carelesness in this area comes down to the fact that the vast majority of our audited plans receive a "Schedule C Report" so we're talking about a super small slice of our business for which even have to delve into this level of detail. I wouldn't be surprised if most TPA's are in the same situaiton as me (perhaps they wouldn't be as honest as me, but I'm an undercover agent, so it doesn't make a difference to me!). So while I admire those that were on top of this requirement, I think I am very good company when I say I was completely caught off guard by this! And here is the next scary question for Derrin - what about plans that offer self directed brokerage accounts? Fidelity might be getting more than $1,000 or whatever it is if people in the self directed accounts really like Fidelity funds... Shouldn't we be looking through the brokerage window?

OK, lets say RK USA is an open architecture platofrm and the Plan holds funds from 8 different families. RK USA is not responsible for sending prospectuses. Rahter each fund company sends the prospectuses to the trustee. Are we saying each fund family needs to be listed on the schedule C as having provided the required information to the trustee?

I was writing my rant while Derri was responding... I walk away with my tail between my legs

This is completely different than a mutual fund. Investing in a mutual fund is like investing in a stock. It's an Individual Security. The expense ratio is just a disclosure to its investors. IT is not an expense of the Plan, not no way, not no how! If the fund pays money to other service providers, than we've got indirect comp. How could Derrin POSSIBLY agree with this perposterous conclusion (with all due respect to one of the TOP industry experts)??? I'm convinced the DOL has absolutely no shame, no consideration whatsoever for the world around them. Yes. The 2009 Form 5500 instructions provide that persons who provide investment management services to investment funds in which plans invest are treated for Schedule C reporting purposes as indirectly providing investment management services to those investing plans. Thus, fees that are paid out of an investment fund's assets to the fund's investment adviser (or its affiliates) for managing the fund's investment portfolio are reportable indirect compensation for Schedule C purposes. The instructions are clear that "investment funds" for this purpose include registered investment companies (commonly referred to as mutual funds) that do not hold plan assets by reason of ERISA section 401(b).

Has even one provider reached this conclusion?

From ASPPA's ASAP speaking about the requirement to attach a schedule C, and the DOL's recent mailing spree regarding failure to attach a schedule C: "For example, consider Vanguard Wellington Fund Investor Shares, which have no sales charges or 12b‐1 fees. The prospectus, however, shows 28 basis points of management fees. At that rate, an investment of only $2 million will generate a management fee of $5,600, well above the limit for which the plan must file Schedule C." I believe this is flat out incorrect. Am I wrong here? The expense ratio is considered indirect compensation?? Just to be clear, the prosectus refers to a .3% expense ratio as of today, and 2011 was .29%, so it appears abundently clear we're talking aboutt he expense ratio.

We unfortunately did not realize the error of our ways on this decsion until it was too late. But for PPA we wisened up. But then of course they eliminated this requirement for prototypes in PPA )(at least I think they did)...

I'm actually pretty positive that there are sepaate allocation rates. The definition of allocation rates for this specific purpose is just contriubtions divided by comp - no integration. The question is solely can this be considered a reasonable classification. Bird, you are saying it would not be.

I still don;'t think 37bps is a "rip-off" for RECORDKEEPING. Probably could do better, but its not aggregious. I've seen providers charge .8% for RK/TPA work. Somoene alluded to average account balances indirectly, which is a huge consideration with pricing. Based on the info provided, the average balance is about $38,000, which is pretty good actually. You could probably get better pricing for recordkeeping/TPA work.

Got a new comp plan where everyone is in their own group, and the plan is a prototype and therefore bound by reasonable classification for the NHCE's. I find it to be reasonable that everyone who is over the wage base gets their stepped up contribution. And because of the size of the company, I'm below the maximum number of allowed allocation rates. What I'm getting at, is may I run an integrated allocation, as long as the number of allocation rates does not exceed the maximum allowed. Could the application of the integration rules be deemed a reasonable classification?