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

I know this is a very basic question, but I can't seem to verify it anywhere else.

Hypothetical: A qualified plan is started with automatic enrollment and no age or eligibility service requirements. Would it be possible for an individual under 18 years old to participate?

I know custodial IRA's can be set up for this purpose. Or perhaps 529 savings plans. I know you can't require an individual to be older than 21 in order to participate, but is it possible for minors to participate?

Every possible answer to this question I've found simply states that having "no" age requirements is "not recommended," but nothing else is said about it.

Any thoughts?

I have a take over plan (12/31 yr end) where the only contributions are 401k ctbs, the company hasn't made any employer contributions for serveral years. Due to an acquistion (over 2 years ago) there is a control group relationship with a company that is currently not a participating employer and does not have a separate plan.

In running the 410b test on an annual basis it fails. Is the snapshot testing method available?

If it's not available and the employer has to make an employer contribution are these their correction options:

1) Make a PS contribution to the covered NHCE's which allows the plan to pass the ABT. If they are making a QNEC because of a failed ADP test, can the QNEC plus the regular PS be considered for the ABT or only the PS contribution?

2) Though the employer wouldn't like it, the cheaper route would be to give the non-covered NHCE's from the other company a QNEC in the amount of the covered NHCE's average deferral percent, which is only 1.87%.

Other considerations? Thanks!!

If an individual is participating in his employer's 401(k) plan but also has legitimate self-employment income from other activities, does anything bar that person from setting up a Keogh plan for the self-employment income?

A distributing plan administrator refuses to make a statement as to whether the plan is intended to be qualified.

Does anyone have any thoughts/experience on alternative acceptable documentation - SPD, check stub with "XYZ 401(k) Plan" showing the distributing plan's name - so the recipient plan can "reasonably conclude" that the distributing plan was qualified?

I have a plan with over 100 doctors all earning more than $100,000. The cross tested plan has 3 classes. one for Dr -owners, one class for other Dr's and one class for everyone else.

Does the 20% cap on the number of HCE's apply to cross testing?

An employer maintains two separate plans: a SH 401(k) plan and a 401(k) plan. In July, the employer is going to merger the two plans.

What does the contribution rate become starting July 1? (Can one merge a SH plan before the end of its plan year?)

I haven't been able to find any IRS guidance.

Employee executed a salary reduction agreement requesting X% be withheld but throughout the plan year (calendar year just ended) a lessor percentage was actually withheld. The employee (HCEE nonetheless) didn't realize the error. Should the correction method under 2006-27 be followed with respect to making up the "missed opportunity" similar to not including an eligible employee? Or should the entire difference be made up by the employer? Or no correction?

I know there is an exception to the 10% early withdrawal penalty due to death. However, I could not find if the exception applies if the deceased participant has an outstanding loan balance. Any help will be greatly appreciated....