J Simmons

I agree, Doug. Because in your example, it is the separate corporations that are each making the decision, and each of the 10 partners owns 100% of his corporation. In a situation like 12AX7 posits where there are more than one S shareholder/employees, the opportunity to blow it and have a nonqualified CODA yet exists. Granted, corporations generally have a more formal and structured decision making process than partnerships. However, the decisions are a bit metaphysical as Bird's posts demonstrate. What makes the decision as to the contributions made by the ER (corporation or partnership) one made by the ER rather than the EE who is an owner and part of the ER's decision making body? As Bird points out, best practices includes documenting the decision as one by the ER (partners, as a body, or board of directors of a corporation), and not have anything in writing indicating that the others were simply deferring to the individual owner/EE. Also, there should not be corresponding deductions to the profit or distribution shares of the individual from the ER.

I take the crotchety approach that Sieve does. It's only the Plan's qualification that hangs in the balance of being wrong about when a hardship has occurred. The general rule is against in service distributions. The public policy is to make sure that the assets are available in retirement, not consumed before. Exceptions to that public policy rule should be interpreted narrowly. In addition to what sale has/has not taken place and contracts may or may not be in place, I think it would also be relevant to know where the EE resides at the time that the application for hardship withdrawal is made.

That's a matter of California domestic relations law. OPM will NOT accept a modified order (don't title it as a QDRO--that is ver boten under OPM's rules). So whether the judge erred or not, it will not affect the payments that OPM has calculated and is now making. Again, a matter of California domestic relations law. Thrice: a matter of California domestic relations law. While OPM will not recognize an amended order or implement it, California domestic relations law might allow the judge to do an offset against other assets for the enhancements he cannot order OPM to make to the share awarded to the spouse. Better question: how the heck did you get OPM to recognize the order in just 4 short months?

I think it has to be 22k less FICA taxes. The arrangement between the EE and ER is for compensation of 22k. The ER is obligated to withhold the FICA portion from the compensation. That means there is only available to be put into the 401k 22k less FICA taxes. The ER cannot honor both its legal FICA withholding obligation and the EE's election for the amount of the FICA taxes. Your OP illustrates another good reason to limit the percentage of compensation that an EE may electively defer into the plan, at least to 92.35% if not a lesser percentage.

I don't think you can treat this as a coverage issue. The ER is not operating this plan as written. The ER is not withholding the mandatory amount out of everyone's pay. The ER match might make this an ERISA plan. The way it is being operated the EE contributions are ELECTIVE deferrals. I would advise the ER about EPCRS remedy.

Necessary, yes. Useful, I've never really thought so, but I'm not a policy maker.

You are right. The prototype approval letter does not count as a FDL and the sponsor must submit all prior plan docs. See this from the Instructions for Form 5307 (Rev. May 2008), page 3: Line 3f. If you do not have a copy of the latest determination letter, or if no determination letter has ever been received by the employer, submit copies of the initial plan (or adoption agreement along with the appropriate opinion or advisory letter), or the latest plan (or adoption agreement along with the appropriate opinion or advisory letter), and any subsequent amendments and/or restatements. Once upon a time the prototype approval letter did so count. Too many people smoked the Service by correcting plan document problems by restating the plan using a standardized prototype, then turning right around and doing it with a non-standardized prototype and make a 5307 application specifying the recent standardized documents as the last 'approved' plan documents. It worked until the IRS caught on and closed that loophole.

Make sure you have a document terminating the old plans, specifying their 3-digit numbers, and that you the termination is authoritatively signed no later than the last day of the last plan year for which you are filing a Form 5500 (albeit the "final" one) for them. The f5500 is a reflection of a plan, just signifying on the f5500 for a plan year that it is the last f5500 does not effectively terminate the plan, nor foreclose employee's claims for benefits under that old plan. Also, you need to give the employees a summary of material modifications timely notifying them that the old plans are being terminated. As for how you propose filing the f5500s, I think that is the appropriate approach.

Could you provide an example of how this works?

Tripodi says that the 402f notice is not required for distributions that total less than $200. EOB 6:D:2.c.3).

Yes, so that when withdrawals are made, the recipient can determine how to report the distribution. Yes, again for later distribution reporting.

It's not the status as top hat that depends on the one-time filing. The one-time filing gives a true top hat plan an exemption from the annual filing requirement. No filing, no exemption, and the annual reports are required.

The portion that should have been RMD'd out to the decedent for the year of death is not eligible for a rollover to an IRA, not even the IRA of the surviving spouse. That triggers a 6% tax to the extent thereof for ineligible rollover. The IRS does correct this situation through EPCRS--I've done such a correction for a client, in order to avoid the 50% tax on late RMD.

I think to avoid liability, you need to notify the client of the document problem and the EPCRS correction possibility (if it qualifies), and once you've told them about that, the ball is then in the client's court, not yours. If they choose not to correct, that's their choice.

I have used CCH's Pension Plan Guide online since 1999 (and before that, the CD version and before than the hardcopy version, dating back to 1990). Annual renewal is around the corner and I'm looking for an alternative, comparable product. The reasons are there have been some pretty steep price increases over the years, and the addition of IntelliConnect in 2009 was, in my experience, an IntelliDISConnect. (Prior to IntelliConnect, I thought the product was much easier and faster to use.) For those that have had experience using this product but have switched, what did you switch to? Are you happier with the other product? Is your replacement product easier or faster to use to locate authorities or already known cites? For those of you who may have been using a different product and have switched to PPG, what was the other product? Do you regret having made that choice? Thanks in advance for all pertinent comments.

It depends on whether among the HCEs there are any Key Employees (416i) and non Key Employees. From a discrimination testing perspective, if all you have are HCEs, then generally that should not be a problem. If the 125 plan has health flex accounts, then section 105h is implicated too. The discrimination test there is between the lowest paid 75% and highest paid 25% of your all HCE group. There is also a 25% concentration test. That is, no more than 25% of the tax-free benefits under the 125 plan can benefit key employees. So, for every dollar the key employees can receive tax-free, there must be non-key employees benefiting $3.

Hi, Larry, If the employee agreed (other than under duress such as threat of termination) to the reduction, I think that exonerate the employer from a 510 claim. After all, the 401k regs outline an exemption from those regs applying if a one-time, irrevocable election is made by the employee not to be in a plan in exchange for more wages, so that implies a viable option the employer could give the employee to participate in the plan and receive less in wages. Of course, here it is an actual reduction in wages, rather than an increase or the forebearance of an increase due to the cost to the employer of plan participation or not. The action you describe is not interference with benefits per se, but an act impacting wages. (Well, okay, reduced wages results in less company contributions to the plan if it is a retirement plan, but the savings in wage reduction itself would likely eclipse and make the savings in company contributions to the retirement plan negligible by comparison in most instances.) In sum, I do not think the scenario you describe should be 510 problematic.

Put a video cam in the RV and link it to your computer and every night at a different time, check to see if the EE is in fact sleeping in the RV. Seriously, this is no different than proof that someone's residence is at 123 Elm St. The EE signs a statement that the RV is his principal residence; if no plan officials have info to the contrary, the plan can take the EE's statement at face value.

I suppose for the one year in which the one time election is allowed, the plan did permit participants to direct the investments. So I would think you would indicate on the f5500 for that year alone that it is participant directed. This would certainly not qualify as an ERISA section 404© plan that gives plan fiduciaries some insulation from liability for investment underperformance. Also, CD's only (apart from the one time investment in stock)? I think your plan fiduciaries would be well advised to seek counsel from an ERISA attorney pronto!

I agree if the AFLAC policy is a group one owned by the company in which EEs can obtain coverage that they cannot obtain under an individual policy at the same premium cost. If the coverage is the same, at the same cost, that the individual could obtain on his or her own, then the company may walk a very, very narrow path to satisfy 125 and avoid ERISA.

Has the DRO been signed by a state court judge?

I would immediately move the assets into the 'correct' default investment, and if the contributions would have been worth more at the time if they had gone into the 'correct' default investments initially, I would make a corrective contribution into the correct default investment in their plan accounts, to make those individuals whole.

The question boils down to whether the $ in the hands of the TPA constitute plan assets or yet 'employer payments'? There is a 9th Circuit case that treats the $ as 'plan assets' from the time paid by the ER to the TPA until the stop-loss premium is paid. This line of reasoning suggests that if the TPA billed the entire amount (actual premiums + broker's fee + 'placement fee') to the ER all as for stop-loss insurance without any breakdown, then all that the ER pays to the TPA is 'plan assets', and thus the TPA keeping a portion thereof for the 'placement fee' would be an expense paid by the plan rather than the ER. On the other hand, if the TPA's invoicing to the ER breaks out each of the three elements and labels them as such for the ER to see, then it is arguable that the broker's fee and placement fee never become plan assets, and that the TPA's intermediary role in the payment from the ER is an ER payment (unless of course the ER is reimbursed by the plan for making that payment).

Wow, first reply to a 25-month old OP that I'd forgotten about entirely. Avoiding premium tax was the ostensible reason given by the TPA in my situation for doing so. That didn't quite explain why it was undisclosed, however. Your question is how that 'stop-loss placement fee' should be reported on the Schedule C to f5500? I think it would be reported as any other insurance brokerage fee. I don't think labeling it a 'placement fee' separately from the fee paid to the actual third party broker means that the 'placement fee' is any thing other than a brokerage fee.

No.