Roth 401(k) contributions held in a trust as part of a qualifed plan has the same protection from creditors as traditional 401(k) contributions, correct? This is spelled out in ERISA.....is it Title I?

Someone outside the office begs to differ

Thanks

I think the answer is "no", but I thought I would check with the experts out there.

If an employee is terminated effective immediately, but his employer pays the employee for a month after his termination (ie: severance), does the month after the termination count towards the employee's service?

Has anyone seen language that would exclude a KSOP arrangement from the requirement to provide quarterly statements for the non-directed employer contribution of the ESOP if associated with a self-directed 401k? The ESOP and k provisions are in the same document.

Client undercalculated lump sum distributions from its defined benefit plan. They have recalculated the accrued benefit (with an interest adjustment on the "make up" amount) but are not sure how to handle the cash out issue (e.g., if the prior lump sum paid in 2003 was $4,000 (and was cashed out) and the corrective allocation is $1,500, is the new amount subject to the automatic rollover rules or would it, in the aggregate with the prior lump sum, be considered to be in excess of $5,000). Just curious how others may be handling this as I don't see it specified in Rev. Proc. 2006-27.

Does anyone know how to export vested percentages to an excel file in a format acceptable to Nationwide Insurance? The DER approach will not work because it needs to be in rows by person and source.

Does anyone know if the enhanced PPA DB deduction limt for 2006 and 2007 (150% of CL less assets) overrides the old FFL?

I know that the DB deduction limit for a sole prop is 100% of earned income less SE tax. Is this merely in a private letter ruling, or has it bene codified? Client is asking me for the citing.

Also, does this apply just to the DB deduction, or to deductions for all plans? For example, if 100% of earned income less 1/2 SE tax is $200K, and DB contribution is $190K, can client ad another $20K 401k, or is he limited to $10K?

Employers A and B are members in a controlled group. Both have separate 401k plans and separate recordkeepers. Employer A's plan passes coverage using average benefits testing with ratio % barely above safe harbor. Employer B's plan passes coverage easily w/ ratio above 70%.

It has just dawned on one of these employers that they could pass ADP and ACP testing if they permissively aggregate the two plans.

As the employer A recordkeeper, I asked them to send us a copy of the other plan document and noticed some plan differences such as different vesting, different deferral election limit, one has an early retirement age, one has an inservice provision and only one allows for auto rollovers.

Since we're exploring permissive aggregation, it would appear the plan would become subject to BRF testing.

The way I understand BRF, it appears the tests on these differences pass simply because both independent coverage tests have a ratio % greater than the safe harbor. That is, we don't have to do anything special for benefits, rights and features.

Is this correct?

Hello,

I was wanted to convert my $3000 in my rollover IRA into my Roth IRA. I was wondering if that would be considered part of my 2007 contribution limit of $4000, or not? Do conversions count as contributions?

Thanks!

Was wondering what potential land mines we may encounter in freezing the current 403b annuity plan and starting a safe harbor 401k? Any thoughts?

Local company was recently sold by a large Fortune 500 company to a small Europe-based owner. The legacy 401(k) plan provider gave employees a 2 week notice that the plan assets must be rolled over to a qualified plan or IRA, or will face a lump sum distribution.

Is 2 weeks a legally acceptable timeframe for this type of action? Also, what unique consideration should be given regarding plan sponsorship of a new plan when it is an overseas owner?

We are down to an April 8th deadline and trying to come up with adequate alternatives (IRA's, SEP's, new K plan, etc.). Any thoughts appreciated.

A participant is 64. He is a new enrollee to a Roth 401(k) plan. If he defers to the Roth in the plan, for the first time at age 64, when can he remove his money without the penalty (a tax free distribution). Is it at age 69?

Has anyone done a communications campaign for their plan on the topic of company stock diversification that they would be willing to share? Our plan has a high concentration of company stock and we'd like to take some measures to cut this down.

We're also looking at potentially instituting limits to company stock in each participant's account. Does anyone have a similar policy in place?

A parent company owns 51% of a smaller company. They qualify as an affiliated services group (ASG) under 414(m). May the subsidiary’s employees participate in the parent’s 401(k)? If so, would the 401(k) plan be a multiple employer plan?

I've read on these message boards that a 401(k) sponsored by a parent company for its controlled group or ASG would not constitute a multiple employer plan. However, I have not found any justification for that.

Though the parent is considered the employer of all the employees of the ASG for testing purposes, 414(m) does not seem to pertain to 401(a), which states that qualified plans are for the exclusive benefit of the employer’s employees. (In the health benefits world, their health plan would be a MEWA because they would not be a single employer.)

Thank you for your help in advance.

Plan has investment options in mutual funds and they also have a stable value fund option. The mutual funds are offered through one of the large mutual fund companies and the Stable Value Fund is managed by a separate investment company. The company that manages the Stable Value fund does not file as a DFE. This Stable Value fund used to be invested totally in a GIC from 1 large insurance company. That insurance company provided Sch. A info and everything was fine. During the plan year the GIC assets were transferred to this other investment company and the fund became the Stable Value Fund, which has investments in a number of different GIC's and other stable assets.

The question is now how do we report this Stable Value Fund on the 5500. We have the Sch. A info for the investment for the time it was still invested at 1 insurance company. But, after the assets transferred to the outside investment company we are unsure how to show this on Schedule H (what line) and also are not certain if we need to complete a Sch. D and also obtain information from all of the GIC's that the fund is invested in. As mentioned the Investment Company does not file as a DFE and they also do not receive any insurance info from the GIC's. Most of which are investments through other investment companies. Any opinions on what to do are appreciated.

Is it possible to convert a cash balance plan to a 401(k) plan?

Follow up on recent post. Looking for opinions to confirm position or to see if contrary opinions exist.

If a person is paid indirect compensation, in cash or some other form, under an agreement with an insurance company based on volume and/or profitability of business placed with the insurer and some of this business involves ERISA covered plans, presumably (based on DOL AO 2005-02A), a portion of this compensation has to be allocated to the ERISA plans and appropriately reported by the insurer to each plan for Schedule A purposes. At the least, this needs to be done for compensation paid to external persons, e.g., brokers, etc. Noncash compensation reported should reflect the cash or fair value of whatever is provided. What about similar indirect compensation paid to internal sales persons, i.e., employees of the insurer? For example, an insurance sales employee gets such additional indirect incentive compensation over and above any set base salary. Does this additional compensation for such employees need to be allocated and reported for Schedule A purposes?

A professor stood before his philosophy class and had some items in front of him. When the class began , he wordlessly picked up a very large and empty mayonnaise jar and proceeded to fill it with golf balls. He then asked the students if the jar was full. They agreed that it was.

The professor then picked up a box of pebbles and poured them into the jar. He shook the jar lightly. The pebbles rolled into the open areas between the golf balls. He then asked the students again if the jar was full. They agreed it was.

The professor next picked up a box of sand and poured it into the jar, where it filled up most of the remaining spaces. He asked once more if the jar was full. The students responded with an unanimous "yes."

The professor then produced two cups of coffee from under the table and poured them into the jar, effectively filling the empty space between the sand. The students laughed.

"Now," said the professor as the laughter subsided, "I want you to recognize that this jar represents your life. The golf balls are the important things - your family, your children, your health, your friends and your favorite passions - and if everything else was lost and only they remained, your life would still be full.

The pebbles are the other things that matter like your job, your house and your car.

The sand is everything else - the small stuff. "If you put the sand into the jar first," he continued, "there is no room for the pebbles or the golf balls. The same goes for life. If you spend all your time and energy on the small stuff you will never have room for the things that are important to you.

"Pay attention to the things that are critical to your happiness. Play with your children. Take time to get medical checkups. Take your spouse out to dinner. Play another 18. There will always be time to clean the house and fix the disposal. Take care of the golf balls first - the things that really matter. Set your priorities. The rest is just sand."

One of the students raised her hand and inquired what the coffee represented. The professor smiled. "I'm glad you asked. It just goes to show you that no matter how full your life may seem, there's always room for a couple of cups of coffee with a friend."

Does anybody know how to go about using EPCRS to fix an impermissable premature distribution of a participant's 401(k) account? This is #5 on the IRS's list of top ten failures found in the VCP, but I can't find any discussion of how to solve the problem under Rev. Proc. 2006-27. I'm assuming the solution is repayment of the amount and a VCP filing, but I'd appreciate any authority. Thanks.

Plan has immediate entry, no eligibility requirements for full-time employees. Can the plan impose a 1-year service requirement on part-time employees?