Non-spouse beneficiaries no longer have to take distribution of a participants account balance within 5 years. Is this correct and if so, was this part of PPA? Also, if true, is a plan amendment needed to allow for this? Does the answer change if this is a 403b rather than a DC plan?

Thanks

I am a part-time employee. I will be changing both my current work hours (will work different days, hours) and also, my day care provider. Will either of these qualify me to change my dependent care cafeteria plan election?

Thank you!

We have a number of 401(k) clients for which the investment advisor established inidividual retail accounts at Fidelity. The invetments are participant directed in that the participants must choose among various portfolios that the advisor predesigned using about 12 mutual funds. The participants receive a monthly statement from Fidelity that shows their account value in each of the funds in which they are invested. The Fidelity statements show only the funds and do NOT break out their accounts by source of money (e.g. deferrals, match, PS, etc.)

My TPA firm provides the year-end Administration services, including year-end vesting statements for the participants. Our statements show their values by source of money, both total and vested amounts, but we do NOT show the funds.

Do the participants now have to receive quarterly statements that breaks down their accounts by both funds and source, or do the above combination of statements from Fidelity and from us suffice?

I've tried several searches, but was unable to locate this specific circumstance, so here goes.

Participant requests a hardship withdrawal. The Trustee signs the withdrawal form and sends it to the funding institution/broker, who processes the withdrawal, withholds 20%, and sends the balance on.

This raises all kinds of problems. First, the participant was only eligible for a hardship withdrawal of $1,200, but the withdrawal was $2,500. So there's an impermissible distribution of $1,300. Then, 20% withholding was done on the whole amount, which is also wrong. And while we don't know, the reporting by the funding institution is almost certainly incorrect.

The fix under Revenue Procedure 2006-27 is fine. My question is: since this participant has (apparently) no money whatsoever, what happens when the participant refuses to repay the plan? The standard language in the Rev. Proc. would require the sponsor to repay whatever the participant does not. However, this contemplates a different situation, and I don't believe it is appropriate to give the participant a windfall.

Whether the employer can require withholding this from the participant's pay is probably a matter of state law. Just wondered if anyone had encountered a similar situation, and if so, how did you handle? I've seen no IRS guidance on this.

Thanks!

Plan has payroll based match - do I strictly use amount employer submitted for 2006 Plan Year using Employer report and pay no attention to what investment firm received during calendar year?

ESOP currently excludes 1042 seller (and family member) because of stock sale. Company also has 401(k) and exluded EES are eligible to make 401(k) contributions but there are no other ER contributions to 401(k) plan.

Are we allowed to consider the "ESOP excluded EES" compensation in the 25% contribution limit (all will be contributed to the ESOP) since they are eligible for the 401(k) plan (combined plan limit) or must we disregard since they are only benefitting under the 401(k)?

Would this be solved by making $10 employer match to 401(k) plan?

many thanks for any help!!

I have a 1 person DB plan (can't file Form 5500 EZ because there is another entity in the control group, even though controlled by him) that was frozen and terminated pending 5310 application as of 12/31/05. We received the favorable determination letter.

We're in the procees of distributing all the assets.

We filed a Schedule B with the 2005 Form 5500, right before the rates changed due to the PPA.

Do we have to file Schedule Bs for 2006 (pending termination) and 2007 (got favorable letter so now we can terminate)?

Thank you for the help - it will be much appreciated.

I apologize if this specific question has been handled previously. I have a situation in which a Company A is owned equally by 3 siblings. Each of the siblings has children in the following amounts.

Sibling 1 has 5 kids.

Sibling 2 has 2 kids

Sibling 3 has 3 kids.

The children of the siblings own companies B and C.

The 5 kids of Sibling 1 own one-third of Companies B and C.

The 2 kids of Sibling 2 own one-third of Companies B and C.

The 3 kids of Sibling 3 own one-third of Companies B and C.

The ideal situation is that Companies A, B and C are part of one controlled group, so that all 3 companies may adopt 1 plan and be tested together.

These 3 companies are each a manufacturing plant and do not perform any services for each other.

Can it be determined with the above information that this is a controlled group?

We do a lot of SCA work for the gov't. Under the SCA rules employers must provide benefits based on number of hours worked (up to 40/week) times the SCA wage determination fringe amount. Currently that amount is $3.01 per hour. So just under $500/month on average. If the employer doesn't provide benefits (health, dental, 410k, etc) that are equal to or above that, the employer must pay the employee the cash equivalent. To date, our company has provided the cash.

We would like to move to putting that cash amount directly in to the 401k plan on behalf of the employee. DoL's opinion on this is that it is perfectly legal and meets the SCA requirements and they know several employers that do just that. The only "rule" is that this pot of money must be 100% vested immediately.

I'm struggling with how to accomplish this administratively. I haven't found anyone out there that has done this, despite DoL's claim that it is being done. And I haven't found a 401k plan that has worked with this before. I may not be asking the right questions. I'm solid in 401k basics, but this is a bit beyond me.

Would this contribution be considered a discretionary contribution? If not, what would you call it?

We currently vest 20% per year to 5 years. But this would be a seperate bucket of money, so I don't think it will matter as long as we structure the plan document correctly.

We have also traditionally failed the ADP and ACP tests (however we passed this year for the first time ever, YEAH). Does the ACP test take in to account a contribution such as this? Could this contribution be included in our testing or is the seperate bucket it will reside in not accounted for in testing?

Thanks in advance.

I have a participant who terminated in august of 2005 but received W-2 wages in 2006 (comissions from a collected contract). The participant did not work a single hour in 2006. Do I need to give her a Safe Harbor contribution (3%) for the 2006 plan year? TIA

Does anyone know if there's a Grey Book question or other guidance on the correct methology for calculating the ERISA FFL in the event of a mid-year benefit freeze ??

I have a plan that the eligibility was 6 months and monthly entry. Effective 8/31/06 they amended the plan for a more restrictive eligibility and entry. (1 year eligibility and dual entry). I have an employee that was hired on 2/28/2006. What would her entry to the plan be?

Thanks.

I am over 591/2. I plan on making TIRA conversions th ROTH over the next six years. As I understand it the earnings for each conversion is taxable if taken out less than five years after the conversion. Does this mean I have to segragate each conversion so as not to mix the earnings of year one conversion with say earnings from year four conversion?

If a 401(k) plan has an automatic enrollment feature, but the employer fails to enroll participants, how do you determine the make-up contribution? Is it based on the automatic enrollment percentage (e.g. 3%) or on the ADP of the group?

In my initial review of the PPA legislation, I recall reading that a new time deadline was imposed for completing the annual valuation of plan assets and the provision of annual participant statements in the case of a plan that utilized a pooled investment approach (i.e., non-self-directed) for all or part of the plan's assets.

A situation has now arisen that involves this issue. However, I am now unable to find this supposed time deadline in the PPA.

Can someone, please, help me out on this? Thanks.

We write POP Plans and then the client typically runs their own Discrimination Tests. I now have a client wh woudl like us it do the tests for them. I have never done testing on a POP Plan... Any suggestions, comments, ideas of how to do this??

The ADP fails as is - if I want to change age/service to 21/1 year and then run the test - can I if one of the newly eligibles for '06 based on the 'no service' requirement is an HC? He deferred the maximum. I've never run in to this before - so, do I change the requirement to 21/1 but keep the HC in the testing? Thanks in advance...

A non-profit sponsors a 403(b) plan and also a 401(a) MPP. Only employee deferrals (pre and post tax) go to the 403b. The 401a receives a matching contribution based on the ee deferrals and a fixed MPP contribution. Both plans allow for after tax contributions.

Is it ok to combine both plans for ACP testing? They have similar plan years, etc

I have an employee who is asking if airfare for him and his wife can be reimbursed under an FSA. They are traveling with their 1 year old son for some follow-up medical care. I'm fairly sure that expenses can be reimbursed for one parent (plus the child), but not sure about BOTH parents. Also, what about hotel expenses?

Here is the situation:

I have both a traditional and a Roth IRA. I have just recently rolled a 401k plan into my traditional IRA. I am over 59 1/2 so I understand I could start taking withdrawals and I am retired/semiretired at this time.

I would like to make contributions to my Roth IRA using money taken as withdrawals from my traditional IRA. I would do this at the 5K annual max contribution limit to the Roth. I may or may not have earned income during this period.

The traditional IRA is currently 15 times larger than the Roth due to the influx of funds from the 401k. I would like to eventually have the funds more equally distributed or even all in the Roth.

OK experts, what is the verdict? Can I or can't I proceed with my plan?

Thanks

JD Thelen