Susan S.

Sorry, I meant to post this under the Retirement Plans in General Section.

We are setting up a new plan for a dentist. He says the employer's name in the plan document should be Dr. X, DDS, APDLLC. I asked if there should be punctuation or a space between APD and LLC, but he said no. Does anyone know what APD stands for? I can't find anything about it as a type of entity. He is in the state of Louisiana.

I am working on setting up a plan for a new client. The only employees are the owner and his son. They want the father to get a greater contribution than the son, so I believe that eliminates SIMPLE and SEP. I have never dealt with a plan with only HCE's. Is cross testing an option with each of them in a separate rate group and a different contribution percentage for each? I assume it would pass testing since there are no NHCE's. Any other suggestions? My only other thought is aged based profit sharing.

The AP does have a segregated account. Participant is a non-owner. His DOB is 12/1939 and he retired on 10/31/2012. His RBD was 4/1/13 and he took his first RMD timely in 2012. AP's DOB is 4/29/1943. Since I was not aware of this rule, I missed her first distribution by 4/1/13, thinking her RBD was 4/1/14. Should the AP receive 2 RMD's this year to make up for the one that was missed?

A QDRO was filed in 1996. The alternate payee (former spouse) has left her money in the 401(k) plan all these years. It is nearing the time for her first RMD. Is it calculated based on the alternate payee's date of birth or the employee's? The Pension Answer Book seems to indicate that the employee's RBD is a factor. That doesn't make sense to me since they have been divorced for so long and the employee has remarried.

I am working on a 401k plan with several missing participants. I have not tried locator services yet, but I made a note of the private options mentioned in today's previous topic. Getting to my question...the document says that account balances over $1,000 can't be forfeited until age 65. Does state law ever trump the document? Otherwise, when does turning money over to the state come into play...only if the plan is terminating?

We are going to set up a couple of new SH 401k plans, most likely effective 8/1 or 9/1. I saw an old post suggesting that in this situation the effective date should be 1/1, with a separate effective date for deferrals and SH. I assume going this route there are no prorated limits. Is there any down side to doing it this way instead of having a short 1st plan year?

Masteff, your reply was extremely helpful. I will check with Sungard Corbel on the language and discuss Notice 2002-4 with the attorney. Thank you very much!

I am working with a 401(k) plan that has several participating employers (controlled group). One of the entities is being "sold." I talked to the attorney and he said it is basically a stock transaction. I don't know what that entails but he did say that for the most part, the employees are keeping the same jobs, at the same place, working for the same person. They are not terminating the plan, and the other participating employers will remain. The attorney wants to make sure the document specifies severance of employment rather than separation from service, or in other words make sure there is a distributable event for the participants of the entity being sold. Why they want this, instead of having the new entity adopt the plan, I don't know. It is a Sungard Corbel document and was restated in 2010. I only see termination of employment referenced and don't see any mention of severance of employment or separation from service. The prior document did specify severance of employment in the EGTRRA amendment, but I assume that is not relevant being from an old document. Can I amend the language to ensure a distributable event? Even if I can, it seems like there is still a controlled group issue somehow and these employees should not be entitled to a distribution.

First, I want to extend a huge thanks to all of you who spend your time helping total strangers for free. You are wonderful people and I hope you know how much you are appreciated. I always receive such intelligent, insightful, and knowledgeable responses. Effen -- Due to family circumstances, I am only able to work part-time. I have a great situation here with flexible hours, and am not looking to change jobs. My boss is a good guy and does appreciate me personally. He is doing what he can to make sure I'm happy and keep me here. That is the only reason he is giving me the option of keeping the cases in the first place. He really would like to get rid of the TPA work, but he knows it is what I enjoy doing. Granted, he may never understand or fully appreciate the work that I do. I would love to find a buddy in another firm and will work on that. Bird -- You have given me hope that *maybe* I can do this on my own. The previous owner was also an agent, so I'm used to that. Most of our revenue comes from commissions on the assets. The admin side of the business isn't all that profitable, but that's ok. The two parts are intertwined and the pairing works well. You are right about ASPPA. I looked at their website and found it interesting that the affiliated membership costs less than the credentialed membership. It seems like it should be the other way around. I have passed the exams for the QKA, but never sent them in to be officially recognized for a couple of reasons. I intended to take the last 2 exams to get the QPA, but honestly, I don't have an incentive to do so. I am doing the same work either way, and save $2,000/yr. in CE costs. Anyway, thanks very much for your input. I may take you up on that private chat another time.

I have worked for a small TPA firm for 15 years. Until last year we had 2 administrators, including me. The owner of the company passed away and someone from out of state bought the firm. He is an agent for an investment company and has never been involved with TPA work. He doesn't appreciate the complexity and says it is a commodity that many investment companies are doing for free. My co-worker left and now I am by myself and feel like I'm working in a bubble. Due to the change in ownership, we lost quite a few cases. I have been given the option of continuing administration, and he will add some new cases, or quit doing TPA work all together. He needs me here in the satellite office so I will have a job either way. My worry is the liability and trying to keep up with the law changes, etc. by myself. I use Relius software, and do get emails from Sungard, but that's about it. One one hand, I could quit and be free of stress and deadlines, which sounds great. On the other hand, I like what I do and prefer to keep on instead of wasting 15 years of knowldege and being bored and having nothing to do. But is the liability too great? Anyone else out there operating alone? How do you keep up with everything by yourself?

I'm working on a calendar year balance forward profit sharing plan with pooled investments. An interim valuation was done as of 9/30/12 on behalf of one terminated participant (physician) because he had a very large balance. This was in accordance with the plan's written policy. He received a distribution in October 2012 based on the 9/30 valuation. The other plan participants are unaware of the interim valuation and were not given statements reflecting their balance as of 9/30. The physician will be receiving an additional PS contribution for 2012 due to retirement. I assume the physician does not deserve any additional gain for 2012. Naturally, most aspects of the report (i.e. testing, Form 5500, etc.) will need to reflect the full year. Should the valuation reflect the period 1/1/12 - 12/31/12 with an override of the physician's gain? Or is it more appropriate to split into two parts and have an allocation report from 1/1 - 9/30 and a second portion from 10/1 - 12/31? I have never done an interim valuation like this and I guess I am uncomfortable overriding the gain.

Late deferrals for 2012 -- the amount involved was $56 and tax was $8. The deferrals were deposited by the end of the 2012 but lost earnings were not deposited until 2013. On Form 5330 part I, line 3b, is an additional $56 tax due in addition to the $8? Is this applicable to the 2012 and/or 2013 filing?

If we send a letter to our terminated clients asking if they want their records and advising them if they don't that the records will be shredded, are we off the hook? These are 401(k) plans, so the records consist of annual report, Form 5500, testing, etc., or in other words things that may be needed for an audit. My boss likes to get rid of everything but I feel that it is still our firm's responsibility to keep the records for 6 years, regardless if the plan is terminated or active and switched to another TPA firm. How does everyone handle this? We are a small firm and electronic storage (high speed scanning) of records is not an option at this time.

A 401k participant (not an owner) with a DOB of July 1939 terminated on 12-31-2012, making his RBD 4-1-2013. The investment company's computer system calculated his RMD based on his account balance on 12-31-12 divided by a factor of 23.8 for age 74. In my opinion, since his first distribution year is 2012, the calculation should be based on his balance as of 12-31-2011 and a factor of 24.7 / age 73. Who is correct?

Thanks again! You have no idea how much I appreciate it.

ERISAtoolkit, thank you so much for your reply! Unfortunately, the language is in the safe harbor notice and SPD. Does that rule out the clarifying amendment as an option?

A 401(k) document says that the basic safe harbor match is to be calculated on compensation for the plan year, but the enhanced safe harbor match is to be calculated on compensation and deferrals per payroll period. This was a drafting error and they both should have been coded for compensation for the full plan year. The employer is making an enhanced SH match and intended to calculate on an annual basis and has been operating that way for years. What is the best method of correction? Can an amendment be prepared to cover the prior years stating that there was a drafting error? Please help me out of this mess.

So if there was a document coding error and the employer intended to calculate on an annual basis (and has been operating that way for years) but the document says it is to be calculated per payroll period, what is the best method of correction? Can an amendment be prepared stating that there was a drafting error?

Our documents typically state that the safe harbor matching contribution and compensation will be determined for the entire plan year. However, I have come across a document that says that the safe harbor match will be calculated based on compensation and deferrals on a payroll period basis. I assume this means that the match will be deposited on a payroll period basis, but may need to be trued up at year end based on annual compensation. The employer is interpreting this to mean that if a participant defers $17,000 in a single pay period in January, only the compensation for that one pay period is considered in the match calculation and the compensation for the remainder of the year is disregarded. Surely this can't be correct or the employer would need to give us compensation for every person for every payroll period. How do I explain this to the client? The document language doesn't spell it out clearly.

One of our clients has a profit sharing plan with pooled investments, valued annually. Some of the participants have very large account balances. The trustees want to create a policy that distributions over a certain dollar amount will be subject to an interim valuation. Does anyone have sample wording?

A participant received a lump sum distribution from a pooled profit sharing account in July 2010. Federal withholding was sent to the IRS. He received a 2010 1099-R Form reflecting the distribution and the withholding. The participant never cashed his check, so 6 months later (January 2011) the investment company staledated it and put the money back in the pooled account. The employer just brought this to my attention. I need to issue a corrected 1099-R for 2010. Do I enter the gross distribution and taxable amount as zero, then show the withholding? This is going to look really strange, but I don't know any other way to do it. Also, do I enter a distribution code? Thanks, Susan

A terminated participant received a total distribution of his balance in a 401(k) plan. The amount distributed was over $5,000. Subsequently, he received an additional contribution of less than $200 due to a match true-up. For his second distribution, which will be in the same taxable year as the first, is he required to receive a rollover option due to the amount of his original balance?

Sieve, thank you very much for the clarification.

We restated our clients' Sungard volume submitter plan documents in April 2010 (EGTRRA restatement) and submitted each of them to the IRS for a letter of determination. I received an email from Sungard about a PPA restatement by January 31, 2012. I'm confused about whether or not this applies to our plans. Surely we would not need to submit for another LOD this soon.