I had a client call us this am concerned about his plan assets. He's in the newspaper buisness, so I think he hears A LOT more than I do.

Here's some basics:

Client called this am concerned about the protection of the plan assets.

This client has a 401(k) PSP and the assets are held at Nationwide. Each participant has their own account and controls their own fund selection.

If a participant declares bankrupacy, all assets are protected against creditors, correct?

Are the assets of the plan as a whole protected from creditors, including the federal government? This client is very concerned about rumors and discussions that are circulating in the media during this economic downturn.

What are your thoughts? I hesitated to ask the client if he felt that the government would go after the assets of the plan if his business was failing, so I am not exactly sure where he's going here. I had another client call the day after the election last week to discuss changing from a 401(k) PSP to a Db or cash balance plan because Obama got elected.....

Have any of you gotten calls from clients who are concerned? Thanks for your thoughts!

And so it begins...

MultiIndustry_Funding_Letter11_12_.pdf

Employer wants to convert existing Safe Harbor plan to a QACA but they want to keep their existing Safe Harbor "Basic" match formula. The existing Basic will provide a 4% contribution for those contributing 5%. The QACA minimum will provide 3 1/2% for those contributing 6% and according to the QACA rules there must be an automatic contribution escalation from 3 to 4 to 5 to 6%. Couple of questions -

Since the "basic" safe harbor contribution will meet the QACA minimum (3 1/2%) once the participant contributes 4% (automatic increase from 3% to 4%), must the plan automatically increase the participant contributions from 4% to 5%? And then from 5% to 6%?

The new QACA will only have to be provided to those existing employees who have made no election to participate (or not), and to newly eligible employees as of the QACA effective date who make no election. Is that correct?

Vesting - since existing participants are 100% vested in the Safe Harbor Basic contribution, must those participants continue to remain 100% vested in the new QACA contributions? EOB Sec. XIV, Part C, 1.d.3 says yes but just wondering if anything changed since that printing. I seem to recall there was some discussion that the QACA could be viewed as a "separate contribution source" from the regular safe harbor and therefore the 2 year vesting could apply.

Thanks

I am the trustee of a medium-sized (325 participant) 401(k) plan. Participant accounts are directed by participants among a menu of funds I select in conjunction with the input of our TPA (which is a regional TPA firm which offers a daily valuation/website interface). Accounts are valued daily.

We know from talking with other businesses in our area that some investment mistakes have been made in the past on the TPA's daily val platform. Mistakes such as participant investment changes (either for old or new money) not being processed timely (or, in a few cases, at all). Mistakes with 401(k) contributions not being invested right away--things like that. In the past, the TPA has written checks to correct the mistakes resulting from use of its daily val platform. However, in connection with an "upgrade" of the TPA's website/daily val platform, all users now have to agree to a number of conditions--some of which seem like overreaching to me. I need your help to determine whether a few of the conditions are inappropriate and may even subject me, as the plan's trustee, to fiduciary liability for retaining the TPA.

The condition I am most concerned about reads as follows (my editorial comments are contained in brackets):

You [the participant] are responsible for monitoring your account [i thought that's what we paid the TPA to do]. You agree to notify ***** immediately if you properly submit, via the website, any instruction regarding investment of your plan account (including instructions relating to the investment of future contributions) that are not reflected on the website within three (3) business days. ***** will have no liability for any claim, loss, cost or expense resulting from your failure to report promptly any of the items listed above.

I take this language to mean, for example, that if a participant makes an election change and the TPA doesn't process the change and the participant doesn't notify the TPA of its (the TPA's) mistake, the TPA doesn't want to be responsible for the mistake.

What do others think about this? It troubles me--especially in light of the fact that the TPA has made these sorts of mistakes in the past.

Maybe notice was sent out in November 2007 for the 08 plan year. Anyone have a notice I can use today to announce the decision to go safe harbor?

First, I am not a 403(b) person, but a friend of mine asked me why his mission (church plan?) recently told him that all new contributions would go to a new 403(b) vendor and that he could no longer use the vendor he was currently using. Apparently old money was allowed to stay, but new money needed to go to the new vendor. The remaining single vendor was available under the multi-vendor arrangement.

When he questioned them, they responded that a new Federal law is forcing them to use a single vendor.

I poked around and didn't see any requirements to use a single vendor. Is there some reason why they would have forced this?

Also, the new vendor doesn't offer any target retirement age funds, but it did offer "active management". Don't 403(b)s have issues with default options? As we see 401(k)'s nudged into offering target funds, aren't 403(b)s being nudged as well? The plan does have a match, so it would seem that a default fund would be necessary.

Any comment would be helpful.

This should be an easy one to answer. For a 2007 calendar Plan year, how do you determine the number of employees in the top paid group for determining the number of HCEs? Say there are 200 employees on 12/31/2006. There are 230 employees on 12/31/2007. Assume there are no exclusions, no owners, and everyone makes over $150,000. Do you take the 200 times 20% or 230 times 20%?

We're a startup nfp/public charity and I heard recently that we could choose between a 403b or a 401k for employees. Is this accurate and what are the benefits of one over the other?

We currently have 4 employees, all with existing 401k that could be rolled over. I don't think we can afford to provide any match funds in 2009, but we hope to do as soon as we are able. Two of the current employees are fairly savvy investors while two are passive contributors. That ratio will skew toward passive investors as we grow.

We expect to grow exponentially in the coming years, and need a plan that will easily grow/adapt as we add employees...

I have a small LLC that wants to adopt a 401(k) Plan. The only 3 people who work at the company are the 3 owners and all 3 will contribute to the 401(k).

Since LLC owners do not have a salary, but rather take "draws" during the year, they should still be able to make 401(k) contributions from these draws correct? For example, an owner takes monthly draws of $5,000 and therefore has $60,000 in compensation for the year. He also plans on having $500 deposited as a 401(k) contribution each month. Can he do this on a monthly basis or does he have to wait until after the end of the year, have his income determined, and then make a 401(k) contribution all at once at that time?

Thanks

Can a plan have an in service distribution provision that allows a participant to receive an in service distribution upon NRA provided the employee reduces his/her hours below the threshold in which he/she will continue to accrue benefits (in this case less than 1,000)? In other words, can the employer design the plan so that those receiving in service distributions do not receive any further accruals? Thanks for any help you can provide.

As part of the termination application, I submitted an Intent to Adopt Pre-Approved Volume Submitter document dated prior to 2/28/02 and a EGTRRA good faith and GUST plan amendment dated prior to 9/30/03. IRS agent said unless I have a corporate extension for 2003, amendment is late. Anyone have a similiar experience, and does anyone know the authority for supporting the 9/30/03 date?

My understanding is that there have been 4 sets of proposed regulations under IRC 430.

The 2nd in the series was on Benefit Restrictions for Underfunded pension plans

The 3rd in the series was on Measurement of Assets and Liabilities

The 4th in the series was on Determination of Minimum Required COntributions

I am not sure, but I believe that the 1st in the series was Mortality Tables for Determining Present Value.

Is that correct?

And have there been any other proposed regulations under 430?

Thanks.

Hello - here's the situation: The TPA where I work erroneously did not process a distribution rollover from a 403(b) to an IRA in mid-August. The participant's financial rep called in a couple of weeks ago to report this and requested that we fund the difference in losses that resulted between mid August and late October. This difference amounted to $40,000 because of the downturn in the market.

My question is this: Do we have a right to request investment elections from the rollover institution to determine what would have happened if the participant was invested in with his/her IRA? If they were invested similarly in the IRA as they were in the 403(b), the value of their account would have gone down there as well.

I'm having a hard time finding out what our liability is in cases such as this (we've had a few others that resulted in large dollar amounts as well). Does anyone have any information on this type of correction?

Thanks in advance.

A lady has an LLC, and contracts her services to a state, and is paid by the state on a 1099. Ok so far.

This same lady finds more contractors for the state for other projects, and is paid more by the state. This lady pays the contractors that she finds, on a 1099. Income is generated to her based on the difference between what the state pays her and then what she pays the consultants.

Can this lady have a plan, and if so, what do I do with/for the contracted employees(?)? BTW, each of these contracted employees(?) are opening their own plans for themselves.

I have searched on this message board, but really am finding nothing.

Thanks, again, for your guidance.

So, how do you guys pronounce QDRO?

I've heard kew-drow. And qua-drow. Even sounded all the way out: kew-dee-arh-oh

How do you say it?

Q & A 12 of IRS Notice 2004-50 defines the Topic Title thusly:

"Family HDHP coverage is a health plan covering one eligible individfual and at least one other individual (whether or not the other individual is an eligible individual)."

Some (including Aloca Aluminum per its website) group health plan sponsors interpret this definition to mean that an eligible individual covering a non DOMA domestic partner may contribute up to $5,900 in 2009 less employer seeding plus catch-up contributions up to $1,000.

Question 1: Is this a correct interpretation of the Code and related IRS pronouncements?

Question 2: May the portion of the employer seeding earmarked for the non DOMA domestic partner be deposited into the HSA tax-free of all federal taxes?

Citations are encouraged and happy holidays.

In my past experience with leveraged ESOPs, the company will pass their loan payment through the trust and based on the plan document, at the end of the plan year, you calculate how many shares should be released based on a formula and allocate those shares.

I've got a new leveraged ESOP client and he is making the annual ESOP contribution today and then in January wants me to use some of that money to make his loan payment.

I've never allocated contributions in cash to eligibles and then subsequently used some of that money to make a loan payment and then, at the next year-end (8/31), released shares based on that payment.

Does that work or make sense? I'm more inclined to not allocate the amount of the contribution that equals the loan payment and hold it in suspense until January.

Any guidance?

Depending upon 2008 year-end mutual fund distributions, my wife and I may be under the $100K threshold which currently prohibits conversion of Traditional IRA assets to a Roth IRA.

Can I wait until 2009 (after I have the eligibility-determining information I need) to make the conversion - before filing my 2008 tax return - or must I make the conversion in 2008, possibly resulting in the need to recharacterize if our AGI exceeds $100K?

If I must convert in CY 2008, can I convert more than one Traditional IRA to different Roth IRAs and recharacterize selected conversions, to control our 2008 taxable income?

Thanks,

Michael

a company maintains two plans a db plan for the union and a dc plan for non union.

are either true?

1) the funding as % of compensation are independent of each other because one plan is collectively bargained.

or

2) the ps can still fund up to 25% of comp because the union plan is covered under pbgc.

Am I way off?

This is regarding a premium reimbursement election.

One of our clients has an employee who's insurance went way down. Unfortunately, it was not reported for a month and now more money has been sheltered from the employee's pay check than would be sheltered by the end of the year if the change had been reported on time.

So, if we change the election to a compromise amount, we still cannot account for all the extra funds paid out by the end of the year.

I know how to correct for this in our software but what should our client do? Are they within their rights to demand the extra money paid out to come back?

Thanks