An employer has a policy whereby it offers employees $250 to have their working spouse "opt out" of employer sponsored medical coverage. Does this policy need to be included in the Cafeteria Plan Document?

I understand the function of the interest rate is to provide an assumed level of return on assets over an assumed period of time to produce the annuity payments over that same period.

For example, disregarding the 417(e) minimum assumptions, if a plan provides for a 7% interest rate and specifies a mortality table for calculating actuarial equivalency, is it accurate to say that a participant is "earning" 7% per year on his benefit, disregarding any actuarial adjustments for early/late commencement ? This does not seem accurate, but I'm not familiar enough with the mechanics to understand the reason.

All of a sudden, a client has orphan participants receiving notices of their possible benefit entitlement from SSA. The Plan valuation records don't report these participants nor are Company payroll records from the 1970s and 1980s readily available if available at all. The Company wants to ensure all participants get their benefits.

Is anyone aware of a process whereby a Plan Administrator may request the SSA to identify all participants listed on SSA for their plan?

Best Regards,

andy

In March, 2012 it was published that there was some funding relief with respect to interest rates used in actuarial valuations starting in 2012.

"For 2012 the interest rates must be within 10% of the average of benchmark bond rates for the 25-year-preceding period, according to news reports"

Are there any published interest rates somewhere to conform with these new guidelines?

We have just been using the regular published rates that we used for 2011. What are other people doing?

Are plan assets allowed to invest with a margin account? Assuming the answer is yes, what happens if there is a margin call and there are no other assets to cover it nor permissible additional contributions?

Side issue - can plan assets be pledged for collateral for a loan (note: not a loan from plan assets)

I've encountered a 401(K) plan in which the plan document states that the Employer will make a 3% QNEC for each participant. It also states that if mandatory employee contributions are required as a condition of employment, then those amounts can satisfy the employer's QNEC. The plan adoption agreement sets out that employees, as a condition of employment are required to contribute 3% once eligible, and as such, the QNEC is satisfied by the employee's contributions and the employer does not make any of the contributions for the QNEC. My question is, based on these facts, does the $16,500 employee deferral limitation include the QNEC? For example, can an employee have a year end deferral of $16,500 based on voluntary deferrals and $2,500 based on their mandatory non-elective deferrals for total employee contributions of $19,000 or does the $16,500 apply to total employee deferrals regardless of whether they were elective or non-elective?

Thanks in advance.

The chairman of a MEWA/VEBA Board of Trustees spends 5-10 hours per week on plan management matters and his co-trustees want to compensate him $2,000 per month from trust assets. He does a critical job and has served the trust 7 years without pay (no back-pay is sought).

The legality is sound in that he is not employed by any employer or union participating in the plan and is not employed by the association - He receives full-time pay from a non-participating employer group. He is completely removing himself from this discussion (other than answering the question of how many hours he devotes to the trust on average).

QUESTION: Any thoughts on how the trustees should benchmark and document this?

$2,000 would be $100/hour on a slow month which seems high...

Thanks in advance!!

One of the alternatives that I would like to present to companies to dealing with the new fee disclosure burden is to do this:

1-Terminate k plan and process payouts (direct rollovers or lump sums, as chosen by each plan beneficiary), those that roll to IRAs will be able to direct the investment of their retirement savings, not held in IRAs rather than plan trust--no fee disclosure or other responsibilities for the company,

2-Establish new profit sharing plan without participant direction of investment, just pooled accounts over which the trustee/investment committee makes all investment decision,

3-Add 401k feature to take effect 13 months after the old k plan's termination.

Does the 12 month prohibition begin to run from the day that employees may no longer make elective deferrals or from the date that the old k plan's assets have all been rolled/paid out incident to the termination of the old k plan?

If a plan that has allowed participant directed investments switches that, to trustee/investment committee making decisions over pooled accounts (the individual ones all swept into the pooled account), may the annuity investments be continued but simply be assets belonging to the employee upon whose life expectancy the annuity is based, with the rest of the benefits in the pooled accounts be shared proportionately?

For example, suppose 2 employees. One with $150,000 in benefits, of which $100,000 is an annuity's value and the other $50,000 is mutual funds. The other employee has $75,000 total benefits, all in mutual funds. The $125,000 is swept into one plan account. The second employee has 3/5 (60%) interest ($75,000 of $125,000), and the first employee has 2/5 (40%) interest ($50,000 of $125,000) as well as all of the annuity as held by the plan.

Is this permissible? No new funds going into the annuity, just avoiding penalties for cashing it out. Leaving it as just benefits of the employee on whose life expectancy the annuity is based, with no ability to direct what happens to that annuity.

Any problems?

We may have deposited too much in an employee's (or several employees) HSA accounts for a specific pay period. Since the HSA accounts are individually owned, I don't think the funds can be taken out of the account. Does anyone know if we can offset the incorrect amount with future contributions?

Thanks for any help.

Clients wants to contribute max for individual and family. HCE is the only one with a family. Is this discriminatory? or is it okay because it is offered to all?

could the employer contribution be 100% of deductible for everyone and be okay? rather than a specified dollar amount?

thanks!!

Hello all,

My (until now) clear understanding of the final service provider disclosure regs (issued July 16, 2010) has been that welfare plans are *exempt* from reporting indirect compensation.

At the same time, a service-provider client has received a demand from a welfare fund for indirect compensation information to report on Schedule C. Letter states that the Plan is required to report to DOL any provider that fails to respond. The welfare plan has more than 100 participants, and holds assets in a Trust, so is required to File Schedule C.

The DOL has affirmed that if a welfare plan is required to file Schedule C, then indirect compensation must be reported. See Supplemental DOL FAQs About The 2009 Form 5500 Schedule C, Q/A-23, available at http://www.dol.gov/ebsa/faqs/faq-sch-C-supplement.html

So... that leaves us... where?

There is a requirement that those welfare plans required to file Schedule C must report indirect compensation.

Simultaneously, providers to welfare plans are exempt from the requirement to disclose indirect compensation (which has not even been defined for purposes of welfare plans, and will be the subject of future rulemaking).

My instinct is to respond in writing the plan (actually the plan's financial auditor) that made the request to say that we fully support compliance with the DOL's requirements but that under currently law our service-provider client is not required to report anything.

Does this seem right? Need a reality check.

Thanks!!!

Is there any prohibition against depositing employer contributions on a payroll by payroll basis that will be tested on a cross tested basis assuming there is nothing in the plan document specifically preventing it?

For example one group of employees will receive 10% of their pay for the payroll period and another group will receive 5%. At the end of the year the contributions will be tested on a cross tested basis. If it does not pass the company can make additional contributions for the lower group. Would it also be allowable to forfeit contributions for the higher group in order to pass nondiscrimination?

I think TIAA CREF changed it's reporting on Schedule A. The beginning balance on the Schedule A report does NOT match the ending balance from 12/31/2010. Recently, an auditor asked me to change the schedule A such that the activity did NOT match the Schedule A report. They were using the Statement of Changes in Net Assets instead.

Does anyone know what's going on here?

Has there been any guidance on how plan auditors are to address the required fee disclosures scheduled for 7/1/12 & 8/31/12 in their 2011 auditor's report? Would these be considered subsequent events requiring to be included in the auditor's 2011 report?

Can I cross-reference the Amnerican Funds/John Hancock, etc., contracts for an explanation of the TPA Compensation that we receive?

new plan

2 partners and a few employees

the employees costs are deducted on the partnership return.

one partner has a target normal cost of 60k and the other has a TNC of 100k.

The partners want to deduct 80k each and amend benefits to eventually be equal.

if partners agree i dont see problem with above.

any thoughts out there?

thanks

Do arrangements subject to 457(f) have available a short-term (2-1/2 month) deferral rule similar to the one available in 409A. For example, a 457(f) arrangement says the substantial risk of forfeiture lapses on December 31, 2012 and the payment of the deferred compensation will occur on January 2, 2013. Is the deferred compensation taxable under 457(f)(1)(A) in 2012 (no short-term deferral rule available) or 2013 (short-term deferral rule available)?

Thanks,

Ken

Calendar year PS plan has 2 allocation groups with the allocation %s written in the doc. Other than initial plan eligibility there is no criteria to receive an allocation of employer contribution. Employer is considering amending allocation schedule to add a third group for 2012. It is my understanding that since there is no last day rule or hours requirement for an allocation it is too late to amend for 2012 as all particpants have already accrued right to current allocation schedule. Can the employer consider the new allocation schedule for compensation earned from the adoption date of the amendment and the current allocation schedule for comp earned prior to the adoption date of the amendment?? Thanks.

For small cashouts ($1,000), do you or your clients require proof of age (to determine the present value, etc.)?