I have a situation with a client that has me stumped. Existing 401a profit sharing plan effective in 2000. Employer discretionary contributions only, 100% immediate vesting. The TPA who set up plan was misinformed and thought the employer was a governmental employer (not subject to discrimination rules). So they set plan up to cover only a select group of HCEs. In addition, the employer has a 403b that covers staff employees (all those excluded under 401a plan). Now, 10 years later, a new TPA discovers mistake (employer is NOT a governmental employer) and thinks the original TPA tried to set up essentially a 457f plan using a 401a prototype plan document for governmental employer. Of course, because they thought the employer was a governmental entity, no Form 5500s were filed and the 401a plan has not been restated for EGTRRA (they in are Cycle A, 1/31/07 deadline). My mission now is to figure out how to correct this mess. Here's my proposal - establish 457f plan, transfer assets/liabilities from 401a plan to the new 457f plan and then terminate the 401a plan. What I don't know is what to do about the qualification issues with the 401a plan (discriminatory, no 5500s, no EGTRRA restatement). Do these even matter since the assets are being transferred to a nonqualified plan? Any suggestions or guidance would be greatly appreciated!

Must a retired 401k Plan participant (Single-K Plan) who turns age 70 1/2 in 2010 first satisfy their Required Minimum Distribution (RMD) before rolling over the entire Plan balance to their IRA?

They could of course delay taking distribution in this, the first year they must calculate their RMD, until April 2011; however, that would mean they would have to take two taxable distrbutions in 2011. For these purposes, they plan to satisfy their RMD from all sources in 2010.

There are different schools of thought on this. I believe they must first satisfy the RMD, but I am the minority in that opinion around here. Help!

I am the TPA of a 401(k) Plan. Participant has requested an in-service distribution of rollover account. The plan allows for this.

The distribution forms for the plan have a place for spousal consent and the Plan Administrator routinely reqires spousal consent for any distributions/loans from the plan. Normal form of benefit is Lump Sum. The Plan Document says that if normal form of benefit is not a QJSA, "all distributions can be made from the Plan to a Participant without the consent of the Participant's Spouse".

The participant requesting the distribution does not want to get spousal consent. Can we require Spousal Consent on this distribution as that is what we have been doing all along for distributions? Would the plan be in trouble treating this distribution differently?

Thanks much for your help with this!

My pension only gives credit for earnings up to $35,000, workers that earn more than $35000 earn no future pension benefits even though the employer contributes on those earnings above $35000. Is this legit?

Our ESOP plan documents state that all non-vested accounts be forfeited and allocated to remaining participants in the year after an employee terminates. It also states that if the terminated employee is re-employed prior to five one-year breaks, their account will be restored. We are in the process of hiring. A former employee, that would require restoration of their ESOP account at a significant cost to the company, has applied for the position. Would it be discriminatory to not hire him based on the financial impact to the company?

Has anyone else noticed that TIAA-CREF's document does not include the "20 hours per week" exclusion? Is there any scoop as to why it's not there, and whether or not there are thousands of sponsors who THINK that this group is excludable when in their plan document they are really not?

ok - I'm doing pretty well with these filings, once I'm on the website - but has anyone else noticed that there are problems with the site "hanging" or simply taking FOREVER to get from screen to screen? I was happy that I finally had some workable systems down with this and now the EBSA site is SOOOO slow.

I am working with a union that is establishing a plan to pay COBRA premiums for continuation coverage under the employer's health plan on behalf members that are laid off. We are running into issues regarding whether the union plan is subject to the COBRA continuation coverage requirements. The definition of "group health plan" is broad enough to cover the union plan and the definition of "covered employee" under the Code is broad enough to cover union members. This would indicate that the union plan is a group health plan subject to COBRA. The two primary "qualifying events" that could occur are death and divorce. We are considering two different design options to deal with the COBRA issue:

(1) Provide that there will be no loss of coverage under the union plan as a result of a qualifying event and thus no COBRA "trigger." As long as the dependent or spouse continues COBRA coverage under the employer health plan, the union plan will pay the premium. We are leaning toward this option.

(2) Comply with the general COBRA requirements, require the dependent or spouse to pay for the coverage and hope they will not elect to pay the premium. There will be issues if a qualified beneficiary did elect coverage, however, because they would be eligible for 36 months of coverage, but the union plan is only designed to offer coverage for the COBRA period under the employer health plan, which will be less than 36 months. We are not sure what to do about the period when the dependent or spouse would not meet the plan's eligibility requirements (because he or she had exhausted COBRA coverage under the employer plan), but had not exhausted the COBRA continuation period under the union plan. I did not find anything in the regulations allowing the COBRA continuation coverage to terminate based on a participant's failure to meet other eligibility requirements in the plan unrelated to the qualifying event.

I am no expert in dealing with COBRA, so I would like to know what we might be missing.

a MPP plan is freezing, future benefit accruals are ceasing? Would hours of service after the freeze date continue to be counted towards vesting?

How are you getting Schedule SB data into your software? Are you uploading an XML file provided by the actuary or are you typing in the information from the pdf of the signed schedule SB?

I'm an actuary using Relius and Relius can't create an XML file of JUST the Schedule SB yet, but I'd prefer to provide that since I have more control over it (and it's easier to upload data than to re-type it all and have it proofed.) I think other providers (not Relius) have XML file creation and upload and so does IFILE, so I'm trying to figure out if Relius just missed the boat on this.

We are qualified plan TPAs and I have been asked by one of my clients to quote on and/or take over the admin of their 125 plan.

Is there any testing other than the Section 125 eligibility test; the Section 125 Key Employee Concentration Test; and the Section 125 Contributions and Benefits Test?

Are these also the tersts that are performed on a premium-only plan.

Thanks.

Posted several plans through Web Client and they went through fine with the message "Filing Received." The last two we have posted did not come back in Web Client with that message but say "Processing Stopped." (Both indicated errors with the signatures but we know that both were ok). We checked the DOL website and BOTH OF THESE PLANS ARE RECEIVED AT DOL! Are we finished? I think so! I think the "Processing Stopped" error message we received on Web Client is bogus. I would REALLY like for Web Client to tell me "Filing Received" but my status history in both plans shows "Stopped" as the last status. Anyone else seen this?

Assocaite received $50,000 in compensation in error. The associate is now being termed and the company is pursuing collections.

There were deferrals on this ineligible compensation. If the compensation is recovered, do we reverse the deferrals accordingly? What if the associate has distributed their account and there is no way to back out the deferrals? Is the plan at risk because there are ineligible deferrals in plan?

Are Non-ERISA Church DB Plans subject to top heavy??? Thanks.

In 1965, aged 90 years and with no heirs, Jeanne Calment (1875-1997) signed a deal to sell her former apartment to lawyer André-François Raffray, on a contingency contract. Raffray, then aged 47 years, agreed to pay her a monthly sum of 2,500 francs until she died. Raffray ended up paying Calment the equivalent of more than $180,000, which was more than double the apartment's value. After Raffray's death from cancer at the age of 77, in 1995, his widow continued the payments until Calment's death at age 122.

A certain fund platform does not allow deductions from the participant accounts to pay for transactions such as loans or in-service withdrawals or distributions. A client on this platform does not want to pay our (very modest) fees for these transactions, feeling they should be borne by the participants. Fund company suggests that the client ask the participants to hand in a personal check with the completed distribution forms.

Logically, this doesn't seem very different than deducting the fee on the way out of the plan, but has anyone been doing this? Is there any formal or informal regulatory guidance? What kind of up-front noticing do you give to the participants? I was thinking just an additional line on the Expense Policy.

And, yes, I suggested that the client might want to change fund platforms if they feel this strongly about it...

Thanks!

The first Social Security recipient

• Ida Fuller retired in November, 1939

• Received the first check in January, 1940

• She contributed $22 in taxes from 1937 through 1939

• Her first check was for $22.54

• Ida Fuller died in December 1974

• She lived just over 100 years

• In that time she collected Social Security payments totaling $20,944.42

Does anyone know if the Form 5558 extension has to be "attached" to the Form 5500 electronic filing with EFAST-2. Or is mailing to IRS sufficient. Thanks...

A salesman is trying to sell a friend of mine this idea.

That he can roll his IRA into a Profit Sharing Plan (this will need to be set up), then use the funds in the PSP to purchase life insurance (1 premium payment), and then an Irrevocable Trust can purchase the life insurance from the PSP (at its FMV). Thus, very little is left in the retirement plan to be subject to estate taxes and income taxes, and the life insurance pays out to the ILIT and avoids estate taxes.

To me it seems like a blatant tax shelter that the IRS would be all over, but just wanted to see if anyone had heard of this strategy. The strategy around it is fairly legitimate from what i can tell as they quote revenue rulings to value the life insurance, etc.

Any input is appreciated.

Hi all,

Looking for solid information to backup/prove wrong an assumption. Situation is: person laid off, went on COBRA, is rehired within the same plan year. Question is, becuase there was no break in coverage (significant or otherwise), shouldn't the employee's accumulators continue/remain rather than be reset? For instance, if the employee had already met $400 towards a $500 deductible, shouldn't that accumulator stay as is? OR, when s/he re-enrolls in the plan as a new hire, would s/he have to start at $0 having been met towards the deductible?

My assumption is because 1) it's the same plan year, 2) there was no break in coverage due to continuance through COBRA, and 3) in the same scenario you wouldn't have to meet a pre-existing condition clause again, the same would be true of accumulators (whether deductibles, OOP Max, co-ins max, etc.).

The plan document is silent other than to state a rehire will become eligible on the first of the month after re-hire. I cannot find any info. in the EBIA COBRA manual to backup my assumption.

Any input would be appreciated. Thank you!