nancy

We also just had this come up in a plan. The one HCE is age 66. His "points" are calculated based on NRA (age 65) but EBAR is based on age 66 which appears to cause the test to fail. I'm going to reread the reg that Tom referenced. It appears we may be ok.

Must a self funded plan with fewer than 100 participants file a Form 5500?

Our plan does provide a grace period for filing claims incurred during the "coverage period". But my real question is must the service date be prior to termination of employment? Or does coverage end at termination of employment? Is the coverage period the full 12 month plan year or does it end at the earlier of termination of employment or the end of the plan year?

Can an employee who terminates employee submit claims for services after the date of termination? Or can they only use the runout period for claims incurred while an employee? In effect does the coverage period end at termination of employment?

It's not the amendment that would cutback the allocations. It would be correcting the allocations to base them on total compensation vs base pay.

We have a plan that had the wrong definition of compensation written in the GUST restatement. The prior document excluded bonuses and the employer did not intend to change. The plan was amended in 2004 when the error was discovered. I know the IRS does not recognize scrivener's errors. However, if we go back and correct the allocations for the years in question it will result in a reduction of benefits for the NHCEs. Has anyone had any experience with this and the IRS?

The total late contributions were about $20,000. The excise tax paid was less than $50. The only situation bothers me. It does appear that we are going to be forced to file under VFCP. I just wondered if others were getting these letters.

We have a client that had late deposits in 2003. This was reported on the 5500 and the appropriate 5330 filed and excise taxes paid. They have now received a letter from the DOL suggesting that they should submit an application under VFCP. Anyone else seen this happen? What might be the consequences of not filing under VFCP? Audit?

If an employee submits a claim to the HRA in 2004 that exceeds his HRA balance, can the HRA pay the balance and pay the remainder of the claim in 2005 when additional benefits accrue?

Can an employer fund his entire HRA commitment in one year and deduct it? Or must he only deduct when the expenses are incurred?

If an employer makes his deposit timely, but the broker deposits to the Profit Sharing Plan and the error is not discovered until after September 15, does a funding deficiency exist? Is there any remedy for this?

My document does allow for both a 2/20 schedule and a 3 year cliff when the plan becomes top-heavy. We selected the 2/20 schedule. Our document vendor also agrees that you should be able to select either schedule for top-heavy irregardless of what the regular shedule is.

I understand all that. We marked the 2/20 schedule for top heavy, but the IRS agent is saying that is not acceptable because the regular schedule is the 5 year cliff.

I have a determination letter request pending with the IRS on a DB plan. We are using a prototype document. The regular vesting schedule is 5 year cliff and the top heavy schedule is 2/20. The IRS is saying we must amend the top heavy schedule because it is not as favorable as the regular schedule in the 5th year. They are asking that we amend to 3 year cliff or change the 2/20 to 100% in the 5th year. I've never had this come up before. I understand there are protection issues when a vesting schedule changes but is this a valid request?

A 401(k) plan is sponsored by a partnership which is comprised of the attorney's PCs. Each PC is an adopting employer of the plan. When a partner leaves the partnership must the partnership do anything to remove the PC that left? The PC is still in existence.

Can the ESOP borrow additional funds to purchase the stock of a retiring employee in order to raise the cash to make a distribution? Or do you need to go through the steps of distributing the stock, having the employer sell the stock to the ESOP through a leveraged transaction? This is a nonpubicly traded employer.

As I understand, this can be corrected under SCP and not submitted for a determination letter if I'm adopting a prototype plan. Correct?

A DB plan defines average compensation as the high 5 consecutive years. If in one of those years a participant did not work 1,000 and receives no credit for service can you still use the compensation in the average? It seems that the rule regarding double proration deals with plans that require more than 1,000 hours for benefit credit and give credit for a partial year. I know many documents allow you to exclude from compensation any year that you do not receive credit or have a break in service. This document does not address this.

We have a 401(k) plan that allowed an ineligible employee to defer. We plan on amending retroactively to cover the document failure. There are also several other employees who will now be eligible (all involved are NHCEs). Is the only impact of this that they are included in the k and m testing? Are there any contributions to be made on their behalf?

I know this was effective April 14, 2004 for these smaller plans. What is the last date the amendment must be signed?

Was the deadline for a calendar governmental plan to amend to final 401(a)(9) regs December 31, 2003?

If you have a small plan (fewer than 10 lives), not covered by PBGC, can the owner waive benefits in order to terminate? I seem to remember that the IRS only allowed this when there was coverage under PBGC. Is the answer any different if the employer is in bankruptcy proceedings?

A plan sponsor timely adopted for GUST but failed to adopt the RMD final reg amendment by 12/31/03. Where are we now? Non-amender? Help!!

Is a child (over age 21) of a majority owner considered a majority owner through attribution for PBGC purposes? Can they waive benefits?

I'm looking for a sample waiver of benefits form for a substantial owner at plan termination. Does anyone have one they are willing to share? Thanks in advance.