I am a trustee on a health plan. I am aware of the DOL's position that service providers' fees must be reasonable. We have an attorney who charges a retainer. This retainer is IN ADDITION to any work done at an hourly rate. I'm not entirely sure what the retainer is for - just to keep him on the ready and answer any simple questions, I guess. Is this arrangement legitimate?

Participant has a loan for a 5-year period and has made the required payments. They now want to renegotiate the loan interest rate to see about lowering their payments and continue to repay at the same frequency and within the original 5-year period. Are there any pitfalls in doing this? Would this constitute a new loan and if yes, would there be any need to take into consideration the outstanding balance of the existing loan (E Outline Book indicates no need).

Is this as simple as just using the new interest rate on the remaining balance for the remainder of the 5-year period?

Some of my retirement is invested in Washington Mutual (which we all know is going down the river!)....Should I dump it now and salvage what little I can and reinvest or ride it out? What are the tax implications of the loss that I will incur?

Thanks for any advise.

Rich

Montana School District has draft 403(b) plan document ready to adopt this summer - based on IRS model.

Vendors are insisting that School District adopt the vendors' 403(b) plan document (not just info-sharing/services agreement and annuity contracts). This could mean 4-5 different plan documents;

Any thoughts or experiences? Has anyone been "forced" onto this situation?

MT law does not require acceptance of particular number of vendors.

I have read and re-read the regulations and notice, but simply do not feel comfortable that I could have this easy of an out.

DB plan that does not allow for in-service distributions has an NRA of the earlier of age 65 or the attainment of a "Rule of 85" -- total years and service equal to 85. The employer DOES NOT want to give up the earlier retirement age, but is not confident it can make the "reasonable to the industry" argument (and not interested in paying for a letter ruling or determination letter). Is there any reason why we can't satisfy the new rules on NRA by simply amending the plan to have NRA at age 65 (or anything over the age of 62) and ERA governed by the rule of 85 with no reduction in benefit and/or the early retirement benefit simply be the present value of what the person would have received, as a lump sum, at 65 (the final NRA)?

This seems too easy....

100% Owner of Company/Trustee of 401(k) Plan is also one of several trustees at an unrelated, publicly traded bank. He has asked if anything prevents him from purchasing bank stock (of which he is on the trustee board) in the 401(k) Plan. I've been looking at Party in Interest rules and prohibited transactions and can't find where this is a problem for the 401(k) plan. He is not an employee of the bank, he does not receive any direct compensation other than trustees fees that are unrelated to the number of shares bought or sold. Has anyone run into this before? It seems like it should be a problem but I'm not finding why it would be.

We used to be able to do this.

1.403(b)-5(b)(2) appears to restrict this. "universal availability".

Thoughts? Anyone have such a plan? popular in health care...

(also posted in 403(b) forumn)

Thanks

A 79 year old Sole Proprietor is taking a distribution from a plan in the form of real estate. It is my understanding that 20% withholding is required on the value of the real estate less the amount of the RMD for the year.

Does the withholding need to come from the plan, or can he use personal funds outside the plan to pay the withholding? If the withholding payment comes from the plan, this will require a larger total taxable distribution, which we would like to avoid.

I know this is probably an easy question: Does a davis bacon plan, sponsored by a government entity, need to file 5500s each year? I think the answer has to be yes.

Thanks

I see dozens of QDRO each year to settle marital property divisions. I have never seen one to pay child support, although it should be possible under the QDRO regs. Why not? Is there a legal impediment?

Your thoughts would be appreciated:

Employer, which is a C Corp, desires to offer an HDHP (and fund HSAs) for shareholder-employees only while providing a low deductible indemnity plan for all other full-time employees who are non-HCEs. In addition, the employer will provide an HRA to all full-time employees (shareholder-employees and all others who have employer health care coverage). The HRA will have a maximum dollar reimbursement amount for all participants but will be a limited purpose and post-deductible HRA for shareholder-employees but will provide for full reimbursement under Section 213(d) for all other employees.

Under the HSA rules (e.g. Notice 2004-50, Q&A 1 and Reg. 54.4980G-3 (Q&A 9, Example (2)), is the employer required to offer the HDHP and HSA to all full-time employees or can it consider only those who have been offered the HDHP as eligible employees for purposes of the comparability rules?

Is there any risk of violating the discrimination requirements under Section 105(h)?

A client of mine has an ESOP that is making annual payments to a number of terminated participants. They send out a mailing each year advising the participant of the upcoming payment, and asking if it should be paid in cash or rolled over.

The question is this - if the participant does not respond to the mailing, and the payment amount is over $1000 (the plan has not amended for automatic rollover) can they pay that to the participant less the 20% tax?

A participant in a cafeteria plan enrolls in the dependent care FSA to provide after-school supervision to her child who is under age 13. During the year, the judge awards custody of the child to the ex-spouse, who lives in a different state (shich is not contiguous to the participant's state). Is this a change in status sufficient to support the participant's desire to prospectively revoke deductions for the remainder of the year?

Anyone aware of an exception to 204(h) notice requirement for a money purchase plan that is being terminated and sponsor is liquidating in bankruptcy?

Does anyone know what the definition of "withdrawal" is for purposes of ERISA Section 4063? Under Section 4063, a substantial employer is obligated to notify the PBGC of its withdrawal from a multiple employer plan and is required to do some other stuff too. The term "substantial employer" is pretty clearly defined, but I am having great difficulty locating the definition of "withdrawal" for purposes of Section 4063. It may be a facts and circumstances standard applied by the PBGC, but I can't even find that. Any help would be greatly appreciated. Thanks!

Law firm has one 401(k) plan for Partners & Staff and a separate 401(k) plan for Associates. Partners & Staff plan passes coverage and ADP on a stand alone basis. Associates Plan must be aggregated with Partners & Staff Plan for coverage and nondiscrimination. In order to keep Associates out of the Partner & Staff Plan "required aggregation group" for top heavy purposes (so Associates don't have to get a top heavy minimum contribution), Partners & Staff Plan runs a separate ADP test and passes. However, when a combined ADP test is run, it fails. Does it matter that the Partners & Staff Plan passes ADP separately? Don't the HCEs in the Partners & Staff Plan have to get ADP returns based on the combined test anyway?

In a pension related context, if someone refers to "the blue book", what are they talking about and is it something available in libraries?

Thanks.

As to partnerships and LLCs that sponsor cross-tested plans that do not identify allocation groups, what practical steps are you taking to assure that the employer contributions for partners and LLC members do not rise to the level of a disqualified CODA? I.e., what practical steps are you taking to dispel the notion that partnership contributions that vary in amount among partners is not the result of their individual choice? Treas Reg sec 1.401(k)-1(a)(6)(i).

What factors does the IRS look to in this regard on audit?

This seems particularly tricky given that the deduction for the employer contributions made for a particular partner or LLC member are allocated to him or her rather than treated as a partnership (entity) expense as is the case for contributions to a DB plan. Treas Reg sec 1.404(e)-1A(f). This takes from the rest of the partners any financial incentive not to allow the individual partner to make the decision of how much will be contributed by the partnership for that partner.

I've prepared written partnership and LLC resolutions that state the partnership contributions are decided by the partnership and not the individual partners, but such seem quite self serving (and vulnerable by reason of such).

When does the IRS Publish 417(e) segment rates? Is it in an IRS Notice at the end of the month following? Thus, are the June segment rates published at the end of July. In such case, how has Datair already reported them in their handy-dandy table. Are the rates published sooner or did Datair compute them? If the IRS publishes in such fashion, how in practice would you administer a plan whose lump sum basis changes monthly?

Handy-Dandy Datair Table: http://www.datair.com/rates.htm

My question is whether a company is required to offer the benefits of its 401k plan to the workers of separate company that is under common control. The factual scenario is as follows:

Corporation X (S corp.) is owned 100% by a husband and wife (51% H and 49% W) and has three employees (H, W and another individual). Corporation X has a 401k profit sharing plan and all three employees participate. Corporation Y (S corp.) is owned 100% by H and has ten leased workers but no employees. All management services for Corporation Y are provided pursuant to a management agreement with Corporation X.

Because Corporation Y is under common control with Corporation X, is Corporation X required to offer the same 401k plan to the leased workers or, alternatively, is Corporation Y required to offer the same 401k plan to the leased workers?

Any thoughts would be greatly appreciated.