501©(3) org sponsors 403(b) plan with match. All employees who work 20 or more hrs/week are eligible to salary reduce. Full time employees (defined as 35 hrs/week) are eligible to receive match. The org has no HCEs. I'm trying to determine whether the match satisfies the non-discrimination tests applicable to 403(b) plans. Any insight would be greatly appreciated. Thanks in advance.

I am writing a grad paper and i read about one of the bigger consulting firms (Milliman i believe) had a option where it tried to act as a db plan as far as the ending balance is guaranteed --i can't remember where i read it or who it was.

fro example, i want $1 million in 25 years. I have $90k begining balance and contribute X each yr, and they allow only a certain percentage invested in equities and i will have my $1 million at NRA.

can anyone point me to the actual description and or website of the firm offering it? I am not looking for any insurance or annuity products.

thanks in advance.

Pension plan money transferred into profit sharing plan, continues to be subject to QJSA/QPSA rules.

Does the plan need to be amended with respect to the mortality tables (i.e., RR 2001-62 re 94 GAR table; PPA 06 refinements)?

Client would like to offer hedge funds in their 401k plan (along with existing selection mutual funds). If you can suggest resources for further reading on this topic I'd be most appreciative.

Here are my questions -

1) If offered, would the plan need to insure the employees who wish to invest in the hedge fund option(s) meet the "accredited investor" requirements (typically $1M in assets or $200K in annual income)? If so, does that raise discrimination issues since many employees, esp NHCEs, will not be eligible for this investment option? I was told that this "look through" to individual plan participants was required for self-directed plans under Reg D of the Securities Act of 1933, but I am not sure if that applies in this case.

2) Can the client offer one of their own hedge funds as an investment option? Is there an issue with the company charging performance or other fees to the plan under ERISA rules? Would it matter whether the fees charged were lower than the "standard" fees charged to outside investors?

Thank you for any help or advice you can offer.

A large law firm provided our firm plan data in order to perform non discrimination testing for their plan for the most recent completed plan year.

The law firm has 50 partners.

The data has a field for each partner entitled "Gross Compensation". While they call it gross compensation, my inclination is to presume that this is Schedule K1 net earned income since they are partners.

Furthermore, the partners each have $30,500 contributed to their profit sharing plan for the plan year ending 3/31/08.

Of the $31,500 a portion of such amount is paid by the partner (I presume out of their K1 income) and a portion is paid by "the firm".

Since my understanding of a partnership retirement plan is that the employer makes deductible contributions for the employees and contributions on behalf of the partners is derived from their k1 income, it would follow that the so called "firm contribution" would simply be an additional amount of k1 income for the partner to applpy to the profit sharing plan.

Any opinions out there on my above analysis of the compensation and profit sharing contribution data in connection with these partners?

Thanks.

Do rebates from drug manufacturers have to be reported as indirect compensation to a PBM on Schedule C? What if the plan is otherwise exempt from having to file a Schedule C because all benefits are paid from the employer's general assets?

Plan is an EACA, eligibility is 1 year of service with quarterly entry. Just taking a poll ---

How are you basing the notice timing - off of the enrollment date or the first payroll date after the enrollment date?

The regs say eligible employee, I assume they really mean when the EE can participate in the plan. They are not clear about the mid-year entry timing - seems to leave too much room for interpretation. The "reasonable time" rule of thumb usually is 30 days before the notice is required.

Here are the "clear as mud" EACA regs. section:

1.414(w)-1(b)(3)(iii) Timing--(A) General rule. The timing requirement of this paragraph (b)(3)(iii) is satisfied if the notice is provided within a reasonable period before the beginning of each plan year (or, in the year an employee becomes an eligible employee, within a reasonable period before the employee becomes an eligible employee). In addition, a notice satisfies the timing requirements of paragraph (b)(3) of this section only if it is provided sufficiently early so that the employee has a reasonable period of time after receipt of the notice and before the first elective contribution is made under the arrangement to make the election described under paragraph (b)(ii)(A) of this section.

(B) Deemed satisfaction of timing requirement. The timing requirement of this paragraph (b)(3)(iii) is satisfied if at least 30 days (and no more than 90 days) before the beginning of each plan year, the notice is given to each eligible employee for the plan year. In the case of an employee who does not receive the notice within the period described in the previous sentence because the employee becomes an eligible employee after the 90th day before the beginning of the plan year, the timing requirement is deemed to be satisfied if the notice is provided no more than 90 days before the employee becomes an eligible employee (and no later than the date the employee becomes an eligible employee).

Are participants able to defer from maternity pay? Does it matter if the payment is made through the sponsor or from a STD provider?

I work exclusively with qualified plans, and have NO desire to branch out into SERPs. Even so, I am constantly being asked about these plans. While I do have some knowledge from related work (i.e. CEBS Study Materials), I would like to have a simple summary of what this type of plan is and how it works so that I can say "this is what...". Following that, I would then like to be able to say "contact... if you want more since I don't work with them". Anyway, does anyone know where I might get that nice, simple summary so I can at least say "this is what....". It would really be nice if I could also fax something to those people as response to their questions. Basically, I do have a desire to support the people asking the question, but I don't care to be the expert. I just want to be able to send the person in the right direction. Thanks.

To all those who participated in that ridiculously long exchange from a month or so ago, I hope this helps conclude it. I think there were a few who were in fact saying this, but I now know why, and I took a good deal of time to lay it all out. I hope it helps (it certainly helped me clear my head).

I painstakingly read through EOB on this issue and here is what was missing, at least for me (from Example 5 of 414(v) regs) (the bolded entry is what inspired this post):

(v) Even though Participant E's elective deferrals for the calendar year 2006 have exceeded the section 401(a)(30) limit, Participant E can continue to make elective deferrals during the last 2 months of the calendar year, since Participant E's catch-up contributions for the taxable year are not taken into account in applying the section 401(a)(30) limit for 2006. Thus, Participant E can make an additional contribution of $3,400 ($15,000 minus ($16,000 minus $4,400)) without exceeding the section 401(a)(30) for the calendar year and without regard to any additional catch-up contributions. In addition, Participant E may make additional catch-up contributions of $600 (the $5,000 applicable dollar catch-up limit for 2006, reduced by the $4,400 ($1,000 plus $3,400) of elective deferrals previously treated as catch-up contributions during the taxable year). The $600 of catch-up contributions will not be taken into account in the ADP test for the plan year ending October 31, 2007.

SO: ADP test at 3/31/08 plan year is failed, resulting in $5,000 of refunds to be distributed. Participant is over age 50 so the amounts are reclassed as catch-ups. As long as the participant made at least $5,000 of 401(k) for 2008, those amounts are disregarded for calendar 2008's (a)(30) limit. SO the participant can make $15,500 of 401(k) for the remainder of 2008, calculated as follows:

Line 1) (a)(30) limit for 2008: $15,500

Line 2a) 2008 Calendar Year To Date 401(k): $5,000

Line 2b) 2008 Calendar Year To Date 401(k) reclassified as catch-ups, and therefore disregarded with respect to the 2008 (a)(30) limit: $5,000

REMAINING contributions for 2008 =

Line 1 minus (2a minus 2b), OR

$15,500 minus ($5,000 minus $5,000) = $15,500.

Therefore, for all of 2008, the participant can make the full $20,500 in 401(k).

THE CATCH

For the 3/31/09 plan year, the full $15,500 in 401(k) made from 4/1/08 to 12/31/08 is included in the test, in addition to any 401(k) made from 1/1/09 to 3/31/09 (which to be consistent we will assume is the same $5,000). So the full $20,500 is included in the test because the 2008 catch-up was consumed in the 3/31/07 ADP test. This of course means his ADP refunds will be higher in the following year because refunds are in descending order, starting with he who hath contributed the most.

This is dead-on consustent with EOB, at the bottom of page 11.283 of the 2008 version if anyone wants to review.

THE ONLY REMAINING QUESTION

What if the participant made no 401(k) from 1/1/08 through 3/31/08? Are there any 401(k) contributions to be disregarded? The answer would appear to be no.

Line 1) (a)(30) limit for 2008: $15,500

Line 2a) 2008 Calendar Year To Date 401(k): $0

Line 2b) 2008 Calendar Year To Date 401(k) reclassified as catch-ups, and therefore disregarded with respect to the 2008 (a)(30) limit: $0*

*The intent of this adjustment is to disregard deferrals actually made. Note that for (a)(30): (taken from 1.414(v)-1©(3):

with respect to elective deferrals in excess of an applicable limit that is tested on the basis of the taxable year or calendar year (e.g., the section 401(a)(30) limit on elective deferrals), the determination of whether such elective deferrals are treated as catch-up contributions is made at the time they are deferred.

Since no deferrals were actually made, I have a hard time seeing a case for entering $5,000 here (which would effectively increase the (a)(30) limit for 2008). The purpose of the adjustment is to disregard deferrals actually made; since there are none, there is nothing to disregard.

Therefore, if there were no actual deferrals made from 1/1/08 through 3/31/08, then participant has solely the $15,500 limit for 2008.

Hello,

With the change in the bankruptcy laws to allow a participant to continue to repay a plan loan to himself while undertaking a bankruptcy, is there any circumstance where a participant, while still gainfully employed with the employer, can unilaterally request that his loan repayments be stopped in payroll and be honored by the employer?

There is nothing that I can see that otherwise prevents the employer from allowing this "stoppage of payments" or on the other hand something that requires that such a participant request must be denied in all circumstances.

I realize this will result in a default, and deemed distribution taxation/penalty are likely to result.

Any insight will be appreciated.

Sincerely,

andmik

An individual (over age 59-1/2 but under age 70-1/2) wants to take as-needed distributions (unequal and nonperiodic) from her profit sharing plan. I believe that:

1. These amounts will be eligible rollover distributions and, thus, subject to the mandatory 20% income tax withholding.

2. The only way to avoid the mandatory 20% withholding tax is to rollover the qualified plan assets to an IRA and then take the distributions. (Note - The individual is phasing out her business, no longer wants to make any plan contributions, and intends to do an IRA rollover/plan termination to avoid future filings of Form 5500-EZ.)

Am I correct?

(Yes, I know that there's no such a thing as a Keogh plan. I use the term as short-hand for a qualified plan sponsored by a self-employed individual with no employees. All of you who get tense over the use of the "Keogh" term -- please don't smack me around.)

My union and city have ratified a new employee contract. Included are in the retirement package is a 6nyr. DROP and a medical supplement. Employees who entered the DROP prior to the new contract are being given the option of participating in the 6th year of the DROP but are excluded from the medical supplement. Is this proper?

It is clear that if you have an existing 403(b) plan without a written plan document, you must adopt a written document reflecting the final 403(b) regs prior to January 1, 2009. However, if you already have a plan document, when does your plan document need to be amended for the final regs--(a) by 12/31/09, with an effective date for the amended and restated plan of 1/1/09; or (b) 12/31/08, with an effective date of 1/1/09? I believe the correct answer is (a), but not everyone agrees with me. Any thoughts?

I work with a cash balance plan that credits a minimum 5% interest credit. For participants that terminate in mid-year, they receive a pro-rata interest credit at their termination date. Employer's actuary has advised employer to wait to credit any pro-rata interest credit for 2008 termination distributions until we get guidance on whether the 5% min will qualify as a market rate of return. So far in 2008, they have had 115 terminations/lump sum distributions, and not provided a pro rata 2008 interest credit on any of them. I have advised them either to credit at least the applicable interest rate or to credit the pro rata 5% interest rate. What are folks doing on this? This delay in guidance is really getting out of hand. Any trends you are seeing? thanks.

Cher

Can we have a quick survey here of what size clients are selecting the yield curve vs. Alternative I or Alternative II interest rate approaches to prepare the 2008 pension plan funding valuations? And if Alternative I or II is being chosen (Alternative II will be the phase in approach), what month are you using to select an interest rate?

Hello! Can someone tell me the most recent version of Corbel's 457(b) document. I'm looking at a 2003 version (copyright 2003 - 9/2003), but I'm sondering if there is a more recent version.

Thanks!!

Page 2 of the May 12, 2008, edition of RIA's Pension & Benefits Week newsletter states that the IRS plans to release proposed regulations defining "highly compensated employees" within the next 12 months. Does anyone know what the IRS is working on and how the proposed regs may change the current definition of HCE? I can't find any commentary on a new or revised definition of "HCE" and would prefer not to be surprised (so many plan designs hinge on the current definition). Apparently, this issue was addressed in their recent 2008 seminannual regulatory agenda.

Thanks!

I've read through the hardship w/d availability questions, but am still confused. Plus the posts are pretty old.

The plan in questions is a 401(k) with match/profit sharing features. It is my assumption that you CAN take a hardship w/d from a match/profit sharing source (the participant is 100% vested in both, and this is NOT a safe harbor plan). The prototype document allows hardships from all sources.

Did I answer my own question?

With Minnesota recently enacting their law to tax nonresidents on MN-earned NQDC money paid out in less than 10 years, is anybody hearing whether this is an isolated incident or whether this is a trend? I haven't heard of any new states looking at this, but maybe someone in this group has.

Anyone have a good source tax source by state?