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!

So if you fail an ADP or ACP test, you have 12 months to make a correction. If you don't make a correction within the 12 month prescribed correction period - then you have an operational failure on your hand.

You can use the Self Correction Program in the EPCRS - and one of the options is the One-to-One Correction Method, which involves the refunds being made and a QNEC in the same amount allocated to the NHCE's.

If a plan allows for forfeitures to offset employer contributions, can they use the forfeitures to fund the QNEC? Or, is this considered a corrective QNEC and would forfeitures not be allowed to fund this?

Thanks for any insight.

I was a full time employee from 1997 through November 2004. Since Nov 2004 I have continued part time. In Sept 2005, employer started an SEP for 2004 and paid out benefits 2004, 2005 and will again for 2006. I just found out about this last week from another former employee who fought for his share. Am I eligible? What should I do?

Client establishes new DB plan eff 1/1/06. Later on advises that made a SEP contribution in 2006 for 2006. Is the SEP treated as a profit sharing plan for purposes of the deduction rules? Can the deduction for the SEP be had if the SEP contribution is equal to or less than 6% of eligible comp under PPA for 2006?

I have a couple of questions : In general , does a participant in a 403(b) plan (1) need spousal signature for a loan and (2) need spousal signature to change to a non-spouse beneficiary.

I think the answers are N & Y but I'm not that sure.

Company has a HDHP medical plan that also covers preventative care benefits, and has a Dental Insurance plan.

Company also has an HSA and an FSA. I understand that an employee cannot have both unless the FSA is a limited purpose FSA.

With the HDHP covering preventative care, and the dental insurance plan covering dental expenses, must the dental deductible and vision care expenses be filed under the FSA or can they be filed under the HSA if the employee elects out of the FSA?

Are dental expenses and vision expenses not considered as medical expenses under Code Section 213 and they cannot be paid by an HSA?

Since we are now able to fund the HSA to the annual limits, why would an FSA be needed if it would cover all of the above?

I would appreciate any assistance and/or direction in this matter.

Thank You

Client (Policemen/Firemen's DB Plan) has asked us to implement this PPA '06 section effective 1/1/07 for plan retirees who currently have insurance premiums deducted from their pension payments. The insurance deductions are totalled for each insurance carrier and checks to each carrier are paid directly from the plan.

Question: Should each retiree's Insurance Premium amount be set up as a separate payment and reported on the 1099-R with Taxable Amount = $0?

OR

Should we leave the retirees' existing payments as is; report Taxable equal to Gross and simply check Box 2a - Taxable Amount Not Determined ?

Company has HDHP with HSA. Employer contributions are made to all employees.

Husband and wife are both employed by this same company and they are each eligible for catch up.

Should each carry single coverage in order to each receive the full employer contribution and each be able to fund the maximum catch up.

If the husband elects family coverage and puts his wife as a dependent and she does not elect separage coverage, would they have to split the contribution andcatch up limits?

If a person aged 50 contributes the full $5,000 catchup to his 401k plan, can he also contribute the full $1,000 catchup to his Roth IRA for the same year? I say yes. Is that correct?

Anyone familiar with any case law/articles dealing with the voting of company stock held by a retirement plan?

Thanks

Plan year end 12/31/06.

ADP test failed and a refund of $1,500 is required for the only HCE in the plan. There are a number NHCE’s in the plan.

The HCE is under age 50 and he contributed $15,000 for the year.

The desire is to get the HCE to a total allocation of $44,000 after any refunds.

The thought is that this could this be accomplished by making a cross-tested profit sharing contribution of $30,500 for the HCE. This would put his total contributions at $45,500 (15,000 + 30,500), which would create a 415 excess of $1,500. The plan says to correct a 415 excess by refunding employee 401(k) contributions. So, the $1,500 gets refunded as a 415 excess, which is excluded from the ADP testing. The ADP test now passes and the total contribution to the employee ends up being $44,000 (after the $1,500 refund). We have in essence changed the excess from an ADP failure to a 415 failure.

Anybody agree, or disagree, with this thought pattern?

TIA

A plan was adopted 6/10/05 and its first plan year ended 5/31/06.

After looking at the regulations or at least the section related to the effective date it is not entirely clear if this plan could provide pre participation compensation in determining the average comp limit.

On the one hand it seems that plans in existance prior to 1/1/07 could use old regs until proposed regs are finalized.

On the other hand it seems possible that this option is not available for plans adopted after 5/31/05 and those plans have to apply the proposed regs immediately.

Any helpful knowledge out there?

Thanks.

PPA says that new, faster vesting schedule applies once a participant has an hour of service in any plan year after effective date for plan. Can someone confirm that this means that plan's old vesting schedule will still apply to any contributions made prior to effective date? Or am I reading this wrong?

Two questions re: 457(f) and 409A "overlapping" compliance:

1) if a 457(f) plan requires immediate distribution upon vesting (assume cliff vesting), or in any event no later than the 2 1/2 month period following the year in which vesting occurs, can the plan still call itself "exempt" from 409A compliance (due to the short-term deferral exception) if the 457(f) plan provides for installment distributions in the event of a participant's disability?

2) if the answer to question (1) is "yes," could the same Section 457(f) plan make a Participant's demotion to a job outside the top-hat group grounds grounds for immediate vesting/distribution? Clearly this is not a recognized distribution event under 409A but possibly would be a sufficient vesting event under Section 83?

I personally don't think that the short-term deferral exception is so broad as to completely exempt a Section 457(f) plan from 409A compliance. However I would be interested in hearing other opinions.

Hello out there. I am working on a plan that has 5 employees. The two HCE's defer and the three NHCE's do not. Are there any exceptions to passing the ADP test if only HCE's defer? I am hoping so.

Thank you!

Someone please tell me if I'm wrong, but I thought that an irrevocable annuity contract purchased in conjunction with a plan termination was not a plan asset.

Well, I posted a similar topic about two weeks ago, but must've phrased it oddly, or incorrectly, because I got no replies.

I'm really interested in the software you may be using to administer Section 125 cafeteria plans, and how you like the software. Any help will be greatly greatly appreciated! Happy New Years!

JD