Recently, we received a revised election form from an attorney who added a section to ask any HCE participant how they wanted to have any possible ADP test failure refund taken from their account. THe three options provided were:

All Pre-Tax then Roth (if necessary)

All Roth then Pre-Tax (if necessary)

Proportionally out of both

I have reviewed our plan documents and it states that the refund can be taken out in any way the administrator sees fit. My questions are as follows:

Does the choice have to be a formal amendment to the plan (I think no)?

Can we also add the choices above to our forms?

Do we HAVE TO add the above choices to our forms?

What criteria (if any) should the Administrator use to choose how to process the refund?

Can the Administrator pick a different method each year? (FOr 2006, All ROth. For 2007, All Pre-Tax.)

Can the Administrator pick a different method for each participant each year? (Mr. A does all Roth and Mr. B does all Pre-Tax.)

How often can the Administrator Switch?

Is there anything else we should be aware of when reviewing the refunds?

Has anyone seen guidance addressing whether the PPA provision permitting the transfer of funds to the PBGC for missing participants in a terminated DC plan overrides 1.411(a)-11(e)(1) (i.e., the prohibition against distributing amounts from a terminated DC plan that does not offer annuities if there is another DC plan in the controlled group)? Thanks in advance.

Have a QDRO that assigns alternate payee a dollar amount as of a specific date. It also gives earnings/losses going forward. The plan is pooled and everyone shares in the earnings pro-rata. If I have to calculate earnings for lets say 1 year prior, where does the earnings come from? The Plan or the Payee himself?

Example: Wife gets 10,000

Earnings would have been $1,000.00

Does the $1,000 reduce the total plans earnings for that period or do we take the 11,000 from the husband

Am reviewing a couple of withdrawal liability calculations

and fournd them both using PBGC rates for calculating

the unfunded vested benefits for purposes of withdrawal

liability though valuation interest rate is around 7.5%.

Aren't they both supposed to be the actuary's best

estimate? How can you have two best estimates?

Any guidelines when choosing interest rate for

withdrawal liability?

Client is terminating an overfunded DB plan and creating two qualified replacement plans to make up the benefit. One of the replacement plans will be a new DB designed to mirror the terminating DB...the second replacement plan will be the current DC plan that will be amended to provide for a QNEC on behalf of each employee who was a participant in the terminating DB as of its termination date.

The QNEC under the DC plan will cover at least 95% of the participants from the terminating DB who are were employed as of the date the DB plan will be terminated. Under the 95% rule for qualified replacement plans, can any part of the reversion transferred to the DC plan be used to offset future matching contributions (in addition to the QNEC)? About half of the participants in the terminating DB plan will not be eligible for matching contributions under the DC plan. I.e., must both the QNEC and the matching contribution separately meet the 95% rule or is it sufficient that only one type of contribution meet the rule? I know this is probably confusing, but I can't find any guidance on this one.

The client is acquired in a stock acquisition. They have determined they want to proceed with a formal plan termination. They would like to be able to distribute the account balances of the employees who are not retaining their employment than distribute the remaining balances after the favorable letter of determination is received.

Any creative solutions?

My IRA has a very high value (well over $4 million). My grandchildren are designated beneficiaries. I am retired and can control my annual income, other than SS. I have not reached age 70 1/2 yet. Would it make sense to convert some or all of the IRA over to a Roth?

A participant turned 70 1/2 in 2003 and took distributions for his 401(k) in 2004.

His 12/31/2005 401(k) RMD was not pulled from the plan, but from his IRA.

What is the liability to the participant? To the Plan?

Can a participant submit a check to the trust to make up for deferrals missed while on active duty or must the deferrals come from current compensation upon return to work?

Hi everyone:

I have two related questions about an ER that acquired a company and found out that:

1) former employees, some of whom have not been on the payroll for years, were never taken off the acquired company's health plan, and, consequently, are continuing to be covered as "self-pay" insureds under the Company's health care plan despite no longer being an "employee;" and

2) The acquired and acquiring corporations do not have any retiree health care plans. There are a couple of retired EE who have Medigap w/ the insurance provider, which is a remnant of when they were still active EE of the acquired corporation. The EE no longer work with either corporation.

Do any of these two groups of people (terminated and retired EE) need COBRA coverage where the qualifying event, and the COBRA coverage period they would have been entitled to had they elected COBRA coverage, have expired, assuming they had they been given proper notice upon the qualifying event?

What do you all think? thanks in advance for any help you might be able to provide.

Lexi.

Has anyone seen a good summmary with examples of the new FAS standard ; I know the standard has some examples but when FAS 87 first came out the accounting houses (e.g Price & Ernst) published "working" booklets that were helpful - just wondering if anyone has seen something similar for 158 ??

As a condition for re-deferring amounts previously deferred and payable upon separation from service, 409A(a)(4)© requires that the plan requires that the payment be pushed back at least 5 years from the date the payment would otherwise have been made.

If a participant wanted to change the timing (before separating from service) so that his account would be paid out on a specified date or pursuant to a fixed schedule, does the above restriction prevent this? At the time of the subsequent election, it doesn't seem possible to know when the separation from service would occur and therefore whether the delayed payment would be at least 5 years thereafter.

Any thoughts?

I wanted to see if anyone had an opinion on the following:

Company is publicly traded now but has been purchased and will become a private company on X date. CEO has an employment agreement that says severance payment will be paid in the event of a change in control and that CEO terminates employment. Under the agreement CEO would get the severance if he was terminated in connection with the change in control or he terminated for good cause such as duties and position changed. In this situation CEO was not terminated but could have terminated under the good cause provision.

Attorneys for the purchaser want to pay the severance payment. They are relying on the transition rule in the proposed regulations entitled "Change in payment elections or conditions on or before December 31, 2006". [i know this was extended to 2007]. The attorneys for the purchaser are interpreting the rule to mean that you can change the provisions of the plan at any time during the transition period.

I was asked the following questions:

1. Would the 6 month delay rule apply to this CEO--If he actually terminated after the company became private, I believe that the rule does not apply. The regulations say that whether a company is public is determined on the date of seperation from service.

2. Does the transition rule let the terms of the plan be changed such that no actual termination is required to get the severance payment. This is where I need real help.

Thanks

I was always under the assumption that since the RMD was a mandated form of distribution that federal taxes were required to be witheld. However, my provider is telling me that they can be deferred until the participant does his taxes. this doesn't make sense to me. Do federal taxes need to be witheld?

Good morning. Please forgive the basic nature of this question, but this is the first Application for Exemption under 501(a) that I have filed. This is a single employer VEBA. I plan to file the following:

1. Welfare Benefit Plan

2. VEBA Trust

3. IRS Form 1024

4. IRS Form 8718

5. IRS Form 2848

6. Most importantlty, the appropriate User Fee.

Am I missing anything?

Thanks in advance for your help.

Ed

I am auditing a 401(k) Profit Sharing Plan that the plan administrators changed the plan year end from 11/30 to 12/31 in 2005. I know that I can defer attaching the audit report to the short plan year Form 5500 to the following plan year Form 5500. How should the financial statements be presented for the following plan year?

Statements of Net Assets Available for Benefits As of December 31, 2006, December 31, 2005 and November 30, 2005?

Statements of Changes in Net Assets Available for Benefits For the Twelve Months, One Month, and Twelve Months Ended December 31, 2006, December 31, 2005 and November 30, 2005?

At the ASPPA conference there were several references to the fact that current liability calculations for maximum deduction purposes should not include increases in current liability for HCEs in plans that are newly established within the last 2 years as well as to plans amended in the last 2 years. Jim Holland said that the reason is that a plan could terminate and start a new plan to avoid this rule. If that is the only reason for his stance, why wouldn't the rule just include as an amended plan any plan that is established within 2 years of the termination of another plan of the employer? I am hesitant to change my current procedure of using the full current liability for new plans, unless I have to, and I am concerned about my prior valuations. Any thoughts?

Christoper, please contact Dave Baker to advertise on the message board.

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A takeover client wishes to submit their plan to the IRS. Unfortunately they cannot locate the Basic Plan Document for their 1999 Benefits National adoption agreement. It appears they company was sold in 2000 or thereabouts and of course cannot be located.

This was the 'pre-GUST' document and does not have a 'Letter of Notification' to refer back to.

Does anyone have a copy or know where to get a copy for my client?

Thank you all.

In a Corbel Prototype plan, can you insert an eligiblity requirement that excludes part-time employees and still have a 3 month waiting period for all other employees?

What language would you use.