Does a SIMPLE 401k that is being terminated need to be amended for PPA?

I am with a small TPA in Colorado and we reserve the right to charge SPECIAL service fees for services that fall outside of our standard service agreement. These special services include things such as fixing payroll problems based upon incorrect data, calculations of lost earnings on late contributions and various other types of special services. These services are charged on an hourly rate due to the nature of the variability/complexity of the project or service. We currently charge $100.00 per hour to the client for these services and we have been using this rate for almost 10 years. I am interested in obtaining feedback as to whether this fee is out of date compared to the marketplace.

Thanks in advanace for your responses.

Please verify that the 5 year period for which an employer can make contributions for a former employee is the 5 taxable years following the year in which separation occurs.

Example: EE retires 6/30/2006. Employer could contribute, up to the 415 limit, in the year of retirement (2006) and for an additional 5 years (2007 - 2011).

Suppose a couple were married 20 years and the wife didn't work. They get a divorce after 20 years and the man continues to work another 10 years. Per majuska/majuska she is entitled to a percentage of his retirement during the years of marriage.

Now because pensions increase most during the last few years of service is she only entitled to the "earlier" value of the pension and not the portion that increased towards the end?

Just to pick a number the first 20 years it might have been worth lets say $200,000 if I had left the company at that time.

But if I work 10 more years the total worth might be $500,000.

If the her percentage is 50% does she get $200,000 times .50 = $100,000? ....... and I get $400,000?

Can someone tell me if the max. hardship amount is mandated by the actual amount needed to satisfy the Hardship? I though this was true, but being Friday, I am second quessing myself. A participant needs 2525 to bring her house loan current but she wants to take 13,000. Is this possible?

Can anyone point me to a good article or some commentary on the order of withholding with regard to benefits? For example, what comes out of a participant's compensation first: (1) 401(k) deferral; (2) Section 125; (3) income tax; (4) nonqualified deferrals etc.... Thanks.

So I'm scrambling to get up speed on various aspects of PPA 06 but don't get the sense that with only 2 months until "liftoff" there is much "angst" out there at least on these discussion boards. That leads me to believe that either (a) I'm the only idiot that doesn't have thie stuff down yet, or (b) people have inside knowledge that leads them to believe this will get post-poned a year.

I'm comfortable with being the idot that doesn't get it fast, but if there is a collective unspoken feeling that this is getting post-poned another year I'd appreciate anyone sharing those thoughts, guesses, or insider tips (I promise I won't use the insider knowledge for unlawful gain in timing Benefitslink's stock price fluctuations).

We recently reviewed a 401(k) safe harbor match plan for possible takeover. The plan sponsor was disenchanted with her current TPA for being unresponsive and unwilling to "hold her hand". They employ about 400 employees, have about 120 eligibles and about 30 participating. The first thing we noted was that the plan was very close to an audit....a very big surprise to the client as an audit will likely add $5,000 - $7,500 to their annual costs.....a lot for a little tiny plan with only $300,000 and 30 active participants.

She found that her payroll provider could offer her a very flexible plan with a pretty good investment lineup for reasonable TPA fees that INCLUDED the audit!

Anyone have an experience with this type of bundled competition? Can clients really get basically a free audit by using a payroll provider plan?

I just took over a governmental DC plan that only has after-tax EE contributions and an ER match on those contributions. The plan allows inservice withdrawals of the EE contributions, but not the ER portion. What account balance should be considered when calculating the taxable/nontaxable portions of the distribution if someone is just withdrawing money from the EE portion of the account balance? In other words, should the nontaxable portion be Contribution Basis / EE Account Balance X Distribution or Contribution Basis / (EE Account Balance + ER Account Balance) X Distribution? Does it matter as long as you are consistent in the calculations?

I would appreciate pointing me in the direction of official guidance/code/regualtions along with any answers you provide.

TIA

I have a 5-percent owner who has to start taking RMDs. The plan & plan sponsor file for extension every year and the contributions are often made in August of the following year. Are the participant's accrued contributions included in his 12/31 balance for RMD purposes? This is a profit sharing plan.

A 401(k) plan provides for salary deferral and matching contributions. There are 10 investment options, one of which is employer stock. Currently, less than 30 percent of all plan assets are in employer stock. In order to get a tax deduction for the dividends, it was suggested by an advisior to amend the plan to be an ESOP. The proposal is to treat the employer stock fund as the ESOP portion of the plan. The amendment would have the necessary restrictions and requirements to be an ESOP, but the plan design did not change. Participants can still elect to have deferrals and matching contributions invested in any investment, inlcuding employer stock.

How does this plan design meet the "primarilly invested" in employer stock requirement? Would the plan have to require at least that the matching contribution be make in the form of employer stock for it to be an ESOP? Any other issues?

I would appreciate any opinions as to whether the following definition of Actuarial Value of Assets for an End of Year Valuation is likely to be allowed under the new funding rules to begin in 2008:

"Beginning of Year Fair Market Value of assets brought forward to the end of the year by adjusting them (increasing) by the pre-retirement interest rate" (BOY assets X 1.0i ).

It's not really an "average" like the new Code sections for PPA 06 talk about so I'm wondering if this will work. Any opinions ?

For what it's worth the code cite is attached that describes alternative options to FMV.

AVA_Assets_2008.pdf

In paragraph (e)(4)(v)(A) dealing with investments in a default fund prior to Dec. 24, 2007, the DOL uses language that states "an investment product or fund designed to guarantee principal and a rate of return generally consistent with that earned on intermediate investment grade bonds" - I'm being told by investments folks that the rates of return on stable value funds would not be as high as the rates for intermediate grade bonds.

What is the DOL trying to say with this provision?

If an employee has a traditional 401(k)/403(b) and a Roth account in the same plan and must take RMDs, does the employee calculate the RMD for each type of account (Traditional and Roth) separately? Can the employee choose to take RMDs only from the Roth account or from the traditional account or is the employee required to take RMDs from the each type of account (traditional account Roth account)?

I "inherited" a terminated DB plan and we can't find the last participant to payout. Lump Sum value is about $11,000. According to the instructions for Schedule MP, only a plan subject to Title IV can use the program. Is there something equivalent for a non-Title IV plan? Thanks.

VEBA owns an annuity contract and receives payments thereunder. Do those payments have to be reported on Form 1099-R even though they aren't generally subject to tax, i.e., VEBA is generally tax-exempt.

A VEBA that is a MEWA wants to start an insurance agency. I have concerns regarding the prohibited transaction rules of ERISA and also tax law. This arrangement will qualify under PTE 84-24 so long as the VEBA does not exercise influence over management. The VEBA will own a minority share of the private stock of the insurance agency (for-profit corporation). To avoid the sharing of commissions, the insurance agency can declare dividends on its stock to get $ back to VEBA.

Now the concern: VEBA wants to make a capital contribution to the insurance agency. This appears to be a prohibited transaction under ERISA because the plan is transferring assets to a party in interest. I cannot find an exemption for this transaction under DOL guidance. Additionally, I have concerns that the transfer of assets by VEBA to insurance agency constitutes a inurement not permitted under VEBA regulations.

Anyone have any thoughts?

A client hires professional employees on a temp-to-perm basis, and would like to have them covered by their very generous plan from the day they start as "leased" employees (they want it to be a selling point to attract the employees). That's in quotes because these employees are (almost always) hired as "real" employees usually 90 - 180 days from the day they walk in the front door.

So... while these employees are employed by the employement agency, they are not employees of the sponsoring employer, so they can't be in the plan. And I can't call them "leased" employees because they don't meet the 1 year discussed in 414(n)(2).

Is there anyway to get these employees (or should that be in quotes?) into the plan? The company is trying to be more generous, and is shocked that it is so difficult to do so. Thanks.

Old client - new auditor - large plan

Auditor wants to see 10% of retiree original calcs and forms - many going back 20+ years.

Auditor says they must select from those receiving payments - not necessarily processed during audit year.

Considering IRS statute of limitations and PBGC record retention, this seems abusive.

Is this is a reasonable request to audit calcs done 20+ years ago? Are there any relevant auditing standards here?

Just trying to confirm that 204(h) notices are still required if a contribution formula is reduced in a MPP?

Thanks.