Assume that a class action suit has arisen and certain participants in an ERISA plan potentially qualify as members of the class. Would it be sufficient for the fiduciaries to simply disclose this information to the plan participants to give the participants the opportunity to join the class if they wish? Could this be considered to be acting in the best interest of participants, or would the fiduciaries need to join the class on behalf of the participants? I'm sure it's difficult to come up with an answer without knowing more details, but any comments would be welcome. Also, is anyone aware of commentary or case law addressing this issue? Thanks.

I am working on a 401(k) / New Comp Plan and and need to increase the contribution percentage of one NHCE in order to pass the Rate Group Analysis for the only HCE in the plan.

Can I do this, or do I need to increase the contribution percentages of all the NHCE's?

The current contribution allocation is

1 HCE: 16.67%

10 NHCE: 5%

Thank you, AJM

What is the standard interest rate used for a New Comp Plan?

I have seen both 7.5 % and 8.5 % used.

Thank you

AJM

My company has a DB Plan and is thinking about terminating it. Is it permissible for employees to rollover their accrued DB benefit into a 401(k) Plan? Or must the accrued benefit be used to buy annuities on behalf of the participants?

If it can be rolled over into a DC plan, please point me in the direction of the ERISA or Treasury Regs that permit it.

Thanks.

We have a takeover client with a 401(k) plan that has a frozen ESOP component. The company pays quarterly dividends on the ESOP stock that are deposited in a holding account and distributed in December of each year directly to participants. The prior TPA did not show these dividends on the Schedule I. Is this correct? The 1099-DIV forms list the plan as the payor which would lead me to believe that we should show the in/out of the dividends on the plan balance sheet. Perhaps the payor shouldn't be the plan?

Any help would be appreciated.

I am working on a Safe Harbor 401(k) Plan / New Comp Plan with a 3% Safe Harbor Cont.

4 participants terminated during 2006. I know that they are entitled to the 3% Safe Harbor Contribution, but are they also entitled the 2% New Comp contribution to satisfy the 5% gateway?

Hello,

Can anyone tell me if a defined benefit plan MUST offer the surviving spouse the ability to defer commencement of the QPSA past earliest retirement age? That is, say, if she did not want to begin receiving it at the participant's age 55, ERA.

Thanks.

We have a client that has a small amount of excess (over the 415 limit) in their 3 person DB plan - about $30,000 extra (all employees are at the 415 limit). They are a corporation - for profit (not a tax-exempt employer). They are still a functioning company and will have enough wages to support the allocation in the QRP.

So, if they transfer 100% of the excess assets to a qualified replacement plan, according to 2003-85 it looks like they pay no excise tax, since no reversion occurred (and also avoid income taxes of course). Is this how you would read this?

Is Revenue Ruling 2003-85 still the most current guidance for this?

We'll assume calendar year plan year.

Say a client comes in to see his CPA for tax planning in early December, 2006 for the 2006 fiscal/plan year.

The client has a one participant DB plan.

The client says he is going to take $50,000 compensation for 2006 and wants to know the minimum funding for 2006.

The CPA needs an immediate valuation for the client, so the client can plan and know.

Available to me is the client's 2006 actual compensation and the plan assets, plus receivables as of 12/31/2005 (assets on 2005 5500EZ). The client doesn't have (and it doesn't exist at t his time) 12/31/06 assets or any plan assets available.

If say a 1/1/2006 valuation is prepared, is it reasonable to compute the present value of future benefits or increase in current liability during the year (2006) or present value of accrued benefits at year-end based on the actual compensation that is known? And then bring, for example all costs, values as of 1/1/06 to the end of the year at the valuation interest rate?

The reality is that the data includes current year-end compensation and prior year-end asset data.

Curious to hear suggested approaches based on the data provided.

Of course the intent is to use a method that is consistent and not arbitrary and capricious as the legal minds might say.

Thanks.

Model language in several DCAPs suggests that upon termination of employment a participant can access unused amounts in the DC FSA to reimburse expenses incurred through the end of the period of coverage. This appears to be the result of the 12-month period of coverage rules for DCAPs, but I am unable to find anything to support this practice.

Any guidance is appreciated.

Can a qualified plan trustee be a foreign corporate entity or non-resident foreign national?. The client has non-US owners and the domestic officers would prefer not to be plan trustees.

An IRA owner died at age 73 and he had been taking required distributions. Just after his death, his spouse beneficiary asked the custodian for a check for the remaining value of his IRA which was about $45,000.

She was hoping to "rollover" the check into an IRA in her name within 60 days. She is age 72. But now her new IRA custodian has told her that she cannot deposit the $45,000 as a tax-free "rollover" because she took a full distribution from her deceased husband's IRA and instead she should have left it there and then had the two custodians handle a "trustee to trustee transfer" of the $45,000 to avoid taxes.

Does the above sound correct? Is there a way for her to "rollover" the funds within 60 days to avoid having to declare the full amount as taxable income?

Thank you for any help you can provide!

Frank1971

Is there a safe harbor investment for money that a company puts aside to cover its future repurchase liabilities?

Thanks -

Is there such a thing as a "rolling" vesting schedule for a qualified plan that applies a 3 year cliff vesting schedule to each contribution made versus total years of service. eg.

2006 contribution is 100% vested after 3 years

2007 contribution is 100% vested after 3 years (one year later than the 2006 contribuiton)

At first I thought this was obvious, but the more I think about it the less I'm sure.

A C Corp is sponsoring a new leveraged ESOP Plan with a December year end plan. Payments are on an annual basis. The loan is taken out at the end of October -- 2 months before the end of the first plan year. This makes the first payment due during the second year.

How much of the interest from that first payment is allocated towards that first plan year?

Thanks

Christopher

I want to learn how to manually calculate a New Comparbility P/S formula.

Can anyone share with me a sample Excel Spreadsheet, or point me in the right direction as to how to go about a New Comparbility P/S formula.

Sincerely, AJM

I have a 401(k) plan who's sponsor has decided to outsource one of their departments. A number of their employees are being involuntarily terminated as a result. We have looked at the partial plan termination issue and have determined that it will not be a partial plan term.

The sponsor would like to 100% vest these participants anyway. The plan currently has a 6 year schedule. I want to be sure that there are no problems with amending the plan for just this group of participants. We will need to determine is this would be benefiting a non-descriminatory group but is there anything else I am missing? They are on a PPD prototype document if that helps.

Any and all input appreciated.

In order to satisfy the "good reason" safe harbors for purposes of separation pay, the service provider must terminate within a predetermined limited period of time after the safe harbor condition arises. The preamble says this is a one year period and the final regs refer to two years. The regs would control in this situation, but perhaps this is a technicality that will be corrected soon. One year seems to make more sense considering the required 90 day notice period and 30 day cure period. Anyone hear anything about this discrepency yet?

Upon payment (lump sum) of NQDC to an executive, a calculated portion goes to x-wife of the executive. Is there any way where x-wife's portion can be paid directly to her and taxable to her? Currently it is anticipated that the entire payment comes to the executive. Thank you.

Exec position is eliminated and the ee is to be given severance payments for a 1 year period. Exec is allowed to continue on health insurance. I don't question that part since the health ins. carrier can create a new class of eligible participants.

What I am uncomfortable with is that the exec is being allowed to do 2 things thru the Sec. 125 Plan -

1. pay for the health insurance on a pre-tax basis

2. make pre-tax contributions to the FSA (medical reimbursement) plan

I am reading the plan docs (POP and FSA) and see that "employees" are eligible to participate and "employee" is defined as an individual whose customary employment is at least 24 hours per week. I tend to read things literally, so I would say that a terminated person is not eligible since they are not working 24 hours per week. On the other hand, neither is someone who is on a paid LOA. Another point of view that has been expressed is that as long as the individual is receiving severance pay they are an employee.

Can anyone point me to regs. that would prove/disprove my theory that this exec should not have been allowed to continue Sec. 125 participation ?

Thanks