Can a 403(b) Plan impose a minimum age and/or service condition for eligibility to make salary deferral contributions without running afoul of the universal availability rule? For example, could the Plan provide that an eligible employee must complete a short probationary period of employment, such as 30 days, before becoming eligible to make salary deferral contributions to the plan? And, can a 403(b) Plan provide for entry dates, such as the first day of the next calendar month or first day of next calendar quarter without violating universal availability, or must otherwise eligible employees be permitted to commence salary deferral contributions immediately on their date of hire?

Are these types of administrative provisions permissible? Thanks.

Reviewing a single DC plan (not a combo) that has each person is their own class.

The plan covers everyone (it passes 410(b) using the ratio percentage test: over 70% covered).

The valuation shows the owners maxing out (20%). The NHCEs look like this:

2 NHCEs get 9% of pay profit sharing

another NHCE gets 49% of pay profit sharing

all other NHCEs get the 5% gateway

The 401(a)(4) test reveals a result of 70.01% (thanks mainly to the one NHCE whose ebar makes up more than half of the sum of the NHCE ebars). Each of the general test percentages are above the safe harbor percentage, except one class: which is above the midpoint, but below the safe harbor percentage.

The one NHCE getting 49% is the youngest and this was their first year in the plan. They are not the very lowest paid of all eligibles (third lowest), but no one else in the plan has less service than they do. The average NHCE in the plan has seven years. Is it a problem that the this one NHCE employee is getting a 49% of pay allocation?

Is there a reg that states that pre 87 contributions must be taken out first? Participant has a large balance of which a small portion around 10k is pre 87 after tax. Participant wants to distribute only part of his total balance (which is allowed under plan terms) and that the partial distribution be only pre-tax money. Record keeper is stating that they can't process the request because the rules state that pre87 money has to come out first and that since the participant has pre87 that he must distribute that amount even if he wants only pre tax money. What rule is this? The plan document is silent on this issue and this is the first time such a request has ever come through. Other participants with pre87 money elect to just take a total distribution.

Client has 95K - 25 after tax dollars and the balance earnings. Client has terminated. Wants to take the after-tax amount and roll the pre-tax earnings to new employer, as new plan doesn't accept after tax dollars. Expert is stating part of the earnings must be distributed and taxed if the after tax dollars are being distributed - approximately 31%. I am unable to find the site that confirms this. Please, if you know, share. PS it isn't in the instructions book....Thank you!

Hello

Employer implemented Roth contributions into its 401(k) plan effective March 1, 2007. The participants were notified in December 2006 and the SPD was updated and distributed in February 2007. Participants have been making roth contributions, no problems there. However, the amendment implementing the Roth feature was not signed. In fact, the TPA just sent over the amendment (over a year later). I don't suppose that I can just have the amendment signed? I guess some type of correction in needed -- what do I do?

Thanks

A calendar year defined benefit Plan which terminated February 1, 2008 is closed out on April 30, 2008. Final 5500 is due November 30, 2008 and presumably the date could be extended to February 15, 2009. In the past, we simply would have used 2007 forms to file the final 2008 5500. However, since the Plan was terminated after the January 1 actuarial valuation date, a 2008 Schedule B will need to be completed and it will look nothing remotely like a 2007 Schedule B. It is quite likely the 2009 Schedule B will not be available even by the extended final 5500 extended due date.

Has anyone heard of any guidance in how the final 5500 may be completed in this particular situation?

I have a new client which improperly made distributions to 5 restricted HCEs from 2002-2005. They went through the VCP, repaid about $1M to the plan, and got a compliance statement. Now several other HCEs have terminated and want lumps sums. Some or all may be in the top 25, depending on whether or not the previous 5 HCEs have to remain in the count or not.

I can't find anything in the regs or the EOB, but common sense would say that, since their benefits of the prior 5 HCEs have been distributed, they're out of the count. However, I was told by another actuary that this question was asked in the 1993 and 1996 Gray Books, and the answer was that they stay in until they are replaced by HCEs with higher comps. She doesn't have the Gray Books themselves, just her notes.

Can anyone verify this?

The plan sponsor is liquidating and may be administratively insolvent.

The plan is to be amended and submitted for a final determination letter. Is it possible for the plan to be amended to provide for partial distributions pending the receipt of the determination letter? Would this be a significant risk to the issuance of the determinaton letter? May those eligible for retirement under the terms of the plan be processed as usual (assuming there is anyone at the company to process the request) and paid their account balances?

Assuming there is no money in the estate and no one left at the company, how should this be handled? An independent fiduciary paid from plan assets?

This is a difficult situation imposing great hardship on participants. Any suggestions would be greatly appreciated.

The plan sponsor is liquidating and may be administratively insolvent.

The plan is to be amended and submitted for a final determination letter. Is it possible for the plan to be amended to provide for partial distributions pending the receipt of the determination letter? Would this be a significant risk to the issuance of the determinaton letter? May those eligible for retirement under the terms of the plan be processed as usual (assuming there is anyone at the company to process the request) and paid their account balances?

Assuming there is no money in the estate and no one left at the company, how should this be handled? An independent fiduciary paid from plan assets?

This is a difficult situation imposing great hardship on participants. Any suggestions would be greatly appreciated.

We have the following problem with a reciprocity arrangement:

Home fund provides $4 per hour contribution to DB Plan. Away fund provides $10 per hour contribution to DC Plan. Employee works away for 6 months and then returns. Away fund forwards $10 per hour to Home fund per the reciprocity agreement. Employee, recognizing the contribution difference, demands that he receive the excess ($6 per hour).

We don't anticipate a problem with the transfer of funds from DC to DB since it's a conduit / "money follows the man" agreement.

However, the reciprocity agreement and the plans are silent on the issue of excess amounts contributed by the away fund. The home fund has always kept any excess since many of the other away funds contribute less than $4 per hour. The excess amounts and the shortfalls generally offset each other.

Is there any official guidance out there that could settle the dispute between the employee and the home fund?

I need to remove my 2007 ROTH IRA contribution because my MAGI is too high. I had purchsed 100 shares of stock at $40 per share with the contribution. In December of 2007 I received 5 shares as capital gains. Today the shares are worth $50. I have instucted my broker to move 105 shares out of my ROTH IRA and into taxable account. The IRS says I have to pay taxes and the 10% penalty on the associated earnings of the contributions.

My question is are the associated earnings just the capital gain of 5 shares or that plus the $10 per share appreciation of the stock on the day I moved them.

Andy

a employee worked for a foreign subsidiary of the plan sponsor is now being transferred to the states. does his prior service count with the foreign subsidiary? my inclination is that it does not unless the plan sponsor wanted to credit this service.

Can someone please tell me if the revised Form 5330 (January 2008 version) is contained in SP2 of the Relius Government Forms 5500 program. Thank you!

I have a DB plan that failed the general test for 2007 - it's annual testing and the non-highs will get a bigger accrual for 2007 - does the 2007 funding valuation also need to be re-done ?

ER pays insurance salesman a negotiated sum as a 'brokers fee' for arranging and facilitating the set up of a self-insured medical plan, and the hiring of a claims TPA. No policy was placed by this salesman.

Q1: Should that brokers fee be reported on Schedule A, Schedule C, elsewhere or not at all on the Form 5500?

The claims TPA places a stop-loss policy for the self-insured plan. The premium is paid to the stop-loss carrier which does not pay the claims TPA a commission. Instead, the claims TPA charged the ER for the stop-loss coverage an amount greater than the premium, and the claims TPA kept the excess over what the commissionless premium cost.

Q2: Should that excess collected by the claims TPA who placed the policy be reported on Schedule A, Schedule C, elsewhere or not at all on the Form 5500?

Situation: ER has been self-funded for more than 10 years. About 5 years ago, it switched claims TPAs. The ER pays a health insurance agent about $5/EE/mo for a "broker fee". The ER pays an insurance company about $30/EE/mo for stop-loss coverage. The ER pays the new claims TPA about $31/EE/mo.

Recently, it was discovered that the claims TPA has charged about $5/EE/mo more that the $26/EE/mo that was quoted for claims administration. When asked, the claims TPA merely dismissed it as a 'stop-loss placement fee' on top of the claims administration, and the TPA holds an insurance producer's license. Such a charge had never been disclosed, at least not beyond invoices with $31/EE/mo that the ER received before the one from which the ER discovered the 'over charge'.

In the industry, is it common for a claims TPA to receive an undisclosed 'placement fee' or commission from the stop-loss carrier?

While I understand that the stop-loss policy and coverage are not ERISA plan assets, generally speaking, I've also heard mention of a 9th circuit decision that the payment of the premiums for stop-loss coverage are plan assets until received by the carrier. Anyone have any illucidating thoughts regarding this?

I contributed the 5k max in January for 2008. I have been fortunate at work and will make too much to be eligilbe to contribute to a ROTH for '08.

What happens now?

I have the IRA with Fidelity. Do I need to notify them? If so when? What happens to the gains I have made on the money I contributed? I assume I should contact Fidelity to get specifics but any insight here would be great!

Thanks!!!

Someone is a 5% owner and has passed the age of 70.5?

This posting is for further clairifaction on life time maximum rules between two insurance companies for Ortho.

Senerico:

Product: Invisalign

Cost: $4,500 (or whatever it costs)

Dentist requires individual to pay upfront for full cost of trays even though service has not been rendered.

Dentist submits claims monthly for each tray to insurance company. The 1st insurance company lifetime max of $2,000 is met & payments are sent to individual for reimbursement (no secondary insurance).

The individual leaves their dental plan during open enrollment and switches to their spouse's dental insurance plan. The individual is still receiving trays every month. The dentist submits claims to the new ortho/dental carrier with documentation showing the amount the other insurance paid to prevent duplication of benefits. The new insurance carrier states that thier plan has a life time maxium for ortho of $1,500. Since the first insurance company paid $2,000 previously the second (or new) insurance company does not pay for a single tray. The second insurance company states the member met the lifetime maximum under that plan because of the other insurance carrier payment.

Do you think this is some kind of preexisting rule or can a dental insurance company apply prior insurance payments towards meeting their own lifetime maxium for Ortho? I don't have a copy of that SPD, but I hope to get one to help the individual. The dental plans I have worked with will coordinate benefits for remaining treatments. Maybe I have been in the dark, I am not familiar with this situation. Please advise

As part of a controlled group, a large tax-exempt parent sponsors both 401(k) and 403(b) plans. The parent has exempt as well as taxable subsidiaries. Employees of one of the taxable subs have been participating in the parents' 403(b). I still don't have data to indicate how "significant" the error is (i.e., number of employees from the sub compared to the number of total participants, etc.), but what will be the appropriate correction method and procedure?

Thanks.

Suppose you have a 401(k) plan with salary deferrals and profit sharing.

Each year the employer makes a 15% P/S contribution and it is allocated comp / comp.

This year they fail the ADP Test. The document allows them to carve the amount necessary to pass the ADP test by classifying that amount as a QNEC.

Suppose 4% of the 15% becomes a QNEC for the two NHCE's. Does that then require us to cross-test?

Does the fact that the 4% QNEC is used for ADP testing then mean only 11% is considered a "Nonelective Contribution" and then subject them to cross-testing?