I was wondering if anyone had a good chart for estimating the maximum DB contribution for one-person plans. For example, Current Age on the y axis, Normal Retirement Age on the x axis, and then an estimated maximum contirbution at the intersection of the two.

For example, someone who is currently Age 52, NRA = 65

Maximum annual DB contribution = $110,000??

Thanks!!

Since the new LRM's required this for PS plans that allow for in-service withdrawals with no immediate forfeiture, I'm struggling with something. Math isn't my strong subject!! I was given the following example:

"If a distribution is made at a time when a Participant has a nonforfeitable right to less than 100 percent of the Account balance derived from Employer contributions and the Participant may increase the nonforfeitable percentage in the Account:

(a) A separate account will be established for the Participant's interest in the Plan as of the time of the distribution, and

(b) At any relevant time the Participant's nonforfeitable portion of the separate account will be equal to an amount ("X") determined by the formula:

X=P(AB + (R x D)) - (R x D)

For purposes of applying the formula: P is the nonforfeitable percentage at the relevant time, AB is the Account balance at the relevant time, D is the amount of the distribution, and R is the ratio of the account balance at the relevant time to the Account balance after distribution."

So, for an example, let's say the 12/31/08 account balance is $100,000, 60% vested. Vested account balance is $60,000. On January 2, 2009, the participant takes a distribution of $20,000. For 2009, the participant's plan account earns $2,000 interest, and the participant increases vesting to 80%. The 12/31/09 account balance is now $82,000.

P = 80% (the new vesting)

AB = $82,000 (updated balance)

R = $82,000/$80,000 = 1.025 percent gain

D = $20,000

R X D = 1.025 X $20,000 = $20,500 distribution with gain

X = .80 X ($82,000 + $20,500) - $20,500 = $61,500

If the money had not been distributed, the fund would have earned 1.025% interest and the vested account balance would be $100,000 X 1.025 X .80 = $82,000.

$82,000 - $20,500 (amount distributed with interest that would have been earned on it) = $61,500.

I'm having a problem with this. It's very clear that if there is no interest earned, so there's actually an account balance of 100,000 x80%, if the participant terminates on 12-31-09, the participant would be entitled to 80,000 minus the 20,000 already received, for a total remaining distribution of $60,000. So far, so good. My real question is that according to the above, the participant is only entitled to $1,500 of the interest earnings. Yet it seems to me that the participant should be entitled to 80% of $2,000, or $1,600. There's something amiss, and it is probably just me - I just can't spot the flaw in the formula assumption that's giving an answer of $1,500 interest.

Can one of you math whizzes for whom this is childishly simple educate me here? Thanks!!!

...

Working with TPA using McKay Hochman prototype plan to help client establish a new 401(k) plan. They didn't mark plan to be a 404© plan and when I requested the change, I was told that they "never" mark the plans to be 404© plans.

Anyone ever encountered?

Very popular real-life 401k mutual fund recordkeeper / investment company (remaining nameless to protect its identity) pays TPA percentage of assets quarterly. TPA offset's client invoice for testing, 5500 etc for amounts paid by investment company to TPA. TPA confirms the payment is removed from the plan's assets, not the general assets of the recordkeeper. Remaining balance paid by plan sponsor to TPA (TPA is not related to or affiliated w/ recordkeeper).

Recordkeeper tells TPA that recordkeeper has no mechanism and no plans to break out the paid quarterly fee by-participant. Dollar amount cannot be determined on a by-participant basis. TPA explains to recordkeeper that 408 requires disclosing the dollar amount charged against the account each quarter to each affected particiant. Recordkeeper reiterates its position (no help). TPA tries to decline payments altogether (w/ blessing of plan sponsor) to avoid the obvious participant reporting problem. Recordkeeper says there is no means of not giving this money to the TPA.

What does the TPA do? Decline the business because the required 408 disclosure cannot be made? Send out a quarterly letter to all affected participants stating "here is the amount TPA received in total, a portion of which is charged to each participant account?" A statement of this type doesn't meet 408 based on my interpretation of the req'ts of 408.

Any comments appreciated, thank you.

My mother in law passed away last December but hadn't designates a beneficiary in the 401k she inherited from her husband. She did have a will that split everything evenly between my wife and her sister. They were both named as co-executors. Upon receiving the proper paperwork, the plan admin moved her 401k into an account in the name of the estate. The estate could close as early as November 19th according the to attorney with entire estate being less than 200k.

I realize that they have up to 5 years to withdraw the money but how can they do that if the money is in the estate's name and it's set to close in the next month or so? Can they request that the plan splits the money into accts in my wife and her sister's names?

Can the amount of the bond exceed $500,000? DOL Reg. 2580.412-20 seems to suggest that this is possible, but it is not entirely clear to me. Does anyone have any thoughts on this?

Download attached chart. May be reproduced and circulated within your organization.

COLA_RO_2009.pdf

Download attached chart. May be reproduced and circulated within your organization.

COLA_RO_2009.pdf

Download attached chart. May be reproduced and circulated within your organization.

COLA_RO_2009.pdf

Download attached chart. May be reproduced and circulated within your organization.

COLA_RO_2009.pdf

This is my first post & I want to start by saying this board is fantastic! It is extremely useful in getting a flavor for that elusive answer & it has helped me many times.

I have been in a large tier accounting firm for several years in compensation and benefits tax consulting. During this time I have supported the benefit plan audit practice doing tax reviews. Basically, 2-3 hours per plan reviewing plan documents, IRS d-letter, financial statements, etc. getting the auditor comfortable that the plan should retain its tax-qualified status. This often this involves helping the auditor get comfortable that any correction method proposed by the client is appropriate under IRS guidance. I have also done several deep-dive operational reviews of qualified plans for compliance with plan terms, code, regs, ERISA. I have also done a lot of tax consulting on the deferred comp and equity comp side.

In my experience the benefit plan auditors are not well versed in how to identify or deal with a tax qualification issue. Extrapolate this out to thousands of benefit plan audits each year (and the new 403(b) audits), and there should be a broader market for my skills, yes? So my idea is to do what I do now, but for local & regional CPA firms with large books of benefit plan audits. From there, I would try to do other work such as special projects, consulting on plan design, and training.

Some more tidbits:

(1) My value proposition would be increasing the quality of the audit and providing additional value (perceived at least) the client may not otherwise be getting.

(2) I expect this would be a high volume, low-hours-per-plan business. This might create a billing headache but I suppose I could outsource that.

(3) I want to be a soloist, at least intially (I suppose I have no choice the matter, at least intially!)

(4) I am a CPA not an attorney, so I need to avoid any unauthorized practice of law. If I avoid drafting plan documents and the like I expect I would be ok.

(5) Ideally I would like to work April-October and work part-time and travel the rest of the year. This has enormous appeal, particularly if I could net six figures during the busy time (am I dreaming?)

(6) I am at the point in my career when looking at spreadsheets and minutiae is not the best use of my time or skills. Tax concepts are what I do best, so doing the actual audits or recordkeeping would not be a good fit.

I welcome your thoughts and constructive criticism!

I believe some local taxing authorities treat 401(k) deferrals as subject to income tax (it appears that Columbus, OH is one). Does anyone know if there is a listing of those tax authorities anywhere?

Can anyone advise where I can find in Excel format all of the mortality tables stipulated in IRS Notice 2008-85?

The new 401(k) logo to commerate the super-bear market:

How do you anticipate the bailout will impact retirement plans? Or, how has it already affected them?

Assume an employer has a DB Plan and PS plan that covers the same employees in both plans.

Covered Compensation is $1,000,000.

The DB minimum under 430 is $300,000

The DB maximum under 404 (assiming no DC Plan) is $500,000

Can the sponsor contribute the $500,000 to the DB and also contribute 6% of pay $60,000?

Are they limited to $300,000 to the DB and also contribute 6% of pay $60,000?

Would they be able to contribute $500,000 to the DB but nothing to the DC?

Our process is that new hires are covered from their first day of active work. We give them 31 days to make an election and if they do not make an election, they are defaulted into certain products (medical, dental, vision), but do not get the other welfare-type benefits. After somebody elects (or defaults), we start collecting contributions on the next paycheck. Example, new hire's first day of work is October 17, makes election November 6, first deduction from paycheck is taken November 30 (no retroactive premiums for October 17-November 6), but they are in fact covered from date of hire. I have been told that in order for new hires to have retroactive coverage, the election period cannot be longer than 30 days, is this true? Could somebody provide me with a site for this? Thanks..

I'm trying to assist a small employer with his vesting calculation for a terminated employee who is threatening to sue. The employee had paid disability leave in 2 non-consecutive years. The payment came from a State of California disability fund with which I am unfamiliar. Can any of you west coast readers fill me in on whether this fund would be one that qualifies under DOL Reg 2530.200b-2(a)(2)(ii) that does not count toward hours of service?

I invested in a company many years ago that was supposed to go public a long time ago but never did. I suppose it is now considered a private placement. I really have no kinds of records of this investment, except whatever FISERV says there is. FISERV wants to resign as trustee of this account, and this asset, because it is essentiall worthless, even though the company still exists. They have sent me a letter saying that they are resigning and will be reporting this as a distrubution on a 1099R for the full value I paid for it. I have been paying them over $200 a year to keep it, which is just spending good money after bad. I can't figure out how to get rid of it, and there doesn't appear to be any documentation I can use to transfer the asset. I would gladly give it away or sell it for a doller, or whaterver just to get away from the annual fees and not have to pay the penalty for distribution, since there is no value.

How can I get rid of this tar baby? I would gladly give this away if I could.

Please Help...