Folks:

In a 1992 paper published by the IRS, it states on pages 9-10:

"The qualified cost of a fund not only includes the qualified direct cost, but also additions to a qualified asset account described in IRC 419A. A qualified asset account may be established only for the specific purposes described in IRC 419A, and no addition is allowed if an accounbt is overfunded."

This seems to suggest that no addition is allowed, even if non deductible.

Yet, I have read in other places that deductions may be taken in the following year.

Does that mean that the funding cannot occur until the following year?

To read pages 9-10, go to:

http://www.irs.gov/pub/irs-tege/eotopicj92.pdf.

Don Levit

a plan with only hces with profit sharing and cash balance plan passes 401(a)(4) and 410(b) by default right> no testing involved except for the 25% combined limit/6%dc limit.

agree?

Does anything in ERISA (or otherwise) prevent an investment manager who manages plan assets from using a foreign clearing entity to hold stock or payment for stock while the trade clears? As background, this question relates to certain foreign countries' trading practices/custom where trades take 2-3 days to settle. Specifically, the stock being sold and the payment for the stock must be deposited in the clearinghouse on the first day after the day of trade (T +1), and the trade is then settled on T + 2 or T + 3 (depending on the country).

Some trust agreements I have seen appear to require that payment and delivery of securities coincide (requiring the Trustee to "deliver plan investments upon receipt of payment"). So while we could amend this provision of the trust agreement, I am wondering if there is some other less-obvious ERISA requirement that would prevent an investment manager from complying with these kinds of foreign trading customs.

I would greatly appreciate any thoughts on this issue. Thanks.

I have plan sponsored by single employer for its union employees, so the benefits are set by the CBA, but it's not a multiemployer plan. The CBA signed prior to 1/1/08 covered the period 4/1/05-3/31/08. The plan runs on a calendar year.

Plan years beginning before the ealier of the later of (3/31/08 and 1/1/08) and 1/1/10 are exempt from the restriction rules, so the first plan year to which the restrictions apply is the year beginning 1/1/09. Agreed?

The new CBA effective 4/1/08 increases the benefit. Assuming the 1/1/09 date is correct, and that the benefit increase does not meet the exception under 1.436-1©(3), what happens to the benefit level at 1/1/09 if the AFTAP is < 80%?

An employee (before normal retirement age) terminates his/her employment with an employer who, pursuant to a CBA, contributes to a multiemployer money purchase plan, and the plan language provides for distributions upon termination of employment. Would it be problematic if the employee, at a later date:

a. began working for the same contributing employer in a capacity where contributions are not required

or

b. began working for a different contributing employer where contributions are required.

The plan language is generic and just states termination of employment without going into any specifics.

The trustees, pursuant to the plan, can rely on their interpretation of the plan language.

My thought is that in both of the above situations, there was a "termination of employment" and that maybe the plan should be amended to specifically address the above issues.

Any thoughts or ideas?

Thanks.

An employee (before normal retirement age) terminates his/her employment with an employer who, pursuant to a CBA, contributes to a multiemployer money purchase plan, and the plan language provides for distributions upon termination of employment. Would it be problematic if the employee, at a later date:

a. began working for the same contributing employer in a capacity where contributions are not required

or

b. began working for a different contributing employer where contributions are required.

The plan language is generic and just states termination of employment without going into any specifics.

The trustees, pursuant to the plan, can rely on their interpretation of the plan language.

My thought is that in both of the above situations, there was a "termination of employment" and that maybe the plan should be amended to specifically address the above issues.

Any thoughts or ideas?

Thanks.

Code Section 432(f)(4) says that during the rehabilitation plan adoption period, the plan sponsor may not accept a bargaining agreement that provides for a reduction or suspension of contributions or the exclusion of younger or new employees. Is it safe to read this as meaning an employer may not during the RPAP bargain for reduced benefits going forward, but may bargain for a complete cessation of contributions - i.e., bargain out of the plan, which of course would trigger wihdrawal liability? If not, what does an employer whose bargaining agreement expires during the RPAP do - bargain to withdraw upon the end of the RPAP?

Early retirement benefit for a school district includes employer contributions to 403(b) plan for 5 years. Are there any reporting requirements? Someone came up with the idea that, since the early retiree has no compensation during this 5 year period, a W-2 should be issued showing zero compensation, but with an "X" in block 13 indicating participation in a retirement plan. The W-2 instructions indicate that a person is an active participant in any year in which an employer contribution is made to his/her account. Maybe nothing has to be done, so any comments would be appreciated. Thanks.

Maverick

I was looking over a client's paystub recently and saw they were participating in their company's 401k plan. (They're puting in 5% of their pay.) I also saw he had a 401k loan repayment (may or may not be relevant). Here's the question: there are two deductions from his gross pay- one in the amount of $53.76 (5% of his gross)- this one is labelled as "401K Match", and another $53.75 labelled as "401K Unmatched". They are both in the same column.

As I mentioned earlier, he is contributing 5% of his gross, which I assume to be one or the other.

At first blush it looks as though the company is taking out their "match" from his pay. (His net pay equals his gross less all taxes AND the TWO contributions- his and the company's "match".)

Am I not seeing something?

Company A bought Company B. A's employees are going on B's payroll (I know, it's usually the other way). Both A and B have 401(k) plans with matching. Is there a way to merge both plans without causing 100% vesting and without causing a distributable event?

softwareI am in the process of evaluating 125 software to administer plans. Can anyone help? We are setting up our TPA and looking for software thaa supports debit cards, hsa, hra as well as pops.

do 412i(sorry i don't remember the new code section) plans get an automatic pass on 436 because they are exempt from 430 as they were once exempt from 412? Does the presence of a side fund for top heavy purposes affect the answer?

I have a client with a defined benefit plan that has been frozen for many years. When the owners reached NRA (age 65), they established 414(k) accounts for themselves.

Along comes 2008, and one of the HCE's must take an RMD because he's reached age 70 1/2. When the AFTAP is computed including the 414(k) accounts as assets of the plan, we get 92%, which means that the owner is okay to take out his RMD. However, when we take the 414(k) balances out of the equation, the AFTAP results are 64%.

What to do? Does AFTAP penalize non-owners but not owners in this situation? Should the 414(k) accounts be considered for AFTAP percentages at all?

Any thoughts would be appreciated.

We (along with the most of the rest of the retirement world) received the approval of our EGTRRA prototype document in the past couple of weeks. During the process, we attempted to make the section on New Comparability a bit more restrictive than LRM94 outlined. However, our modifications were rejected at every turn. Therefore our document contains the exact language from LRM94. Now that we are re-reading it for the 100th time, we have come up with a new view.

From our reading, it appears that the LRM allows for two options. One is divided between HCEs and NHCEs. The other appears to be each participant in his/her own group. There does not seem to be any other options. Is this the way others are interrpreting the language? (This differs from the volume submitter which allows for specific groups of participants to be named in the document.)

If this is the case, I am concerned on a number of levels including:

a) My recollection is that some sort of corporate resolution is to drafted each year detailing each group and the contribution amount allocated to each group. Does anyone have a suggestion how this should be done for a plan with each person in their own allocation class?

b) An oldie but goodie, the deemed CODA issue. It certainly appears now more than ever that this type of arrangement would lend itself to being a deemed CODA? Any thoughts? How do we help clients avoid this issue? (Especially is each person is in their own group.)

c) We plan on billing our clients on an hourly rate for processing the New Comparability allocations and associated testing. Even with the billing, we are concerned that clients will request multiple re-runs by making changes to one or two individuals at a time. Again, any thoughts?

d) From reading LRM94, it appears that there can be upto 25 allocation rates for the HCEs (one per HCE) and upto 25 allocation rates for the NHCs (based on the chart). My guess is that a number of clients will either use way less for the NHCs or simply say each percentage up to 25% is a allocation rate. Is this what anyone else has heard? Also, does 0% have to be considered an allocation rate? (If on the off chance that the plan can pass on allocation rate?)

e) Are the counts for the allocation rates based on total population or Statutory employees vs. OEE employees? Do they each get their own number of groups where, in the aggregate, they cannot exceed 25 (for NHCEs)? Pertaining to D above, if a client wants to give 0% to the OEEs, does this then reduce the allocation rates available by 1?

My apologies for the length of the post (and I am not sure that all of it makes sense.)

Any help would be greatly appreciated. Also, if anyone has more information (or where to get it) I would appreciate the source.

My firm has just taken over a plan. This plan was a one-life corporate plan, filing Form 5500-EZ. The owner-employee tranferred his ownership in the corp to a trust, with his attorney as trustee. This trust does not have any employees, and there have been no contributions to the plan. The trust, as owner of the corp, has since dissolved the corp. The (now) former owner of the corp is also the trustee of the plan.

Is the trust allowed to sponsor the plan? If so, can the plan continue to file a 5500-EZ?

Thanks in advance.

If employer has his p/s monies at let's say Smith Barney,and employees are at Am Funds;is that permissable?

If he gives everyone option to be at Smith Barney and none choose it is that ok?

ty

Stan

Does anyone have any experience with responding to former employees who have received a Potential Private Pension Benefit Information Notice from the Social Security Administration (Form SSA-L99-C1). I searched the boards but could not find any prior discussions on these notices.

We have a client that acquired a company in the late 90s and, following the acquisition, merged the seller's 401(k) plan into the buyer's 401(k) plan. The Seller apparently had a defined benefit pension plan prior to adopting the 401(k) that eventually got merged. Nobody at current company really knows anything about that old DB plan but understanding was that it was terminated and benefits annuitized or distributed in some fashion well before the current company appeared on the scene.

Wife of former employee with seller back in mid-70s recently received an SSA Notice indicating that she MAY be entitled to potential pension benefits based on information reported to SSA in 1977 (notice indicates potential life annuity in the amount of $22 to be paid monthly).

We suspect the amounts under the old plan have already been paid out to the former employee but, not having any involvement with the termination of the old DB plan or really knowing circumstances of the termination, etc., we would like to be able to provide a helpful response to the wife or point her in direction for seeking additional information that would let us confirm there are no amounts still due.

We can try and ask some other older employees if they recall what happened with the pension plan benefits, etc. but they are apparently few and far between. Would the IRS or PBGC be able to provide any additional information? We have already checked PBGC website of missing participants and neither individual or any others from old company seem to show up there.

Would appreciate any suggestions for being able to provide a helpful response that would let company close this issue. Thanks.

I posted this in the "Litigation and Claims" forum and did not get any responses. Since it is health plan-related question I thought I'd try here:

Hypothetical:

Self-insured dental plan does not condition receipt of a benefit upon obtaining approval in advance of any procedures. The plan's claims procedure only provides for resolution of post-service claims. I am in extreme pain and need a root canal and call my plan to see if it is covered. The plan tells me "No pre-certification is required. We can't tell you if it will be covered until afterwards." (I know that most times the plan will tell me but remember this is a hypothetical.)

Does the plan violate ERISA Section 503 because it has not established proper claims procedures? The few things I have read have conclusorily stated that an urgent care claim is only such when the plan requires pre-certification (i.e. it is also a pre-service claim) and that seems to be a reasonable conclusion. But to me ERISA 503 is unclear. To make a long story short, it applies to pre-service claims and to post-service claims (2560.503-1(e)). Post service claims are any claim that is not a pre-service claim (2560-503(m)(3)). So what is a claim involving urgent care?

What am I missing?

Hello all:

Does anyone have an updated Section 402(f) Notice available in WORD rather than pdf format? I have been unable to cut and paste from ASPPA's 4/12/07 updated notice.

Also, is anyone modifying the model notice to address the possibility of direct rollovers from a plan to a ROTH IRA, effective in 2008?

Thanks for your comments.

Dave Peckham davesbpc@yahoo.com

Say a plan sponsor wants to draft a DBP that provides different benefit formulas as follows:

10% unit accrual for Employees A and B

2% unit accrual for employees C, D, and E

0% for EEs F and G

1% offset formula for EEs H, I, J, and K.

The above is hypothetical, and endless variations can apply.

We'll assume that the above formula, combined with the DC plan passes non discrimination and coverage.

The question is:

How could or should the DB plan be drafted in terms of who gets what formula?

Should it explicitly say who (by name) gets what formula?

Must employee classes be created that includes specific employees by name? Even if there is no real criteria except to pass non discrimination?

This is a pet peeve of mine.

Thanks.