We hardly ever see diversification, but a couple of participants are inquiring about it. What if they elect to diversify? The plan doc states that the plan may satisy the requirements by offering at least 3 investment options to the participant. In addition if the participant consents, the plan may DISTRIBUTE the portion of the ESOP stock account covered by the electionto the participant within the 90 day period after the election is made. So I interpret this to mean the participant can keep their money in the plan, transfer a percentage of it out of employer stock into another investment of which they must be given 3 choices OR they can elect to have that percentage distributed to them. My other concerns center around how the assets are held (I am assuming they must be segregated to a specific individuals account, but still held by the ESOP as an asset) and how do we purchase those assets? Can the participant contact a broker, tell me to send the broker their money, and then hold it for them by the ESOP or does it work some other way?

Thanks in advance.

I have been googling trying to find a clear employer/employee contribution limits for 457 and 403 B plans. I can't find anything so I thought I would cut to the chase and throw it out here where the experts really are! If we have a school employee with both 403B and 457 plans, what are the 2008 limits for employer and employee contributions? We want to do as much as we can on the employer side first and he can take advantage of the over 50 but not the service catchup.

Thanks!

We have recently taken over a small plan, with our first valuation covering the 2008 calendar year. I have replicated the prior actuary's work for the 2007 plan year in accordance with Section 4.03 of IR Rev. Proc. 2000-40.

However, in one sense the whole concept of funding methods somewhat goes away w/ the new PPA funding rules (which I guess is really a change for everyone). I'm going to continue calculating a recommended contribution using the prior ACM (Individual Aggregate) as a guide for the client. That cost comes out between the PPA min and max numbers.

My question is does 2000-40 go away in this instance, since we're all changing to the PPA funding method for minimum funding?

What is the DOL's position, now, with a Plan provision that permits forfeiture of an account when the terminated participant cannot be located? Does FAB 2004-02 (detailing how to locate missing participants) effectively eliminate forfeiture as a proper procedure?

Is a rollover from a SEP IRA to a 401k allowable?

Is a SEP IRA considered a qualified plan?

thanks

Lexy

For the last couple of days, I have had to logon each time I visited the message boards. I haven't logged off or deleted cookies in between visits. I don't know if the issue is with my computer/network or with BenefitsLink. Has anyone else had similar issues?

Does anyone have an opinion (preferably informed, but I'll take what I can get) on whether the following situation would be likely to trigger an IRS or DOL audit:

For a welfare benefit plan, on the 2006 Form 5500, an Administrative Services Only contract with an insurance company was reported on a Schedule A, even though it shouldn't have been. On the 2007 Form 5500, Schedule A, the ASO contract is not reported.

Does the DOL or IRS compare a new annual report filing with previous years' filing to identify differences? My inclination is that the agencies will not care. Am I wrong?

I have a client that recently aquired a few companys. They have 9 "locations" that have seperate Tax ID, Seperate Group numbers for the carrier, an operate as a seperate cost center. Total employees covered are 144. None of the individual locations have over 100 employees.

Do we need to file a 5500 based on the common owership, or are each "location" veiwed seperately and thereby no need to file a 5500?

I have a 401(k) document that lacks QNEC provisions and yet they are in the position of having to make QNEC for leaving out a participant. Is this going to be an issue down the road?

Situation: Husband and wife (no other EEs in the plan) want to terminate their frozen Money Purchase Plan, and roll to an IRA (both are age 65+). Currently, they have collectibles (i.e. artwork) in the plan.

I thought independent trustees existed who could handle the collectibles, so the clients would not have to sell them, but could retain them in an IRA, however I'm not finding anything online.

Is there any retirement plan, besides a qualified plan, that would allow collectibles as an asset?

W2=100,000

MRC = 100%UCL = 50,000

150%UCL = 80,000

1. The deductible contribution is 150%UCL + 6%W2 = $86,000 (correct?)

2. Client made $105,000 as 150%UCL + 25%W2. Since DC plan contribution is over 6%, 404(a)(7) applies.

What contribution amount is subject to excise tax? Is it $19,000 (25%W2-6%W2) or is it $49,000 ($19,000+ $30,000 (150%UCL-100%UCL))?

Does the non-deductible contribution have to be removed from the plan's asset (DC only, DB only, both)?

If $49,000 is subject to excise tax, will paying excise tax on $19,000 and removal of $19,000 from the DC plan's asset put you in #1 above and make the full 150%UCL deductible?

Has the DOL taken a position on whether telemedicine arrangements are subject to ERISA? Assume the benefit is offered outside of the er's health plan. My thoughts are that the arrangements likely are subject to ERISA but I would like to know the DOL's position since that is the one that matters.

We have a difference of opinion in our office on the following:

Participants have been reported on a Form SSA in the past as an Add because they terminated and did not take a distribution. They are still in that status when the plan is merged into another plan (and the other plan is the survivor).

In the final 5500s, do you report them as a D on the merging plan and an A for the successor plan so that you are sure that the Social Security Administration tracks that right and (assuming they do not take a distribution).

OR do you do nothing special for them in the merger relying on the Social Security Administration to pick up the merger/transfer data from the final Schedule H?

Any thoughts?

What are the SIMPLE EE salary deferral deposit requirements? Are ER's required to remit within 7 days due to the new ruling that came out in Feb 08 for employers with less than 100 employees? Or do they still have 30 days from end of the month?

Self insured health insurance plan provides employee's spouse not eligible for participation in employer # 1's group plan if spouse eligible for medical coverage through spouse's group plan. Employer' # 1's plan required that as a condition to participation, employee deliver a signed form which allowed employer # 1 to contact spouse's employer to confirm whether spouse eligible for group medical coverage. Form completed by employee and / or employee's spouse and returned to employer # 1. Later, from check with spouse's employer, it is learned that the form we were provied was false when provided.

Anyone have thoughts re: 1) ability of employer 1's plan to bring action to recover from employee claims paid which would have not been paid had a correct form been provided, and 2) ability to take disciplinary action against the employee who delivered to employer 1 the false statement pertaining to spouse's medical coverage? Thanks for any thoughts on this.

I am occasionally dragged to a casino by other family members (and I do mean dragged; I don't like gambling much) and end up with an objective of looking for ways to lose my money slowly rather than quickly. I don't play cards and can't stand slot machines, but I have stumbled across video Keno machines, which I spend most of my time on. What I like about keno more than slots is that with slots, you are at the mercy of the games random number generator (RNG) to pick the winning/jackpot number/sequence. That is, you can play and play and play and depending on how the machine is programmed to pay out, your odds of hitting the jackpot are entirely dependent on the RNG arriving at the jackpot number. With keno however, there are probably thousands, maybe hundreds of thousands, of "jackpot" numbers/sequences picked on each spin. You just have to have 1 of those sequences in order to win the jackpot. Of course, the more you bet, the bigger the jackpot. And the more numbers that you pick each game (usually you pick anywhere from 3 to 10 numbers), the greater the jackpot.

If you're unfamiliar with keno, the game is played as follows: Typically, there are 80 numbers to pick from (1 - 80). Per game, you can pick anywhere from 3 to 10 numbers. Lets say you decide to play 6 numbers. After picking your numbers, the machine will always draw 20 numbers. If 3 of your numbers "hit", you hit for maybe 3-1 odds. 4 numbers maybe 5-1, 5 numbers around 200-1, and all 6 numbers around 1600-1.

As I said, it just "feels" that your odds are better at Keno than slots because there are jackpot numbers drawn each spin, you just have to have the right ones. With that said however, I'm at a loss as to how to calculate what those odds are. Given my keno playing experience and the fact that I have only hit once in my life (since I was only playing quarters, my "jackpot" was only $400), I suspect that the odds of hitting are pretty long. But, could one of the math experts out there determine what those odds actually are? The factors are: 80 numbers are available, I pick 6 numbers, the machine picks 20. What are the odds of my 6 numbers being among the 20 picked?

1.415(a)-1(d) refers to a 'default' rule on how to handle someone exceeding the 415 limit. just what the heck is the default (besides "whatever Mike Preston wants it to be")

1.415(a)-1(d)(3) Incorporation by reference--(i) In general. A plan is permitted to incorporate by reference the limitations of section 415, and will not fail to meet the definitely determinable benefit requirement or the definite predetermined allocation formula requirement, whichever applies to the plan, merely because it incorporates the limits of section 415 by reference.

(ii) Section 415 can be applied in more than one manner, but a statutory or regulatory default rule exists. Where a provision of section 415 is permitted to be applied in more than one manner but is to be applied in a specified manner in the absence of contrary plan provisions (in other words, a default rule exists), if a plan incorporates the limitations of section 415 by reference with respect to that provision of section 415 and does not specifically vary from the default rule, then the default rule applies. With respect to a provision of section 415 for which a default rule exists, if the limitations of section 415 are to be applied in a manner other than using the default rule, the plan must specify the manner in which the limitation is to be applied in addition to generally incorporating the limitations of section 415 by reference. For example, if a plan generally incorporates the limitations of section 415 by reference and does not restrict the accrued benefits to which the amendments to section 415(b)(2)(E) made by the Uruguay Round Agreements Act of 1994, Public Law 103-465 (108 Stat. 4809) (GATT), apply (as permitted by Q&A-12 of Rev. Rul. 98-1 (1998-1 CB 249) (see §601.601(d)(2) of this chapter), which reflects the amendments to section 767 of GATT made by section 1449 of the Small Business Job Protection Act of 1996, Public Law 104-188 (110 Stat. 1755)), then the amendments to section 415(b)(2)(E) made by GATT apply to all benefits under the plan.

(iii) Section 415 can be applied in more than one manner with no statutory or regulatory default. If a limitation of section 415 may be applied in more than one manner, and if there is no governing principle pursuant to which that limitation is applied in the absence of contrary plan provisions, then the plan must specify the manner in which the limitation is to be applied in addition to generally incorporating the limitations of section 415 by reference. For example, if an employer maintains two profit-sharing plans, and if any participant participates in more than one such plan, then both plans must specify (in a consistent manner) under which of the employer’s two profit-sharing plans annual additions must be reduced if aggregate annual additions would otherwise exceed the limitations of section 415©).

I'll try this question one more time, a bit more simplified, since there were NO responses to my first post. I'll give up the ghost if I get no responses this time. (I see this as an "optional form of benefit" anti-cutback issue, not an "accrued benefit" anti-cutback issues.)

A DC plan permits a beneficiary to select payment of a death benefit over the beneficiary's life expectancy. (A participant can only select a lump sum at termination of employment.) Plan is restated. Death benefit payout over life expectancy is eliminated, and replaced with a mandatory 5-year payout rule. Ignoring the non-spouse rollover rules that may permit a beneficiary to take a life expectancy payout from an IRA, is either of the following beneficiaries protected against the elimination of the life expectancy payout in the DC plan:

• Beneficiary of a still-living participant (at least as to the benefit accrued by the participant prior to the elimination of the life-expectancy death benefit payout)?
  
• Beneficiary already receiving a life-expectancy payout?
  

(It is interesting to note that the regs prevent the elimination of a protected benefit based simply on the fact that it is payable to a beneficiary. (Reg. Section 1.411(d)-4, Q&A-2(a)(4).) Also, the regs consider death benefits paid AFTER the annuity starting date to be a protectable optional form of benefit in some circumstances, but say nothing about death benefits payable BEFORE the annuity starting date. (Reg. Section 1.411(d)-3(g)(6)(ii)(B).))

The treatment of credit balances under PPA has multiple issues.

436 would require a permanent release to comply with AFTAP. But it only gets invoked if the actuary has done the AFTAP certification.

430 depends on the election to use or keep the COB. How much is a decision for the employer.

Quarterly payments require burning of the COB. But if so, how does that election affect the 430 minimums?

I am looking for a more recent article than the excellent Buck article reported on BenefitsLink last November.

Our payroll system does not automatically change a participant's deferral rate to zero upon separation from service - should it? What is happening is upon rehire, the deferrals start automatically even without the participant processing a re-enrollment on the recordkeeping system (different system than the payroll system).

Plan doc is vague on this subject and describes this issue in terms of break-in-service rules but that's not the issue here.

Thanks!