masteff

The core of the message is roughly: The rules and regulations for qualifed retirement plans are very complex. These can sometimes result in companies having to make small additional contributions to (some) participants' accounts. This is a one-time occurance and was done in a fair and consistent manner. If it didn't effect everyone: Only some participants are effected by this, so not everyone should expect to see the additional amount in their transaction history. I'm waffling on something along the lines of: The amount received by each affected participant may vary because it is based on factors such as eligible compensation {or "amount invested in mutual fund abc" or "loan fees paid during the year" or other factor relevant to your VCP}. {this anticipates people comparing numbers and griping about it.}

For what it's worth in the overall conversation.... Prop Reg 1.125-1(m)

Could also point them to their own publication on Cobra, specifically the Q&A that explains Cobra ends if the employer ceases to maintain any group health plans. http://www.ibx.com/pdfs/employers/employer..._manual_ibc.pdf (page numbered 5, physical page 7)

I think we're all in agreement w/ you that your employee is getting the run around. http://www.ins.state.pa.us/ins/lib/ins/con...2003_health.pdf Page 12: have used up any COBRA continuation coverage for which you were eligible Don't go thru a normal phone rep... you'll keep getting the run around. You need to escalate and find someone who's able to go off script. You may need to issue a letter on company letterhead informing the participant that she is not eligible for COBRA. That letter along w/ HIPPA certificate can be submitted to BCBS. Your next course of action, if you can't find someone to escalate to who will listen, is to contact your state insurance department. You may have to be assertive to get routed to someone who can help explain to BCBS how the rule works in this case... they will also have backoffice contacts at BCBS which can help get past the script readers.

Distributions and loans are two separate things. You refer to the 60-day rule, so I assume you're looking at a distribution. The 60-day rule is to do a rollover. You have to deposit the funds as a rollover to avoid it being taxable to you. What would happen is 1) you'd receive a 1099-R showing the distribution, then 2) you'd complete your 1040 tax return showing that you did the rollover. Note that 20% will be withheld from the distribution and you will have to come up w/ this 20% out of pocket to fund the full rollover. Otherwise, if you only deposit the 80% that was paid to you, then the 20% is taxable. If you fund the full rollover, you would get the 20% withheld back on your tax return (it would go on the same line as other withholding, like from your paycheck). You might read IRS Pubs 575 and 590. http://www.irs.gov/pub/irs-pdf/p575.pdf http://www.irs.gov/pub/irs-pdf/p590.pdf

In slightly different words in case it helps for clarity, the relevant regs are under 1.72(p)-1, however those address "participants and beneficiaries", not "active" vs "terminated".

Not sure how it works w/ it being an insurance company but if it were any other trustee holding securities, there should be a trust level transaction detail report. One of those from 1/1 to account closure would be good for the audit papers in general.

That's your catch. This takes us back to my answer above which stated it depends on how the plan is written. There are ramifications to several different issues. And any scenario we can make up has a real life fact pattern that puts that scenario on its ear. I'll go you all one better.... we had a running true up.... so every payperiod we took the lesser of year-to-date deferrals or 3% of year-to-date eligible comp up to the limit and matched it. You could even have no deferral on the current payperiod and still get match because we calc'd it year-to-date (and yes, it was horrible to program). And we didn't apply the comp limit midyear so if a very HCE contributed 3% in January and December and nothing in between, we would allow deferral and match in both months. Keep in mind it also has impact on profit share, especially if it's paid as a fixed % per payperiod. In that case, you do effectively apply the limit mid-year because x% times $230K is a fixed dollar amount and the PS contribution S/B capped at that amount.

And yes, you can rollover from QP to QP even if it previously orginated from an IRA. As ERISAnut correctly states, it lost it's IRA characteristics when it entered QP #1. It's all one single QP distribution when rolled to QP #2. While QP #1 has to account for the rollover source monies separately while it's in the plan, when disbursed the only distinction is pretax, aftertax and Roth account.

What mechanism of the discount causes the employee to have a deferral of income from the company? An "employee discount" can mean anything from $1 tickets to the local ballet to reduced prices on company stock. So you might explain in non-confidential terms what's being discounted to explain why you feel the discount might result in future income to the employee as a result of the transaction.

If your real question is "do you have to stop contributions because the person's cummulative pay goes over the limit mid-year?", then the answer is no because you don't have to apply the comp limit mid-year.

IRS Code Sec 401(c )(1) IRS Reg Sec 1.410(b)-9

And just so it's not lost, still have the issue of how can a 403(b) be converted to a 401(k).

Did these FF's occur on or before January 18th (the date that the insurance company received the premium payment)? If so, then I stand by my answer that it was excess premium which was refunded after the current month's forfeitures were credited against the Plan's balance due to the insurance company. How else would you propose that the insurance company would refund excess premiums? Or do you propose they would hold the excess and not refund it at all? This is simple and ordinary accounting. I see it as a straight forward question of what order are things applied to the Plan's account. If the forfeitures arose prior to the receipt of the premium payment, then the forfeitures can be known and applied to the outstanding balance of the Plan before the premium payment is applied. So, when the premium check arrives on Jan 18, it is in excess of the current outstanding balance. Two business days later on Jan 22, the insurance company processed a refund of the excess premium payment.

It would be different if the final premium payment had gone into the plan and then weeks/months afterwards the ins company processed a refund. Sounds to me like the extra money never got into the plan because the ins company caught it before the premium was applied. Yes, the amount of the refund is exactly equal to the amout of the forfs. That doesn't mean the forfs were disbursed to the company. The forfeitures were applied as a credit prior to the application of the premium so the forfs were used to offset a contribution in accordance with plan terms. It's a simple refund of an excess payment that resulted because the ins company applied the forfeitures to the outstanding premium due which thereby caused less be to due than was remitted by the plan sponsor. Jan 18, 07 was a Thursday. Jan 22, 07 was a Monday. This is an extremely prompt return of an excess premium payment and is not at all indicative of an after the fact attempt to disguise a return of forfeiture as something different.

Great story, Andy. Thanks for sharing. I'm so tempted to print this and send to a former boss who looked everywhere for pennies to pinch and always moaned about postage. An extra dollar or so per year for certified is really cheap insurance when you look at the bigger picture. That's, what, roughly 7 cents per $1K?

Need to back up a step or two as David's right on the Special Tax Notice should be provided prior to the distribution. EE requests to make a distibution. Plan/ER provides Special Tax Notice and forms or directions to initiate the distribution. EE completes forms or alternate means (such as electronic, phone, etc). Now we pick up w/ your sequence. One question is whether your trust agreement w/ Schwab includes tax withholding service (some trustees, generally for a small fee, will handle remitting withholding taxes and preparation of the proper forms). One correction: the Plan (or trustee if paying for a tax service) prepares form 1099-R and form 1098... one copy of 1099-R is sent to the EE and the others are sent to the Service. The EE gets paperwork three times in total. 1) at the beginning and includes the special tax notice. 2) the check and stub, which ought to reflect the gross distribution, less withholding (do not mention the extra 10% on the stub; if in doubt then enclose another copy of the special tax notice which more than covers the topic). 3) after the first of the year, form 1099-R. Now, if you (or someone else) is a TPA between ABC plan and Schwab, then the participant may complete a distribution form that goes to the TPA and then the plan sponsor/trustee may complete another form that instructs Schwab to process the distribution (and has a copy of the participant's form attached).

1) never rely upon a vendor for legal advice. they're in CYA mode. they're simply on record now that they warned you in case it goes wrong later. 2) in light of that bit in the preamble, it's hard to decide from the Code and Regs whether a designated Roth program mandates that active employees be allowed to make Roth deferrals or if a program can be established by satisfying the separate accounting requirements for Roth accounts. 3) this is worth spending a few bucks to get a proper ERISA atty to render an opinion.

So don't add it for current participants as a contribution option. No reason you can't amend the plan to allow rollover and separate accounting of designated Roth monies but to not enable current participants to make designated Roth contributions. They're not tied hand-in-hand. It should really be two, maybe three, very minor changes in your plan text.

http://benefitslink.com/boards/index.php?showtopic=36196

There is no reason to use multiple trustees. And the point of a target date fund such as the TR 2040 is that you CAN put it all in that one fund and know that it's reasonably diversified. So using it for both accounts is not problematic. As you become more educated about investing, you might choose to develop your own diversified fund portfolio and replace the TR 2040 fund with your own mix of funds. But for a good place to start that will have an appropriate long-term investment perspective, that target fund is a good way to start.

http://benefitslink.com/boards/index.php?showtopic=37698

Before anything else, make sure your 401(k) will accept rollovers from IRA's. If you rollover the maximum amount possible from your IRA to a 401(k), this would leave only basis in the Trad IRA. See this recent thread: http://benefitslink.com/boards/index.php?s...c=39412&hl= Specifically see page 24 of IRS Pub 590: http://www.irs.gov/pub/irs-pdf/p590.pdf (underline added for emphasis) You can then read elsewhere in that publication about doing a conversion to a Roth IRA.

Sieve - having read QDROphile's posts in prior discussions, perhaps it would be helpful for you to understand that QDRO isn't so much a proponent of F&C as he is an opponent of 6-month suspension. (QDRO - hope I'm not misstating your position, feel free to correct me.) If you go back to the original post, it's the deferral suspension that the OP was mostly referring to eliminating. The catch is that once you've gone a tiny bit out of safe-harbor, well, you're out of safe-harbor. The question becomes how far out that limb do you go. I have to say that I'm a convert to QDRO's way of thinking. Short of doing a full F&C plan, one could take the safe harbor reasons provided by the Service but then be non-safe harbor by dumping the 6-month suspension of contributions. Personally, I'd also include other debts besides mortgages in which the threat of collections are imminent. But that's a whole separate discussion.

The inconsistency is easily explained if he's a capital-only partner (who should still get a K-1 but that's a separate issue). I can assure you as a CPA that this is not entirely uncommon. However... I agree that they've mischaracterized it and it's a source of potential confusion.