Spencer

Thanks. I also talked to CPA who advised that IF they did this, they would have to amend their W-2's and personal tax returns (if filed) and it would be obvious that they just trying to avoid the TH min. We have advised the client against this for a variety of reasons.

I have a new,small client who was Top Heavy for 2009. The owners deferrred $600 and $1800 in 2009 before being notified that they would fail ADP testing. The Top Heavy min is for 2009 $4000. They want to know if they can reverse their 2009 deferrals so that no TH min would be required. They are an LLC taxed as a partnership and they have not filed for 2009. They think they can just "reclassify" the deferrals. Obviously, this is not a mistake of fact. They just want to avoid the TH min contribution. Can they do this?

Client changed name and EIN in 1996. When they changed service provider in 2002, new TPA picked up the old EIN and filed 2002-2006 5500s under the wrong EIN. We filed for 2007 and 2008 using the correct EIN. Now IRS is looking for the 2007 5500 under the wrong EIN. How do I fix this? Respond to IRS Notice noting in Section I of the notice that the Form 5500 for 2007 was filed under a different EIN (the correct EIN) and leave it at that. Or do I need to amend each Form to show the correct EIN? I don't have copies of the forms from 2002-2006. Would I just print the 1st page of a 2009 Form and indicate an amended return, the appropriate PYE and correct EIN? Thanks!

That is helpful, thank you. I have more info now. Only non-HCEs had vesting accelerated; HCEs were already 100% vested. Client thought having a partial plan term sounded bad. Anyway, they have guidance from an ERISA attorney (I wasn't aware it was an ERISA atty yesterday). Thanks again!

Client closed a location in 2009. Their attorney advised it was not a partial plan term. I don't know the numbers yet, but for purposes of this question, let's assume that is correct. Atty prepared amendment to accelerate vesting to 100% for all participants at location that closed. Does this need to be BRF tested?

I have received the P-227 and I-104 error messages as well. I will check with the client regarding the password. Thanks for the tip.

If we do forfeit, is there any requirement to record the liability of the forfeited accounts?

Thanks for your answers. Did more research on the retro amendment and realized that I can't cutback anyone (I though maybe it was okay to cut back HCE). The owner opted to make a smaller contribution instead of maxing out and we gave the wife and son the same contribution rate as the owner (all in group A). They have salesman who receive commissions and they are HCEs, but they do not want them to receive to contribution so they put them in a separate group from the regular salaried HCEs.

In addiition to checking out the salary sites, you may want to talk to a couple of recruiters who specialize in employee benefits administration. For me, obtaining my QKA designation significantly increased my value in the local market.

thanks anyway.

100% owner and his wife and son work at company. Wife and son are not management and are only HCEs by attribution. Intent was for wife and son NOT to receive contributions. But I am concerned about wording of the rate groups. Rate Groups are: Classification A shall consist of: >10% Owners and Management Classification B shall consist of:Non-Commissioned HCEs Not in Classification A Classification C shall consist of:Commissioned HCEs Classification D shall consist of:NHCEs Are the wife and son in A because they are owners by attribution? Or can they be in B because they are non-commissioned HCEs and less than 10% owners (not taking into account attribution)? Can I do an 11(g) amendment to add another group, Owners by Attribution Only to clarify and not allocate a contribution to the wife and son? Thanks!

thank you so much! I will read IRS Pub. 969.

I am not very familiar with cafeteria plans or HSA plans. Client asks: "We are converting our employee health plan to an HSA plan effective 1-1-10. Please let me know the impact of this on our FSA account for medical expenses. Can we have both an HSA and a Section 125 Plan? Does it make sense to have both?" Can they amend existing FSA to allow employees to have their health insurance premiums withheld on a pre-tax basis (POP)? Or can they amend to a limited-purpose or post-deductible health FSA? My understanding is that a person cannot participate in both a general purpose FSA and an HSA, correct? Thanks!

People who forfeited term'd in 2003 and prior - most of the forfeitures are from 2000. Distributions were paid years ago as well. I know, why weren't forfeitures used previously? Or reallocated upon plan term? I don't know - I just started new job, trying to clean up some messes. per plan doc, all participants became vested 100% at plan term. No, partial plan term prior to termination of plan.

I have a similar situation to BuckyBadger. Owner one person plan established in 1998. Assets have been over $100,000 for at least five years, never filed a 5500-EZ. How we correct this since DFVC isn't available?

Plan terminated in 2008. All participants are paid out, but there is $3500 remaining in forf. suspense account. Doc says forfeitures can be used to pay plan expenses or reduce contributions. No contribution for 2008 and plan expenses have already been paid by employer. Client wants the forfeitures returned to company as reimbursement for fees paid. Would that be considered a reversion to employer? Client also wants to avoid 5500 for 2009. If we allocate forfeitures now, we most likely can't get the add'l payouts done by 12/31. Thanks!

Thank you both so much for your help. The 1099 was issued in 2003 in error (by the insurance agent). The insurance policy still has a cash value so there are still plan assets. I will advise our client that we will need to pursue DFVCP and VCP as a nonamender and advise him to consult his accountant regarding the effects on his personal tax returns. p.s. Just to clarify, assets should not be distributed until the plan is brought into compliance?

Money Purchase Plan term'd in 2003. It was thought that all assets were distributed and final Form 5500 was filed for 2003. It has just come to our attention that one insurance policy still exists in the plan name. A 1099 was issued for the rollover of this policy, but the insurance company never re-styled assets to an IRA for the participant. Since the assets were not distributed, what do I need to do to bring plan into compliance? prepare for interim amendments file 5500's using Delinquent Filer VCP Anything else? Thanks!

I have a new client that has been audited for a plan year in which we did not provide service. But apparently, the client experienced some financial difficulties and suspended their discretionary match contributions beginning Jan. 01, 2003. Mid year, their finances improved and they decided to resume the match contributions as of July 1, 2003. Since the match was discretionary, they thought this was okay. However, the prototype document states that the match contributions are based on the "Plan Year" deferrals. So the IRS is saying the plan is disqualified. Any solutions to this or creative suggestions we might use to disagree with the IRS's conclusion? any other suggestions?

Okay, that makes sense. But my real concern is that the broker has advised the client to pay plan expenses prior to executing an amendment and the fees are for the 2004 plan year end. Is it okay to amend the plan on April 13, 2005 to pay plan expenses and then pay expenses that are nine months old? Thanks.

I have a client who is about $5000 and several months in arrears regarding our invoices for TPA services. We have a signed contract with them that states we will cease services if any invoice goes unpaid for 60 days. When we notified them that we would be ceasing services until we received pmt., they informed us there were on the verge of filing bankruptcy. Also, they had not remitted several months worth of deferrals. Now, without our prior knowledge, the broker has requested a check from the plan to pay our past due fees. I explained to broker that 1) the plan had to be amended to do this and 2) the amendment could be not retroactive and past due fees could not be paid from the plan. Do you all agree that the past due fees cannot be paid from the plan? Broker has accused us of holding the plan and participants "hostage." My understanding is that upon filing bankruptcy, bankruptcy trustee will appoint a TPA to terminate the plan and payout participants. Regarding our past due fees, I realize that we are just in line with the other creditors. But I want to warn the broker and the trustee that in trying to remedy the problem, they are creating others. Agreed?

thanks for sharing, Tom. It looks useful.

I have a client with a frozen DB plan who would like to set another plan to provide some contributions for a select group of non-highly, non-management employees. These employees are not members of a specific class of employees by either job description, geographic location or method of compensation. Most are older, but not all. They appear to have been selected arbitrarily. This group is about 30% of their total rank and file employees. I'm not very familiar with non-qualified plans. Is it possible to give these select employees a contribution?

How are the taxable amounts on distributions from a non-qualified stock purchase plan reported? The stock was purchased with employee after-tax contributions. Do I report the distribution on 1099R and just show the taxable and non-taxable amounts? Or is another form used since it's a non-qualified plan? Thanks.

We have a several DB plans that we have recently restated for GUST. The termed vested participants were provided SPD's upon eligibility. Is it necessary to provide them with new SPD's? Thanks.