The 404 cushion amount in PPA is currently 50% of the funding target. I thought I heard that this should have been 50% of the funding target AND 50% of the target normal cost... and that adding 50% of the target normal cost to the cushion amount would be in technical corrections.

As far as I know, the tech corrections bill now in Congress doesn't have this item. Can someone update this information?

Thanks...

Is there an annuity product that lets you choose which index you want to be attached to, and then guarantees that you will receive that interest rate, and never lose any principal? How can investment companies guarantee income when the market is taking such losses? Do these types of funds generally have higher fees? It just sounds too good to be true.

Thank You.

Company has a number of ex-employees on COBRA. Company wants to terminate all its group health plans. Contemporaneously with the termination of the Plans, the remaining employees will become "employed" by a leasing organization or PEO for payroll and health plan purposes. The remaining employees' jobs will essentially be the same.

Can the Company terminate the COBRA coverage for the ex-employees because the company no longer maintains a health plan for the benefit of any employees?

Are Native American corporations (tribes, casinos, etc...) required to file a Form 5500?

Does the Universal Availability requirements under IRC section 403(b)(12) and the regs 1.403(b)(5) apply to 403(b)(1) and 403(b)(7) plans? I feel they do apply and the only real differences between a Church 403(b) and one for other eligible employers is that no document is required unless for a 403(b)(9) Retirement Income Account and the possible effective date of the regs

Anyone have a mandatory DB Contributory Plan?

If so, how to handle the ee contributions for determing Target Normal Cost?

Is it Gross Normal Cost minus ee contribs? Something Else?

Any help appreciated, thanks.

ER terminated d.b. plan and will deposit excess assets in the 401(k) plan (a qualified replacement plan). They are being told that amending the 401(k) prototype to allow deposit of excess d.b. assets will cause the plan to become an individually designed plan. I don't have a problem with that. However, they are also being told that once the d.b. assets move into the 401(k) plan and are allocated as an employer non-elective contribution, the plan can be amended to "discontinue" the d.b. deposit amendment, and thus go back to reliance as a prototype document.

I looked at the IRS det ltr guidelines, Tripodi's ERISA Outline and prior benefitslink posts and found nothing on this issue. If anyone has had this situation come up in the past I'd appreciate comments or references. Thanks.

Maverick

A small business - 3 key employees (owners) and nine full-time non-key employees - wants to set up a 401(k). They were originally planning on a Safe Harbor 401(k) because the owners didn't want to be on the hook for large matches. When presenting the plan to the employees, every single one of the non-key employees decided to opt out / not participate in any retirement plan. Because of that, the owners now want to sock away as much as possible.

Question: If all non-key employees opt out of a 401(k) and the three key employees max out their contributions, would it be top heavy? Does the top heavy test apply to "total employees", "eligible employees", "total participants", or one of those three but with "whom have not opted out of the plan" added to the definition?

Thanks!

My client is asking if a participant from the UK can rollover their Pension plan from the UK to a 403(b) Plan in the U.S. The question is two fold, will his UK plan allow and will a US 403(b) allow?

1. Does anyone know when would be a good time to start submitting EGTRRA pre-approved plan documents?

We use Corbel's Volume Submitter Documents and they recently came out with the EGTRRA document. So we are in the process of restating our GUST documents to the EGTRRA docs. We want to submit these docs for determination letters? ( We understand that we don't need to since the documents are pre-approved, but we feel that it's a security net).

2. Should we wait until we adopt the PPA amendment in 2009 to submit? Would the determination letters be different if we applied now rather than later?

3. What amendments should be included when we submit? I've read that the EGTRRA good faith and 401(a)(9) amendment should be included? but we submitted these with our GUST documents, am I wrong in assuming that they do not need to be included?

I believe that the amendments that need to be included are:

1. Autorollover amendment

2. Final 401(k) Amenmdent

3. Final 415 amendment (if we sumbit now)

If we sumbit closer to 2010 then the

4. PPA amendment should be included

5. And possibly the HEART amendment

(am I correct, I hope I have a good understanding of this!)

ANY ADVICE WOULD BE HELPFUL!

A common design (particularly at private universities) is to have an ERISA plan that receives employer contributions and a non-ERISA deferral only plan. In light of the administrative obligations imposed by the final regulations, including the restrictions on contract transfers, does anyone have experience or comments on whether we will see more of the deferral only plans be treated as ERISA plans due to employer-imposed limitations on vendors and other employer involvement?

When a non-ERISA plan "converts" to ERISA status, presumably the sponsor would need to go to participants and inform them of the QJSA/QPSA consent requirements that now apply to distributions and beneficiary designations. Anyone have experience with a plan that was determined to be an ERISA plan due to changed circumstances, after many years of non-ERISA status?

Seems like another issue would be filing a 5500 for the first time and including a plan effective date that is many years earlier. Perhaps an explanatory cover letter with the filing would help prevent a DOL inquiry. Any thoughts?

A clarification as to what Grantor trusts are would help very much. Do grantor trusts ever figure into retirement plans?

In Datair's Summer 2003 newsletter, one comes across a bold statement that Revenue Procedure 2002-73 allows, under certain circumstances, one to have a remedial amendment period extending beyond 9/30/2003.

http://www.datair.com/PDF/News%20Summer%202003.pdf I refer you to the article on page 3 "Countdown to the End of Gust".

I have also seen some reference to Rev Proc 2003-72, Rev Proc 2004-6, Rev Proc 2003-6, and Rev Proc 2002-73. As well as Rev Proc 2000-20 and 2001-12.

What is the proper correction where an employer allows a loan in excess of the max permitted? Section 6.07(1) seems to allow a self correction by having the participant report on Form 1099-R, but it also states that any applicable income tax withholding amount that was requried to be paid in connection with the failure must be paid by the employer. Does this mean that participant pays income tax on the excess amount and employer pays the required withholding amount? what is the required withholding amount in this context? Thoughts?

I ran my ADP/ACP test and printed the QNEC/QMAC/Match Limits report because the test is exculding the disproportionate matching contributions from the ACP test. Relius does not currently support the representative matching rate; therefore, if the additional matching contributions need to be included in the test, you have to manually adjust to reflect them in the test correctly. I've tried adding them into the Additional Amounts field on the Regulatory/Compliance tab for a participant and the test still does not include all of the match contributions. The amounts are also in the participant's payroll screen. Where do I enter them so they will be included in the ACP Test?

basic 401k has a 6 year graded schedule. 1000 hours year of service. AA states that for vesting purposes the vesting computation shall be the plan year. A participant in a calendar year plan has a DOH of 7/2/06 with 920 hours at year end and works all of 2007 with over 2000 hours. For vesting purposes this participant has 1 YOS and is 0% vested, correct?

For discussion purposes, the plan has an option to choose the vesting computation to be the date an employee first performs an Hour of Service and each anniversary thereof. So if that participant was hired 7/2/06 and as of 7/2/07 worked 1000 hours. He would have 1 YOS by the anniversary. How would you compute vesting based on the remainder of the plan year 7/2/07 thru 12/31/07 if the part next anniversary is not until 7/2/08?

Am I making this more difficult than it really is? Thoughts?

Hi All,

My father is getting closer to retirement age and I am trying to figure out his retirement benefits.

He works for New Jersey Transit and has either Federal or State based pension (I believe it is Federal.) Anyhow, I have a copy of his retirement benefits which is fairly easy to figure out if it were just him, but it gets more complex as he will be taking a pension that also works with his wife (my mom.)

His base is figured by 2 1/8% of his final average salary (average of the highest three years of the past ten) mutiplied by his years of service. - This part I have figured out.

Where I am having an issue is that it says his pension would be based on the actuarial equivalent which is based on the 1983 group annuity mortality table and a 7% interest rate and other actuarial factors adopted by the committee. What does this mean and how can I figure out (roughly) what this number would be?

Thanks!

What is the proper correction where an er allows a loan in excess of the max permitted? My research indicates that it must be corrected using VCP. Any thoughts?

Large plan filer where all assets are participant directed. The money is held at an insurance company. The insurance company closed 13 funds during the year. The plan notified the participants before moving the money of the changes and that their funds would be mapped to new funds if the participant made no formal election at the time of closure. Should these closures / fund movements be treated as a reportable transacation for purposes of the 5500?

Is there any operational or regulatory reason that a plan should not allow hardship distributions from other sources besides the deferral source?