The client's auditor is questioning the assumed rate of return on plan assets for the calculation of the net periodic benefit cost. Does anyone have suggestions on how to justify the use of the rate the client has selected?

I have a plan that was created in December 2005 but had an effective date of 1/1/05. Unfortunately on 1/1/05, there were 103 employees who were all eligible participants. The company wound up only having 80-90 employees by the end of the year. As of 12/31/05, there were no assets except for an employer contribution receivable. Is there a way to deem this a short plan year for purposes of the audit requirement? I know the 80/120 rule doesn't apply because there wasn't a previous year filing. Any way around the audit? Thanks in advance!

Last time I calculated one of these (many years ago), the accepted method was dividing the individual's PVVAB by their life expectancy factor. The general consensus in my office is that you can't do that anymore, yet no one knows what the procedure is since the laws last changed. I may have missed something, but it seems that the 401(a)(9) regs don't specify how an RMD from a DB plan should be calculated. Can somebody please explain the procedure to do this? Thanks everybody and have a happy new year!

If you have a SH that had immed entry for sh and deferral but you have a PS contribution that has a 1 year and 1000 , Do I still need to pass a 410 (b) on the ps?

Because right now I am giving out a SH and on the PS side I only have 4 out of 16 ee's eligible for the contribution. I always get confused on if I still ahve to pass the Coverage if I gave every one a 3% SH.

Thanks!

The trustee of a plain psp wants to take appx $240,000 of the plans assets to buy a house so that his daughter can live in and pay rent. I am not quite sure if this would be considered a prohibited transaction. I know plans can own real estate and they need annual appraisals, but this does not sound sound.

If a client desires to start a new SIMPLE IRA plan effective 7/1/07 is the plan compensation for matching purposes only used from 7/1/07 to 12/31/07 ?

In other words in this first year of the plan ( 2007 ) is 3% of compensation from 7/1/07 ( not 1/1/07 ) to 12/31/07 the highest cost that a sponsor can incur regardless of deferrals from employees this year?

The fund companies are not willing to answer this question.

Thank you !

A multiple employer plan (calendar year, two employers) is spinning off one employer effective 1/1/07. Effective 1/1/07 there will be two single employers each with its own DB plan. For 2006 the multiple employer plan had over 500 lives. The assets will not be transferred until April or May. Is the 2007 PBGC 1-ES required to be filed for the original employer?? How should participant counts be determined for the final Form 1 filings due in October?? Does the fact that the assets have not been transferred yet have significance?? Thanks.

Generally, my understanding is that the RPA '94 CL is the pvab on a termination basis using prescribed interest and mortality and all other funding assumptions.

Now let's say we are valuaing a 1 participant plan and the NRA is 55 and the ARA is say 60 (i.e. participant is to work past NRA and not receive pension until ARA).

Therefore, Sch B will have ARA as 60.

The question is:

What ARA to use for CL for PBGC premium purposes, 404 and 412 purposes?

If CL is supposed to be on a plan term basis one would think that an ARA age greater than NRA is unreasonable.

However, CL requires that you use funding assumptions w/r/t ARA, which is after NRA.

Bottom line, is it reasonable to use ARA higher than NRA for CL and for PBGC?

It seems ok to use ARA greater than NRA for funding if participant intends to work beyond NRA and not receive pension until actual ret. Of course the participant is suspending his pension as required.

Thanks.

My company has recently increased the employee contribution for Health Insurance and required enrollment prior to 12/1. After 12/1 they announced that they would compensate anyone who enrolled in the company Health Insurance with a stipend of 1,750 and would not pay out to employees who declined coverage due to inclusion on a spouses policy elsewhere. Could this be considered discrmininatory and are there any precedents?

I read the Roth IRA options and am interested in it and I am thinking of using Roth IRAs on Mutual Funds, not stocks or banks. There are a lot of companies out there and I see Charles Schwabb and Fidelity quite a lot on television. Anyone have any suggestions for the "best" company I should send my money to? Also, is mutual funds the best way to go? Stocks to me seems to be a bit risky and banks probably wont give me the best rates available. I want high returns but not too unstable at the sametime. Sorry to sound like a newb. Thanks a bunch.

I have an opportunity to receive options in a privately held C corp. Can I purchase the shares at the approriate time with cash in my Roth IRA account and hold them until 59 and 1/2, then sell them and receive the distribution tax free? Could you please cite IRS code, regulations, rulings as to the validity of this transaction?

If we have a plan year that runs from November 1, 2006 through October 31, 2007, by when is the first quarterly participant statement due? 45 days after 1/31/07? Thanks for any and all input.

I am questioning the new law that was passed for HSA specifically regarding the rollover provision from the FSA to the HSA. (1) Does anyone know if this is an option of the Employer/Plan Administrator to allow for the rollover (similar to the Grace Period for the FSA where the Plan Document must specify that the Plan allows for it), or is it something that the Plan Administrator must allow for? (2) If the Participant were to rollover remaining funds from an FSA to a HSA, does the annual election get lowered so the employer does not run the risk associated with Uniform Coverage? Please let me know your thoughts. Thank you everyone!

Are church plans subject to Required Minimum Distribution Rules?? Thanks.

I have read Publication 503, but still would appreciate any clarity that can be provided with regard to individuals who have a babysitter/nanny come to their home every day to care for their dependents (under age 13) and want to claim these expenses through their dependent care FSA. I have always been under the impression that such expenses would be eligible, but can't seem to find anything to support my assumption. My assumption is that the following are all eligible expenses under Section 129:

1) Care provided at a qualified day care center

2) Care provided outside of the home (like a neighbor's home), as long as the person is claiming the payment as income

3) Care provided inside the home, as long as the person is claiming the payment as income

4) Care provided by a family member age 19 or over, as long as they are not a tax dependent

5) Summer day camp

Am I incorrect about #3??

Thanks!

Plan has end of year employment requirement. The Min. Gateway Amendment seems to say that I can allocate contribution to such a person anyway if I need to satisfy 401(a)(4). Does that mean this is a fail-safe, safety net to bring such person into the plan if I will fail testing otherwise? If so, and if you have multiple employees who fail end of year, is there any requirements as to *which* of them to give allocation to? Perhaps have to base on who was terminated the latest and work your way back?

Likewise, could you have over-1,000 hours requirement, and count on Gateway as a safety net if they need to be covered?

Thanks!

Client has been in business several years and wants to set up new Plan. One employee was hired 12/20/06. I would prefer not to automatically include everyone employed as of 1/1/07.

In lieu of Dual Eligibility, can I simply base eligibility on Hours and Year of Service prior to new plan? If so, with dual entry dates, that employee would not participate until 1/1/08, but existing employees with over one Y of S as of 1/1/07 would be be eligible 1/1/07 (as though the plan had always been in existence)? Thanks!

Regarding a restristed employee situation, when making up the list of Top 25 HCE's of all time would one include HCE's that are part of the controlled group but were never covered by the plan (because the plan is only for one company of the controlled group)?

Can a 401(k) plan be written with a tiered match formula based on years of service? For example: 50% on the first 5% deferred for the first 5 years of service and the match would increase to 100% on the first 5% deferred after 5 years of service.

The clients current TPA is telling them that they could write this into an individually designed document but could not in their prototype. I would have thought that you could not do this in any document.

Seems to me that the 5 year of service "requirement" to get the second tier of the match would violate the minimum age and service requirements for a qualified plan. What am I missing? Can a match be written this way?

I know you can fund by your tax return due date (does that include extensions??), but do you have to have the HSA in place by 12/31/06? I don't know if HSAs use the IRA rule or the SEP rule.

Thanks!