12AX7

How many payrolls were processed at the 50% rate?

My concern was more with the "closed MEP" rather than the "open MEP" concept. Othern than a single plan document, what would be the advantage?

Just to backtrack a bit, I'm not convinced that there is necessarily an option for a multiple-employer plan in this situation. If there is no longer common ownership, what is the factor that binds the employers to a MEP? If a spin-off is done, the current plan document should reflect that the prior related employer is no longer an adopting entity of the plan, a new plan and trust (account) is created for the spin-off plan to receive the assets. Not sure what you mean about showing the loss of employees - do you mean on the Form 5500? It all takes a little bit of planning and timing to get the pieces together.

Good point to distinguish between the HCE Key and HCE Non-key in this example. This gets into more advanced design concepts that need to be monitored.

Also, if it's a SH Match, EVERYONE needs to get at least 3% ER money. If the plan is Top Heavy all participants (employed on last day of plan year) get the TH minimum regardles of the type of SH arrangement. Also, if there are HCEs in the group not getting the SH contribution, that part of the plan does not meet the ADP SH and is subject to the ADP test. edit: SH contributions would be credited toward the TH min.

You mean other then the fact that it's the law? Are you perhaps confusing the 10% early withdrawal penalty with the 20% mandatory withholding requirement for ERDs?

There is no automatic use of the VFCP calculator, unless there is a submission to the DOL. Additional lost earnings may have to be restored in the event of a DOL examination, which would affect the filing and penalty paid with a Form 5330. The difference may be minimal, but worth the extra effort to use plan rates of return as to not having to do this calcuation again in the future. Same is true when calculating the amount involved in the prohibited transaction (Form 5330).

Whatever "reasonable steps" are taken, and if they fail, is the only option to adopt the retroactive amendment? This seems to take the plan in an unintended direction. How much money is involved? Can the participant repay the plan in installments or through deductions from payroll so that the entire amount is repaid within the plan year and not upset the reversal of possible 1099-R processing.

I know this is not part of EPCRS, but a practical approach at this point in the plan year may be to determine the missed deferral opportunity based on year-to-date to deferrals. A true-up can then be done at the end of the plan year, if necessary. Also, if there any opportunity for the participant to double-up on deferrals until the end of the year, without giving up any of the associated match? This may be an alternative to my first suggestion.

I agree with your approach. Short plan/limitation years will prorate compensation and annual limitations of benefits. Also, depending on the plan document used, compensation for purposes of calculating the SH contribution may be limited to the period of the plan year that this provision is in effect...although this provision may be more applicable to a SHNEC than a SHMAC calculated on a per-payroll basis.

Exactly, but in some instances there's no other choice.

If forfeitures are held in a money market account, they can lose value.

Normally, no. You have to follow the terms of the plan document. Some plan documents allow for a one plan year delay in the application of the forfeiture. For example, a forfeiture in 2013 would get applied for the 2014 plan year.

In my world, the 401 (k) plan doesn't drive this type of business decision for the client and I would be hesitant to making these suggestions to a client; however you are likely correct.

BG, those rules go back to ERISA, I believe. Having been in the business almost as long, we rarely made amendments to plans at that time, and usually those amendments did not affect participant elections within a plan. These old rules do not correlate to today's participant plan involvement and therefore best practice would require interim communications until such time the SMM is produced or a revised SPD is distributed (sooner the better).

I'm not sure how to answer the question about reasonable administrative delay, but is it possible to re-do the amendment or rescind the amendment until such time that programmer has the ability to implement Roth?

I've had this situation come up but for different reasons that were unrelated to the actions of my firm. In my situation, I only checked the DFVC box because no other changes were made to the form. The form and payment were accepted and no further action taken by the IRS.

I read thourgh Publication 969, which leads you to where the deduction for the employer contributions occur. There is no reference to employees including these amounts on W-2. You may also want to take a look at IRB 2008-29. For the auditor to claim that an HSA contribution is not part of the included plan comp definition assumes, a) that these amounts are reported as W-2 comp for the year, and b) the plan would exclude these amounts as comp. Assuming that no portion of the employer contribution of the HSA is reflected on the W-2, is the auditor perhaps confusing themselves with the pre-tax employee portion? If that is true, then there is no exclusion for that definition of comp. The client or payroll company should know if any part of the employer contribution is on the W-2. The easiest part of this equation is to first determine that no HSA employer contribution is part of the W-2. Edit - here are the guidlines for making employer contributions to an HSA. Not sure these have been updated since 2005. http://www.gpo.gov/fdsys/pkg/FR-2005-08-26/pdf/05-16941.pdf

I thought your concern was only with the Roth portion of the account , but you bring up the vesting issue which is another complexity with or without the original sourcing. Is the account on a platform recordkeeping system? If you're doing the source recordkeeping in-house, you have a good understanding of this issue. If it's recordkept, you may need to discuss if their system can handle the calculation of the vested amount, assuming they are reporting it on statements and potentially paying out the account at some future time again, if less than 100% vested.

I'm not an HSA expert, but to my understanding if certain guidelines are followed, the employer contribution portion to an HSA account is not taxable to the employee. More relevant perhaps is the definition of compensation in the plan and what it perhaps excludes for plan purposes. Based on the definition you reported, it appears only bonuses are excluded. Edit - there may be an exception for benefits to a spouse or family memeber of the employee, where in this instance the contribution would show up on the W-2, but I think you are only referring to employer contributions made on an employee's behalf.

Not sure why you need to place the buy back amounts in their orginal sources. It's all after-tax in your situation and if on a recordkeeping platform, a source for this purpose should be available.

I agree with BG, but there's a little more to calculating the partner's compensation for plan purposes than pulling a number off the K-1.

You would need to allocate according to the terms of the plan, and increase contributions necessary to meet the TH minimum contribution.

George, I'm not finding the answer in Q6: Q-6: How is the number of group health plans that an employer or employee organization maintains determined? Thanks.

Employee is terminated and has money remaining in their FSA account from payroll withholding. Can that employee get reimbursed for medical expenses after their employment terminated? If so, is their a cite for that? Thanks.