Code Section 411(a)(6)(D) provides that for purposes of determining a participant's vested percentage, a plan can disregard the prior service of a "nonvested particpant" after five consecutive one-year breaks in service. Code Section 411(a)(6)(D)(iii) defines "nonvested participant" as "a particpant who does not have any nonforfeitable right under the plan to an accrued benefit derived from employer contribuitons." Here's the question: If a participant is fully vested, but takes a complete distribution of his or her benefit under the plan (such that the participant no longer has "any nonforfeitable right unde the plan to an accrued benefit derived from employer contributions"), and is rehired after five consecutive one-year breaks in service, can the plan disregard his or her prior service in determining his or her vested percentage going forward?

Sal Tipoldi's treatise subscribes to the "once vested always vested" view, but without any authority. Based on Treas. Reg. Section 1.411(a)-6©(1)(iii), it appears that whether a participant is "nonvested" should be measured at the end of the break in service priod, and not the beginning, which would argue for disregarding the prior service and making a rehire start over with zero years of service for vesting purposes.

Any help with authority would be appreciated.

My boss is wondering how other TPAs are handling the Participant Fee Disclosures.

Is the TPA providing the Plan Sponsor with any information regarding the disclosure requirements and letting them know it is the PA responsibility to comply or is the TPA gathering the data and preparing the disclosures without PA assistance?

What about the fund data, is TPA taking the responsibility on gathering and benchmarking, etc or are they getting that data from the Investment Advisor?

We had a conference call with Sungard yesterday (we are currently using Relius) and their new Wealth Station module seems like it will provide a lot of the data we need and in a usable fashion but we want to be sure we need the module before spending the money on it if the advisor should be giving this information to the plan administrator and not us.

Thanks!

How would you feel if your boyfriend/husband wanted to get life insurance on you or the both of you? Whole family? This isn't about me, it stems from something that happened in my city where a girl took out life insurance on her 11 month old and then she later drowned in the tub I just don't know if I'd feel comfortable having life insurance on me so young. Just makes me think. Kind of like a prenuptial agreement would be a slap in the face to me. What about you?

May litigation proceeds relating to a life insurance contract ever be treated as plan assets if the insurance contract was previously held in a qualified plan and subsequently rolled over to a different retirement vehicle?

Thank you.

17 years this month!

I know I have learned a lot from others' comments, questions and the like.

I have a deferred compensation plan(457) sponsored by my municipal employer located in New Jersey. I was told by the plan's local representative that the only way to take money out was at retirement or if I quit. I called "Metlife" directly and was told by their corporate representative, that I could take money out for hardship, which included for example, my desire to obtain funds for a downpayment as a "first time homebuyer". My employer sided with the local plan representative who is of the opinion that "first time homebuyer" doesn't qualify as a hardship and that the IRS expressly forbids it! WHO IS RIGHT?

Second, I have lost faith in the trustworthiness of my deferred compensation plan's representative and their guardianship over my funds. Can I rollover the accumulated value of my plan into a retirement plan sponsored by another investment company or bank. My township employer, together with Metlife's local plan representative maintain that this is only possible upon my retirement (in 2015) or permanent seperation. Can you point me in the right direction to secure competent answers to the above questions?

I have a 401(K) plan and the owner will be required to start taking his Required Minimum distributions this year. The plan also has profit sharing and Roth sources of money. When calculating his RMD for 2012, I'll use his balance as of 12/31/11. But, do you consider the Roth contribution source in the 12/31/11 balance, or are they excluded from the calculation?

http://hr.cch.com/news/pension/042312a.asp

Take a look at this, from today's BL newsletter. This has always bothered me because it puts SE individuals at a disadvantage from corporations. IF a corporation does a PS contribution for the owner, the PS contribution is not subject to SE Tax. But because the SE's contributions are deducted on page 1 of 1040, they are still included in SE Income.

Am I missing something or do others agree that SE Individuals are paying more in payroll taxes (assuming two otherwise identical businesses)?

We had an executive sever employment. His 457(b) paperwork with distribution options was sent to his home. Executive was away for a long period of time. Executive's spouse was home but never opened the mail with his 457(b) paperwork. We paid out the 457(b) account in lump sum. Now Executive has returned and wants to know if there are any options for returning the money to the Plan or rolling it over.

Any ideas?

The 401k plan has as one of its investments a few Brazilian ADR shares. Each year there is a small amount of tax withholding at the source that is removed from the trust. Is this something that can be recouped or is it simply a trust expense? Should the trust be exempt from this withholding?

I have several small plans where each Participant has his own brokerage account. Do we have to list the fees to buy and sell stocks and bonds or is just stating that there is a $25 per year fee enough?

I think I am getting a pretty good handle on what needs to be disclosed as far as compensation for the TPA (me) and the CPA doing the audit on large plans. But I have almost no information on what needs to be disclosed as far as comp for the investment adviser and the investment company. Are the prospectuses sufficient?

I need a $250,000 life insurance policy ASAP for $250 a month or less, lasting around 12-24 months. USAA doesn't really have anything that fits this so I'm looking for recommendations of other companies. Who do you have your life insurance policy through? Do you like them?

Plan Sponsor adopts a brand new safe harbor plan with an effective date of 1/1/2011. This is a safe harbor match, which is determined/calculated on a per payroll basis. The Plan Sponsor did not actually Adopt the Plan until April 2011 and 401(k) and match did not actually start coming out of employees' paychecks until May 2011. The owner is self employed and will have schedule C of well over $245,000.

Being that the payroll for 401k and match did not actually start until May, is there any reason I should have to pro rate the compensation limit even though the effective date is 1/1/2011. Meaning (245,000 / 12) * 8) = 163,333.33. My concern is that the nature of the owner's compensation is such that it unfarily benefits the owner, by allowing him to take into account the entire year of pay, while his employees did not have the same benefit.

My concerns would be alleviated if the Plan provided for an annual match, because then everyone would have the advantage of 12 months of pay.

When we first submit a 5500 in behalf of a client, we follow the process of asking them to request us to file electronically, and then countersign their request and return it to them.

When we amend the form, do we need to go through the request process again with the amendment or does the initial request cover the amendment?

In a DB plan that is currently making monthly payments out of current plan assets to retirees, what happens to these benefits when a plan is terminated? do they convert to lump sums? do they purchase annuities for the retirees? Thanks.

generally the plans I work with provide that if an employee terminates with a vested benefit before NRA, for example age 40, he can recieve his benefit as an act equiv. life annuity at age 40.

so when computing the MVAR I compute the EBAR for each age from 40 to NRA of 62 for eg.

This often results in an MVAR that is much larger than the normal EBAR.

It appears in the above eg. vesting percentages are not applied.

If a plan (though not common) has terms that only provide for payment of benefit at NRA (aside from plan term) then it would seem that the MVAR would only be computed at NRA.

This would minimize the disparity between normal EBAR and MVAR. Perhaps small payouts (under 5k) could be made and that is it.

The above is presented in the context of a small plan (i.e. less than 10 participants).

Why not? Am I missing something?

Thanks

Does anyone know if the new cost disclosure rules that apply to 401K plans also apply to profit sharing only plans whose assets are invested by the plan trustee and are pooled together. These plans only get valued once a year. Partyicipants have no control over the investments.

THank you

A Defined Benefit Plan must pass either the ratio test or the ABT to pass coverage, correct?

We submitted a Plan to the IRS for a DL upon termination and they are questioning why some of the variations of the ABT fail, and are wondering if this means the coverage test fails as a whole (interestingly, they are posing this more as a question to us, as opposed to a statement off act - shouldnt the IRS know the rules??). Seems to be a moot point however, since the Plan passes the ratio test, which means it passes coverage.

Is anyone familiar with the rules regarding purchasing a life insurance contract in a 401k or Individual 401k?

Specifically, I'm looking for what the maximum premium amount can be. i.e. 50% of account value, or maximum dollar amount.

I would also like to find any source information from the IRS, but have been unable to.

Thank you.