I have what should be an easy question.

For 2008, minimum lump sums from DB plans are computed using 20% of the PPA's present value methodology and 80% of the pre-PPA present value methodology. My question relates only to the pre-PPA present value methodology--as applied now.

Here's the thing, prior to PPA, we used the Applicable Interest Rate and the Applicable Mortality Table (which, last year at least, was the 94GARU mortality table) in calculating minimum lump sums. The Applicable Mortality Table is now different from the 94GARU mortality table--the new Applicable Mortality Table is defined in IRS Rev. Rul. 2007-67.

Camp 1

I have heard some actuaries say that the 94GARU mortality table must be used for purposes of calculating 80% of the pre-PPA present value methodology.

Camp 2

I have heard other actuaries say that the 94GARU mortality table no longer applies and that instead the new Applicable Mortality Table defined in IRS Rev. Rul. 2007-67 must be used for purposes of calculating 80% of the pre-PPA present value methodology.

Neither camp can site anything supporting their position except that Camp 2 sites IRS Rev. Rul. 2007-67's language stating that the new Applicable Mortality Table applies to all distributions made in 2008.

Does anyone else find this same confusion and have any helpful thoughts/comments? Thanks.

Definition of comp includes overtime. Overtime is paid in a seperate check to employee. Employee would like 401(k) deferrals taken form regular paycheck only. Can this be done by having employee sign salary reduction agreement stating no 401(k) from overtime checks?

Thanks in advance.

Is there a time limit to submit employee deferrals and employer matches to a 401(k) plan? I'm working with a plan that doesn't seem to be filing these in a consistent time frame. I don't see the issue addressed in EPCRS. Might, this be a cause for some type of "Self-correction"?

Suppose a company took 2 or 3 months to submit deferrals and matches...?

Employees of parent A and subsidiary B participate in the same self-insured group health plan. A has hundreds of employees, while B has about 75. B will be sold in a stock deal next month to a financial buyer that does not have its own health plan. There is concern that the buyer will not have sufficient time to establish a new, fully insured plan for B employees as of closing.

What is the best way to prevent B's employees (about 75) from having an interruption in coverage?

If A and B continue to cosponsor the plan for the remainder of the year, wouldn't that make the plan a MEWA? If so, they would like to avoid such temporary complexities.

The plan states that coverage terminates on the date the employee ceases to be eligible for the plan (rather than the end of the month). Would it be possible to amend the plan (with consent of the stop-loss carrier) to provide coverage through the end of the month for B employees only, without triggering MEWA status? That would give a few extra weeks to get the plan in place.

I suppose COBRA is an option, but it would be a hassle to have everyone elect COBRA for a short time period.

Thanks in advance for any thoughts.

We have a difference of opinion, so I am throwing this one out to you all.

The plan (calendar year) terminated on 12/31/07. Distribution is to occur in 2008.

Nothing particularly unusual about the lump sum provision; the minimum lump sum as defined in the document is calculated using the applicable interest rate as of December, and GAR mortality.

Upon distribution of benefits in 2008 in accordance with the plan term, do we stick with the old basis, or do we use the new three-tiered interest rate and new mortality?

Do any of you import Schedule D data into Gov't Forms in the Schedule D? We are currently keying the amounts per fund and have to add new funds completely. Do any of you import this data? Is it possible? Or is there a way to export a file to do an ESUM of the amounts? We are also adding those amounts per fund by hand.

Thank you

We are trying to conduct a salary assessment for our wholly owned subsidiary which is a TPA that provides COBRA, FSA, Dep Cert, Self-funded administration services to clients. Does anyone have any feedback on the average salary for the Customer Service Reps; Account Manager and Vice President of TPAs. We are just looking for some estimates. Thanks!

A defined benefit plan has been disqualified.

The plan sponsor wants to know if they should still file a 5500 until assets are distributed. That is, at least for the current year.

I'm curious to hear views from others on this.

That is, should the plan file a return?

Thanks.

Histocial plan allows a surv. spouse to have three years of additional coveage paid by the company

The three years expired in 2007

In January of 2007 a notice was sent to her stating should would be able to continue her coverage under COBRA.

COBRA forms were sent to the individual in December when the loss of coverage occured and she elected COBRA

We later determined that there was not a qualifying event AND a loss of covearage for her to elect COBRA (death was not in the last 30 days).

+She is on Medicare

Are we obligated to continue coverage for her or can she be removed from the plan?

I think Relius may not be telling me everything I need to know when testing a 401(k) Plan with a 3% SHNEC and a 5% profit sharing with permitted disparity and a last day requirement.

The coverage test tells me everyone benefited for 401(a). This is correct because everyone received the Safe Harbor contribution. But some people with more than 500 hours did not recieve the discretionary nonelective contribtuion. I have a prototype document so in theory I should have a design based safe harbor for nondiscrim.

Do I need to test the discretionary nonelective for coverage seperately or do I need to test the whole 401(a) contrib for nondiscrim? Or am I just making things more difficult than they need to be?

What report is best for this?

Controlled Group determination is one of my worst skills, along with Affiliated Service Groups. Anyway, Corporation X is owned equally (50% each) by Mother and Adult Son. Both Mother and Adult Son also have Proprietorships. The source of earned income for both Propietorships is commisions from Corporation X. It is my understanding that there is not a controlled group based on ownership for ERISA purposes. Is this correct, and what about the "income relationship" between Corporation X and the Proprietorships? Is it possible that there a controlled group or affiliated service group for ERISA puposes? Thanks!

An employer told me that there are "no funds" to be able to distribute to my fathers 2,000 shares in the ESOP???

How can this be???

Do we now need two assumptions? One for computing TNC under 430 and the other for computing the cushion amount for maximum deduction purposes under 404(3)(A). It would seem like the first would be established each year to reflect expected practice while the second would be reviewed for appropriateness from time to time but likely would remain constant (unless it were tied to the change in discount rate).

Any thoughts?

CPA client just called about Form 940 asking if they have to report contributions to their retirement plan on the 940 now. I don't prepare these, so I didn't know. I did pull the form off of the IRS.GOV Web site. It appears to me that what is being asked for is if the employer pays retirement benefits and uses their corporate ID # rather than trust ID#, those benefit payments would be reported on the 940, but not subject to FUTA. Can anyone confirm or correct this? She also asked me if they should be reporting matching contributions on the employees W-2s. That was also a new one on me. Any help on this is greatly appreciated!

I need to do a 1099 for 2006 Return of Excess for ROTH contributions. What code or codes would you suggest I use?

Thank you

Another strange situation . . .

We have a 401(k) safe harbor match plan; the plan sponsor is an S-Corp. The two owners (husband and wife) deferred to the plan in 2007 and received safe harbor match (they do have valid deferral election forms in place). Their accountant is now telling us that he is revising their compensation amounts for 2007 (the husband from $30,500 down to $3,000 and the wife from $37,742 down to $26,000) and that their deferral and SH match amounts should be $0 (husband originally deferred $20,500 and wife $10,000). We are not accountants (we're a TPA firm), but this just doesn't pass the smell test.

In the past I have had sole proprietorships and partnerships who would deposit salary deferrals from their "draw" throughout the year, and then at the end of the year when their Schedule C/K-1 showed a negative income we would then return their deferrals to them as a 415 violation. However, in the situation we have currently, both owners clearly have comp to support at least some of their deferrals and match. And obviously, FICA and federal income taxes have been withheld from their pay throughout the year and deposited appropriately, with the appropriate governmental forms being filed. So, my question is this . . . does anyone know of any regulations that would allow the accountant to revise the W-2 figures in this way (assuming that the owners have actually returned compensation they have already been paid) and take the salary deferrals down to $0? We'd just like to have a little more insight if this is addressed anywhere in the regs before we talk to the accountant about this.

Thanks!

J

My father retired in 2005 due to cancer, and died in 2007. His company had argued his retirement date but now admit that he retired in December of 2005. With his death, we are still waiting for the company to payout on his ESOP...it is now 2008. What penalties can the company be faced with (if any) by waiting so long to pay his children. What kind of timeframe should we give the company before we seek legal action... Thank you, Chuck Nelson

To qualify for the employer match in our 403(b) plan, a participant must work 1000 hours. Compensation is defined, for purposes of the match, as W-2 earnings. We have an employee that is terminating soon and has 1000 hours. He will be paid severance after his termination. My question is this: since his severance payments will be part of his W-2 earnings, is there any way that those payments should not be taken into account when calculating his match? There is no "last day of employment" requirement.

Thanks.

Does anyone have any experience with the above firm. Specifically, do they offer no-load mutual funds from fund families like Vanguard, Fidelity and T Rowe Price.

As a result of the new 403(b) legislation my spouse's school district is going to hire them as a third party administrator. I went to their web site and I only saw mutual fund families that normally charge loads and charge above average expense ratios, here is their web-site:

https://www.cpiqpc.com/Data/ouralliances.aspx

I am confused. Under the tab "fund families" there is a tab for redemption fees. When you click on this they show mutual funds from Fidelity, T Rowe Price and a few Vanguard funds. Does this mean that they offer these funds? Or does this mean something completely different?

My spouse cuurently has her 403b with Vanguard and they have said that they will NOT sign an INFORMATION SHARING AGREEMENT provided by a TPA and they require a TPA to sign their I.S.A.

I am hoping that the funds listed under the above mentioned tabs represent mutual funds available from CPI Qualified Plan Consultants. Does anyone currently use CPI Qualified Plan Consultants as a Third Party Administrator and if so do they offer No-Load mutual funds.

Thanks

Under what circumstances is this allowed? Obviously, people prefer to avoid excess contribution penalties or at least limit them (prevent them from pyramiding), but of course, people prefer most the "no harm, no foul" approach, and it would seem that a reversion or refund of an excess contribution serves as that sort of approach.