Hi,

Question: Employer who is the trustee of the 401(k) plan wishes to transfer the plans investments to a new adviser. Are there any standard formalized procedures/laws for notifying the old investment advisor and a legal time from for the old advisor to complete the transfer? Limit on fees for leaving?

Thanks.

erisaauditor

Company A acquires company B in a stock transaction. Company A has a defined benefit pension plan and a 401(k). Company B has only a 401(k) plan. Can company A continue to cover only employees of Company A in the defined benefit plan, or must Company A cover the "new" Company B employees also?

We were told that going forward, we need to change the way we administer our health benefits. We used to always use the effective date of coverage as the qualifying event date as long as the form was received by us within 30 days. Now we are told that we would use the effective date of the date the form is received by us, not the qualifying event date. This doesn't seem to make sense to us, does anyone know where this new legislation is written? Is this a governmental thing?

When must an employer match be deposited to the Plan? The Plan operates on a calendar year (January 1st to December 31st) and the fiscal year is October 1st to September. For instance, if it was 2004, the plan year is January 1, 2004 to December 31, 2004 and the 2004 fiscal year is October 1, 2005 to September 30, 2005. I know if the both plans operate on a calendar year, the employer contributions are due 30 days after the form 1120 (taking into accoutn all extensions).

But, what about in the case when the employer and plan operate on different years? When would the employer contribitions be due?

A portion of a participant's monthly benefit was previously assigned via QDRO. The participant has now requested to start the pension and low and behold, the participant is remarried to the former spouse, and the QDRO was never revoked (I presume this could be done?).

So, presumably we still present benefits as if there had been no remarriage?

Any help clarifying the following would be appreciated.

A PS plan has an "employed on the last day of the year" allocation requirement. The company also likes to deposit PS money into the participant's individual accounts throughout the year. The employer deposits an equal percentage of pay for everyone, or at least a makes a reasonable estimate to keep things equal. Not the cleanest way to do things, but valid nonetheless. If a participant leaves before year end, then the PS money for that participant is moved eventually to all of the eligible participant accounts, based on the final contribution allocation calculated after year end.

Question 1: This is valid, is it not?

Question 2: The participant can direct this current year PS money, just like the rest of the account balance, correct?

Question 3: By depositing PS money during the year, the employer is "committed" to at least this PS amount, right? That is, the employer cannot make $50,000 in PS deposits during the year, and then at year end decide that the company only wants to make a $20,000 contribution?

I have an accountant argueing that because of the employment on the last day requirement, that no allocation is valid and that no PS money should be going into anyones accounts during the year, let alone having the participant's self-direct this money that is not really their's yet. I see his point and I agree that making deposits in mid year is not a great idea.....but I still don't think that any of this is necessarily wrong.

Any thoughts, comments or cites that can make the case one way or the other?

Thanks

any investment advisors out there carry a fiduciary erisa bond. i am seeing that there is an exception for advisors that do not have discretionary authority. i want to see if others agree or what others are doing?

We recently heard about this company's services and were wondering if anyone in our community was using them (or a company similar). I have been checking out their demo videos on their website this week, and it seems fairly easy. It would sure save time and money to be able to send and amendment to a client via email this way.

Anyone have thoughts or comments on this? If you have used this company's services - or those of a similar company - we'd like to hear your feedback.

Thanks!

Q-2. Can a 401(k) safe harbor plan match elective and employee contributions on a payroll-by-payroll basis (instead of on an annual basis) without making additional contributions at the end of the year to take into account the total amount of an employee's compensation for the plan year?

A-2. Notwithstanding section VII.A. (or any other provision) of Notice 98-52, the requirements of sections V.B.1. and VI.B. of Notice 98-52 that relate to matching contributions may be met for a plan year by meeting such requirements either (1) with respect to the plan year as a whole, or (2) if the plan so provides, separately with respect to each payroll period (or with respect to all payroll periods ending with or within each month or plan-year quarter) taken into account under the arrangement for the plan year (the "payroll period method"). If the payroll period method is used, however, matching contributions with respect to elective or employee contributions made during a plan year quarter beginning after May 1, 2000 must be contributed to the plan by the last day of the following plan year quarter. Accordingly, in the case of a calendar year plan that uses the payroll period method, matching contributions with respect to elective or employee contributions made during the calendar quarter beginning July 1, 2000, must be contributed to the plan by December 31, 2000. The payroll period method applies only for purposes of satisfying the ADP safe harbor matching contribution requirements of section 401(k)(12) (section V.B.1. of Notice 98-52) and the ACP safe harbor matching contribution requirements of section 401(m)(11) (section VI.B. of Notice 98-52).

the above copied from IRS Notice 2000-3 on Safe Harbor 401k Plans

It seems simple questions just lead to more confusion. How does any Retirement Plan career enthusiast stay sane??

HR had communicated to me through email that our safe harbor match is payroll based but the notice that was provided after our recent plan conversion says it is based on compensation annually. I wanted clarification and was told it was payroll based because they make the match each payroll period. I asked if a corrected notice would be provided and was told it was believed there would be a corrected notice and that one had been requested from the service provider. Since the answer to the question impacts whether or not I decide to increase my deferral percentage in the next pay cycle and the SPD was not clear and my opportunity to change my election is soon to expire for the next payroll period and because I had thought it needed to be explicity stated in the plan if it was payroll based I asked to review the plan document and adoption agreement so that I could be sure one way or the other. As it turns out the AA/BPD is also unclear. There does not appear to be anything that explicity states either that the match is annual or that it is payroll based. HR has asked the document provider for the exact location of the plan provision that states the match is payroll based. Again because the looming deadline to change my deferral I went on a search for information. The BPD does state the contributions can be (not will be) deposited more frequently than annually. Does this satisy the "if the plan so provides" in notice 2000-3? Does this mean if the employer matches each payroll that the match is payroll based by virtue of the act of depositing the match each pay period? Does this also mean that if they stop matching each payroll period it will be annual? If both of these are true does this also mean that it can change the type of match without plan amendment? Does it also follow that they could match per payroll for a portion of the plan year and only the portion that is not matched per payroll would have the match determined based on compensation earned in the partial year rather than on a payroll basis? Does anything regarding the computation period of the match need to be provided in the annual notice?

Thanks for any help in clearing up my confusion.

For those who may recognize me from my other thread, the reason I asked about the match is because I didn't want to increase my deferrals to recoup the portion of my deferrals that are not reinstated to the plan through the correction process if my increase would be subject to a true-up and thus put me in a better position than I would have been in had my deferrals not been stopped inappropriately. And yes, my head hurts. Not even 800 mg Motrin seems to help.

Does anyone have any current experience with Audit CAP sanctions for EGTRRA non-amenders, not in the DL context? There are some posts on the board indicating that the sanction may be about double the amount in the table in the latest EPCRS guidance, and I am wondering whether this seems to be the typical opening bid. The guidance just says that the sanction is expected to be larger when a non-amender situation is identified through an audit vs. the DL process. Anyone have much success in getting the Service to back the sanction down through negotiation or do they tend to stick with the opening bid?

Much obliged, fellow practitioners of the deadly arts of ERISA.

Is it legal (particularly, is it legal in Oklahoma) to mandate participation in employer-provided health insurance? The exception would be evidence of other coverage (spouse's plan, Medicare, Tribal insurance, Veterans insurance, etc). If it makes any difference to the answer, we do have a Sec 125 premium-only plan.

Basically we'd be saying, if you want to work here, then you have to be in our health insurance. I.e., participation would be a "condition of employment".

The reason is to reduce adverse selection. We're leaving a multi-employer association due a 37.6% increase this year and want to minimize the risk of major increases in coming years by maximizing our number of insureds.

I’m really out of my element here, but am trying to help a client – would appreciate any help you can give! If I should post on another board, please let me know.

Several years ago, a fire fighter’s local union set up a post-retirement benefit trust under Section 105(e) for the purpose of helping to pay for health and life insurance benefits for retirees for the period between when they retire at age 55 and the time that Medicare starts at 65. After they attain age 65 they’re no longer eligible for the benefit.

The plan reimburses the retirees (annually) for a portion of the out-of-pocket cost for health, dental and term life insurance premiums, up to an annual limit. The trustees determine the amount they will be reimbursed based on fund performance, health costs and the number of eligible retirees that year. The trust is funded by an annual payment made by the City. The firefighter’s union agreed to this payment in lieu of a 1% pay increase that would have started the year the plan was set up.

Questions –

1. How would you go about terminating this type of plan and have each employee who contributed to it (indirectly) be treated equitably? You have varying categories of employees based on their age, how long they’ve “contributed” to the plan, and whether they’ve retired or not and starting receiving benefits. The plan has also had significant investment losses in the last couple of years.

2. Could the assets be “split” and allocated to some type of account for each retiree and pre-retiree based on age and how much went into the plan for their benefit?

3. If so, could some type of individual account be set up for each employee to manage on their own?

4. Any way any of these assets could be transferred into a qualified plan for the employees?

5. What type of plan is this ?!?

Thanks in advance for any input on this!

Found a provision in an EGTRRA volume submitter doc that requires a participant who alleges failure to implement investment direction to file a claim within the earlier of 60 days after the mailing of a document from which the error can be discovered or 1 year from the date of the related transaction error. Claims filed outside that period will be limited to the benefit determined if the claim were timely filed. What allows them to put this timing restriction on claims? Does it have to do with the calculation of the claimed loss?

I am confused as to the IRC limit for defined contribution plans. According to IRC 415©(1), the limit is the lesser of 1) 40,000 (indexed for inflation) or 2) 100% of participant's annual compensation. However, with respect to 2), the IRS website states the limit is 25% of participant's annual compensation. I am considering a money purchase plan and want to know if the limit is 25% or 100% of annual compensation. Can anyone refer me to the code?

http://www.irs.gov/irm/part4/irm_04-072-007.html

http://www.irs.gov/retirement/article/0,,id=108949,00.html

We have a Safe Harbor 401k plan with a 3% NE contribution - no match. One of the participants called today to see why there was no 401k coming out of her check. The payroll service they used stopped her 401k deduction in early January 2009 with no reason. The participant is just now noticing on her paycheck that no 401k has been withheld since January.

The payroll service said they have no idea why they stopped the 401k deduction. They are asking what they can do to rectify the situation. I'm not sure what the payroll service can do.

Any ideas?

Our 5500 preparer is telling us the following:

Question 8 (amendment increasing value of benefits): Check INCREASE. This response is required for all plans that base benefits on compensation, where the 401(a)(17) compensation limits increase every year as published by the IRS.

Is that really true? The instructions to Line 8 say to check "increase" if an amendment was asdopted during the plan year that increased the value of benefits in any way. This includes an amendment providing for an increase in teh amount of benefits or rate of accrual, more generlous lump sum factors, COLAs, more rapid vesting, additional payment forms, or earlier eligiblity for some benefits.

While, I will concede that an automatic increase under 401(a)(17) is a cola, we didn't amend the plan this year to make that increase.

Thanks

I have a DB plan document that defines AE as the pre-PPA 417(e) basis for everything, lump sums and converting to optional forms. It defines the Applicable Interest Rate as the 30 Year Treasury Rate and the Applicable Mortality Table as the prevailing commissioner's standard table per Code Section 807(d)(5). The plan pays full lump sums upon termination of employment.

I have read Revenue Ruling 2007-67 and IRS Notice 2008-30 and particularly per Notice 2008-30 Q&A 18 it seems clear that the plan sponsor can switch to the PPA 417(e) basis for both calculating lump sums and for annuity conversions without grandfathering anything.

Agree or disagree?

Here is the situation:

Company A & B are part of a controlled group. They performed coverage testing in 2006 (with just the 2 plans). In 2005, Co. B acquired a new company (Co. C). They want to rely on the transition rule for 2005 & 2006. In 2007, Company A&B still want to rely on the 2006 test results and not complete coverage for Company A&B. The demographics of the plan are Co A&B have about 15,000 with 3,000 or so HCEs. Company C has about 100 ees, with 75 HCEs. Obviously, Company C has coverage issues. Company C is to complete coverage including Co A&B as nonexcludable, not benefiting.

Can Company A&B use the2006 Coverage Test still in 2007 since members of the controlled group changed? Any thoughts would be greatly appreciated.

The gap period income distribution requirement is gone now for returns of excesses due to ADP/ACP testing and going over the 402(g) limit, but can I continue to distribute gap period income if I choose to (and leave it in my plan)? What are most people doing?

I have been completing 5310's and have some general questions.

1. On 15a, should the Current Plan Year always end with the plan termination date, or current date? I have a plan that terminated 8/31/08. Would I use 8/31/08, 12/31/08, or 12/31/09?

2. Number 18(b) - For each year, do I provide the amount of forfeitures that was forfeited from employees accounts during the year, or do I provide the amount of forfeitures that was reallocated to the participants during the year. Since it is in a section with contributions and rollovers, I would think they want the amount reallocated. However, since the 5310 instructions say "If these forfeitures resulted from a cashout for a year not listed on 15a..." it makes it sound like it wants the amounts actually forfeited from the participants for the year.

3. Number 15a(6) - are they asking for all participants who terminated with less than 100% vesting, or all participants with less than 100% vesting who took a distribution? I know it says number of participants who terminated, but then 15b has you list those people, along with the amount and date of distribution. The people who didn't take a distribution obviously wouldn't have that, so I didn't know if they needed included in 15a(6). Also since those people are made 100% vested if they don't take a distribution by the plan termination date, they may not be the people the IRS is interested in.

4. Number 4e - Is this participants as of the plan termination date, or some other date?

Thanks.