Mom dies in 2005 as the owner of a Qualified Plan. Adult daughter is designated beneficiary of the QP. No RMD has been made to Daughter for 2006 yet. QP Admin. is telling Daughter she must take a lump sum distribution or take distributions over 5 years. What are people doing to get the most benefit out of the new non-spousal rollover provisions in cases like these? After all, the new rules aren't effective for distributions made until after December 31, 2006.

It's likely that a plan offering health and welfare benefits to multiple employers is a MEWA. I see that they must file a Form M-1 annually.

It's an ERISA plan and files 5500s, as do the underlying employers.

My boss just asked me what the significance of being a MEWA is, and I realized that I don't know the answer. Help!

Hi all,

We are new to Relius Admin and are beginning to work our way through compliance testing. Does anyone have any guides/checklists or anything that might help someone that is new to the system work through the compliance tests? Its not that we are trying to avoid doing the dirty work by not developing on our own, we are looking for a little help to get us going in the right direction.

Thanks!

BCJ

Help! I have no had success determining which states assess a tax on the earnings portion of a roth 401k distribution? I would appreciate if someone could provide a list of states that assess the tax or a website that would provide this information.

Thank you

A participant in two different plans dies. The last beneficiary form shows the children as beneficiaries, however, the participant remarried, and the spouse did not waive. Therefore, the spouse is the beneficiary. The spouse is not a US citizen, and lives in South America. She has not responded to any attempts to contact her.

One plan is terminated. As long as we have documented the necessary steps to try to locate the beneficiary, is it okay to roll over the terminated plan's participant account balance to an IRA in the participant's name? Then the beneficiary could claim the benefit from the IRA rollover carrier if/when they appear.

The other plan is not terminated. According to the document, the spouse is not required to take the benefit until the participant would have reached age 70 1/2, which would be in the year 2025. Does the participant's account balance need to stay in the plan until that time? Or is there any way that this can be handled (rolled over to an IRA) earlier than 2025?

MEWA will be established as a single self-funded ERISA plan (an association of bona fide group of employers is the sponsor).

Association needs to pre-fund to get it going. State insurance laws require certain reserves, etc. Association would like to loan the funds directly to the MEWA trust.

My feeling is that we need to follow the requirements of PTE 80-26 as amended and do this as an interest-free loan to the plan.

But, I was thinking, the plan does not exist yet so could the contribution merely be viewed as a setllor function.

MEWA will be established as a single self-funded ERISA plan (an association of bona fide group of employers is the sponsor).

Association needs to pre-fund to get it going. State insurance laws require certain reserves, etc. Association would like to loan the funds directly to the MEWA trust.

My feeling is that we need to follow the requirements of PTE 80-26 as amended and do this as an interest-free loan to the plan.

But, I was thinking, the plan does not exist yet so could the contribution merely be viewed as a setllor function.

I am drafting a 115 Trust...if anyone has a form they would be willing to share I would really appreciate it! Thanks.

Client is completing an application to invest in a new asset. He is a single person plan investing in a limited partnership. One of the questions is below. How would he answer the question without being too vague (i.e. investor is a qualified retirement plan)

"If the investor is exempt from US Federal Income Tax, please indicate the basis for the exemption:"

Thanks!

I heard it mentioned at the ASPPA annual conference that there is a way to import data into Relius 5500's to avoid having to enter all SSA's into the necessary form. I read over the Help instructions in Relius briefly but they sounded foreign.

Is there anyone who is utilizing this feature, and can it be used for the Schedule of Assets schedule as well?

Is it just a matter of setting up your excel file properly? If anyone already has the format figured out, I would be very greatful if I could get a copy. Thanks.

I am drafting a Section 115 Trust...does anyone have a form they would be willing to share?

I hope I'm posting this question on the correct Board. I'm dealing with a self-directed multiemployer defined contribution plan. Currently participants don't show up for the offered investment education classes and thus about 80% of the plan's assets are held in the default fund. The Trustees want to provide a $25.00 gas card to those participants who show up for the education classes and select investments. Can these cards be paid for out of the Trust? The plan provides that plan expenses can be paid out of the trust.

I am new to DB plan general testing and cash balance plans. I've been trying to figure out how to calculate a normal accrual rate and equivalent allocation rate for a cash balance plan. In the text below, I've shown my attempt to calculate both rates. Can someone who is familiar with these concepts take a quick look at these calculations and let me know if they are correct and, if not, why not? I greatly appreciate any help--I'm largely operating on my own and don't have the benefit of working with an actuary or compliance testing specialist. Thanks again!

Data:

Mary Smith

Pay = $220,000

AA = 48

RA = 65

Cash Balance Plan Hypothetical Pay Credit = 7.5%

Hypothetical Interest Credit = 6%

Part 1--Calculating Mary's Normal Accrual Rate

 Using the current year as the measurement period.

 Since using the current year as the measurement period, Mary's testing service is equal to 1.

 Using current year pay as average annual compensation.

Step 1: Mary's hypothetical pay credit @ 48 = $16,500 (i.e., $220,000 * 7.5%)

Step 2: Mary's accrued benefit @ 48 = $16,500 projected to RA using hypothetical interest credit (6%)

= $16,500 * (1.06)65-48

= $16,500 * (1.06)17

= $44,431

Step 3: Convert the accumulated value of the hypothetical pay credit to a single life annuity ("SLA") payable at age 65 using the cash balance plan's definition of actuarial equivalence (assume GAM83 @ 6.5%)

= $44,431 ÷ 10.45

= $4,252 annual benefit

Step 4: Divide the annual benefit by Mary's annual pay

= $4,252 ÷ $220,000

= 1.93%

Normal Accrual Rate = 1.93%

(ignore Most Valuable Accrual Rate for now)

Have I computed this figure correctly? If not, why not?

Part 2--Calculating Mary's Equivalent Allocation Rate

Step 1: same as above

Step 2: same as above

Step 3: discount the $44,431 to age 48 using a standard interest rate (say 7.5%)

= $44,431 (1.075)-17

= $12,994

Step 4: Divide the discounted benefit by Mary's annual pay

= $12,994 ÷ $220,000

= 5.9%

Equivalent Allocation Rate = 5.9%

(ignore Most Valuable Equivalent Allocation Rate for now)

Have I computed this figure correctly? If not, why not?

IRS Notice 2005-58 (July, 2005) made NO provision for a source of authority for nonqualified deferred compensation (NQDC)plans in Federal Credit Unions AFTER the August 15, 2005 deadline to have in place or authorize a plan under 457, eligible or ineligible. Looks like the IRS project on FCU's is no place close to an answer and won't be until way into 2007, since the interagency committee to review FCU's has not even met yet, if my information is still current.

So, does anyone think that there is a nonqualified deferred compensation plan, DC or DB, that can be safely created for an FCU during this period before the IRS completes its project and establishes a specific authority for FCU's. If so, what does it look like and what is the argument that it will be OK regardless of the unknown outcome of the project on FCU's and NQDC plans, since I don't believe there is any authority for correction if the drafter guesses wrong?

I've seen marketing materials suggesting that it is "conservative" for FCU's to proceed with a 457(f)/409A plan design(no legal support) in the current situation.

Plan's revenue sharing $ have been used to offset monthly admin fees paid by the employer. The admin fees are based on # of participants and total participant assets.

Client changed its mind and has decided to begin charging terminated employees the per participant and asset fee. They choose to only pay admin fees for the active employees. However, revenue sharing $ will continue to offset the employer's charges.

My concern with this arrangement is that the terminated participants will essentially pay inflated admin fees because their assets are being used to fund a portion of the active participant fees (via revenue sharing) and again used to fund the terminated participant admin fees. We are not crediting any portion of the revenue sharing $ back to the terminated participants.

Any problem with this?

We are about to file a VFCP submission for late deposit of elective deferrals. Does anyone have a sense for how long it will take the DOL to get to, and process, the submission under the revised VFCP? Thanks.

A client wants to gift $100,000 to his former university from a qualified retirement plan.

If this is possible, what type of distribution is this from a qualified retirement plan? …rollover or cash?

Cash?

Distribute $125,000 ($25,000 payable to the fed for w/h and $100,000 payable to the participant) and have the participant endorse the check to the university. Or, have the participant deposit the check and have him issue a personal check to the university.

Can this be a rollover?

Thank you.

does anyone know of caselaw discussing trustees' using a "blended rate" to calculate an ER's withdrawal liability?

I have a client that recently had an "awakening" with regards to their insurance broker. The guy had lots of whole life insurance policies inside and outside the db plan. There was also some large stock re-purchasing contracts outside the plan.

Is there anyway the policy holder can find out exactly how much the agent has received in commissions? The "commissions paid" was generally left blank on the previous Schedule As.

Does the policy holder have a right to know this information? If so, will the insurance company provide it if they are contacted directly?

Client withheld money from employee paychecks without completed enrollment forms. Employees email HR department asking them to withhold money. Is an email sufficient? My initial reaction was that these are not 401(k) contributions and the employer should return the money to the employees, have the employees complete enrollment forms and then withhold deferrals from pay. Any thoughts?