A quick search of recent news articles has turned up the following list of companies that have suspended their ER match.

Sears http://www.businessinsurance.com/cgi-bin/n...05&id=14914

Motorola http://www.wsbt.com/news/local/37071614.html

Starbucks http://www.wsbt.com/news/local/37071614.html

Fed Ex http://www.wsbt.com/news/local/37071614.html

GM http://www.wsbt.com/news/local/37071614.html

Ford http://www.wsbt.com/news/local/37071614.html

NCR http://www.wsbt.com/news/local/37071614.html

GateHouse Media http://www.planadviser.com/investing/article.php/3436

Denver Post http://www.bizjournals.com/denver/stories/...29/daily19.html

Eastman Kodak http://www.nytimes.com/2008/12/21/your-mon...1retire.html?hp

Resorts International http://www.nytimes.com/2008/12/21/your-mon...1retire.html?hp

Unisys http://www.usnews.com/blogs/planning-to-re...401k-match.html

Is this just media hype, some high profile companies that make for a good sound byte or half column article, or are folks seeing the same thing in their practices?

Trying to determine if the trend is widespread enough to justify an attempt to study and quantify the effects of reduced in flows on various market sectors. I'm also wondering how many of these Companies eliminated DB plans and swapped in a 401(k) or enhanced 401(k) plan, in order to soften the blow.

An Employer adopts 2 new plans. One is a 401(k) profit sharing plan and the other is a DB plan. Suppose the DB formula provides 0.50% of pay as an accrual (for the non-key EEs of course). In order to use the 50% cushion in the first year, the DB plan includes one year of past service.

The plan documents are written in a coordinated fashion such that the top heavy minimum of 5% of pay is provided as an allocation in the DC plan for anyone who is in both plans.

Under Treasury Reg 1.416-1 M-4, a year of service for top heavy minimum accrual purposes is to be credited in a manner that is consistent with the plan's definition of service for benefit accruals under the regular plan formula.

How is that rule satisified? Must the DB plan provide a 2% minimum accrual for the past service portion of the plan?

Calendar year 401(k) PSP w/ 3% SHNEC and discretionary match (50% up to 4% of pay). Investments are pooled. Participant became eligible 7/1/2008 but just given enrollment forms 1/1/2009. My understanding on how to calculate the corrective contributions under 2008-50 is as follows: (1) 3% of compensation for the period: 7/1/2008 - 12/31/2008, times 50%, will satisfy the "missed deferral opportunity"; and 2) 2% of 7/1/2008 - 12/31/2008 compensation to satisfy the "missed matching opportunity". Are these two statements correct?

Next, we need to adjust the corrective contributions for earnings. The trust had a loss for 2008. If we determine what the actual plan losses were, then can we simply apply that percentage for half of the year to the total corrective contribution from above? Or are there any other "simplified" methods to calculating the earnings (losses) adjustment for corrective contributions?

Any input would be greatly appreciated.

Thanks!

I should know this, I know....

Do I let forfeitures share in earnings (well, a big loss!) in a pooled account, balance forward plan?

Thanks, marna

Ok, mind is still in Holiday mode. One too many spiked EggNogs. Ok, more than just one too many

calendar year plan. Plan Failed ADP for 2008.

New rules say 2008 corective distributions made in 2009 are taxable to participant in 2009 or does participant get to choose between 2008/2009 ?

3/15/09 still have any relevance any more ?

thanks

If the underlying welfare benefit plan has 121 or more participants at the beginning of the ERISA plan year, the plan is subject to audit. Must the audit include sampling of employer seeding of HDHP participants (regardless of whether they actually make HSA contributions) noting that employer seeding will be allocated to individual HSAs to be invested and accumulated to meet future health care needs?

We're having a difference of opinion on how to handle this situation:

New 401(k) safe harbor with short initial plan year of 10/1/08 - 12/31/08. Pro-rated 415 limit is $11,500. Safe Harbor Match is 100% on first 4% deferred per payroll. An employee deferred a total of $13,000 on compensation of $130,000, or 10% of comp. The match on this should be $5,200, which would make the total contributions/annual addition $18,200 which exceeds the pro-rated 415 limit. One opinion is that the full match should be allocated in accordance with the plan's provisions, and the 415 excess returned from salary deferrals per EPCRS (since after refund of $6700 deferrals the remaining deferrals would exceed 4% of compensation and are entitled to the match) (this seems to agree with the provisions of the document). The other opinion is that all of the deferrals should be allocated, and only the portion of the match that would not exceed 415, with the remainder of the match being credited to forfeitures.

The plan document provides that " . . . if as a result of the allocation of Forfeitures, a reasonable error in estimating a Participant's annual 415 Compensation, a reasonable error in determing the amount of elective deferrals . . . that may be made with respect to any Participant under the limits of Section 4.4, or other facts and circumstances to which Regulation Section 1.415-6(b)(6) shall be applicable, the "annual additions" under this Plan would cause the maximum provided in Section 4.4 to be exceeded, the "excess amount" will be disposed of in one of the following manners . . . © to the extent necessary, matched Elective Deferrals and "employer" matching contributions will be proportionately reduced from the Participant's Account. The Elective Deferrals, and any gains attributable to such Elective Deferrals, will be distributed to the Participant and the "employer" matching contributions, and any gains attributable to such matching contributions, will be used to reduce the "employer's" contributions in the next Limitation Year; . . . "

Thoughts and opinions appreciated. If the match was a quarterly rather than per payroll match, would your opinion change? Thanks!

J

Taking into account both the proposed cafeteria plan regulations and ERISA, can an employer use health FSA forfeitures for one plan year to offset medical plan premium increases in the next plan year?

An owner retired and sold his shares in 2008. His son works at the firm and continues to do so after his father's retirement. Both the former owner and his son are HCEs for the 2008 nondiscrimination testing. Will the son be an HCE for the 2009 testing due to his father's 2008 ownership? Assume the son's pay will be below the HCE comp threshold.

We service a small profit sharing plan that has a trustee directed fund, subject to an annual valuation. In otherwords, an old style balance forward profit sharing plan.

Our practice for this type of plan is to have an employer file an SS-4 to obtain a TIN for the trust. Of course, clients sometimes don't file the form (even though provided signature ready), or lose the number (and coupon book if received); resulting in problems processing withholding. In this instance, the number is unknown, there is no coupon book, and we have federal withholding of about $50 to process.

I know that the employer can serve as "agent", but my questions are how is this done? Specifically, what form is sent (945 or 941) to remit the withholding, and what TIN (employer's) is used for that filing and the 1099R? Any details on this processing would be very helpful!

Thanks.

A client wants to put in a new deferred compensation plan effective April 1, 2009. They want to include a performance-based bonus election (2009 bonus payable in 2010).

If a participant makes an election to defer this bonus, will the deferral amount need to be prorated from April 1 - Dec 31? Or can the full 2009 bonus be deferred because the election was made six-month prior to the end of the bonus performance cycle?

My understanding is that there are 4 possible statutory reasons for excluding employees from a QRP:

1. Less than 1 year of employment

2. <21 years old

3. EE covered by another QRP through collective bargaining

4. Foreign nationals working for ER ourside of US

My question has to do with part-time employment.

Lets say an EE is working full time and a participant in the QRP, and then drops to part time (<1,000 hrs/yr). May the plan then exclude the EE, allowing the EE to do a rollover on the vested QRP plan balance? Or, after meeting the 1 yr working requirement, must the now part-time EE continue to be non-excluded and eligible for salary deferral/ER contributions if the EE is otherwise eligible for plan participation?

Thanks

BruceM

Hello. I seem to have found a place where there are some highly educated people regarding issues with self-funded plans(or self-insured or whatever the preferred name is) and I really need to pick your brains.

I'll try to make a long story short. My husband is employed with UPS. We have Cigna PPO and our health benefits are administered through the Health and Welfare Trust or the Fund office as it is often called. The only summary plan description we have is from 2005 and is about our old insurance with Alliance PPO. I asked for a new book and am told there is no updated SPD. I called repeatedly to confirm benefits for gastric bypass surgery. I was told on no less than 5 occasions (kept calling to make sure) that obesity treatment was excluded unless it was medically necessary. I told them all I saw in the old SPD was the obesity treatment exclusion but was again told there is coverage if medically necessary. Forward to now. I followed all of the precertification requirements to get medical necessity determination. I am scheduled for surgery Feb. 3 and have received a precert from Cigna. I called the fund office just to verify some recent changes in deductibles and they tell me that there is a review of how the gastric bypass claims are paid and the previously paid claims may have been paid in error due to an audit finding. They said they may be "retracting" the other payments and denying one that is pending. We are talking 25-40K for this surgery. My question is can they do this? Can they arbitrarily mid contract (meaning union contract) just decide they are going to interpret the exclusion differently now? I'm praying someone has some clarity for me and better yet has something I can throw at them to help them decide to continue paying for the surgery as they have been. Any ERISA stuff or any other legal mumbo jumbo that might pertinent?

Thanks so much for any help you can lend. My surgeon is ready to go ahead, but I'm terrified to proceed with this being so up in the air.

Thanks a lot!!

We discovered a system glitch in which health & dependent care deductions for 2 employees stopped in September.

We discovered this during finalization of 1/1/2009 open enrollment

How do we fix this issue now that we are into another tax year?

Can we double-up their deductions in 2009 to play catch-up for the next 3 months?

Can we ask them to send a check for amount on an after-tax basis?

any other viable options?

Calendar year plan. 2008 AFTAP=91%. 2009 AFTAP= 72%.

Discussion bandied about is whether EA should certify 2009 AFTAP early and thus restrict lump sum payments or wait until say September 30. Further, question that has been posed what does the client want.

Perhaps, our answer lies in the attached?

Pages_from_ea_program_booklet_fall_2008.pdf

Researched and can not find a distinct answer - hoping someone could help.

According to PPA Amendment, excess deferrals are now taxed in the year of distribution. I am assuming that means only one 1099r in 2009, unlike prior years where you did the "P" and "8".

However, what do you do when there is a loss - do you still distribute the full amount and send a letter regarding the loss, or do you send the net amount as the refund with a letter explaining why the amount is less than the full excess deferral.

Thanks for any help.

What is the Effective Rate for a new plan with $0 FT?

I thought I had read a thread regarding this, but it may have been somewhere else.

Client referred from their new accountant due to potential problems with retirement plans. After speaking with client and their new accountant, discovered that client was part of controlled group. Previous accounant only had them doing contributions on the company that had the owner as the only employee. This has been going on for almost 8 years!

Need to to a VFCP submission to get plan correction done to correct for failed coverage tests and get plan in compliance. My big question here is How can we fix this? What we want to do is return the contributions (plus earnings) to client and make them pick up as taxable. Going back and giving 25% contributions to the employees is NOT an option. It would bankrupt the company. Owner only put in at most $12k a year.

Anybody come across this before?

Someone mentioned that Technical Corrections now uses the new 417 mortality tables for 415 lump sums beginning in 2009.

I read where small employers may provide a fixed 5.5% interest rate (ignoring the 105% rule??) for maximum lump sums but did not see the above. Did I misread or overlook something?

Hello Everyone,

I started a Roth with Vanguard in 2007 with $4,000. I invested in a Target Retirement Fund, and plan to retire somewhere around 2035. I contributed another $5,000. in 2008 and was planning to do the same this month with another $5,000. for 2009. I'm not sure if I should do so now, considering I've already lost approximately $3,000. with this fund. I know there are many people in my position with the way the economy is right now. I want to make a wise choice here. Should I continue with my plan of contributing $5,000. since I am in this for the long haul, or keep my money safe until the economy gets better? What do I need to consider here? Any thoughts either way? Any advice would be greatly appreciated. Thank-you, Gracey