This a medium-sized DB plan (> 900 participants).

We found that there are 8 terminated participants who should have commenced annuity payments years ago.

ERISA counsel suggested to self-correct the error by making backpayments (with interest) for those missed payments.

My question are:

Prospectively, can the participants elect benefit options, even though those backpayments will be made based on the plan's normal benefit form-SLA?

Thank you.

If a nonspouse designated beneficiary elects to directly rollover to an Inherited IRA in the 2nd - 4th year after death, does the plan need to distribute the MRD first?

Example: Participant dies in 2007. The plan only permits the 5-Year Rule.

Year of Death (2007) - Nonspouse can directly rollover entire account to the inherited IRA. The nonspouse can elect the 5-Year Rule or Life Expectancy Rule under the IRA.

Year After Death (2008) - Nonspouse can directly rollover the account to the inherited IRA but only after the MRD is paid first. The plan assumes that the nonspouse is rolling over to the inherited IRA to elect the Life Expectancy Rule. The nonspouse can still elect the 5-Year Rule or Life Expectancy Rule under the IRA.

2nd - 4th Year After Death (2009 - 2011) - Nonspouse still can directly rollover to the inherited IRA, but to the extent only the 5-Year Rule applies under the IRA, does the plan need to pay the MRDs due first?

5th Year of Death (2012) - Direct rollover not permitted since this is the 5th year after death and the entire account balance is the MRD.

Would there be any difference in the scenario above if the plan allows the nonspouse designated beneficiary to elect either the 5-Year Rule of Life Expectancy Rule.

Thanks!

Is there any guidance out there, or insight, on how the top heavy test is impacted when the permissable withdrawal option is included in an 401(k) automatic enrollment plan?

Guys, I've been told by someone in my office that K-1 income can not be used in a person's wages for purposes of a retirement plan; that I can only look at W-2 wages. This client is an LLC and the partners receive mostly K-1 income, and very little W-2.

Please help... what is the answer? Can I use K-1 in addition to W-2 wages? The document says 415 comp, and for a SE individual - their Earned Income.

Thanks.

I have designated a portion of my paycheck to go into a Roth 401K account. This option became available only recently through my employer and to my understanding, it is an option available that is not quite as ubiquitous at the "normal" 401K, i.e, not every major company necessarily has the Roth 401K option, though a traditional 401K is available within most major corporations.

My question has to do with switching jobs. What if I find myself taking a job with a different company at some point in the future and they do not have a designated Roth 401K contribution system in place as my previous employer did? Conversely, what if my new employer DOES have a Roth 401K contribution system in place?

Without getting me too confused, I'm just wondering if my money and it's earnings will somehow lose the privledge of non-taxation, say, by being rolled into a normal 401K plan of the new employer should they not have a Roth 401K option. What must I do in order to ensure that the money contributed to my current Roth 401K plan and its earnings remain tax-free should I change jobs?

Any problem with a plan sponsor deducting two years worth of minimum funding contributions in a single tax year based upon the following?

Election to deduct contributions for plan year beginning during tax year

Plan adopted 5/15/07

First Plan Year 5/31/06 - 5/30/07

Second Plan Year 5/31/07 - 5/31/08

Tax Year 6/1/06 - 5/31/07

Assume 100K minimum funding requirement for PYE 5/30/07 and 100K minimum funding requirement for PYE 5/30/08 (ignore interest for simplicity).

Assume 100K contribution deposit on 6/1/07 for PYE 5/30/07 and 100K contribution deposit on 6/2/07 for PYE 5/30/08.

Can the 200K be deducted for the Tax Year Ending 5/31/07 considering the first 100K as includible contributions (not deductible for Tax Year Ending 5/31/06 solely due to timing of contribution)?

Employer maintains a 401(k) plan and offices throughout country. Employer, in a collective bargaining agreement, agreed to make contributions to the IRAs of 5 employees (in one of its offices) on a weekly basis several years ago. Employer continues to make contributions each week for the employees. Based on eligibility, maintaining other plans, written plan document requirements, etc., this cannot be a SEP, Simple IRA, SARSEP or 408© plan. Should contributions be stopped? Any glaring corrective measures jumping out at anyone? Thanks!

Has anyone seen where a plan administrator has given plan signing authority to the TPA? I'm not sure if a TPA would want to do this since it would also make it a fiduciary. If this can be done, would it be considered a prohibited transaction? ERISA does permit a fiduciary to be able to be compensated for fiduciary services.

Thanks!

Can someone tell me the formula used to determine the Allocable earnings for the Plan year for a failed ADP test.

I have the following information, but not quiet sure of the formula:

Total Earnings, Opening Balance, Contributions, Withdrawals, & Refund.

Thank you, AJM

Hi, I noticed a guest post a reply on a topic. Is that supposed to happen? I thought you had to register to use the forum. Just wanted to bring it up in case it is an oversight.

The participant was taking MRDs when he died. Can a nonspouse directly rollover the death benefit to an Inherited IRA after the MRD is taken for the year?

Example 1: Participant dies in 2006 and took his MRD for the 2006 distribution calendar year. In 2007 the nonspouse is due an MRD. Can the nonspouse directly rollover to an inherited IRA after taking the 2007 MRD?

Example 2: Participant dies in 2006 and took his MRD for the 2006 distribution calendar year. In 2007 the nonspouse takes the 2007 MRD. In 2008 can the nonspouse directly rollover to an inherited IRA after taking the 2008 MRD?

Thanks

Is a municiple DB plan required to provide a benefit statement to a plan participant upon request (as is required in a private sector plan)? Similarly, what about the SPD, must it be provided upon request?

I have a non-calendar year end 401(k) Plan (04/01/06-03/31/07). One of my HCE's went over his 402(g) limit for 2006 and has already been refunded the excess (about $900). I have just completed the ADP test for the 03/31/07 plan year and the same HCE has to return around $250. Do I need to refund this employee the additional $250+ or can I use part of the excess 401(g) contribution that has already been refunded to him.

We want to provide our employees with a death benefit that is similar to life insurance such that when an employee dies, his/her beneficiary/estate will receive a nominal amount. We are not purchasing a policy to insure the death benefit but rather are paying any benefit ourselves. Is the benefit taxable, and if yes, can we structure it so it isn't taxable to the beneficiary (we don't want to purchase a group life insurance policy however.) Thanks in advance for any responses.

Does anyone have an opinion or can site resources on whether or not an electing Church or Religious Entity can sponsor a Multiple Employer 401(k) Plan? If so, do you need to exclude clergy and only cover non clergy? I know it is off the track a bit, but I am trying to determine if this is a suitable option. I believe a 403(b) is a better fit, but see nothing that has been codified that would suggest that a 401(k) is out of bounds. Thank you!

Jim

Upon withdrawal from a plan, can an employer simply make a lump sum payment to satisfy its withdrawal liability never to be bothered again or is there some catch in doing this (i.e., is the plan potentially entitled to an additional contribution later on if, for example, the plan assets decline?)?

Can attorney fees be paid from qualified plan assets?

This employer really needs direction / opinions from an ERISA attorney. The company may not have the resources to pay those fees but the pension plan will have excess assets.

Has anyone heard anything recently about the final regs? What's the likelihood that the regulations will be finalized any time soon? What about the termination provisions...think they'll make it into the final version? Has anyone sought a ruling on terminating a 403(b)?

Am I interpreting Revenue Ruling 2004-45 correctly?

"A post-deductible health FSA does not pay or reimburse any medical expense incurred before the minimum annual deductible under Section 223©(2)(A)(i) is satisfied....The deductible for the HRA or health FSA ("other coverage") need not be the same as the deductible for the HDHP, but in no event may the HDHP or other coverage provide benefits before the minimum annual deductible under Section 223©(2)(A)(i) is satisfied. Where the HDHP and the other coverage do not have identical deductibles, contributions to the HSA are limited to the lower of the deductibles. In addition, although the deductibles of the HDHP and the other coverage may be satisfied independently by separate expenses, no benefits may be paid before the minimum annual deductible under Section 223©(2)(A)(i) has been satisfied."

Client's HDHP deductibles are $2600 for self-only and $5,150. Since the minimum annual deductibles under Section 223©(2)(A)(i) are $1,100 for self- only and $2,200 for family, are these lower amounts the most they would have to meet before the health FSA can start reimbursing expenses? Or am I confusing it and the client's higher HDHP deductibles must be met?

A fully-funded terminated DBP wants to distribute 90-95% of benefits to participants before the end of the PBGC 60-day review period. The remainder would be distributed after approvals.

The plan is in good shape, is following all the rules (except the one I'm asking about), but for financial statement purposes, needs to make distributions sooner rather than later.

What are the consequences, penalties, jail terms, etc.?