if an employer purchases annuities for all participants ( i.e. irrevocable committments) but doesn't go through a formal termination with PBGC, are actuarial valuations for subsequent years still required ?

I would think so but what say you ????

Child is beneficiary of parent's Trad IRA. Parent was mid-70's at time of death, so RMDs were being taken. Child wants to move funds to an inherited (or "beneficial") IRA with another custodian. Since RMDs were being taken by Parent, RMD rules say:

"If distribution of the employee's interest had already begun under the RMD rules at the time of his death, then the remaining portion of his interest must be distributed at least as rapidly as under the distribution method being used as of the date of his death."

Does this mean that Child continues to use Parent's RMD for each subsequent year? e.g., Parent was 78 in 2006, so RMD factor of 20.3 was used; does child use factor of 19.5 for 79 year old in 2007 for the RMD she has to take from the inherited IRA?

I think Child could only use her own lifetime if Parent had been younger than 70.5?

Under COBRA each qualified beneficiary has a separate right to elect continuation coverage. For example, an employee's spouse may elect COBRA coverage even if the terminated employee does not. COBRA can be elected for only one, several, or for all dependent children who qualify. However, can a terminated employee elect COBRA for a minor child, and not cover themselves? I have searched the COBRA Handbook, notices on the DoL site, and even called the DoL - but have not received a satisfactory answer.

Two employers (located in US) are each owned by the same parent company (located overseas). Controlled group situation. One of the employers has a 401k plan in which no HCEs currently participate. They want to establish a Plan for the other Employer. The other employer has 3 hces and 3 nhces. The new plan would not pass 410(b) coverage including all the employees from both groups. If each plan could pass coverage considering employees of all employers, then we could test each plan separately for other nondiscrim testing, right?

Any suggestions on ways to separate these employers for testing purposes? I've thought of QSLOB but one employer only has 6 employees.

I have a plan where the company is closing or actually it is closed, all of the employees are terminated. The client doesn't have the money to pay for the annual fees out of the business. Can the owners/trustee's take the money out of their accounts in the retirement plan to pay these fees?

Kim

What filings, tests etc are required for a 401k under safe harbor?

I have a client that uses a discretionary match. Client started matching per the specified formula January 2006. They stopped matching end of February 2006 for financial reasons. They did not notify us so there is no amendment in place relating to any of this. What are the requirements for amending a discretionary match as far as timing of a board resolution? Does this client have to match for the year?

participant died with a designated beneficiary. plan says that the benefit must be paid out by the end of the plan year following the date the participant died. my question is as a practical matter how do you facilitate this distruibution? how do you force the participant to complete distribution paperwork?

I'm working with a company starting a 401(k) plan. The company was formed as a result of the merger of Spin-off A and Spin-off B.

Spin-off A had company stock in the 401(k) Plan -- closed to new money. However, as a result of this transaction, 10% of the Spin-off A shares will become Company C shares. Within the new Company C 401(k) plan, there will be two separate stock accounts: Spin-off A balances and Company C balances (both will be closed to new money - and all stock money can be traded out to core funds immediately).

What admin/compliance issues do I need to consider to implement this change?

if a calendar year plan is top heavy for 2007, does the ER have until 12.31.2007 to make 3% match?

Specifically, how does a top heavy ER make contributions to satisfy the 3% DC minimum?

1.416-1 says that all participants as of the last day of the plan year are entitled to receive the top-heavy contribution. so can one interpret that to mean that the top-heavy contribution doesn't have to be made until the last day of the plan year?

thanks in advance for your help.

Does an auto enrollment plan make sense when there is immediate eligibility to participate?

As a 3rd party actuary to a TPA, on a takeover case for 2006 work I noticed that someone had forged (bad forgery) my signature on the 2005 Sch B with my EA # and the rest of my information on page 1 of Sch B.

This is a classical case of the "dumb criminal" - the TPA or someone for him forged my signature and he expects me not to notice it! If I worked on the case last year then I wouldn't need last year Sch B or plan doc which he sent me!

Where does one report a case like this? I don't know if the local police or the DA's office cares about this kind of fraud!?

I started working with this TPA late last year and worked on only handful of his cases for 2005. So, I won't know on how many Sch Bs he has forged my signature unless I go through the 2006 cycle on his cases. But I have no intention of working with him anymore.

Company A aquires the assets of Company B ( both sponsor 401k plans). 2/3 of the company B ees will

be re-employed by Company A. Can a direct transfer from B's plan to A be required by company A for the reemployed participants? Isn't this a severance of employment?. Any assistance appreciated

A plan excludes HCEs from a safe harbor match formula and the plan is top-heavy - one of the HCEs is NOT a key employee - is it ok for the Company to continue to exclude him from the safe harbor allocation or must they give him a safe harbor match allocation to cover top-heavy?

Hello..

Please forgive me if this is posted in the wrong thread..BUT

My sister has worked for a LARGE THREE LETTER computer company since 1989.

She went out on a medical leave of absence in March of 2004 after a troublesome pregnancy, and resigned from the company last month.

She just received a letter which states that she owes over $10,000 by the end of March due to excessive benefits into her qualified pension plan. Essentially it states that both she and the company owe FICA and Medicare tax due to "recent changes in regulations, require that both you and XXX are required to pay FICA tax on excess pension benefits that you accrue each year".

My questions are

1) Why had this suddenly occurred..? She has not withdrawn any pension monies, nor was she a highly paid employee ie, less than $100K per annum

2) Are there any offsets to this payment ie, if she pays the $10K, is it deductible against regular earnings on her 2006 Federal return

3) What can be done to avoid this surprise in the future?

Your response(s) are very welcome and not construed as OFFICIAL professional advice for which there would be any liability. Recommended reading would be a welcome alternative to any other feedback.

Thank you

ED

Can an employer charge employees different amounts for the same level of health insurance?

Meaning two exempt employees both single:

Employer pays 100% for one and charges the other 50% of the premium

Does anyone know whether it's permissible to specify alternate forms of benefit payout that are based on the PV of the benefit at commencement? I'm familiar with the exception to the anti-acceleration rule for de minimis amounts, but my concern deals with the ability to design a plan so that the form of payment, though specified in the plan before amounts are earned, is driven by the PV at the time of commencement. For example, if PV is $25k or less, lump sum; if not, then default annuity.

I'm not finding an answer to this in the prop regs, but I easily could have missed something.

N is a wholly owned subsidiary of M on every day in 2005. Both M and N sponsor 401(k) plans--these are two separate plans. Henry works for N and draws $115,000 in pay from N in 2005 (Henry does not work for M).

In 2006, M and N constitute a controlled group of corps until November 2006 when M sells N to V (an unrelated corporation). Coincident with the sale of N to V, M hires Henry. From November 2006 through December 31, 2006 Henry is paid $10,000 by M. Henry is eligible to participate in M's 401(k) plan now that he works for M and does so, contributing $5,000.

As of November 1, 2006, M and N cease to be members of a controlled group of corporations. M still needs to perform an ADP test on its plan.

Is Henry an HCE with respect to M's plan for the 2006 plan year? Henry has never been an owner of M or N. Did Henry have pay in excess of the HCE pay limit in 2005 (the lookback year)? If, for this purpose, the "employer" is the M/N controlled group, then the answer is "yes". If, instead, the "employer" is only M, then the answer is "no".

I need help quick!!! Thanks so much.

I am completing the testing on a brand new plan - 2006 was it's first year. On 8/2006 two employees signed up for deferrals but never had it withheld. There is a payroll to payroll match.

What happens here? Does the company have to make a match because they missed the deferral? What if the amount is too big for a one time contribution for the participant and they don't want to make up the deferral, does a match still need to be made?

ok... let me know if any of what i believe is correct

I've got a 401(k) safe harbor plan with a new comp that is top heavy...

a) Since the plan is TH, i must give a top heavy minimum to plan participants who did not work 1000 hours, but are there on the last day of the plan year... (the contribution allocations provision says 1000 hours and last day of plan year)

b) since the plan is safe harbor, i must give either a match or a nonelective contribution to all participants whether they are active at the end of the plan year.

c) in order to pass the gateway for the NC, i must give the minimum of 1/3 of highest HCE rate or 5% to all active NHCE participants and all NHCE participants in category a or b

am I close at all?

Also, a plan document can't classify the safe harbor match or nonelective contribution as an elective contribution can it?

Do i have to use either a or b in the nondiscr testing?