A 401(k) Plan has a participant that terminated in 2005 and they still have an account balance as of 12/31/08.

My question is where to report them on Form 5500. Line 7b or 7c

7b = Retired or seperated participants receiving benefits

7c = Other retired or seperated participants entitled to future benefits.

I am thinking since they have not requested a distribution yet, they are entitled to future benefits and should be reported on line 7c.

Is this corrrect?

Figured a few people on here might find this interesting...

http://www.chron.com/disp/story.mpl/business/6437320.html

Any thoughts? This is new to me and I haven't found much guidance on point.

Thank you!

Preparing annual administration for a client we discovered the client approved a loan to a participant for $49,000 in August 2008. While the participant's account balance would support a loan of that size, a prior loan with an outstanding balance of $7,000 at August 2007 was ignored in calculating the maximum available loan. I understand that this not a self-correction type of prohibited transaction. What should be our steps to help the client clean up this mess? Thanks!

Can a collectively bargained, multiemployer plan be amended to allow non-union employees of other employers to participate in the plan? I would think that this would make the plan a multiple employer plan as well. If this is allowed, would the multiemployer plan rules only apply to the union portion of the "plan"? Also, would there still be just one 5500 for the entire "plan"?

We are considering holding a "vendor plan summit" this fall. We have ~15 large vendors (health, dental, vision, Rx, EAP, retirement) that we want to bring together to discuss resources, tools etc. to assist us in our health strategy initiative. Has anyone done a program like this and if so, what has been the reception? Any advice? Thanks.

We received the following from an advisor to a client today. I wondered if this was mere rumor, or if any of you have discovered anything similar. Client received a $15,000 penalty letter for not filing a 2006 form.

"However, I have encountered this same issue with other plans handled by an outside actuarial firm. They informed me that this problem was very common. The reason for that is that the IRS hired an outside firm to handle the returns for the year in question and approximately 30% of those returns have come up as never having been received. The actuarial firm had to write to the IRS 2-3 times before the IRS acknowledged their receipt of the return and eliminated the penalty."

P.S. - these are EZ forms.

our clients assets were acquired and its plan terminated. the new employer of the employees will be starting a new plan. there are participants with loans that would prefer if they could roll their loans over to the new plan. i believe they could do this. however, the loan policy of the old plan provides that you have to be a party in interest to have a loan. in this case since they are now terminated they are no longer parties in interest. my question is whether this puts them in default and makes the loans ineligible for rollover or do they have a grace period where the loan would be eligible for rollover?

I am currently living in California and I am thinking of creating a living trust to avoid probate. I have so many questions that I don’t know where to begin. I know I need to talk to a lawyer, but not really sure which one. I have already searched online and found, San Diego Estate Center and Morgan Stanley, but I don’t know who to speak with. How do you find a good lawyer for living wills and trusts? I live in Southern California and would love recommendations!

Does the top heavy benefit continue to increase in a frozen plan if participant salaries continue to increase after benefits are frozen?

Our DB val provider is telling us that the FTAP and AFTAP on schedule SB (lines 14 and 15) are to be computed using only vested benefits in the denominator for the funding target. Section 430(d)(1) and 430(d)(2) define the Funding Target and the FTAP, respectively, and make no mention of using only vested benefits.

Are there regs out there saying that the FTAP and AFTAP should be computed using only vested benefits? I believe this goes against the line-by-line instructions for the SB. Has anyone else run into this?

Joseph

I am confused. Each participant gets quarterly statements but vesting is not shown on the statement.

Annually, we (TPA) prepare a vested balance statement showing vesting.

In late 2006, the multiple source notice was sent to EES advising them of this.

How often and when does this "multiple source notice" need to be provided.

Is it quarterly? 45 days after quarter?

Help!

Employer sponsors a SARSEP. Employer called us recently concerned about several potential issues with their plan. I just want to make sure that I have a firm grasp of possibe repercussions of the potential errors:

1. Document has not been updated since 1993. I think we can correct using VCP.

2. Potentially less than 50% of the employees participated in a given year. If that occurred the employer ceased to be an eligible sponsor. Is the IRS just going to allow the plan sponsor to cease contributions at this point? It seems like that from reviewing Rev. Proc. 2008-50.

3. Potentially the plan could have failed the deferral percentage test in any number of years. Under VCP employer should be able to correct in any such error by making nonelective contributions for any such and adjusting for earnings.

4. Potentially employees may not have been provided with an opportunity to participate. Under VCP this requires nonelective contributions adjusted for earnings.

5. Potentially excess contributions (elective deferrals) could have been made. Under VCP this requires refunds adjusted for earnings.

Am I grasping this correctly; particularly point #2?

Thanks in advance for any guidance.

An employee terminated employment and has sued the plan sponsor of a group-term life insurance plan for failure to notify the employee of his right to "convert" to an individual policy. Clearly, COBRA does not apply to life plans. My questions are:

1. Does ERISA preempt this claim so that it does not matter what State law may require (i.e., require conversion rights, require advance notice, etc.)? If so, there would be no remedy for the employee, because to my knowledge, ERISA does not require conversion rights or advance notificatin.

2. If the life insurance contract itself provides for the conversion right, but does not specifically require the plan sponsor to notify the former employee of his conversion rights, has the plan sponsor, by its failure to notify the individual, breached any "fiduciary duty"?

I realize there are sub-issues galore, but I thought I would ask if anybody has encountered this issue and has any opinions that could help us navigate through this grey area.

Thanks much.

Lyme disease is rarely fatal. Since it affects people's health adversely, however, it must affect their mortality. Does anyone have ideas how to approximate this effect?

Thanks for any help!

Hello to all. Can we have a Last Day Rule, 1000 hour requirement, and Vesting schedule on a discretionary match to satisfy the ACP testing requirement, when used in conjunction with the 3% Safe Harbor??

Our normal formula is 100% on the first 3% deferred plus 50% on the next 2% deferred. I know there are requirements of this discretionary matching (can't match on more than 6% deferred; HCE's cannot get more than NHCE's, etc., etc., etc.)

Thanks. One of us has been reading the CCH and is getting the rest of us confused. Have we been doing this wrong??

I'm soliciting opinions on this. Most plans that provide for a safe harbor nonelective (or match, for that matter) will be either prototype or Volume Submitter plans.

Technically, this is not a required amendment. So if a plan sponsor adopts it, will this remove the plan from prototype or VS status?

Common sense would be that it would not. This new relief in the proposed regulations is predicated upn the idea that it is better to have an employer continue to maintain a plan, rather than have to terminate it. Yet many small employers, when faced with filing for a determination letter, would simply opt to terminate the plan. When they truly have a business hardship, they surely won't want to pay extra fees associated with "custom" documents.

Any thoughts on this issue? Anyone discussed this with the IRS yet?

Many thanks.

Does anyone here have any insight to establishing and admisistrating a Self funded disability policy?

What laws must a retirement plan amend for after 12/31/2006? What provisions of the Pension Protection Act of 2006 must one amend for after 12/31/2006?

We all know that all participants must be notified when a 436 restriction applies within 30 days from the date the restriction applies. It does not appear, however, that there is any parallel obligation to notify particpants that a restriction has been removed One might ask, "What's the difference? The participant will know this when he/she gets a benefit election package." However, notifying the participant of the benefits restriction removal might affect the participant's financial planning.

Is anyone aware of a legal requirement to notify participants that restrictions have been removed?