PensionPro

Depends on state law.

My recollection is the answer is No unless it is a dual-qualified plan.

A rural cooperative's 401(k) plan MUST be a DC pension plan per IRC 401(k)(7) such as a MPPP and I don't believe the plan can be amended to a non-pension plan.

Yes, rural cooperatives may sponsor a 401(k) plan per IRC 401(k)(7). Also see 401(k)(4)(B)(ii). Not sure on your second question. A 401(k) plan sponsored by a rural cooperative does not seem to meet the definition of governmental plan under 414(d).

A deemed CODA is an arrangement “that directly or indirectly permits individual partners to vary the amount of contributions made on their behalf." If the IRS can make an argument during audit that the individual partners are exercising discretion over their employer contribution then they can call the arrangement into question. Employer can strengthen its argument if it has a DL for an allocation rate by individual. Also having resolutions/minutes from the partnership regarding contributions/allocations can help. From EOB: In Q&A-4 of the Q&A session [ at the 2011 annual ASPPA Conference], the IRS said that, particularly in a corporate context,merely because each shareholder represents a separate allocation group does not result in a deemed CODA designation, and that the IRS routinely approves plans designed this way without raising a deemed CODA issue. What the IRS is more focused on at the determination letter level is whether there is under the terms of the plan the ability of a participant, on an individual basis, to affect the amount of bonus declared for the participant’s benefit by agreeing to a certain contribution level to the plan with respect to such a bonus. However, the IRS still might examine the operation of the plan as part of an audit.

Thank you for the helpful responses!

We are looking at a cash balance proposal by a firm that involves 401(h) accounts and insurance within the plan. I have researched the issues a little but looking for someone to shed additional light. The proposal is for a law firm with five partners and about 45 common law employees. The law firm already sponsors a 401(k) plan with 3% safe harbor nonelective. Q1. None of the partners are hitting their 415 limit. In which case what is the benefit of the 401(h) account -- is it simply that those contributions are made on a deductible basis by the employer and are not taxable to the participant when distributed to pay retiree medical benefits? Q2. Under what circumstances is it appropriate to provide life insurance policy within a DB plan and to what extent? What are the pitfalls to avoid -- such as springing cash value, etc.? We are a little nervous because part of the proposal involves product sales and not merely administration services. I am sure if done right all these pieces work, but I am trying to understand the nuts and bolts to determine if it is in fact appropriate for this client's situation or if the desire to sell product overshadows the needs of the client. Thank you for the help!!

Per my calculations, 1,237.50 from A and 2,062.50 from B for a total of 3,300 after pro-rata adjustment.

Thanks, Tom. I had deleted my prior post regarding key employee definition under TEFRA after I realized the original question probably related to HCE definition. Here is the relevant section from TEFRA anyway ... PL97-248.pdf

There was a time (I believe under TEFRA, 1982) when anyone who was an officer during the plan year or 4 prior years was a key employee regardless of compensation. Are you working on a 1982 plan year?!

There are about 150 professional designations listed on the FINRA Web site. The client usually has no idea which designations are difficult to obtain and which are relatively easy. Most don't know if the QKA is harder or CPC. To the client its just some random letters after your name. So in marketing situations only, I am PensionPro, CPC, QPA, QKA, TGPC.

Participants may rollover their balances into the 401(k) plan, the employer may not transfer the balances or merge the plans.

From 1.415-2(d)(2): paragraphs (d)(2)(i) and (d)(2)(ii) of this section include foreign earned income (as defined in section 911(b)), whether or not excludable from gross income under section 911. Compensation described in paragraph (d)(2)(i) of this section is to be determined without regard to the exclusions from gross income in sections 931 and 933. Similar principles are to be applied with respect to income subject to sections 931 and 933 in determining compensation described in paragraph (d)(2)(ii) of this section. Hope this helps.

If the corp is 2-yrs old are you saying the owner been employed for 3 of the last 5 years but the common law employees have not? All employees who received at least $5,000 in compensation during any 2 preceding calendar years (whether or not consecutive) and who are reasonably expected to receive at least $5,000 in compensation during the calendar year, are eligible to participate in the SIMPLE IRA plan for the calendar year.

The user fees are listed in sections 6.03 and 6.04 of rev proc 2013-8.

Certain meal and entertainment expenses are subject to a 50% limit. If meals or entertainment are provided for the benefit of employees, the employer can write off 100% of the cost as a business expense. This is an exception to the usual 50% write-off rule. Common examples of expenses that can be written off at 100% include: Meal and entertainment expenses for a company picnic or holiday party. Free coffee, bottled water, donuts, etc. provided to employees at the place of business. Free food or beverages provided to the public for promotional purposes. Meals provided at the place of business to more than half of the employees as an enticement for working after-hours, weekends, or holidays. Cost of meals included on employee W-2 forms as taxable compensation.

IRA assets are protected from bankruptcies but not other types of judgments. Qualified plan assets are protected from bankrupticies and other types of judgments under ERISA. The amount of bankruptcy protection for IRA assets may vary by state. My understanding was the the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCA) raised the limit on bankruptcy protection to $1 million of IRA assets even if the limit is lower under state law, but you may want to verify that because the article below seems to offer a different view. Qualified plan assets rolled over into an IRA are exempt from bankruptcy proceedings even if the amounts are greater than $1 million. This 2011 LA Times article might be helpful because it references the golden state: http://www.latimes.com/la-ira-story3,0,6977190.story

Former key employee can become a key employee in subsequent years.

Couple of prior threads on the topic ... http://benefitslink.com/boards/index.php?/topic/20684-qdro-processing-expenses-for-db-plans/ http://benefitslink.com/boards/index.php?/topic/41002-qdros-reasonable-administrative-fees/

The system (widely used in the industry) only goes one decimal. There is nothing that says it is wrong to only go one decimal. With the same fact pattern we have 60% = 60% 60.0% = 60% 60.04% > 60% Should I take our report that says ratio is 60.0, then hand calculate to see whether it is 60.04 or 60.002 or just rely on the report? Fun stuff.

TH ratio on system report is 60%, but it is actually 60.04. All the numbers including inservice distributions have been reviewed. Is the plan top heavy?

If no one worked 500 hrs then a benefit has not accrued in your example.

If no benefits accrued there is no cutback. You can amend if no one has attained rights to a benefit/contribution. Watch out for plan language that waives allocation conditions for deceased, disabled, retired participants, etc.

Is this permissible in a standardized plan? I thought a standardized plan must benefit all participants except terminees with less than 501 hours.

Depends on the facts of the case. In a March 19, 2009 ruling, the U.S. District Court for the Northern District of Texas recognized that the Texas Whistleblower Act prohibits health care organizations run by the State of Texas from retaliating against employees for making good faith complaints of violations of the Privacy Rules of the Health Insurance Portability Act ("HIPAA"), Nevertheless, the court dismissed the wrongful discharge lawsuit brought by a former Terrell State Hospital security guard who alleged he was wrongfully fired for complaining to the U.S. Department of Health and Human Services Office of Civil Rights (OCR) that the Hospital violated the HIPAA Privacy Rules because the plaintiff had failed to present sufficient proof that he was terminated in retaliation for filing a HIPAA complaint.