I am running discrimination testing on a plan who has not had testing done all year (we just aquired them- unfortunately). Their plan ends on Dec. 31st and they are failing the 25% tests for elections, contributions and reimbursements.

How do I go about fixing this? Should I tell the employer they need to bump up the key employees pay to cover the 25% they would have saved with this plan, have them pay taxes on their full annual elections or what!????? HELP!

Can anyone tell me whether true-up matching contributions (under a plan that provides for matching contributions on a payroll by payroll basis) that have a last day of the year requirement have to be tested as a benefit, right or feature (i.e., different rate of match)?

A plan provides for early retirement at age 55 for all employees

The plan provides that early reduction factors are 1/15th for the first five years, 1/30th for the next five

The plan further provides that the benefit for Employee A, an HCE, is unreduced at 55

Clearly, this will impact A's most valuable accrual rate and I am not concerned about that, the general test is readily passed

One of the other actuaries in my office is arguing that the unreduced benefit is a Benefit Right or Feature subject to testing and automaticallyfails since only an HCE gets it

I disagree and believe that 1.401(a)(4)-4 is clear that using more than one actuarial assumption set for converting to other forms of benefits creates separate optional forms, but the amount of the benefit payable in the Normal form and corresponding QJSA are tested in the general test and not as BeRF's

Thoughts?

New to the HSA world, so my apologies on what I am sure is a basic question...

What types of funding mechanisms are available for HSAs. Must they be funded entirely through payroll deductions (If offered by ER)? Can I make a lump sum contribution with after tax savings? Do I have the ability to rollover funds from a rollover IRA (all pre tax funds) directly to the HSA?

Any insight would be appreciated!

Our volume submitter provider is recommending that all of our clients sign the Form 8905 by 1/31/2007. Don't have a problem with that, as they have provided a Word version of the form via their website. The info actually entered on the form is relatively trivial (plan name, EIN, plan number, and plan sponsor).

However, in order to produce these forms using their document software, we have to open up each plan, update it to the newest version of the language, and then build and print the form. Seems pretty time consuming for 800 plans, especially for what is essentially a nonbillable item.

My thought last night was to print out a raft of the partially prepared 8905s, and then using our existing database prepare a blank report page with the items lined up on the form. Then just a matter of loading the printed out forms, and then printing the database job. Estimate this would take a 2 week process down to about 2 hours (from experience of updating 500 SH 401(k) plans in November to generate the new SH notice).

My only question is that the form itself has those annoying boxes to individually enter each letter. I am not inclined to parse each item character by character to exactly line up; rather just align with the start of the line and let the characters fall where they lay (I've got better things to do with my time around the end of the year). Given that these are just retained forms, not sent to the IRS, does anyone think it a big deal if the characters don't perfectly line up on the 8905?

The Employer wants to buy back some shares from the ESOP. All shares are currently allocated to participants. Under what circumstances can the company come along and decide they want to buy back shares from the ESOP?

I have a plan where the participant named her spouse as (partial) beneficiary of plan benefits. The participant died (before her required beginning date). The spouse died a month or so later, before taking any benefits.

Spousal benes can roll to an IRA, and in 2007 non-spousal beneficiaries can roll to an IRA. In this case, we'd love to be able to roll the benefits out somehow, but I don't see how it's possible...the spouse is the named bene for purposes of RMDs, but the estate is effectively the beneficiary for purposes of actually making the payments, and the estate can't do a rollover.

Can anyone convince me of some way that we can get this money out of the plan in some kind of a rollover?

I've read that the "Highly Compensated Employee" status is based on prior year compensation. Is that still true if my company uses the current year testing method for nondiscrimination testing? In other words, will they use my compensation from 2006 instead of 2005 to determine whether I am an HCE for 2006?

EGTRRA changed the 409(o)(1)©(ii) limit to $800,000. Was this required to be incorporated in the EGTRRA good faith amendment?

We use access and outlook for my palm and for a database to do mailmerges. When we mailmerge a letter, we save a paper copy in each client file. Does anyone have a decent way to save a copy electronically?

The all new edition of the Governmental Plans Answer Book has now been released!

This book takes the reader step by step through the various laws that govern such plans. For those practitioners with private plan experience who wish to work with governmental plans, it compares the regulation of the two types of plans. The authors' systematic answers to hundreds of questions will provide an invaluable reference for investment advisors, plan administrators, attorneys, actuaries, and accountants. It will also serve those institutions that promote, market, service, or provide technical support to retirement plans, products, and related services.

Highlights of the Second Edition

The Second Edition of the Governmental Plans Answer Book (November 22, 2006) gives subscribers the most relevant, current, and practice-oriented answers to the issues faced daily by plan administrators, attorneys, actuaries, consultants, accountants, and other pension professionals as they navigate the requirements and procedures involved in administering their plans. The Second Edition has been revised to include the most up-to-date developments in the area.

New features include:

• Pension Protection Act of 2006 provisions affecting governmental plans.
  
• All new surveys of practices of state retirement systems.
  
• New staggered cycle for requesting IRS determination letters on qualified plans.
  
• Automatic rollover requirements in the absence of a participant election.
  
• New regulations under the Uniformed Services Employment and Reemployment Rights Act ("USERRA").
  
• New requirements for annuities involving cost-of-living changes or other payments that vary over time.
  
• New flexibility to allow for terminations of tax-sheltered annuity or custodial account (403(b)) plans.
  
• Options for governmental plans that have not been timely amended for legislative changes.
  

For more information on this book, written by Carol V. Calhoun, Cynthia L. Moore, Keith Brainard, you can use the following links:

• Description
  
• Table of Contents
  
• Purchase
  

What is considered an Affiliated Service Group for retirement plan issues.

The all new edition of the Governmental Plans Answer Book has now been released!

This book takes the reader step by step through the various laws that govern such plans. For those practitioners with private plan experience who wish to work with governmental plans, it compares the regulation of the two types of plans. The authors' systematic answers to hundreds of questions will provide an invaluable reference for investment advisors, plan administrators, attorneys, actuaries, and accountants. It will also serve those institutions that promote, market, service, or provide technical support to retirement plans, products, and related services.

Highlights of the Second Edition

The Second Edition of the Governmental Plans Answer Book (November 22, 2006) gives subscribers the most relevant, current, and practice-oriented answers to the issues faced daily by plan administrators, attorneys, actuaries, consultants, accountants, and other pension professionals as they navigate the requirements and procedures involved in administering their plans. The Second Edition has been revised to include the most up-to-date developments in the area.

New features include:

• Pension Protection Act of 2006 provisions affecting governmental plans.
  
• All new surveys of practices of state retirement systems.
  
• New staggered cycle for requesting IRS determination letters on qualified plans.
  
• Automatic rollover requirements in the absence of a participant election.
  
• New regulations under the Uniformed Services Employment and Reemployment Rights Act ("USERRA").
  
• New requirements for annuities involving cost-of-living changes or other payments that vary over time.
  
• New flexibility to allow for terminations of tax-sheltered annuity or custodial account (403(b)) plans.
  
• Options for governmental plans that have not been timely amended for legislative changes.
  

For more information on this book, written by Carol V. Calhoun, Cynthia L. Moore, Keith Brainard, you can use the following links:

• Description
  
• Table of Contents
  
• Purchase
  

This is requesting a quick answer(I know it is late in the year), for a situation where there is:

1)W2 income with a 401k that gets contributed maximally with matching by employer

2)K1 income that is subject to SE tax from an LLC partnership due to a consulting agreement...equal partners only. No employees.

3) 1099 income outside the LLC

All for the same person...

Want to know if the 1099 and K1 incomes can be pooled to make a larger DB plan contribution. This is the first year we will be doing a DB plan

I have a 401(k) cross-tested plan that has immediate eligibility for all division with respect to employee deferrals, however excludes certain divisions from any employer contributions.

The plan passes coverage testing using the ratio test. Working on my 401(a)(4) test. Do I exclude these excluded divisions from my 401(a)(4) test since I pass coverage? If I need to rely on the general test to pass each rate group, are they also excluded from the average benefits percentage test even though they are eligible for deferrals?

Thanks!

I was asked to look at a DB plan that is overfunded by approximately $1 million. Two participants are in the plan. One is 73, the other is 80. Both are beyond NRA and their accrued benefits are at 415. It was suggested that life insurance be purchased to reduce the excess assets. Has anyone ever seen this in a plan? Are there any other suggestions to avoid the costly reversion? Thanks.

ERISA Section 4021©(2)(A)(i) defines a professional service employer as owned or controlled by professional individuals or by executors or administrators of professional individuals. What does "administrators of professional individuals" mean?

(1) Client offers a self-standing Section 105 medical expense reimbursement plan ("MERP"). They also allow employees to maintain HSAs. Can anyone confirm that Revenue Ruling 2004-45 allows a self-standing health FSA to provide limited purpose benefits in conjunction with an HDHP?

(2) The MERP was revised to provide limited purpose benefits (dental and vision). The client wants it also to reimburse preventive care expenses.

The HDHP already provides preventive care and in accordance with Notice 2004-23 the preventive care does not count towards the deductible, it is "first-dollar" coverage.

So is it possible to still have preventive care expenses be reimbursable under the MERP, presuming they are not the same expenses that are covered under the HDHP? Would it have to do so only after the HDHP deductible is met?

Example 1 - HDHP allows for one checkup visit per year. Employee gets a second checkup visit. Can the MERP reimburse the cost of the second checkup visit? If so can it do so only if the employee has met the deductible under the HDHP?

Example 2 - Employee gets a full body scan, which detects for cancer, even though it is not a covered preventive expense under the HDHP. Can the MERP reimburse the cost of the body scan? If so can it do so only if the employee has met the deductible under the HDHP?

All help would be greatly appreciated.

The all new edition of the Governmental Plans Answer Book has now been released!

This book takes the reader step by step through the various laws that govern such plans. For those practitioners with private plan experience who wish to work with governmental plans, it compares the regulation of the two types of plans. The authors' systematic answers to hundreds of questions will provide an invaluable reference for investment advisors, plan administrators, attorneys, actuaries, and accountants. It will also serve those institutions that promote, market, service, or provide technical support to retirement plans, products, and related services.

Highlights of the Second Edition

The Second Edition of the Governmental Plans Answer Book (November 22, 2006) gives subscribers the most relevant, current, and practice-oriented answers to the issues faced daily by plan administrators, attorneys, actuaries, consultants, accountants, and other pension professionals as they navigate the requirements and procedures involved in administering their plans. The Second Edition has been revised to include the most up-to-date developments in the area.

New features include:

• Pension Protection Act of 2006 provisions affecting governmental plans.
  
• All new surveys of practices of state retirement systems.
  
• New staggered cycle for requesting IRS determination letters on qualified plans.
  
• Automatic rollover requirements in the absence of a participant election.
  
• New regulations under the Uniformed Services Employment and Reemployment Rights Act ("USERRA").
  
• New requirements for annuities involving cost-of-living changes or other payments that vary over time.
  
• New flexibility to allow for terminations of tax-sheltered annuity or custodial account (403(b)) plans.
  
• Options for governmental plans that have not been timely amended for legislative changes.
  

For more information on this book, written by Carol V. Calhoun, Cynthia L. Moore, Keith Brainard, you can use the following links:

• Description
  
• Table of Contents
  
• Purchase
  

Just got back from vacation and apparently my brain is still on vacation. . .

Plan year end is 5/31/06 - what would the limit be to determine HCEs for the 06/01/05 - 05/31/06 plan year? 90k or 95k?

THANKS!