According to the 403(b) regulations, an employee is considered "normally works less than 20 hours a week" if he meets two criteria.

1. Employer generally expects him to work less than 1000 hours in the year of hire

2. Employee actually works less than 1000 hours in the year of hire and each subsequent year.

If an employee works more than 1000 hours in the 12 month period, can he be excluded in a subsequent year using the "normally works less than 20 hours a week" exclusion if he drops below 1000 hours again?

In other words, can an employee fall in and out of this class? Or is he considered, once in, always in like normal eligibility?

Say that a small company (three employees all eligible) sponsors a profit sharing plan and makes a generous annual contribution (doesn't matter just setting a hypothetical employer example up). The assets are trustee directed and the employees have no say in the investments. Some of the investments are in very conservative investments such as savings accounts.

Let's say for example there are fees (minor but still they're there) charged for the mainenance of the savings account. It seems like 408 would require that the plan fiduciary have a written service agreement with the bank because technically the bank is getting a fee out of the plan's assets.

Practically speaking I doubt the bank would be very interested in accommodating a service agreement (I could be wrong). First - is a service agreement required here (I'm not aware of any de minimus exceptions under 408). If the answer is technically "yes," - what advice would you give a plan in this situation, assuming they can't get an agreement w/ the bank.

Close the account and put the money somewhere else? Hope the DOL would look kindly on the situation due immateriality?

Thanks for any help.

Can anyone confirm whether 403(b) plans that ceased receiving contributions before 1/1/05 are totally exempt from the plan document requirement under the new regulations? I have found discussions mentioning this but I can't track down the authority. Thanks.

Community impacts of Mandatory Insurer Reporting

Section 111 of Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA) adds new mandatory reporting requirements for Group Health Plan (GHP) and Non-Group Health Plan (NGHP) liability, no-fault and workers compensation insurance.

MMSEA expands and mandates the Voluntary Data Sharing Agreements (VDSA) for electronic reporting, originally conceived as an exchange of GHP entitlement data for Medicare beneficiary entitlement data. For those insurers that are already reporting GHP through VDSA, the changes to the reporting requirements are minimal (one additional piece of data). Insurers that have never reported GHP, an estimated 50 to 70%, will find the way has been paved by their industry competitors. However, the entire insurer industry is facing new, and still changing, NGHP data submission requirements, file transfer changes and compliance issues.

To be clear as possible at the moment, CMS defines who must report GHP data as "an entity serving as an insurer or third party administrator for a group health plan... and, in the case of a group health plan that is self-insured and self administered, a plan administrator or fiduciary." This "Responsible Reporting Entity" or RRE has a broader definition for NGHP, but still insurers will shoulder most of the burden of reporting.

Currently, CMS has no plans to lighten the reporting requirements for self-insured / small business reporting.

from piattconsulting.com

You guys/gals look at the yield curve lately? short term 6.5%+, mid term 8%+, longterm 7.25%. With the market tanking and the 430 segment rates lagging behind (5.09, 6.16, 6.58) it would make using the full unaveraged yield curve very tempting. Could save lots of $$ in contributions... but you would be stuck with it for a period. Then again, you could get burnt on the other end as well.

Am I thinking correctly?

430(h)(2)(D) CORPORATE BOND YIELD CURVE. --For purposes of this paragraph --

430(h)(2)(D)(ii) ELECTION TO USE YIELD CURVE. --Solely for purposes of determining the minimum required contribution under this section, the plan sponsor may, in lieu of the segment rates determined under subparagraph ©, elect to use interest rates under the corporate bond yield curve. For purposes of the preceding sentence such curve shall be determined without regard to the 24-month averaging described in clause (i). Such election, once made, may be revoked only with the consent of the Secretary.

We are terminating a calendar year 401(k) plan effective 11/15/2008. The plan has a 3% SH non-elective contribution. Is there a specific notice requirement for the SHNEC (e.g., 30 days prior to the date of the discontinuance of the safe harbor contributions) or does that advance notice requirement only apply to SH Matching contributions?

I am new into the 403(b) world and just wanted to see if I had understood the rules correctly. For a non-ERISA 403(b) plan, as long as they meet the Universal availability requirement for deferrals, they can have whatever age and service requirements for employer contribution and match? They are not bound by the 21/1 or 21/2 with 100% vesting. Also not bound by the 1000hrs for a year of service and 500 hrs for break in service. Also, can anybody recommend any really good reference books on 403(b) and 457 plans? Thanks

I have two QDRO orders in which I am trying to get vacated in order to modify. Both were put n place in 2006 less than one month apart in filing. The one for Texas gives the mother, my child's guardian a lump sum for for back child support which should have been modified and was denied and an additional; 200 dollars per month for 2 years. The child moved out of the mothers home in 2006 and has since resided with friends. The other child and her mother now live in Georgia but the QDRO stems fromSeattle where they have not lived in years. The order itself was sent to me after the fact. I was aware that it was being sought but never received any information as to when my court date was etc. (I reside in NC) That particular case was closed for 4 years. It was reopened in 2006 and I was charged back child support for that period. The document I received lists my daughter as a male and refers to me as Mr. Rogers. Yet I am told that I cannot get the motion dsmissed that I have to file motions to vacate on both the probably appeal. Is this true? is there more? What routes can I take if I cannot afford counsel and I do have other children in which I need to provide for?

DW2

Must the plan offer an in-service withdrawal provision in order for a participant to take distribution of more than their required minimum? Sounds logical that the answer would be yes, but I can't find any citing regs.

not sure what they are used for (except perhaps PIA calcs in DB plans)

on the plan limitation table

Bend Points for 2009 are 744 and 4483

cost of living% 5.8

national average wage 40405.48

taxable wage base 106800

We have a client with a Participant that received his military orders in July and has to report October 25.

We sent a distribution form to John Hancock w/the date he has to report as his Term date since he's working right up until he leaves. They said they can't process a withdrawal with a future term date.

Then we sent an in-service withdrawal form to them (the plan does not allow in-service distributions); now they say they can't process this without making the check out to the plan and charging a fee.

They've been no help and don't seem to know what to do about this type of distribution - even though we can't believe it's the first one they've received.

Has anyone found a way around this???

Thanks!

ok- plain vanilla crosstested integrated profit sharing plan (no 401k, SH, etc.) Split into 2 component plans to pass nondiscrimination testing. Plan passes coverage as a whole and both component plans pass no problem. Both pass 401a4 as well.

My question is...when I put my employees into the 2 "divisions" does it really matter where I put the employees who have not yet met the eligibility requirements of 1 YOS age 21 since they don't impact the testing?

I left them in the Relius "default" division, but seems to me I might want to put them one of the groups so that all employees are reflected in the 2 groups non discrim reports.

Am I overanalyzing? We had a client's crosstested plan go through an IRS audit, and after having spent so much time with the auditor on all the reports and details, I'm thinking it might be best if those noneligble excludables show up somewhere on the nondiscrim reports.

I have a plan that terminated in 2008. The plan does not allow for lump sum distributions until NRA. When the plan termination resolultions were done, an amendment was not included at that time to allow for lump sum distributions. The document does not indicate lump sum payouts upon plan termination.

Can I currently (after the term date), do an amendment to allow for this lump sum option? My prior understanding is that only regulatory amendments are allowed after the termination date.

If not, does that mean that deferred annuity policies must be purchased for all participants?

I've had a couple of participants request the plan documents for our 401(k) Plan and our Severance Plan. In both cases, although there is nothing to hide, I'd rather not begin sending over voluminous plans with multiple amendments and simply send the person a copy of the respective SPD again.

Nothing in the DOL regs seem to contemplate the actual plan document being required to be provided. Perhaps I'm reading between the lines too much, but it seems that the DOL sees the SPD as serving the same purpose as the plan document itself.

So, the question is whether I do have to provide the plan document or can I just keep sending out SPDs?

Under our cafeteria plan, our employee chose to receive cash in lieu of health insurance coverage. The employee's ex-spouse carried health insurance for the dependent children. The ex-spouse will be losing his insurance coverage through his employer, so our employee would like to pick up full family medical coverage for herself and the children under our health insurance. The dependent's loss of insurance would be a change in status. My question is, if the employee currently does not have the medical insurance would the dependent's loss of insurance qualify her to now pick up full family coverage which would include coverage for herself?

Terminating employees that do not pay off their loans and the loan is called......is the loan offset shown on Schedule H (or I) as a "benefit payment directly to participant" or a "deemed distribution". The 5500 instructions are not clear to me. However, logic tells me that the only loans that should be reported as a "deemed distribution" are those that violate 72(p), i.e. participant stopped paying and is still working, amount of loan too high, etc. The above example is not violating any provisions of 72(p) since a distributable event has occurred.

I have always reported such loan defaults as a regular distributions, but reviewing the 5500 of an audited takeover plan made me question this issue.

An existing cross-tested SH 401(k) plan is sponsored by an affiliated service group. A new group of doctors (part of ASG, only HCEs in that employer) not otherwise sponsoring the plan previously now wishes to sign onto the existing SH and then max-out their contributions for 2007 (calendar year). Can they sign on to the existing plan after Sept 30 and still participate in the SH without needing to separately ADP test?

Participant has submitted a credit card bill from a company called, CareCredit. I looked up the company on line and it is a company that offers credit to people for medical reasons. The bill shows a balance of $5,800 and, as with most credit card bills, shows a minimum amount due ($264.00).

We believe the participant is requesting a hardship withdrawal for the total amount due, but it seems to me that she has already paid the medical bill with the credit card.

Can she take a hardship withdrawal to payoff this bill? The plan uses the safe harbor hardship rules.

Thank you.

Seems like I should know this but I'm not sure. If a participant terminates with less than $200, since there is no mandatory withholding necessary, would it be permissible for the plan to cash him out by just mailing him a check without giving him any options or must he receive a distribution form and special tax notice first?

We have a 401k plan that we are taking over that uses the MFS platform for investments but allows participants to have individual brokerage accounts. Not surprisingly, the only four people who have brokerage accounts are HCE doctors. The plan would like to eliminate the brokerage accounts but are getting resistance from some of the docs who have them, so they are asking for recommendations.

I have informed them that they could simply announce that they are no longer allowing these accounts, but short of that, I would like to recommend some alternatives as follows:

1. They could announce that no further brokerage accounts can be established in the future and grandfather the existing ones.

2. They can pass on administrative fees for the brokerage accounts to either all participants or just to terminees.

3. They can inform participants that once they terminate employment, they can no longer maintain the brokerage accounts.

I'm confident that they can implement both 1 and 2 - although I welcome any opposing viewpoints on that. However, I'm not certain that recommendation 3 is legitimate, but I think that it is. Seems to me that this is discrimination issue.

In reviewing the (a)(4) regs on this, I don't see any roadblocks. This is a brf and termination of employment is an excluded condition. All the effected people are HCE's so I don't see any effective availability issues.

Any input is appreciated - thanks.