A client has decided to create a retro Wrap plan (for DFVC purposes) that will include the 3 seperate H&W plans it formerly filed.

Do we need to amend prior filings to show final report?

Do I need to indicate that this is the 1st filing for the plan? It will be a new plan name and #.

Is the Effective date of the plan the date of the wrap document?

Any other guidance you can offer will be greatly appreciated.

Plan has been making a matching contribution on a periodic basis throughout the plan year (5-1 to 4-30). The matching formula is 50% of deferrals not to exceed 3% of participant's compensation. Compensation is "plan year" compensation.

Two HCEEs hit their deferral limit mid year. Corresponding match therefore stopped. Although the plan document does not specifically address true-up (either yes or no) upon reviewing the plan language the sponsor is interpreting the plan so that it requires using the full plan year compensation in determing the match. The Sponsor wants to retroactively apply the true-up for the 2006 plan year (and all subsequent plan years).

Do you see a problem with applying it for the 2006 plan year if the sponsor determines they were not interpreting the plan provision properly and the additional match should have been made?

Any additional true-up match would be made to all affected participants (NHCEEs and/or HCEEs). It would be counted for 415 purposes for the 2007 plan year so have to make sure no 415 excesses.

Another factor is this is a safe harbor plan (using the 3% nonelective to satisfy ADP) and this Match in question satisfies ACP safe harbor. If the additional true-up match can be made for the 2006 plan year, could it be made only to the extent when added to the 2007 total match satisfies the ACP safe harbor limits (no match of deferrals in excess of 6% of comp.) for 2007? Want to remain within the confines of ACP safe harbor and not have to test any match. Thanks.

Under 409A, would a plan admministrator be considered a fiduciary, as would be the case under ERISA?

Can a plan fiduciary be indemnified by the sponsoring company for the plan administrator's errors in administering the nonqualified plan?

I feel very proud to be one of the first, if not the first, to inquire as to where we find guidance as to modifying an AFTAP and when/how that is done. I remember the "materiality" theme of any changes but that's about it.

I changed the force out level from $5,000 to $1,000. Are there any problems in changing it back to $5,000?

Employer maintains a self-insured health plan. An employee enrolls herself in health plan through the employer's cafeteria plan but does not enroll her dependents.

Employee (still working) becomes eligible for Medicaid (don't ask). Under the employee's state's HIPP program, the state will pick up the tab for the employee's and her dependent's coverage under the plan. The state has sent a letter requesting that the plan put the individuals on the plan effective July 1. Since the plan runs on a calendar year, this would be in effect a mid-year election change.

Leaving ERISA preemption issues aside (which I think exist, but the employer doesn't mind complying), is the change problematic under Section 125? The two most relevant events permitting an election change don't seem to apply: It's not a QMCSO because it's not related to a divorce, separation, etc. and it doesn't fit in the Medicare/Medicaid exception because that exception only permits you to DROP coverage upon being eligible for Medicaid (and vice versa). Here, the employee is staying on the plan and the dependents are being added.

Any thoughts on this are appreciated.

In small plans it is going to be impossible to do an AFTAP cert for PY xx by 10/01/xx considering that we (at least I) don't even start working on PY xx val till well into the year xx+1 regardless of BOY or EOY val date!

Is there any rumor of postponing the cert date by the congress or IRS to the date when Sch B is required to be filed or some other relief?

Other than issuing the ERISA 101(j) notice for ERISA plans, what are the practical consequences of not completing an actuarial certification before 10/01 for small plans in general and for one-person plans in particular, keeping in mind that:

In small plans, the restriction on accelerated payments is generally of no consequence as the plan sponsors are not in a great hurry to pay out benefits. In any case, if and when there is a need to payout accelerated benefits one can do the actuarial certification at that time, i.e. do the actuarial certification on as needed basis.

In particular, for 2008, why should one do an AFTAP certification before 10/01/08 based on the 2007 val when another one will be required by 10/01/08 based on the 2008 data?

We have a group of doctors, let's say 25 doctors, who want a cash balance plan for 2009.

They are interested in contribution class levels of say:

10,000 annual credit

20,000

30,000

50,000

75,000

100,000

So in other words, some doctors will be in the group that receives annual cash balance credits of 10k, others in the 20k class and so on.

Now here is where it gets interesting or perhaps too unorthodox.

They (the doctors) want to be able to potentially change their contribution credit from year to year. Of course most would stay at the same contribution level each year. So for example, a doctor may want a credit of 50k in year one and then a credit of 75k in year two and then a credit of 30k in year three.

Now this can be done with annual amendments before each year.

WOuld the IRS strike such a plan design down?

Perhaps iIt could be said that it doesn't meet the definitely determinable benefit rules.

And then there are the accrual rules. While the benefit may increase by more than 33% from one year to the next, it isn't based on the attainment of a specific age or amount of service, which would presumably violate the backloading rules.

Curious to hear comments on this type of cash balance plan design approach.

And lastly say the first plan year is 1/1/09 and contributions for a participant total 100k for the year made proportionately throughout the year.

Could there be no plan interest credit for 2009 and then have the balance at the end of each year (eg. 12/31/09) be credited with interest on 12/31 of each subsequent year? So in other words the account value as of 12/31/09 would not receive an interest credit and the balance as of 12/31/09 of 100k would be hit with an interest credit on of 12/31/10 based on the amount as of 12/31/09 and so on?

Thank you.

I have a 6/30 fiscal year end plan that has one HCE who is over 50, and wants to contribute the maximum.

catch up contributions are based on the calendar year plan.

There is no deferral limit on the plan level

The payroll service shows a $192.31 catch up contribution for each payroll on the 401(k) payment check stub they send in (26 in the year)

For the 2007 calendar year, the HCE contributes $18,134.83

while the payroll service shows $4,423.00 as catch up, the actual 402(g) overage is $2634.83

Do I use the $4,423.00 as catch up; recharacterizing $1,788.17 as catch up for ADP test (test doesn't pass for pye6/30/08)

-or-

Do I disregard what the payroll service shows on the check stub as catch up and only use the $2634.83, even though the PYE 6/30/08 test could fair better?

How does catch work when you need to recharacterize for ADP testing and you're on a fiscal year end plan?

Any guidance would be appreciated.

Thank you.

What happens when an ADP test fails based upon incorrect census data and when the correct census data is used, the plan passes ADP testing? What options are available to the HCE that already received a refund?

If a 5500 has never been filed, at least cannot be seen on freeERISA and all the other public websites, how far do you have to go back with the filings?

I understand that the Delinquent Filer Voluntary Compliance Program caps the penalty at a per plan max of $4,000.00 for a large plan. How far do you have to go back?

I have heard that you would only have to file 3 years worth (2004, 2005 & 2006). Is there any documented evidence of this or is it obtained through a Private Letter Ruling?

Here is a timeline:

-Plan with 500 participants terminates in March 2007

-all of the participant balances will be distributed.

-This is a slow process such that by May 2008, the Plan still holds participant balances

what is the 5500 and financial statement/ audit requirement here? I would think you need March 2007 dated audited financial statements on the liquidation basis of accounting such that ending net assets are $0, and a large liability is recognized for all remaining payments. But the final 5500 would not be created if the plan still had assets, therefore there will be a standard 12/31/07 5500 and no final 5500 available.

Do you wait for the final 5500 and ignore the 12/31/07 5500, then file the 3/07 financials with that? Or do you still have to file the 12/31/07 5500?

Since financials and the audit are for accrual basis, I have to think the financials are dated as of the official plan termination date (3/07). But then you have a 12/31/07 5500 and later, a final 5500...

For distributions in 2008 and beyond, I have not seen anything that indicates that the interest rate can be less than the pre PPA rate of 5.5% for 415 limit purposes.

I haven't found a new applicable mortality table after GAR 94. I need to see if the updated mortality table is provided in the PPA funding regs.

Please let me know of any deficiencies in my above comments.

Thank you.

A doctor maintains a early 80's 100,000 face policy in his plan. Premiums are $1500 annual and he has about $50,000 cash value in it. He is considering changing the policy to one that would not build as much cash value but would give him substantially more than double the face amount of the current policy. Are there any reasons to keep him from making any changes? The plan has about 1.4 mil in assets with just over 1 million allocate to the doctor.

Client has contacted us about how to correct their error. About 15 participants elected Roth deferrals, but the client's payroll provider withheld pretax deferrals for them instead. The funds are showing as Roth with the custodian, but were reported as pretax on the W-2s. At this point, do you fix the W-2s or move the money from Roth to pre-tax with the recordkeeper? I can see pros and cons either way, so I'd love to know what others are doing in this situation.

I have a mutual fund in a joint taxable account and would like to transfer it to my Roth IRA. I can contribute $6000 this year and the mutual fund has a $4000 value. Can I do this and I assume the value of the fund would be what its worth when I transfer it. Correct? That would allow me to add an additional $2000 to the Roth.

I need help and fast. I have to choose whether or not to stay in my 401a plan through my employer and Great West Retirement System or switch to the TRS system of WV. In my TDC plan I pay 4.5% and my empoyer pays 7.5%. If I switch to TRS I will start paying 6%. It seems like in the TDC the money is mine, but maybe more risky. When I looked at the estimated graphs based on 7% return, my monthly income seems to be about the same in both. Is this a conservative return? I'm afraid that the state will cut the percentage in the formula they are using by the time I retire. I have about 20+ years before I retire. I have grossed about 35 ,000 over 8 years in the TDC. Which system is better for me and my family. I'm married with 2 children. My husbands retirement is a 401K.

What is the procedure to transfer the contribution made to Sep-IRA in 2008 (by ignorance) to a solo-401K which established last month (2008)? So far the total contribution may be more than the limit allowed by SEP alone, but definitely less than the limit of Solo-401K.

If I can not move the money around, will rollover the Sep-IRA account to solo-401k solve the problem? Or what other solutions available?

I tired to find a local competent tax adviser, but all the people I talked to, seems have no knowledge about this.

Thank you very much for the help.

PPA provides a special rule that extends 404© protection during “fund mapping” as long as the following three requirements are followed:

1. Notices provided at least 30 days before.

2. The participant or beneficiary does not provide affirmative investment instruction before the effective date of the change.

3. Immediately before the effective date of the change, the participant’s or beneficiary’s account was invested in accordance with elections made by the participant or beneficiary.

So, if I am reading this correctly, you have to allow the participant to make investment elections. Correct???

Most times if we take over a plan the participant’s account is mapped and they are allowed to change elections after the initial mapping.

How do others handle take over plan??