I'm hoping against hope here.

Key employee prior to EGTRRA became former key due to the law change. (Officer whose comp. no longer sufficent to be key) We have been exlcuding him from top heavy since he is a former key. It would be awful nice to callhim non-key. Was there anything in EGTRRA that I may have missed that would allow us to classify a former key due to the law change as a nonkey employee? I haven't found anything, but it doesn't hurt to take a stab in the dark.

Hi everybody,

As I promised last week, I herewith post a free copy of my program which will calculate certain PPA lump sums. IMPORTANT NOTE: I guess my magic moderator permissions are a bit lacking at the moment, because the message board wouldn't let me upload the file unless I changed the extension from .exe to something it thinks is benign. Hence, I changed the extenstion to .pdf. But, I promise that it really is an executable file that you must rename from ".pdf" to ".exe" in order to allow it to run on your computer. Windows only, please, as it isn't set up to run on Unix.

The program is in the form of a regular windows installation routine. The program does not write to your computer's registry. Hence, it has an uninstall that comes with it that will completely eradicate any traces of the program from your computer as long as you haven't stored any additional files in the program's directories. If you have stored information, then the uninstall will not delete that additonal information.

I will be honest with everybody and state up front that the purpose of posting this copy of my program is to encourage you to purchase a version of my program that has more capability than the posted version.

NOTE TO THE MODERATORS: I have already discussed this with Dave Baker and he has encouraged me to post this version here and to announce the availability of the other versions.

The purpose of the attached program, other than the obvious attempt to have everybody and their mother's uncle write me checks or otherwise funnel money to me so that they can have their very own copy of one of the other versions, is to provide everybody in the industry with a completely free calculator that can be used as they see fit; including the ability to:

1) check the results produced by my program against their own spreadsheets or programs they have developed

2) check the results produced by my program against the results that their valuation system produces

3) compare the relative value of present values based on alternative assumptions such as the funding segment rates versus the lump sum segment rates

With that said, the attached version, which I have labeled the "trial" version, has some limitations that can be removed by purchasing either the "lite" or the "pro" version. The trial version can only calculate present values for ages between 62 and 65 (either current age or retirement age). It does calculations at non-integral ages. In addition, it can only use certain periods of 0 through 12, 60 and 120 months. That should be enough to check against whatever system you want to check against.

Obviously, the "lite" version eliminates the restriction on ages and certain periods and is otherwise fully functional, calculation-wise. The lite version can be used in a production environment, but it isn't intended for heavy lifting, so to speak. It is intended more for one-off type calculations where you want to have a quick and handy way to calculate present values.

The "pro" version includes a number of options that are intended to be used in a production environment. From the help file:

1) the ability to enter dates (valuation, birth and retirement) rather than ages (current and retirement). The system will then calculate the resulting ages. The system provides for six separate methods of determining ages based on the difference between two dates. You can select which method to use separately for current age and retirement age. You can use dates for one age (current or retirement) and not for the other, if you choose.

2) the ability to save a specific calculation in a separate data file.

3) the ability to call up the information from a specific data file so that it is redisplayed on the screen

4) the system maintains a history file which records the full path and file name each time a data file is saved. This history information is accessible by accessing the FILE menu option and selecting the HISTORY option which appears on the drop-down menu. Use of this option allows one to recall a prior calculation easily. The number of files maintained in the history file is configurable.

5) the ability to create your own output file (like a mail merge file) and therefore format the output as you see fit. [Actually, I have left this capability in the trial version.]

6) Range Print Option - you can easily print a series of calculations so that you can publish what the present value will be in the future. This option is intended to allow the user to generate output for a client indicating how much a plan should pay to a participant based on the exact date in the future that a payment is made, but it is not limited to merely that.

7) the information that is recorded allows for participant name and plan name.

A program like this requires that interest rates and mortality tables be updated in order to remain usable. I currently intend to provide 12 months of such updated information to purchasers of the lite version without an additional charge and 24 months to purchasers of the pro version. I expect any additional charge for updates beyond those dates to be nominal.

The cost for a single user license of the lite version is $225 and for the pro version it is $425. Additional licenses for the same site are 25% of the original price, with a maximum payment of twice the original price. That is, once you have purchased 5 licenses (the original and four additional licenses) you have a site license and can use it on all computers in the office. Contact me about pricing for multiple offices or for those, like me, who have businesses where employees work from home in multiple locations.

I want to thank Dave Baker for generously agreeing to let me post this. I intend to use a separate site for support discussions as I don't really think it is appropriate for me to use the regular forums within the BenefitsLink message boards on a continual basis.

If anybody notices any calculation errors, please let me know about them.

I can be reached via email at mike.preston@prestonactuarial.com

I intend to set up a download site that will enable purchase and downloading online.

Thanks

mike

NOTE: The attachment was deleted and re-uploaded at 9:45am Eastern time on Friday, February 8. If you downloaded the attachment before then, you may want to uninstall that version (or not install it at all) and install this version. Then again, you may not. The only changes were: 1) fixed a mis-spelling on the main screen (you would think I would know how to spell preretirement) 2) enhanced the pathing so that the context sensitive help will hopefully work no matter how one has their explorer settings "set".

PPAPresentValuesInstallTrial.pdf

Are Non-ERISA 403(b) Plans subject to the IRS requirements for loans?

IRC § 414(p)(1)(B)(ii) and ERISA § 206(d)(3)(B)(ii)(II) require that the order be “made pursuant to a State domestic relations law (including a community property law)” relating to "provisions of child support, alimony payments, or marital property rights to a spouse, former spouse, child, or other dependent of a participant" (IRC § 414(p)(1)(B)(i) and and ERISA § 206(d)(3)(B)(ii)(I)).

May the PA accept at face value an order issued by a divorce court that cites to a state statute on domestic relations or community property? or must the PA dig deeper to make sure that the order complies with the wording of such statute? or yet deeper to determine if the order complies with the statute as interpreted by the state's courts?

Situation is one where a PA I'm advising has received an order that recites the state's community property division statute. However, the order also purports to make the ex-spouse the 'surviving spouse' of benefits that the employee will accrue after the divorce (a provision as to which a PA cannot reject the order--IRC § 414(p)(5)(A) & ERISA § 206(d)(3)(F)(i)), but under state community property the state's supreme court has ruled (not in this specific situation) is an 'impermissible invasion' of the employee's separate property (property rights earned after the divorce).

Does the PA accept the order as issued under state community property law because that's what it says on the face of the order that it is issued under, and thus follow ERISA's requirement to treat the ex-spouse as the 'survivor spouse' to the extent so specified in the order?

Or does the PA reject the order as not meeting the IRC § 414(p)(1)(B)(ii) and ERISA § 206(d)(3)(B)(ii)(II) because it is not appropriately entered pursuant to the authoritative interpretation of the statute recited in the order?

I'm doing a QNEC allocation and I was looking at the slides from ASPPA's webcast "401(k) Testing for 2006".

My question has to do with "50% of the eligible NHCEs": Is that 50% of the NHCEs who are eligible to receive a QNEC, of 50% of those who are eligible in the ADP test?

In this case, there is a last-day rule for a QNEC to satisfy ADP test.

A husband and wife are the only employees of their company and they have a DBP.

They get a divorce and the wife terminates from company.

I inform client of the wife's vested pension rights under the plan.

The client (husband) says nothing is owed to wife since she has given up all rights under plan in divorce settlement.

I have not responded to client on this matter yet.

As far as I can see the only way the benefit could be assigned (assuming no civil judgement or settlement, crime, etc.) is if a QDRO was prepared and certified by the judge and all parties (i.e. husband and wife).

Are there any other views on this matter?

Meaning, the client should contain in his possession a valid QDRO that assigns the former spouse's (i.e. wife) entire pension.

Thanks.

I'm looking for guidance on how to get the IRS and the DOL to bless (or, in the alternative not challenge) a settlement regarding the calculation of accrued benefits. I have a client that has been ordered to recalculate accrued benefits for a period of years (remanded to lower court). Parties are negotiating some different options, but are now concerned that either or both the IRS and the DOL are not a part and that all of this could be moot should they decide to audit/challenge the settlement. I had a similar experience with the DOL and the PBGC. A client made a deal with the PBGC and paid a rather hefty settlement and the DOL refused to honor it and imposed their own separate penalties.

I suggested an anonymous VCP submission, but I'm interested to see what other ideas the community has to offer, including inviting either or both agencies to the settlement table.

A plan is changing from "high 5" to "high 5 in the last ten." There are definitely people who will end up with lower accruals because of this at NRA (we are preserving the existing accrued benefits). The "powers that be" are wanting to avoid the

204(h) notice and are requesting some citation defining "significant" in reference to "signficant reduction".

In the Q&A from the final regs 54.4980F-1: A8.(b) addresses "Application for determining signifcant reduction in the rate of future benefit accrual" it reads ..."the determination of whether an amendment provides for a significant reduction in the rate of future benefit accrual is made by comparing the amount of the annual benefit commencing at NRA, under the terms of the plan as amended with the amount of the annual benefit commencing at NRA under the terms prior to the amendment."

I interpret this as a "yes" or "no" test and if it's less with the amendment than without, you need the notice. Is there some other measure? Code citation?

Client failed to adopt automatic rollover amendments. Rev. Proc. 2006-27 says that the nonamender fee is $375 for each year of the failure for "interim amendments" as provided in section 5 of Rev. Proc. 2005-66. I've read 2005-66 and I can't figure out whether the automatic rollover amendments qualify as "interim amendments." Anyone have an opinion on this? (Client has multiple plans, so real money is involved here).

Second question--what is each year of the failure? Do I include 2005, the year it should have been adopted, or does the failure start 1/1/06?

Safe harbor plan uses 3% nonelective to satisfy contribution requirement. The plan also includes an additional profit sharing contribution with 501 hours or last day requirement.

Understand the safe harbor nonelective and additional PS need to be looked at as one contribution source to make sure a uniform allocation rate is provided and 401(a)(4) is satisfied and that the plan basically has to satisfy 410(b) to do that.

Does the fact that the additional PS contributions automatically satisfies 410(b) (no employee exclusions)make this a moot point?

Employee terminates service in March 2006, and elects COBRA coverage. The Social Security Administration sends a letter explaining that because of his end stage renal disease he is entitled to Medicare beginning April 2006. He is going along on COBRA until September 2007 when the 18 month period lapses. He provided no other notices to the plan adminer or employer. He claims he should have COBRA for a total of 36 months because of his ESRD.

I am having a hard time figuring out what is required here. Is he actually entitled to COBRA for 30 months (under the Medicare Secondary Payer Act) or can COBRA terminate at the 18 month mark? Or is COBRA extended for 29 months under the disability extension? Essentially, what is required because he has ESRD?

The employer knew he had ESRD so does that automatically extend COBRA beyond the original 18 months to 30 months?

Any thoughts would be appreciated!

Thank you.

A graduate student received a 1098-T and the institution chose to put an amount in box 2 rather than box 1 (amount billed rather than amount paid). Student paid 10,000 in 2007 and took a penalty free IRA withdrawal in 2007 for 10,000. The amount billed (box 2 Form 1098-T) was 30,000 of which 12,000 was for spring 2008 and 18,000 was for 2007. If the remaining 20,000 owed the school was paid in 2008, by loan, can another 20,000 be taken out of the IRA in 2008 penalty free? Everything I am reading is saying that the IRA Distribution must be taken in the same year in which the qualified expenses are paid. The loan paperwork was done in 2007 but the bank did not actually disburse the loan amount to the school until Feb 2008. All 30,000 was for qualified expenses (tuition) I know everyone is busy now so thanks in advance for helping me out!

I realize the IRS is looking for comments on this topic, but I was wondering if others have come up with their own correction methodology where an employee elects to make a Roth deferral but the employer fails to deposit the dollars into a Roth account (i.e., the employee's paycheck was unreduced for any Roth deferral) In the case I'm dealing with, there also would have been an associated match.

We are considering the following approach, with the intent of keeping within the principles of EPCRS to put the person in the same position they would have been had the error not occurred:

1. The employer increases the employee's pay by the amount of the missed Roth deferral and then deducts it from the paycheck as a Roth contribution and deposits it into the plan. All applicable taxes are withheld.

2. The employer makes a make-up matching contribution to the person's match account.

3. The employer contributes an appropriate amount of earnings to both the Roth account and the match account.

4. For ADP/ACP testing and 415 purposes, both the Roth deferral and match would be considered made in the year in which the error occurred.

Any issues I've overlooked?

SSA requires reporting of various items related to "deferred vested" particpants.

Any clues, ideas, insights, as to why there is a need for plans to report this info?

I'm not trying to avoid filing it, just curious what purpose it serves to DOL, IRS and/or PBGC.

Note, I checked the preamble to 301.6057-1 (the regs that instituted Form SSA reporting) without any luck.

Thanks in advance to any who share comments!

Andrea

The 100% owner of a corporation (50 employees) is also the Plan Administrator and the only Trustee of the plan. They are also the only officer of the company.

A DRO is served regarding this owner's benefits in the 401(k) plan (account is about $60,000).

The QDRO procedure would have the Plan Administrator review the order to determine if it is qualified. The Plan administrator is the Employer. Thus, the detemination of the qualified status of the order would be done by the participant to whom the order concerns.

Any problems with that? or guidance you may want to provide?

-Thanks!

Terminated person has a little of $3,000. Plan has cashouts retained for $1,000 and below, so no "automatic direct rollover". Also, person is no where near NRD.

Person was provided with appropriate notices and election forms. However, person does not want to complete election forms as provided to receive payout. Person wants the payout, but wants to use her own election forms that she makes up! Specifically, she demands that she send Trustee forms that she approves of, the trustee's signs and mails back to her, and then she submits forms directly to the institution holding the money. (She will not send any form she signs to the Trustee.) Stated reason is that she doesn't trust anyone in the process and wants to process payout herself.

Any comments or suggestions on how to deal with this are appreciated.

I have a dumb question, but one I've been meaning to ask. When I post a message, all of my posts show the little suitcase in the first column with the corner carved out and there is an asterisk next to the No New Replies message. I haven't been able to figure out what the asterisk means. Most of my questions seem to be out of the ordinary at times, so I may not get a lot of replies. I was just curious. Thanks.

Corbel non-standardized prototype plan

Adoption Agreement:

REQUIREMENTS TO SHARE IN ALLOCTIONS OF EMPLOYER DISCRETIONARY PROFIT SHARING CONTRIBUITON, QUALIFIED NON-ELECTIVE CONTRIBUTIONS (other than Qualified Non-Elective Contributions under Plan Sections 12.5© and 12.7(g) AND FORFEITURES

A Participant must complete a Year of Service if employed on the last day of the plan year

----------------

So, I go to Plan Section 12.5© which is the section that talks about QNEC to pass ADP, which is what we're doing. It does talk about terminated participants and how they DO NOT get an allocation

BUT

What about those participants that ARE employed on the last day, but do not have the 1000 hour requirement.

Do they get a QNEC allocation?

Help...

Employer is selling company and all of the employees have terminated and are now employees of a new unrelated company. Plan was safe harbor and was terminated as of 12/31/07. However, the employees all left several months earlier. Safe harbor contribution was made through dates of employee terminations. Do we still have a safe harbor plan? Should we test for 401(k) discrimination?

We have a Safe Harbor 401(k) effective 1/1/2007. The effective date for deferrals is 10/1/2007. The plan has 90 days eligibility and quarterly entry dates. There are several participants that terminated employment before 10/1/2007 so they did not have the ability to defer. Do those participants still receive the 3% SHNE? The plan also uses full year compensation. I believe they are entitled to the 3% contribution because the safe harbor provision is effective 1/1/2007.