I have received an email inquiring about a new regulation that Obama has signed into law that allows for distributions from 403(b) plans. I have not heard any information about new 403(b) regs and I cannot find anything on the internet that is recent enough to have been signed by Obama.

We have ERISA 403(b) clients who want to get out of AIG/Valic, with its current downward spiral. What are your clients doing to transfer? Our clients don't want to put new money into AIG or AIG annuity products (both group and individual annuities), and they want to do something QUICKLY.

What are you advising? Terminating the 403(b) and simply starting a 401(k)? Amending plan doc to allow a trust, and client says up new trust to collect new deferral money -- and then transferring to whatever new provider (whether for a new 403(b) provider or newly adopted 401(k) plan/provider).

What can be swiftly done to protect old/new money? Satisfy fiduciary obligations (after all, because these are products, backed by a company that may or may not be around next year), what's an ERISA 403(b) fiduciary to do?

Running an end of year valuation (12/31/2008). AFTAP for 2008 plan year using 2007 RPA current liability (12/31/2007) is about 124%.

There is a Carryover Balance as of 12/31/2007 of about $88,000. The 2008 minimum contribution is too high for the client (big surprise). Can I burn some of the Carryover Balance to offset the minimum contribution? Or, did an election have to be made by the end of 2008?

A pretty big mistake caused a payroll clerk to "withhold" and contribute nearly 4-8 pay periods worth of deferrals for a participant in a single pay period. Deferral agreement indicates somewhere in the area of 25% per pay period. So, this participant didn't even receive a paycheck for that period, and now they are reducing the next few paychecks to make up for the amount they withheld over the period compensation.

Not only that, this withholding took place about 6 weeks (or 20%) ago. The issue was brought to the attention of the payroll administrator promptly, who said there was nothing she could do.

It is my understanding that the company who made the error (sponsor) is liable for the losses of the deferrals made in error; they are saying otherwise. My next step is to get the DOL (as the sponsor is not being very easy to work with) involved but I would like some feedback in case anyone has handled this situation before.

FINALLY a definition of "involuntary termination"!!!

"Involuntary termination is a termination that is at the direction of the employer."

"while death of an employee can be a qualifying event for that person's beneficiaries to be eligible for COBRA coverage, death is not an involuntary termination of employment."

House Ways & Means Committee

On their website the PBGC shows the maximum guarantee benefit at age 55 as $24,300. The PBGC shows the PV of guaranteed maximum in 2009 at age 55 as $349,238. This determination ostensibly uses the 2009 applicable mortality table and segment rates of 4.78%, 5.45%, and 5.46% I agree within reasonable tolerance for ages 65 and 62 but not at age 55, where the PBGC is about $5,000 higher.

Would someone mind checking as it appears one of the PBGC published guarantee or pv is off. Or alternatively, I am off, which is my self-accepted norm these days.!

Has anyone seen anything addressed regarding the new Annual Funding Notice (aka M.F.P.) that (a) reported assets will not necessarily allign with IRS Form 5500 Schedule H or the PBGC premium filing and (b) it in many instances must be submitted before the auditor has completed its review of the related plan year?

The response to Q-4 of "good faith compliance" Field Assistance Bulletin No. 2009-01 indicates that most covered plans are not required to file this notice with the PBGC (unless the PBGC requests). Are anyone's clients planning to file anyway? If so, does anyone know the address to mail this?

I have several Plans where the match is paid monthly but the doc is annual. And of course all of my 3% SHNEC plans that pay monthly also need a true up. I had an idea that would make this easy and I wonder if anyone sees a problem.

If you have imported contribution amounts into census that overrides anything Relius would calculate. And Relius calculates nothing unless you delete the import.

I am thinking about setting up weekly payrolls and importing into the second to the last payday that month or year. Than we can do a " last pay day" contribution transaction using "year to date minus prior" to get the true up amounts.

Now my question: Does anyone see a problem with always importing into the second to the last pay day on all plans as a standard operating procedure?

If an "eligible plan" was effective January 1, 2001, submitted for GUST and received a waiver of the User Fee, is that plan eligible for another waiver if submitting again for the EGTRRA restatement. Plan is on a prototype document.

I thought the waiver was a one time waiver for the first letter submitted for. But now we are getting responses back from reviewing agents suggesting that the plan might be eligible for the waiver and do we want the $300 back.

Thanks!

I have what might be an embarrassingly simple question, but that's why I like the (relative) anonymity of these message boards.

Some welfare benefit brokers we've encountered offer things like FSA Discrimination Testing, Health Fairs, Flu Shots, FSA and COBRA administration and so on to clients. Absent some kind of billing/commission sleight of hand, is that rebating?

I'm also curious whether people run into this a lot. We see a lot of it in the LA area.

Thanks!

Are there any differences in the RMD rules (required beginning date) for persons who may have a voluntary 403(b) plan (Non-ERISA plan) with an employer vs. an ERISA plan with the same employer? An individual who is over age 70.5, is still working with a tax exempt organization but he has been informed by a consultant that he must begin taking RMDs at 70.5 regardless of still being employed. I am wondering if there could be any different treatment, say, if the individual had a portable 403(b) where the employer simply made contributions but had no further involvement with the plan. I have asked for details on the plan type but just thought I would check the forum to see if there are any references or aids someone could point me to for further understanding.

It was my understanding that box 14, "Self-Employment Earnings (loss)" was used to determine plan benefits for the partners of an LLC as earned income. I have been questioned by the CFO of a client who is questioning why "distributions" in box 19 arent also included. All of the literature that I have seen (so far) refers to box 14. However, upon looking at the instructions for box 19 I can see why this MAY be included as earned income. Does anybody have any insight on this?

Is a governmental 403(b) plan with a service based employer allocation schedule subject to non-discrimination testing? I believe governmental plans are subject to testing, but not sure about governmental 403(b). Thanks.

If a new calendar year cash balance plan is established with a 1-1-2009 effective date, can the crediting rate for the cash balance accounts (not the funding rate), use a rate in effect at the beginning of the plan year (such as a rate for the month of January), or must the plan have a 1 month (or more) lookback to get the crediting rate (such as December's rate, or August's rate)?

The plan document does not technically state this is a reason for a hardship, but.....Here's the sob story: Participant has two mortgages, they(husband and wife) were on short term disability last year, they are trying to sell their house in alabama, but it has not sold. They do not have other assets to sell and they do not want to take out a loan and get further in debt. They owe $9000 in fed taxes.

The SPD does say that the amount of your need may include any amounts necessary to pay any federal, state or local income taxes or penalties REASONABLY ANTICIPATED TO RESULT FROM THE DISTRIBUTION, being the operative words.

It would seem like if the government is due money, they could get it from a retirement plan.

Once again this year, an employer sent $15,500 to the investment company 11-2-08 and told his CPA. The CPA who doesn't do the payroll personally, never thought to tell his staff to run this through payroll. W-2 is wrong and so are medicare taxes.

This is a 5 year old plan. The employer blames me, because his wife told me about it and asked if there was anything else for her to do. I never thought of payroll and said no.

Everything will be fixed through amending. But my question is: how do other people prevent or at least diminish this occurrence?

A plan has a non-uniform retirement age of 62. This means the benefits must be tested at a retirement age of 65.

I understand the normalization calculation involves the following:

1 Take the monthly benefit at 62 and multiply by a normal form APR divided by a QJSA to get an immediate QJSA benefit (all this at AE assumptions)

2 Increase this from 62 to 65 using testing assumptions (either a pure interest if AE has no pre-retirement mortality or Dr/Dx if it does)

3 Take the result and multiply by a QJSA divided by a straight life annuity using testing assumptions

Now, what happens when the test is using different pre and post retirement interest rates for testing purposes. I believe Step 2 should use the post-retirement rate for the increase from 62 to 65.

Is this correct??

A small doctors office has a profit sharing plan. The plan defines comp as W-2 wages. The practice is an S Corporation and in calendar year 2008, the Doctor did not receive W-2 wages but received dividends, which I believe was reported on a 1099. I believe this is something he did under the advice of his book keeper( he does not have a CPA). The adoption agreement only offers the following options for compensation: W-2, Section 3401(a) wages or 415 safe harbor compensation.

I am under the impression that should he choose to make a profit sharing allocation, he gets ZERO since he claimed no W-2 wages. Nor do I think retroactively amending the plan's definition of compensation would accommodate dividend payments. Am I thinking right?

is box 14A the comp for a partner

is 14C relevant?

Our 2008 AFTAP is between 70% and 80% as of 1-1-08 and we are under benefit restrictions now. (Basically we can't pay full lump sums.) If our actuary does not tell us what our 2009 AFTAP is before April 1, I understand that it is DEEMED to be 10% less, or between 60% and 70%, until such time as he calculates it - which must happen prior to October 1. (Please correct me if I got any of this stuff wrong.)

Then what? We expect the real 2009 AFTAP to tank pretty bad. Let's assume it ends up below 60%.

On what date do the under 60% benefit restrictions kick in? On October 1, 2009? On the date the actual calculation of the 2009 AFTAP is determined? In the meantime do we just continue operating under the 2008 restrictions?

I love this stuff. Not.