Plan A terminated by transferring all of its assets/liabilities to Plan B. The transfer occured on the last day of Plan A's year.

There's a substantial unrealized gain for the year. But, I believe that a terminated plan can't report an unrealized gain; there's $0 asset FMV at the end of the year and, thus, no unrealized gains or losses.

1. Do you agree?

2. If yes, how do you treat the unrealized gain on Schedule H? I can't report it on Line 2b(4) because the amount wasn't, well, realized. Do you simply plug the amount to "other" interest?

We just got our 2008 EOB, CD version, but all of the text is giberrish. Anyone else run into this? Were you able to fix it?

Is anyone familiar with rules regarding vesting in relation to the break up of an affiliated service group? I am dealing with participants of a group that is breaking away from an affiliated service group sponsor of a 401(k) plan. The plan is not terminating, nor will it be eligible to be considered partially terminating. Certain participants want to take distributions, but they are not fully vested. If they are remaining with the same employer, will there be any vesting exceptions that will allow them to avoid forfeitures?

Hi,

I will try to give as much info as possible with this. I think something is wrong here and want to confirm this.

We have an employer who's employees are covered by several different unions. One of the unions has negotiated a type of arrangement for their healthcare coverage. For any employee who wants health insurance, the employer pays for the health insurance. For any employee who does not elect to have health insurance, they are set up with an annual $4000 reimbursement account. They can submit medical receipts to the employer who will then reimburse the employee for a maximum of $4,000 per year. Everything is done tax free. At the end of the year, any money left in the employee's account remains with the employer - so if receipts are not submitted, no payment is made to the employee. Again, all reimbursements are done tax free to the employee.

My issue is, there is no cafeteria plan in place. Shouldn't there be one? Is there any way to set something like this up without a cafeteria plan? I am not familiar with unions and wonder if unions have greater flexibility?

These are union negotiated benefits, with several attorneys involved. I would be surprised if they were doing something that was not previously researched.

Thank you so much for any help you can give.

Hi,

I will try to give as much info as possible with this. I think something is wrong here and want to confirm this.

We have an employer who's employees are covered by several different unions. One of the unions has negotiated a type of arrangement for their healthcare coverage. For any employee who wants health insurance, the employer pays for the health insurance. For any employee who does not elect to have health insurance, they are set up with an annual $4000 reimbursement account. They can submit medical receipts to the employer who will then reimburse the employee for a maximum of $4,000 per year. Everything is done tax free. At the end of the year, any money left in the employee's account remains with the employer - so if receipts are not submitted, no payment is made to the employee. Again, all reimbursements are done tax free to the employee.

My issue is, there is no cafeteria plan in place. Shouldn't there be one? Is there any way to set something like this up without a cafeteria plan? I am not familiar with unions and wonder if unions have greater flexibility?

These are union negotiated benefits, with several attorneys involved. I would be surprised if they were doing something that was not previously researched.

Thank you so much for any help you can give.

A 401K miscalculated its match and ultimately deposited too much match into some participants accounts. In addition the ACP test failed and and match refunds were do. The financial company issued checks to the participants, however we were under the impression the funds should be transferred to the holding/forfeiture account or at the very least returned to the company, not the participants.

For 2007, Plan reported on Schedule B current liability of $150,000 and excluded preparticipation liability of $100,000. Actuarial value of assets for 2007 was $150,000. Assume no credit balance.

Is 2007 AFTAP = 100% or is 2007 AFTAP = 60% [150/250] ?

I'm sure this is a dumb question but HSAs/HDHPs are new to me....

We received a proposal for an HDHP plan. It shows the benefits to be a deductible of $1,500/$3,000 and all plan benefits are "covered 100% after deductible". Does that mean that if I have employee only coverage I pay my $1,500 deductible and then will incur no other medical expenses that year other than prescriptions as long as they are covered by my plan?

For example, if I have family coverage and we meet our $3,000 deductible, and then have a high risk pregnancy with an extended hospital stay, we pay nothing other than our deductible?

I assumed all expenses were paid from the employee's HSA. So you paid your deductible out of pocket and then used your HSA balance to pay for health care visits.

The proposal shows a decrease in the employer benfit cost of close to 40%!! I just don't understand how our premium can be so low and the benefits so rich if the insurance company is paying the healthcare costs. I must have it confused.

Help!

Hi,

PPA required the DOL to provide a model for the new Annual Funding Notice for Single Employers. The notice must distributed by April 30th & I cannot find the DOL model anywhere. The only model funding notice I find is for the pre-PPA Multiemployer Funding Notice.

Can anyone tell me where I can find DOL's model for the single employer funding notice?

Thanks,

pcjackson

Anybody know if any state laws require a minimum number of vendors be offered in a 403(b) plan for school districts? Or, is there any reason why a single vendor would pose a problem under some state laws?

Does anyone know of a study group, webcourse or webinar for either of these exams? I'd like to take at least one spring 2008.

Any thoughts?

I work in a small (3-employee) trade association which is organized as a 501c6 corporation. We currently have a SEP retirement program. I recently heard that the laws which previously forbid employees of 501c6's from establishing a 401k have been changed. Does anyone know if this is true, and if so, could you refer me to a good reference document or web page. Thanks!

This is sort of a spin-off of Blinky's post.

Calendar year plan, only pays benefits from fund, but does offer Full Cash Refunds and small lump sum payouts.

We are currently not prepared to calculate exact PPA liabilities, but do have a work-around that provides, in our opinion, slightly higher liability amounts.

2007 AFTAP = 73%

2008 Estimated Conservative AFTAP = 72%

2008 Estimated Conserative Assets/Funding Target = 85%

If i certify to a 2008 AFTAP range by 4/1/08, a portion of the credit balance will be waived and AFTAP will then be 80%. Or client can make additional contribuiton to get Assets/Funding Target to 92%. The waiver and the additional contribution are similar, reasonable, amounts.

One question is once i make above certification, is the required credit balance waiver revocable upon an actual certification made by October 1??? If not,

my next question is would i be better off not certifying the 2008 range on April 1 and falling back to the 2007 AFTAP less 10% which would bring me to 63%?? Benefit restrictions would apply, but since plan pays benefits from fund with small exceptions, the restrictions will not have significant impact. This keeps credit balance intact until i can calculate actual Funding Target and determine how close they really are to the 92% exception.

Thanks.

We have a 401(k) plan which failed the ADP test. The trustee sent a letter to the custodian instructing them to make corrective distribuitons prior to the 2 1/2 month deadline for making corrective distributions without incurring an excise tax. The custodian (a mutual fund company) did not make the distribuitons by March 15, but says they will do it now and treat it as if it was done on March 10 (based on March 10 share balance and value, checks dated March 10).

One of the participants (not an owner) is aware that if he received the distribution after the 2 1/2 month deadline he would not have to amend his 2007 return which has already been filed. This participant called the fund company after March 15 and is aware the checks had not yet been cut as of that date.

Our client, the plan sponsor, is now in a dispute with the mutual fund company about whether or not they can treat the corrective distribution as occuring on March 10 if they cut the checks now. Especially becasue a participant who does not want to amend their return knows they were not cut by March 15, even if they show up dated March 10. The Fund company does not want to treat the distribution as made after March 15 because they know the sponsor will look to them to reimburse them for the excise tax since they received instructions to make these distribuitons well in advance of March 15.

Has anyone ever heard of any allowable reason to cut a check after the 15th and treat it as made before the 15th, just becuase you were using share values and amounts as of some date prior to the 15th. If this were allowable it seems we could make corrective distributions as of December 1 and treat them as made on March 15.

Any opinions would be appreciated.

Does this represent a common phrase in retirement plans?

What do QDROs entail?

In 2008 pension plans are subject to the new minimum funding requirements.

I have not had to apply the new rules yet and I have a client that once a maximum pension deduction estimate for 2008 for a plan they are considering to implement.

Does an estimate that is essentially the first year-end unfunded current liability (of course $0 assets) serve as a conservative estimate (i.e. not overstate) for the maximum deduction sound reasonable?

It's a situation where the estimate is for doctors (actual data not yet provided) that will accrue the 415 limit in their first year of participation.

A more detailed calculation with actual data and applying 2008 law will follow later.

Thanks.

We administer a 401(k) plan that terminated three months ago and will be submitted to the IRS next month for a DL.

A participant called and needed a hardship distribution.

Generally, when a plan is terminated and waiting for a DL, we have not been allowing any benefit distributions until all benefits are paid at one time after receiving the favorable determination letter.

Has anyone ever considered allowing a hardship withdrawal after a plan has terminated prior to receiving a determination letter?

Thanks.

A DRO has language as follows "The alternate payee is hereby awarded 100% benefits and benefit rights under the plan as of December 28, 2007." The value on 12/28/07 is about $600 more than the current value due to market fluctuations. There have been no contributions, distributions or investment changes/transfers since that date. Is there a problem with distributing 100% of the value on the distribution date (less than the value on 12/28/07) if the order is determined to be qualified? The DRO makes no specific mention of earnings/losses accrued from the 12/28/07 date.

As a result of a corporate acquisition (asset sale i believe), employees temporarily (two or three pay periods) will be working for the new entity (A) (the acquiring company) but the acquiring company will be sending the employee deferral contributions to the acquired company's plan (Plan B). They plan on eventually merging the plans. Is this ok in your view?