I have a plan that uses a modified definition of compensation for the employer contribution. (It excludes bonus, overtime, commissions.) The nonelective contribution is calculated at 4% of modified compensation. When I run the 414(s) compensation ratio test, it fails. At this point, I need to run the 401(a)(4) General Test using a definition of compensation that meets 414(s). I simply use gross compensation. When I run it on an allocation basis, it fails. I then run it on a benefits basis and all of the rate groups pass the ratio test, but the gateway minimum test fails. It fails for 3 NHCE participants (using the gross compensation number) on the 1/3 test. (Obviously, everyone fails the 5% test.)

PLEASE CONFIRM

1) My feeling is that since I am using gross comp as my defined comp for 414(s), I can use the 1/3 of the gross comp to satisfy the gateway.

2) Since there are three NHCEs causing a failure of the gateway minimum test, I can provide an additional contribution to these three employees to satisfy the gateway test. (I will automatically satisfy any 401(a)(4) testing on the additional amount as it is only going to NHCEs.)

3) This will need to be accomplished via an 11g amendment and will also have to provide some additional vested percentage if the employees are 0% vested.

4) I would think that the additional contribution should be a uniform percentage. Therefore, I have calculated the NHCE with the highest additional percentage on the modified compensation (to achieve the gateway min on gross comp) and provided that percentage to each of the three participants. Does this sound reasonable? Or can I provide various percentages in order to simply satisfy the 1/3 gateway minimum contribution (based on gross comp).

Any comments are greatly appreciated.

The 2007 ADP/ACP test needed to be redone. The original tst did not include some pretax and matching contributions. The plan uses the prior year testing method. For the 2007 test, I know I use the 2006 averages. Can I use the disaggregated numbers? In other words, my 2006 test had two group the "otherwise excludable" and all others. Or do I need to revise my numbers to have one subgroup?

LLC, which is treated as a partnership, maintains a Cash Balance Plan and a PSP/401(k). Chief Executive Officer employee works full time for LLC and receives compensation of at least $245,000. LLC expects a partnership operating loss for 2009, a portion of which will be allocated to the CEO.

For qualified plan purposes, is the CEO's compensation $245,000 or is it $245,000 less her share of the LLC losses for 2009?

Thanks.

A DB Plan has 3 active participants, the two owners (husband and wife) and their son. Is this plan required to be covered by PBGC?

Hi - we are fairly new users of Relius - and have found that the canned loan reports in the report writer reports do not seem to accurately reflect activity for the time periods selected. For example - if someon pays off a loan in 2009 but we try to run a report for 2008 for an audit package = that person does not show up.

Has any one had this issue? Or have you created your own custom reports?

Any advise/direction would be greatly appreciated!

I don't have much experience with Post Retirement Life Insurance (PRLI) and i am trying to value the liabilities for a FAS report. I'm sure contracts are different from plan to plan would like to know if there is a basic principle. It was my understanding (or at least what i've been told) that a participant is not covered by the PRLI unless they retire (claim benefits) from active service so we weren't valuing liabilities for terminated particpants. I have a situation where it seems participants who terminate after age 55 (earliest date benefits can be claimed) but do not claim benefits until a later time supposedly become covered upon claiming benefits so these participants would need to be valued. Again, not sure if this is different for all contracts, but would like to get opinions if not actual facts. Any help is greatly appreciated.

SEP-IRAs are treated the same as traditional IRAs for required minimum distribution purposes, right? In other words, the required beginning date is April 1 of the year following the year in which the participant turns 70 1/2. I presume that it does not matter if the participant is still employed by the employer that sponsors the SEP-IRA (and is not a five-percent owner), as it would if dealing with a participant in a qualified plan under Treas. Reg. 1.401(a)(9)-2, Q&A-2(a).

Which official directive states that the effective date for a GUST restatement must occur on 1/1/02?

What official citation directs that a plan, unless a distribution of all assets takes place within on year, will stand as considered ongoing and thus must undergo amendments?

Anyone willing to describe the process from the perspective of the plan's actuary of a takeover of a 150 life DB plan who's sponsor went belly up and closed it's doors and boxed and stored what records it had, leaving the actuary/TPA as the only source of any reasonable records of benefit entitlements?

What is the actuary's responsibility? Can it get paid for it's time assisting the PBGC in compiling records?

What happens if employer refuses to contribute a SIMPLE Match, for his employees?

Is there an excise penalty he must pay? If yes, what IRS Form must he use to pay it?

Must the employees sue the employer to get the match ?

What punishment will be administered by the IRS ... upon the plan, on the employees, or on the employer, if the employer simply never contribues the match ?

The employer is a corp. The plan year is 2008. The match was due by 9/15/09. Is the employer allowed to contribute the match "now" (in Oct 2009)? I would think that a late match is better than no match at all.

Is there a penalty or ramiifications for contributing the match after its due date ?

ARRA amended ERISA sec. 602(2)(A) to add that if a person has a nonforfeitable right to a benefit to be paid by the PBGC as of the date of the qualifying event, the maximum period of coverage shall extend to the earlier of the death of the participant or December 31, 2010. This is ARRA 1899F. What is odd about this provision is that there is no requirement that the PBGC benefits be attributable to the sponsoring employer. Is this a drafting error, or did Congress really intend to say that when an employee receives benefits from PBGC as a result of Employer A's underfunded pension, that, when employee loses coverage under Employer B's group health plan, that Employer B must potentially offer coverage to the employee for a longer period of time?

I am trying to understand Section 17.04 of Rev Proc 2007-44 regarding intended adopters. It states that if the employer's 5 year remedial cyle ends "during or after" the 6 year pre-approved cycle, the employer should adopt the newly approved version of the pre-approved plan instead of executing a Form 8905. My client adopted a GUST plan on April 1, 2005 so is not a "prior adopter". They are on the 5 year Cycle D which ends January 31, 2010. Is this considered "during" the 6 year cycle, so they don't have to execute a Form 8905 prior to 1/31/10? And if so, what is their deadline for adopting the new pre-approved plan - 4/30/2010 or 1/31/2010? I am considering having them sign the Form 8905 and adopting the new plan by 4/30/2010. Any guidance will be greatly appreciated!

Would the assets in a secular trust be subject to the creditors of the participant? We're talking about an ERISA plan...obviously one that is not tax qualified.