A PS plan has a pro-rata allocation formula, and requires last day of employment to share in the allocation. There is not an hours requirement however.

Since the participants do not "earn" a share of the allocation until 12/31, can the plan be amended in mid year to switch to a new comp formula?

Thanks

Real estate management company wants to allow participants to invest in one of its projects. The project involves a single purpose llc that would engage in the following activities: own, hold, sell, assign, transfer, operate, lease, mortgage, pledge, and otherwise deal with an office building. Notwithstanding a potential problem with current and effective availabity (price of one "unit" may be higher then most nhc's account balances), I want to focus the prohibited transaction issue. Searching the investment issues forum back to the beginning did not reveal a similar thread. I believe there will be a 4975 p.t. for self-dealing. If someone has encountered a similar situation I'd like to hear his/her thoughts. Thanks

Maverick

I am a union musician and recently took a job conducting a musical in China, but not under the jurisdiction of my union. I was able, though, to get the employer to pay my health/welfare and pension benefits. Now that I am in China and working the job, the employer has been making the benefit payments, but my union is refusing to accept them.

At first they said it was because the job was "out of their jurisdiction," meaning in China instead of the US (even though I'm being paid by an US employer and paying US taxes. Now they're saying that according to ERISA rules they can't accept MY benefit payments unless all of the other US musicians are allowed to make the same payments to their benefits (even though said musicians did not have this agreement with the employer).

I've done a little research on ERISA, but so far have found nothing about this, and am now wondering if the Union is trying to confuse the situation by bringing up ERISA.

Does anyone know anything about this? Can anyone help me out?

The only reason I took this job was to get my benefits paid. If I don't have my health & welfare paid by October, my current health insurance will expire. I'm a diabetic and that's going to be a big problem.

Thanks!

1. For the exception from 20% mandatory withholding on distributions under $200, I believe we can consider the Roth & non-Roth portions separately. Do you agree? (See final regs under "modifications to final roth 401k regulations" on page 21108 of federal register.)

2. Does the $200 threshold for exception to withholding refer to only the taxable portion? For example, if the Roth distribution is $300, but only $100 is taxable because the basis is $200, is 20% withholding required on the taxable $100? I would think no withholding is required because the taxable portion is less than $200, but it's not clear to me when I look at treas reg 31.3405©–1, A-6 or the roth regs.

Thanks in advance for any information on this.

One of our valued employees retired a couple years ago at age 66 and took a lump sum distribution from our DB plan. We occasionally had her back for a day or two but now am contemplating having her back more or less full time for about 2 months. The plan says we have to suspend her pension during that period.

What pension? Does she have one? If she has one, what do we do? Anybody faced this before?

Is an Adoption Assistance Plan that stands alone (is not part of any other welfare or cafeteria-type plan) an employee welfare benefit plan under ERISA? I've looked high and low and it seems some people treat them as ERISA plans, while others do not. Thanks!

I have 2 NQDC plans which for reasons I won't go into here will need to be aggregated at least in part with each other. One offsets the benefit it provides by employer contributions to the 401(k) qualified plan, the other permits elective deferrals and matching contributions in excess of the 401(k) qualified plan limits. Because I am concerned about the limitations imposed on linked plans, I want to "unlink" these nonqual. plans from the 401(k) plan. I believe I can do this by: (i) requiring that deferral elections under the NQDC plan be made prior to the beginning of the year and be irrevocable for that year while at the same time assuming that the each participant will make the max contribution he can under the 401(k), and (ii) not recognizing any changes that a participant actually makes in the 401(k) plan during the year for purposes of calculating deferral amounts in the NQDC plans. Since no change that the participant makes under the 401(k) plan during the year will affect the amount deferred for him under the NQDC plans, I think this strategy works. However, I would appreciate any other opinions, or contrary views. Anyone?

I need some help - or information on where to search.

I just got off the phone with a client's CPA. He is helping the client enter participant information into our recordkeeping system and received an error on the ss# because our system does not allow for ss# entries that are not valid (i.e., starting with a 9, etc.).

He stated the individuals they are entering are considered "Guest workers" (immigrants) according to the Immigration Amnesty Act - which did not pass legislation but he said it is currently pending. In any event, he is stating his client is required to enter and offer the qualified plan to these guest workers otherwise the plan will be considered discriminatory. He had received this direction with his office's National Tax Advisor Department, which receives their information from the Dept. of Treasury.

He did not have a citation for me to reference, but was very adamant that his client must allow these guest workers into the plan and a ss# is not required in order to do that. He said their plan document would support this.

This is the first I have heard of this type of situation - and maybe I am overanalyzing it and should allow the client to enter whatever numbers they want, they have ulitimate responsibility for the compliance of their plan in the event of an audit. I guess I just wanted to get an education myself on what this means - but translated in a way that a pension administrator can understand.

Thank you for your help!

I have a client with a frozen DB plan that is concerned about making lump sum distributions next year. They're an underfunded calendar year plan with approximately 120 participants.

Can someone please confirm that since the plan was frozen before 09/01/2005, they can continue to pay lump sums as long as the funding percentage doesn't drop below 60%? It's my understanding that they're exempt from the 60%/80% rule because of their frozen status.

Also, when is the funding status for 2008 actually determined? Assuming we're doing a 01/01/2008 valuation, which probably won't be done until late winter or early spring 2008, is there any guidance on how we should be administering the plan for the first several months of 2008?

Lastly, if the plan were less than the 60% threshold as of 01/01/2008, could a contribution be made in the 2008 calendar year to boost the funding percentage for 2008?

Any thoughts are appreciated.

There was a recent article posted on BenefitsLink by Deloitte regarding a potential problem with rollovers of Roth 401(k) money into Roth IRA's during 2008 and 2009 for taxpayers with adjusted gross incomes in excess of $100,000. http://benefitslink.com/articles/washbull070716.html

Do others agree with their conclusions? If so, how come there has not been more uproar to get this snafu corrected for 2008 and 2009? Are any industry groups carrying the torch to get this corrected? How come it is not in the PPA Technical Corrections bill recently introduced?

If this is indeed correct, then try explaining this to participants......you can roll over your Roth 401(k) to a Roth IRA in 2006, 2007 and anytime in 2010 or later, but for 2008 and 2009, you are out of luck.

Client received correspondence from AP's attorney placing all parties "on notice" of AP's claim, per property settlement agreement, to a portion of former husband's (Participant's) benefits under client's qualified retirement plans. Property settlement agreement does not, by itself, constitute a QDRO and no proposed DRO has been received. Correspondence from AP's attorney was drafted two weeks AFTER death of Participant and also states distribution of funds under the plans should be prohibited.

(1) Must I look to state law (PA) as to whether a post-death QDRO can assign benefits to the AP?

(2) If yes, does it matter that no proposed DRO was received prior to Participant's death?

(3) In any event, must Participant's benefits be suspended? If yes, for how long?

(4) If benefits need not be suspended, are benefits distributable in accordance with any valid beneficiary designations on file?

Ugh.

A not-for-profit employer has a provision in their 403(b) plan that says in order to get the 5% employer contribution, the employee must contribute 3%. If the employee contributes 2%, they don't get any employer contribution. I think I need to advise the employer that they must amend their plan to remove that provision, or at least modify it. Or can their current provision be interpreted as a permissible match?

If I understand the Universal Availability rule, for employee elective deferrals, there can be no exclusion of certain classes of employees like in the 401(a) plan (for example, a 401(k) might exclude employees in Dept B as long as the plan passes coverage. A 403(b) plan can't do that.). The exclusions are limited to those listed in the regs.

But what about for employer contributions? Can different classes of employees be excluded from these contributions?

COmpany has many ees with IRAs held at one custodian. Co wants to roll IRAs into plan.

(We dont want to set up deemed IRA option in plan, just roll IRA assets into plan as rollovers)

Do IRA assets now become plan assets, subject to all plan rules on distributions etc? I assume no more IRA contributions can then be made to the IRA rollover account (I hope)?

I don't even know if such a scenario is possible, but here goes:

Suppose you have a DB plan, where under the plan formula, the participant has accrued a benefit in excess of the 415 dollar limit. Naturally, the participant cannot receive payments in excess of 415. Plan is now frozen. Can the frozen plan provide for an increase in this participant's benefit solely due to increases in the 415 dollar limit, or does frozen mean FROZEN so that the participant's benefit payable cannot increase over the dollar amount in effect as of the freeze date of the plan?

Thanks.

California governmental entity sponsors a Section 457 plan and offers investments through one large insurer.

Govt. entity wants to offer CalPERS' 457 plan to employees.

Per CalPERS reps, gov't. entities commonly do this (maintain "private" 457 plan alongside CalPERS), with each provider's plan document governing only those monies invested with the provider. No "global" plan document is prepared.

Participants are notified about keeping deferrals within one single 402(g) annual limit and about making sure beneficiary designations are current under each plan. Also about withdrawal charges if they intend to move money from the insurer to CalPERS.

Questions: have any of you seen arrangements like this? Any thoughts or comments as to such an arrangement?

Clients has an employment agreement with change in control definitions broader than IRC 409A allows. No amounts are actually deferred under the agreement -- the change in control payment is the only provision that triggers IRC 409A. If Client fails to amend their employment agreement to comply with the final IRC 409A regs by 12/31/07, it is subject to a tax on the "amount deferred." (Treas. Decision 9321.) But in this case, there is no amount deferred. Or do we treat the prospective change-of-control payment as the amount deferred for purposes of the penalty? Any insights would be appreciated.

Recently we received a call from a prospective client regarding the proposed design of their new plan. They own two companies. Specifically, they stated that they wanted to cover one company (Company 1) and not another (Company 2). They then went on to say that they have a number of employees who receive pay from both companies. Forgetting the coverage issue that goes with the exclusion of Company 2, my question revolves around the ADP/ACP testing and the people who work for both entities. After some thought, my opinion is that the ADP/ACP tests should initially be run using the plan deferrals and ONLY the compensation from Company 1. The compensation would then have to be tested using the compensation ratio test. If that test is failed, then I would need to use all comp (Company 1 and Company 2) for everyone who worked for both entites. Essentially, all employees who are eligible for the plan would be using all comp earned from the control group. (People who are employed by Company 1 whether or not they also received pay from Company 2.)

Is this clear? Does this sound correct? Any comments would be greatly appreciated

After reviewing the new proposed regulations issued August 3, 2007 by the IRS and published in the Federal Register, I have a question on the implications about group term life insurance, which is now a qualified benefit.

My question: with the new proposed regs, will employers and employees save on payroll taxes for this benefit if it's in a cafeteria plan?

The new proposed regs say: the entire amount of salary reduction and employer flex-credits for group term life insurance on the life of an employee is excludible from the employee's income.

The new proposed regs provide that the employee includes in gross income the Table I cost of the excess coverage (minus all after-tax contributions by the employee for group-term life insurance coverage) and that the entire amount of salary reduction and employer flex-credits for group term life insurance coverage on the life of the employee is excludible from the employee's gross income.

Susan Middaugh, CEBS

Have Pen, Will Travel

Baltimore

410 727-0336

Now that the 5558 is no longer required to be signed and dated, how would we go about showing to a client that we timely filed for an extension. We mailed all of our 5558s in this year. So all we really have is internal documentation. There is no date on the 5558 and we receive nothing back from the government. Has anyone else had to deal with this or does anyone have any suggestions?