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!

For the new PPA 06 notice requirement for employer stock diversification, the notice has to be given when the participant is first eligible to diversify. Does this apply separately to eligibility with respect to employee and employer contributions? What's the general opinion. Have heard different interpretations.

We have a claim for the wife of an attorney in one of our law firm clients, who have submitted a claim for breast implants. She submitted a doctor's letter explaining that he was treating her for assymetry. This looks cosmetic to me, but I wanted other opinions because I know that this action will be harshly questioned by the client. Thank you for your help.

S-corp ESOP – effective 2001, terminated 12/31/2004. No administration was ever done. My recommendation is to bring it in under VCR. My concern is - what if they classify it as an abusive transaction. The attorney feels comfortable that it is not, however, a review of a different plan by this attorney, felt that it was.

Another question – since no payments were ever made on the note, should they rush to setup an account to put all the money in? or it doesn’t make a difference?

This 401(k) with Safe Harbor feature has decided to make a discretionary PS contribution - the first one since Plan inception ten years ago. The owner prefers not to receive any of it - can he simply waive his right? If so, would the waiver be permanent or can it be a year by year thing? Thanks in advance...

Can anyone list or point me in the direction of what should be included in an annual retirement plan review?

I have a client (I took over in 2004) that implemented a 412i plan back in say 2000.

The plan they implemented was a 100% life insurance plan that clearly violated the incidiental death benefit requirements and thus many other qualification issues. The client was aware of this, but prospectively chose to handle new participants more in line with the rules, such as limiting the insurance premium to 50% of the employer contribution, but made no change to its original participant.

The IRS will not allow the plan sponsor to enter its national global settlement program for 412i plans and the plan will thus likely be subject to a full local audit and be disqualified.

Does anyone have suggestions as to how this situation can be remedied in some fashion? That is, pursuing a voluntary compliance intiative of some sort or somehow minimize the damages?

I can come up with a suggested solution that essentially converts the plan to a standard 412 insurance funded plan where a side fund is established and ultimately consists of at least half the costs, and perhaps the insurance is converted to a paid up policy thus lowering the death benefit and not requring future insurance premiums.

Of course my main question is what can be done with the IRS to get on track, before a specific approach is even relevant?

Thanks.

If an organization has both a 403(b) plan (to which contributions are made by employees only) and a Defined Contribution (Money Purchase) plan (to which only the employer contributes), is an employee subject to a specified overall aggregate contribution limit for both plans combined? Or may the employee contribute up to the maximum allowed contribution for each plan considered separately?

Thank you.

I have a plan that excludes bonuses from the compensation definition, and for this plan year fails the compensation ratio test. The plan is meeting the ADP safe harbor with a 3% nonelective contribution. There is also an additional discretionary match. I cannot find anything definitive to tell me what we need to do with this situation, although my assumption is we need to do the 3% nonelective on the basis of total compensation instead of compensation less bonuses. Correct? Thank you.

I heard today from an annuity carrier that it could not comply with the provisions of our client's retirement plan, which provide for automatic rollover distributions on the plan's termination (for participants who fail to respond to election forms). The stated reason was that New York law prohibits the establishment of an IRA without the account holder's signature. That would seem to interfere with the automatic rollover rules under 401(a)(31). Has anybody heard of this? Client is going out of business and needs to roll these accounts out of the terminating plan. Thanks.

While starting conversion of a takeover plan have discovered prior loans did not follow loan provisions of the document, ie multiple loans were made under the document specified minimum of $1,000. In addition all loans were made at a 6% interest rate.

This is a large plan and will be audited. The last seminar I attended regarding EPCRS and VCP seemed to suggest there are no correction methods for loans.

Any cites or suggestions would be appreciated.

I know that compensation of participants that are eligible to defer, but elect not to, is included for determining the maximum deductible contribution to a 401(k) plan, but do not have a referral cite. Does anyone have a cite that refers to this?? Thanks.