kwalified

I understand that the new regs do NOT cover certain 403(b) contracts or custodial accounts issued to current or former employees before 1/1/09, but if the plan is subject to ERISA, the disclosure is required, yes? So for example if a plan with 10 participants 8 of which whose accounts were issued prior to 1/1/09, receive some sort of employer contribution, they are not required to have the 408(b)2 notice, but 2 participants who joined the plan after 1/1/09 must be issued the notice of fees?

Let's say a participant deferred the max into a 2011 calendar year plan prior to the end of the year. For example $16500 was deferred on 25K in comp through June 30, so the part should receive a basic SH match of $1000. Let's say that the P.S. only deposited $900. The $100 shortage was not discovered until after 3/31/12, is the P.S. still allowed to put in the $100? Also, let's say the participant earned $50K for the year, the P.S. should deduct the $16500 throughout the year which would have afforded the participant a SH match of $2000 instead of $1000, correct? This is how I am interpreting Treas Reg 1.401(k)-3©(5)(ii)

OK, I get that, but I'm not so sure the way I stated it is wrong either. And I must say that your insight on this is more than a little scary.

A previous poster stated this disclosure is prospective... how am i to disclose miniscule quarterly RSA payments to me as a TPA when I have no idea what the plan sponsor will be contributing or even if the RSA program will still be in effect?!?!?! I guarantee you with all the changes and companies scrambling to lower their fees, these RSA payments will be a thing of the past. They are more trouble than its worth now.

80 year old participant died this year. 86 year old husband/owner is beneificiary. I am reading conflicting information on future RMD's. Page 6-22 of this link states if the life expectancy of the deceased participant is greater than the beneficiary, you use that divisor and reduce it by one each calendar year. IRS RMD's The 401(k) Answer Book (2011 edition) makes no mention of reducing the divisor by one each calendar year for a spousal beneficiary. It states as follows "If the participant has a designated beneficiary as of 9/30 of the calendar year following the calendar year of death, the the distribution period is based on the beneficiary's life expectancy using the ben. age as of his or her birthday in the calendar year following the calendar year of the part. death or, if longer, it is based on the participants remaining life expectancy. In subsequent years, the distribution period is reduced by one for each year after the calendar year in which life expectancy was originally determined. HOWEVER, if the spouse is the participants sole beneficiary, then the spouse's life expectancy is recalculated each year based on their birthday for the year in which a min. dist. is required. For this purpose, life expectancies are based on the single life table" I may be over thinking this or misinterpreting but I'm thinking the former is accurate rather than the latter as I have found more than one discrepancy in my usage of the Wolters Kluwer's answer books.

A plan sponsor of a small esop is considering acquiring a small company. The plan sponsor wants to use prior years of service with the predecessor potentially acquired employer for vesting(6 year graded)/eligibility purposes(1YOS/Age18). The document touches on affiliated employers as well as Participating employers but I don't see why prior service with the acquired employer can NOT be used for plan purposes when those participants are acquired. The benefits, rights and features of the current participants are not reduced. Am I missing something? Thanks

What 5/31/12 disclosure? The earliest date the notice is required is 7/1/12. If you receive revenue sharing, then you are a covered service provider and are receiving payment from the plan. Also, the $1,000 limit is total fees for the life of the plan, not annually. Correct, 7/1 not 5/31 I was looking at the old 404(a)(5) disclosure date to participants. Still, what is the reporting period? Is it the prior plan year? Jan-June 30? The life of the plan, which number will accumulate in subsequent plan years? Some of these micro plans I have not received in excess of $1000 in RS. I suspect the safest route would be to report all income.

Hi, I am putting together this disclosure. I have a few plans that I receive revenue sharing lunch money. It's almost not worth doing the disclosure, since it will about cost me as much to produce it as I get in revenue sharing. Anyway, for the 5/31/12 disclosure to calendar year plans, is it acceptable to report 2011 plan year revenue sharing? We are a non-producing TPA whose expenses are paid from the plan sponsor, not the plan. Also, if the RS I get is less than $1000 per plan, it is my understanding the disclosure is not required. Thanks

If they amended to allow for 1 month of service on deferrals and it was NOT TH, it would still consider satisfying NonDiscrimination due to basic SH match, yes?

Eligibility is uniform through out 1YOS age 21...match, sh, deferral, p.s. Plan only currently provides deferrals and SH basic match. Thanks for the replies.

If the plan is top heavy, the safe harbor exemption would not apply. You would be required to provide a top heavy minimum to those eligible to make salary deferrals and not eligible for match. Thanks Kathy. Plan is not TH only a couple/few key ee's. Of course, that would be something to keep a keen eye on.

a large 401(k) had a Year of Service eligibility across the board. It is deferrals and SH Match only. They want to make the deferral eligibility a Month of Service and maintain the YOS for the SH Match. I can not think of anything that would prevent this aside from greater administration detail. Keeping up with those who are eligible for deferral only and those who are eligible for both.

Hello, A small employer will be hiring 8 employees from a company. Currently, the plan has 1 yos age 21 eligibility conditions. Could they amend the plan to allow for service with these new hires predecessor employer so that they can be in the plan or would that be discriminatory?

thanks. I have explained the purpose of the regs in correspondence to give the client a heads up and that they should be expecting something from a csp if applicable. And I guess a statement alluding to the fact that all my plan admin fees are paid by the employer would be a simple "cya" notification.

That makes sense but as a TPA whose flat fee is paid by the employer, not the plan, and does not receive revenue sharing what is to disclose? Our annual admin fee that we disclose when we bill the plan sponsor?

It is my understanding that these regs only apply to participant directed accounts, yes?

I understand that and thanks for your replies. Basically they will have to go back and either contribute the 6% employer in accordance with how the plan was initially written or do you think that they could argue that while the plan was not operating in accordance with its terms, it was operating uniformly and non-discrim and therefore should be allowed to retroactively amend to mirror how the plan was actually being operated? Therefore saving the sponsor additional funding.

What if the sponsor maintains a terminating 401(k) and a FROZEN MPPP?

What about on the employer side?

an 8 participant 403(b) has not been following the plans eligibility rules for several years. plan doc has no service/age requirement, so immediate eligibility. However, sponsor has been making participants wait for one year to enter the plan on a uniform and non discriminatory basis. I understand this is a VCP case and they are aware of it. My question is....would you think the IRS/DOL would allow the sponsor to go back and amend retroactively to install the eligibility(1 YOS) they were actually using OR is it more likely that they will have to go back and make up the 6% employer contribution to all employees they had excluded? The plan has an effective date of 7/1/05. Sponsor has been contributing 6% irregardless of whether the participant actually deferred since plan inception. Thanks a heap!

Employer has less than 30 employees, 5 of which are key ee's, therefore for TH purposes only top paid 3 are considered. So if 2012 is its first year for being TH, do the 2 excluded Key employees get the TH minimum? My thinking is no, but wanted verification. Thanks

a NP sponsors a 403(b) with an employee who makes in excess of the 401(a)17 limit. Sponsor makes a 12% contribution to the participant. In addition makes a 12% contribution of the excess to the plan and reports the excess contribution as comp, I believe, on the participants W-2. Does this sound kosher? Participant does not defer into the plan.

It seems that RSA money has become more prevalent in the last few years. Correct me if I am wrong, but I am of the opinion that RSA came into existence as a way for Investement Dealers to entice TPA's to encourage plan sponsor's to consider moving their investments. It was also a way to solidify a relationship between a TPA and the Investment Provider. Therefore, why are some TPA's using RSA funds as credits towards plan admin expenses? It seems as if many IP's refuse to speak to the plan sponsors and will only communicate with the TPA on plan matters therefore creating more work for the TPA. Yes or No? Now with 408(b)2 why can't the IP's just give the little bit of money, (I am talking Micro Plan) from the RSA's directly to the plan and circumvent the TPA, if the TPA is going to do it anyway? Seems that it would save the TPA some disclosure effort.

Is there a safe harbor? If not, will HCE's forgo the tax benefit?

I know 5500 reporting used to be required, but are they still subject to NonDiscrim rules?