We're into October and PPA's effective date is just around the corner. We don't have a segmented yeild curve or a mortality table published for determining lump sums and other 417(e) forms of payment. Delaying implementation of the PPA basis does not seem like a great option due to the potential issues with grandfathering the GATT/GAR basis (loss of relief from 411(d)(6)) and issues with the QJSA possibly not being the most value form.

What are sponsors planning to do about lump sum payments? Some participants need to made elections pretty soon if they are going to take thier lump sum in 2007 rather than 2008. Systems need to be modified and that takes time and time is getting shorter every day.

And what about lookback and stability? Any sense that they will continue to apply to PPA rates? Any ides, hints, or just plain rumors as to when rates for PPA will be published?

I have a plan with a deceased participant whose beneficiaries were subject to 1.401(a)(9)-5;Q&A7. The section specifies the life expectancy for continuing required minimum distributions from a qualified plan in the case of multiple beneficiaries. For simplicity's sake, the Plan Administrator elected not to establish separate accounts. Hence, the life expectancy of the oldest beneficiary was used to determine ongoing RMD's from the plan.

Some of the beneficiaries wish to roll over their share of the participant's remaining benefits to non-spousal IRA's. The plan has no objection and wishes to accomodate the beneficiaries. To the extent necessary, the plan was amended to ensure that it allowed for non-spousal rollovers.

The beneficiaries are now wondering whether the election made by the plan administrator not to establish separate accounts requires that ongoing RMD calculations from the separate inherited IRA's be determined based on the single (shortest) life expectancy, as was the case while the monies were in the qualified plan.

Notice 2007-7 states quite clearly that non-spouse inherited IRA's should determine the RMD .... " if the employee dies on or after his or her required

beginning date, the required minimum distribution under the IRA for any year after the year of death must be determined using the same applicable distribution period as would have been used under the plan if the direct rollover had not occurred. "

If my description isn't clear, please ask for clarification.

A terminated participant was rehired the year after she was paid the vested portion of her account balance. Her nonvested amount was placed in the plan's forfeiture account at the time of her distribution and then used to offset contributions. At the time of her rehire, she had not incurred a 5-year break in service. Regarding rehired participants, the doc only mentions that if the participant pays back the distribution, the earnings and/or forfeitures that would be allocated to the other participants in the year of rehire can be reduced to reclaim the nonvested portion so that she could have her entire balance again, but only if a 5 yr. BIS has been incurred.

It seems that since the doc does not address what to do for rehires who either don't have a 5 yr. BIS or agree to repay the distribution, any method can be applied as long as it's reasonable. The issue I see is that since the plan has individually directed accounts, a PR problem may be created by transferring amounts from the other participants to the rehire (who is a participant on the date of rehire). There are only 4 participants with account balances in the plan, and they are all 100% vested, so there won't be any forfeitures to use for this purpose in the foreseeable future. And, of course, the likelihood that the participant will pay back the distribution is practically nonexistent. The amount of the nonvested balance is only about $600, but we would like to have the employer handle this as appropriately as possible - what should be done in this situation?

The company owner took a loan out of their 401(k) account 9 months ago. No loan policy was adopted. The "employer checklist" attached to their document indicates that the plan will NOT provide for participant loans.

The IRS talks about discretionary and interim amendments and the deadlines that apply. However, isn't a participant loan more of a DOL issue - what is the timing requirement to adopt a loan policy? I believe it must be done before the loan is made, but I have not found the official cite for that.

Any guidance is much appreciated.

Oh, just for fun, as I'm sure you've guessed, the loan exceeded $50,000 and no payments have occurred yet. We are currently trying to find out if we could turn this into an in-service distribution, and deal with the tax withholding problem.

I am auditing a set of financials for a Plan for the 1st year that they were required to attach audited financials and file Schedule H on their 5500 (i.e. they had >100 participants at beginning of 2006 as well as at the end of 2006.

My question is: Do I need to present a comparative statement of plan assets? How about a comparative statement of net changes in plan assets? No audit was done for 2005.

Can a we submit a comparative financial with the 5500 where we indicate that the prior year data is UNAUDITED?

Any help is appreciated!

-Jim

We administer a Money Purchase plan. Broker called to say he wants it amended/restated to a 401(k) as he's freezing their 403(b) due to new regs and wants the 4-5 NHCE now participating in the 403(b) to be able to defer in to the 401(k). He also mentioned the only HCE in the workforce has a 457 Plan so wouldn't be deferring. To accomplish what the broker wants, is it as simpe to use a Standard 401(k) document with only 4-5 employees deferring? Can the HCE be eligible and just not participate or should he opt out of the 401(k)? Thanks for any assistance

I know virtually nothing about 403(b) plans. The broker on this case called to say with the new 403(b) regs, he wants employer to freeze it (only 4-5 NHCE ee's contributing), thus avoiding to have 403(b) plan document. I have no idea if this is true or not.

Then - he wants us to amend/restate their exisiting Money Purchase plan to a 401(k) to allow the 4-5 employees now in the 403(b) to contribute to it. Only one HCE in the company and he has a 457 Plan (know nothing about those either). Can someone tell me if the broker's idea makes sense?

Thanks in advance for any assistance.

is the approval or denial of loans by a tpa in accordance with loan program created by the plan sponsor a ministerial or fiduciary function?

First post here. Thanks for all of your work, guys and gals.

Owner/Employer client has three different simple ira accounts with one simple plan. The accounts are with three different

well-known wirehouses. Contributions were made to the first a few years ago, to the second in 2004, and the third in 2006. The client now wishes to establish a solo 401k for 2007 for larger allowable deferrals. The client also wishes to move the 2006 simple account total into the newly established 401k and leave the earlier accounts as they are.

First, may the 2006 simple plan account be moved into the newly established 2007 401k, or will we violate the two-year rule. Am I wrong in thinking that since contributions have been made for several years to the "plan", that the two-year rule does not apply.

Second, may we even HAVE a 401k plan as long as the simple is in place. In other words, since the initial contributions and the simple plan will remain with the company, can we have a 401k plan in place, as long as contributions are not made to the simple plan anymore after 2006?

Any ideas would be greatly appreciated here. This is a bird's nest and I would like to help this client.

Thanks.

Question regarding early retirement in 2 parts.

(1)If a participant reaches the age of 55 and seperates from the company and it does have an early retirement are there ways to provide a continuing income drawing from a profit sharing plan annually without being subject to 10% penalty.

(2)If there is an early retirement provision, the pension answer book chapter chapter 16(10) only states a lump sum payment as an example, could he take partial distributions at his own discretion or does he have to follow one of the three IRS tables for annuity payments?

Any help on this would be appreciated.

I know I have seen this but can't find it now. An employee (otherwise eligible EE) does not work hours or get any compensation for 2006. Are they included in the ADP test?

Assume a participant has a grandfathered benefit under a NQDC plan. Another entity purchases the assets of the service recipient and agrees to assume sponsorship of the plan. The purchase takes place in 2005. The participant retired and began receiving payments in late 2006.

Since we have a new service recipient this seems like a completely new NQDC to me, and since it is really a new plan it appears to be subject to 409A.

Does anyone see a way to preserve this grandfathered status even though we have a new service recipient?

Would welcome any thoughts on the following. Company 401(k) plan included participant who recently died. Decedent had a son by a previous marriage who she named as primary beneficiary of the 401(k) Plan assets. Second husband was named as contingent beneficiary of the 401(k) Plan assets. Decedent submitted a signed and notarized beneficiary designation form bearing second husband's signature.

Second husband is now claiming he has no memory or recollection of ever signing the beneficiary designation form and that it must have been forged. Never heard of the notary, no recollection of ever agreeing to waive his rights, etc. etc.

The 401(k) account is not that larg--$80,000--but enough for the husband to make a stink over. We suspect the husband simply forgot signing the designation and/or didn't really pay attention to what he was signing---was signed shortly after their marriage. As a result, the company believes the son is probably entitled to the assets but doesn't want to set itself up for a lawsuit.

I know there is a possibility of filing a federal interpleader action to protect the company and get it out of the middle of this mess but the company has never had to do that before. Wondering how involved and expensive of a process that is. Curious what sort of burden that puts on the presumably innocent son to have to prove his right to the benefits. Also wondering if anybody might have any experience as to other practical suggestions or work-arounds to handle without significant time and expense but that would also protect the company. Thanks.

Salary deferrals to a 401(k) plan are technically considered employer contributions.

Does anyone know if salary deferrals are considered employer contributions in a 401(k) plan that may have a horizontal partial plan termination?

For example, if an employer sponsors a 401(k) plan and has made substantial profit sharing contributions for years, then quit making profit sharing contributions for the past three years. Are salary deferrals considered employer contributions for purposes of determining whether a horizontal partial plan termination has happened?

from http://benefitslink.com/links/20071001-056296.html

(The New York Times; free registration required)

Excerpt: "The International Brotherhood of Teamsters announced last night that it had reached a tentative five-year contract with the United Parcel Service that calls for sweeping changes in the pension plan for many workers."

Times reports UPS is paying $6.1 billion to withdraw from the Central States pension plan, which would reduce the plan's underfunding from 49% to 30%. Any opinion on the short and long term effect on those remaining in the Central States plan?

One of my partners is the trustee of an ESOP and the plan sponsor of the ESOP is in bankruptcy. What are his fiduciary duties now that the plan sponsor is in bankruptcy? Are his duties the same as they were before filing for bankruptcy?

We have dozens of H & W 5500s to complete for 2006 with these questions...

1) If you have a Fully Insured Dental Plan, is it by it's nature a non-experience rated contract?

Basically, How do you know when to complete experience rated or the non-experience rated sections?

2) We have assumed that you do NOT complete a Schedule A any longer for Self Insured Plans, is that accurate?

Thank you

For the late distribution of ADP failure, how much is subject to the excise tax: the gross amount that would satisfy the test, or that amount net of earnings/losses? I need to know how much to put on the 5330 for the plan.

I need to get my NHCE's up by an aggregate of 11.51% to satisfy the ADP test. I'm doing a bottom-up QNEC for them. I have 8 NHCE's but two of them are terminated. I have two allocations, and I'm not sure if the first one is okay with the new rules. The NHCE's are labelled A-H and have descending comp (ie, A is highest, H lowest) and as it turns out G & H are the terminated people.

First one:

A 0

B 0

C 0

D 1.51%

E 5%

F 5%

G 0

H 0 total: around $6100

Second one:

A 0

B 0

C 0

D 2.51%

E 4.5%

F 4.5%

G 0

H 0 total: around $6300

Is the first allocation okay? I can do a bottom-up since no one is getting more than 5%. But the rule about nobody getting more than twice what some one else is getting: does that apply since no one is getting more than 5%? Or does that kick in if I'm doling out more than 5% to anyone?

Your thoughts are appreciated.

so the employer gave us the wrong company ein when we submitted the plan and for all the plan admin for the last couple years... anyone ever have to correct the corporate sponsor EIN?