What are the penalties when a profit-sharing plan's 5500 auditor report was not prepared by an independent qualified public accountant? I don't think VFCP is available because we are under examination.

The proposed reg. published by DOL a couple of weeks ago would impose new contract and disclosure requirements as a condition for relief under the "service-provider" exemption from the PT rules. Perhaps I am missing the forest for the trees on this one, or suffering from brain freeze, but does anyone see anything in the reg. explaining how those requirements would apply (if at all) in the context of service-providers providing services to group trusts, hedge funds, and other commingled vehicles that are deemed to hold "plan assets" (but not providing those services directly to plans that invest in those vehicles)? Did the DOL slip up, or am I overlooking some very fundamental principle?

Thanks in advance for your help!

I have a client who changed their HCE deferral plan-imposed limit three times during the plan year. Each time increasing the amount the HCE(s) could contribute to the plan. How would you reclass what contributions are catch-up and what are not at year end? On a payroll basis or just based on the plan-imposed limit last in place?

Thanks!

We are fairly new to the 403(b) arena, and have a quick question that we cannot seem to find an answer to. Can a 403(b) plan REQUIRE salary deferrals at a set level? For example, we have a prospect that mandates all eligible participants defer 5% of pay. I know DB plans can have mandatory after-tax contributions, but I've never heard of mandatory pre-tax deferrals in a DC plan. Any info would be appreciated. Thanks!

J

I got a call today from a client who wants to terminate their 401(k) safe harbor [3% non-elective] plan as of 12/31/07. The company is not going out of business; the employees/participants will still be employed on 1/1/08. Everything I can fund says that you have to give notification if it is the safe harbor match that you are eliminating, but nothing specifically speaks to the non-elective contribution.

The plan gave the required notice in November 2007 that they were committing to a 3% plan contribution for 2008. Doesn't that create some sense of obligation on behalf of the participants? Or at least something with respect to the document that it is a safe harbor plan? If we have to run an ADP test for 2008 that's OK because with no one deferring, it can't fail, but isn't there a "bigger" issue here?

Thanks...

I have a request to "re-register" the shares of a participant's account into accounts in the name of a self-settled (or grantor) trust.

My thoughts are this cannot be done but I want to be clear with the Participant as to why and what are the alternatives.

1 - The participant is not the owner of the shares held in his account because since the Qualified Plan assets are held in trust the Trustee of the Plan owns the shares and not the participant. The participant has no rights to re-register or re-title while held within the Plan trust.

2 - The participant can name the trust as the beneficiary for the account (so long as J&S rules either don't apply or are satisfied).

I am fairly certain regarding #1 - but I don't know enough regarding #2 to indicate what is the effective difference between having the shares held within the living trust (as requested) and having the trust simply be the beneficiary of the participant's account.

What would be the different treatment, if any, since it is a self-settled (grantor) trust whereby the settlor/grantor and trustee is one in the same and essentially has control of the assets until death anyway.

Thanks in advance.

Details:

- Prelim ADP testing is failing for a 1/31 plan year end.

- HCE that is terminated is going to get a refund.

- HCE is rolling over entire account to an IRA.

- HCE is demanding distribution immediately.

- Corbel Prototype Document

The three options we see in no order:

Option #1 - Hold the distribution until after the ADP test is complete and refunds are paid.

Option #2 - Pay out a percentage of the account and the remainder after the refund is paid.

Option #3 - Pay out the entire distribution and try to get the money back or reclassified by the receiving IRA.

I'm wondering if I have missed any options and how others are handling similar situations.

Our health, life, ad&d & STD plan are all part of 1 wrap plan.

We have about 80 union emloyees covered under our STD plan but are not eligible for any of our medical or life/ad&d plans. THE STD plan covers the NY mandated temporary disability benefit of up to $170/wk.

They are covered under another union plan for those benefits

I see an exemption for not needing an SAR for plans with <100 who have only a plan for state insured disability.

THe SAR encompasses premium payments for all healt & welfare plans.

Must I send an SAR to these union participants?

Much thanks

I am the Plan administrator of a Profit Sharing Plan of a single employer. In June 2007 the office of Plan Sponsor was “raided” by about a dozen agents from several agencies (federal and state). Among the material removed from the office was a notebook containing the current Plan, SPD, FDL, the most recent Administrator’s Report, and other items. I did not learn of the removal of the plan information until a meeting in October. At that time I directed the office manager to contact the agency who had possession of the plan information and request a return of the original documents. As of today that has not been done.

1. Does anyone have any experience in this area?

2. Is the following ERISA section the correct one for requesting the return of the original documents?

104b-1(b)(3)(i)

(i) In the case of a plan not maintained according to a collective

bargaining agreement, including a plan maintained by a single employer

with more than one establishment, a multiple employer plan, and a plan

maintained by a controlled group of corporations (within the meaning of

section 1563(a) of the Internal Revenue Code of 1954 (the Code)),

determined without regard to section 1563(a)(4) and (e)(3)© of the

Code), documents shall be made available for examination in the

principal office of the employer and at each employer establishment in

which at least 50 participants covered under a plan are customarily

working.

I have a question on the calculation of average benefits % for aggregated DB/DC plans. Its a cash balance plan aggregated with 401(k) PS plan. In the calculation of ABP, do we also have to include the deferrals in the DC calculations.

eg my plan has match, profit sharing and now cash balance.

Do I need to include the deferral amount for each emplyoee along with the match, PS and cash balance contributions and then calculate the average benefits percentage. Or is it safe to only count match, PS and cash baalnce contributions and exclude the deferral. Last years calculations by the prior analyst show that he does NOT add in the deferral while calculating the ABP.

Help!

Due to plan error, some participants missed matching contributions. The plan wants to make-up the missed contributions using forfeitures. The plan document allows use of forfeitures to offset matching contributions, so that seems okay. Plan also wants to use forfeitures to cover participants' missed investment gain on missed contributions. Is this a legitimate use of forfeitures? Thanks.

Does anyone know where the people responsible for employee benefits programs go to get or discuss ideas on how to reduce or contain employee benefits costs?

I would think that there must be some Forum, Newsletter or Conference etc where ideas and experiences are discussed and exchanged. Otherwise it would seem that they operate in a vacuum and only know what the providers tell them or steer them towards. If they only go by what is published in the popular media then all they would be getting is what the provider and agents (consultants) are trying to create buzz about.

I have been looking and asking, but there seems to be nothing.

401k plan with SHNEC and New Comp plan passes testing but only after limiting the ownership group to a contribution that is 10k-12k lower than maximum for each of 2 owners. There are additional employees recently hired that could change the results dramatically....

Can we amend the plan to make the eligibility for the profit sharing (and forfeitures) immediate while at same time leave eligibility for deferals and SH plan at 1 year with 6 month entry dates? At same time we would be removing the 1000 hour requirement but leaving in the employed at end of year requirement.

Plan is not top heavy and won't be for another 5 years or so at current contribution levels.

Doable?

I know this seems like a basic question, but is it still permissable use pre-participation comp in a DB plan to develop a higher average comp for the plan's first year? Not that I believe it matters, but the plan would only cover a Sole Proprietor and the prior years' net Schedule C is much higher than it is for 2007. Thanks.

I have a client that is setting up a HDHP with an HSA option for the employees. The employer is contributing $ 500 for each employee to their HSA. The business is a C corporation. The business owners were wondering if there is any limitation for the owner/employee to receive the $ 500 employer contribution to the HSA? Thank you!

If you take an early distribution from your IRA for qualified education expenses (avoiding the 10% additional tax), does the brokerage house have to do a mandatory withholding even if client will have no tax due on the amount (low income year)? Thank you!!

I have an employer that has an employee that works enough hours to meet eligibility for their company health insurance. However, this employee has also been a student at the local college, and had student health plan coverage while enrolled. The student has now graduated, and will be working full-time. The change in hours does not effect her eligibility for health insurance with the employer, but would her loss of coverage as a non-student give her cause to enroll in the employer's health plan now, or is she required to wait until open enrollment?

Any help is greatly appreciated.

If an employee dependant has to have a phychological test for his schooling, can this be put through the employees Section?

Just looking for thoughts on the matter. In particular, with regards to the possible anticutback issues?

Can a sponsor change the safe harbor from a match to a 3% non elective after the start of the year, or after the 30 day notice has been given?