Would an allocation schedule with tiers based on (2 times Service) plus Age still be allowed to meet minimum gateway requirement by meeting the smoothly increasing criteria??

I own a NAIC compliant and state licensed TPA that specializes in consolidated billing. Between the state regs, TPA fees, TPA bonding, and worse, the TPA E&O requirements, the costs are staggering to remain compliant. Since many states now require an annual audit, expenses have gone out of the roof.

If anyone is also a licensed TPA, can you share your source of TPA E&O? We have have used a large broker from OK from years, and the last few years, we've been with Lloyd's. Virtually every state DOI now requires any firm that does insurer billing to have TPA Bonding (fidelity as well as surety in some states), TPA E&O, as well as annul audits.

We are looking also to upgrade our billing software.

Thanks,

Bill Ball

President

HAC

Many rollovers were made from a plan that was later found to have a qualification failure. These rollovers were not eligible rollover distributions since the plan did not meet the qualification requirements at the time of the rollovers. Assume the failure is corrected under EPCRS. I'd like to be able to point to some authority that states that IRAs will maintain their favorable tax treatment with the retroactive correction of the plan. I know it makes complete sense that a retroactive correction will cure any rollover issues with the IRA, I'd just like be able to point to something. Please help.

Say an employer has a 401(k) plan with a one-year waiting period before a new employee is allowed to participate. Is there a way that this waiting period can be waived for certain new employees without putting the plan at risk? I say no, since you are then going against the terms of the written plan document and, for example, Rev Proc 94-62, Sec. 4.03 states: "Failure to follow the terms of the plan is a disqualifying defect even if the operation of the plan would otherwise satisfy the qualification requirements".

But, somebody showed me this article from the NY Times, which implies waiting periods can be negotiated:

http://query.nytimes.com/gst/fullpage.html...75BC0A9669C8B63

(sorry - not sure how to insert hyperlinks)

Is this just wrong, or is there some truth to it?

Does it make a difference if the employee is an HCE?

We are performing the ERISA audit for a 401(k) plan and have found what appears to be an inconsistency with the document. The adoption agreement shows 6 months of service. The plan uses hours of service method. It states that a year of service will be credited upon completion of 1,000 hours of service. Is this possible? Wouldn't that violate the statutory requirments?

It was always my understanding that if you are using a prototype document and select 6 months of service, you can not impose an hours requirement also. We contacted the document sponsor (same as tpa)...and were given the following answer..................

"There is no conflict and the document is correct as drafted. The

requirement is 6 months of service where the employee has worked 1000

hours.

Further, had we wanted to use the elapsed time or expected year of

service, those options would be marked.

Excerpt from Document

[ ] 10. Not applicable. There is no Service requirement.

[ ] 11. Not applicable. The Plan is using Expected Year of

Service or has a Service requirement of less than one (1) year.

[x] 12. Hours of Service method. A Year of Service will be

credited upon completion of 1000 Hours of Service. A Year of Service

for eligibility purposes may not be less than 1 Hour of Service nor

greater than 1,000 hours by operation of law. If left blank, the Plan

will use 1,000 hours.

[ ] 13. Elapsed Time method. "............

Thanks in advance for any and all input.

External payroll service stopped witholding participants deferrals when he reached the 15,500 limit for 2007. However internally the plan sponsor kept making deposits to the participants account over several payroll periods resulting in 22,000 in deferrals deposited. Recordkeeper will not allow a mistake-in-fact distribution of the excess because it happened more that once - in thier opinion that by definition makes it an operation failure.

Has anyone run across this situation and been able to do a mistake-in-fact distribution back to the plan sponsor. The record keepers only solution is to forfeit the excess amounts.

Employer has a 401(k) plan with 3% safe harbor and discretionary profit sharing contributions. Plan year and corporate year are 12/31. On the 12/31/05 plan year administration we allocated the employer safe harbor and profit sharing contributions. The contributions were made by the due date of the 2005 corporate filing, but the employer took the deduction on the 2006 corporate return. The employer does not want to amend their 2005 corporate return.

Several questions:

• Is it okay to handle it like this? It seems the safe harbor contribution could be handled in this manner but what about the discretionary profit sharing piece? Can you take the deduction in 2006 but allocate it in 2005?
  

Assuming it is okay:

• Would the safe harbor contribution be considered an annual addition for 2005 or 2006?
  

• Would the discretionary profit sharing contribution be considered an annual additions for 2005 or 2006?
  

Thanks in advance for any responses.

I have never worked with a VEBA before, so excuse my ignorance. Does the VEBA trustee need to be an independent trustee or can it be someone at company that sponsors the VEBA. FYI: Employer is setting up a VEBA to provide Retiree health benefits. Any help would be appreciated. Thank you.

Anyone familiar with this insurance product? The intent is to use TOHI to get retiree medical liabilities off the books and the accelerated deduction.

Specifically, since you can accomplish the same business and tax goals with a self-funded VEBA, what would be the benefit of funding the VEBA with health insurance other than to make the insurance company richer?

Somewhat buried in 1.409A-3(i)(5)(vi)(A)(2) is the requirement that the only relevant corporation for purposes of a change in the effective control of a corporation is a corporation for which no other corporation is a majority shareholder. The way the regulation is written, at first glance it appears that the requirement only applies to the board of directors provision since that's where the requirement is located and the only example is a change in the board. But, the regulation clearly states that the requirement is for purposes of 1.409A-3(i)(5)(vi)(A), which would include the acquisition of 30% or more of the corporation's stock.

I've looked at the corrections to the reg's and haven't seen anything limiting this requirement to only a change in the board of directors. Has anyone seen any other guidance or heard anything regarding which corporation is the relevant corporation for a change in control upon the acquisition of 30% or more of the corporation's stock?

A large number of our clients have gotten IRS letters saying that their 04 (so far only calendar year) filing was late or not received at all. The letters refer to a prior notification from the DOL, which no one has received, and all the letters have been erroneous - we ask our clients to return a copy of the signed return, and every one has been filed timely. Is anyone else experiencing this. Is it a glitch in the system?

Not sure what forum to post this question in, so I'll start here:

We are taking over a prevailing wage plan (no other contributions go into this plan, they have a separate 401(k) Plan that addresses other money types). I haven't done one of these in many years! This is probably a dumb question, but I'll ask it anyway.

The existing plan document has no age / service requirement to enter the plan (whew!) but has a 1,000 hour requirement to receive a davis-bacon contribution. If the participant doesn't work 1,000 hours during the plan year, the davis-bacon contributions get paid to the employee directly (through payroll), and don't run through the plan. Is this ok? I was under the impression that there can't be an accrual requirement to receive an allocation in this type of plan.

Any input on this would be greatly appreciated.

Thanks!

A former HCE of a company has recently retired. However, he has been hired as an independent contractor by the same company. He insists that he controls his own time and work and would not be considered an employee. He wants to set up his own retirement plan based on his 1099Misc income. At this point he doesn't provide his services to any other company, but that's not to say he won't at some point. This question must come up fairly often, so I'm hoping somebody has prior experience.

Is a hardship withdrawal a protected benefit under 411(d)(6)?

Guidance/cites are appreciated - thanks!

Is there any law that requires a public defined benefit plan to provide a breakdown of how a pension has been calculated for an individual. Currently working with a client who is retiring with a defined benefit and was only given a dollar amount of what their pension would be.

Thanks.

Can a plan in which no HCEs participate exclude some NHCEs from participating and still pass testing? The benefits provided to the NHCEs would be nondiscriminatory. I would appreciate anyone's thoughts.

When a plan requires less than a year of service to become a participant, it can utilize service conditions based on elapsed time of service, hours counting, or a combination of both types. In this case, one of my Plan amended the eligibility requirements on 1/1/2007 from 1 Year of Service (YOS) with at least 1,000 hours worked to 6 months of service with at least 501 hours worked. Due to this change, it is possible to violate the minimum statutory service standards.

An example of this is as follows. An employee has a DOH on 2/1/2007. He works 500 hours from 2/1/2007 – 7/31/2007 and 500 hours from 8/1/2007 – 1/31/2008. For his initial YOS, he has worked 1000+ hours. Under the minimum statutory service standards, he has met the service requirement and should be permitted to participate in the plan. However, under the service requirements of the Plan, this employee would not be permitted to participate in the plan as he did not work at least 501 hours in the six month eligibility period. (This should rarely if ever happen, but it could still cause the violation.)

While writing this example, I have come up with a question. How do we calculate the 6 months? Is it a running clock or does one period have to be compelted before another starts? Using my example above, the first period used for measuring service is 2/1/2007 -- 07/31/2007. Is the next period used for measuring service 3/1/2007 -- 08/31/2007 (and so on for future periods) or is it 8/1/2007 -- 01/31/2008. I am leaning towards the first option, but I need confirmation. Also a citation would be nice.

Second, does the amendment have to (or can the amendment) state that the service is based on CONSECUTIVE months of service? If it can and does not, does this mean that we will have to track how many hours of service were worked in each month of service by the employee until he meets the service requirement?

Any help would be greatly appreciated.

Back in 2006, New York State passed a law effective 1/1/2008 which restricts the use of Social Security Numbers by employers for many purposes. My understanding is that 6 or 7 more states, including Florida and California, have or are considering adopting similar legislation.

Does anyone know whether this affects our operations as administrators, actuaries, and TPAs? For example, many plan administration systems use the SSN as an identifier for an employee or as an initial password for a participant's web access. Many daily administration systems such as Relius use these numbers for transmission and allocation of periodic contributions by payroll as well as for distributions and other purposes. Would these features run afoul of the new laws? There appears to be some relief when encryption is used. What about the transmission of employee census data requests and information received by e mail? By regular mail?

Has anyone read or heard any commentary about these laws and whether or not they potentially affect our practice areas?

Company sponsors a 401(k) plan and has a cafeteria plan. Company funds the cafeteria plan at $300 per month for all eligible employees. Employees can choose from a menu of benefits on which to spend their $300.

The plan provides that any unspent money will be contributed to the 401(k) plan as an employee deferral. There does NOT appear to be a cash option. I am waiting to get a copy of the document.

My questions are:

Is this really a deferral if there is no cash option, or is the deferral treated as a cash option? If not a deferral, then what is it?

The document calls for the addback of all deferrals to compensation used for benefits and testing. Does this get added back also since it is on the W-2?

If the leftover 125 money gets added to compensation, does this cause ALL of the employer 125 contribution to be added back?

Please provide any cites so I can see where I missed the rules.

Thank you.

There is a non-elective safe harbor 401k plan for a small employer, effective this year. The plan is effective back to 1/1/07, but the 401(k) portion became effective 9/1/07. We just had an employee terminate employment 9/11/07. She did not make any 401(k) contributions. I know she will get the 3% s/h contribution for her compensation for the 9/1/07 - 9/11/07 period, but should she get 3% back to 1/1/07 - 9/11/07? I do not see where that is clearly addressed in the document. Is there certain language that I should look for that would answer this?

There is a good chance the plan will be top heavy and I know that as a result, she will get 3% T/H for comp from 1/1, but that has a 3 year cliff vesting schedule (she has less than 3 YOS), so in terms of what she is actually entitled too, there is a big difference in whether she gets the s/h for the whole year.