----Client had payroll withholding for employee 401(k-1) contributions and employee loan payments on 6/30/2005. Client finally remitted the contribtution and employee loan payments one year later 6/2/2006.

How do I calculate the lost earnings to compute the 15% excise tax? Also client has not yet put the "lost earnings" amount into the plan.

Plan year and sponsor year is 12/31. Will I need to prepare a 5330 for 2005 and 2006?

Thanks, Shelley

Under our current plan, there is a (1) voluntary employee deferral and (2) 3% Safe Harbor flat employer contribution for all. All funds go direct into a MM account and then the employee can transfer to any Vanguard fund.

In reading about the changes, I believe I am correct in stating that going to Automatic Enrollment on the deferral side is optional. But then there is, to me, confusing mention of Safe Harbor and default investment. Does that refer to pre-exisiting Safe Harbor or is it just in reference to the Automatic Enrollment change?

If we do not add Automatic Enrollment, does our Safe Harbor remain the same? Can we continue depositing funds into the MM account? This could become a major issue here if we are required to change our exisiting arrangement.

Thank you,

gfeligonde

Has anyone heard when the IRS intends to finalize the 402A regulations? If so, what is the estimated time frame?

Is anyone aware of any proposed changes to plans that contain a 7 year vesting cliff?

We have been recently reviewing a non-governmental, non-for-profit (501©(3)) organization’s retirement plan. The organization has approximately 80 employees and they maintain two 403(b) plans (not sure of the rational for maintaining two plans), one for employee deferrals and one for the employer’s defined contribution of 3.3% for all employees.

A few issues have surfaced and I am not sure if they are applicable. First, it is my understanding that once an employer is materially involved in the plan, such as making contributions, then the plan is subject to ERISA reporting. In this case the organization did file a Form 5500 in 2001 and in 2005, however no Form 5500 has been filed for 2002, 2003, and 2004. Query: Are they subject to the late filing rules as outlined in ERISA and would they be candidates for the VCRS?

Second, they have not been testing their plan for discrimination or top heavy. How would this be corrected dating back to 2001? Thank you.

An employer current has a calendar year safe harbor 401k plan. They want to convert to a Simple 401k effective 1/1/07. The plan would have to be amended by Dec 1 to revoke 2007 safe harbor - by what date must the plan be amended to adopt Simple 401k for 1/1/2007?

Are there amjor institutions Merrill? Fidelity? That handles transfers from an 401(k) format to a 457(b) format?

Obviously, participant contributions/loan repayments that are not timely remitted to a plan's trust (i.e., as soon as administratively practicable) are a prohibited transaction and, if the time period for remitting such contributions to the trust is specified in the plan document, an operational failure to follow the plan's terms.

What if a plan specifies the time period (e.g., monthly) for remitting matching contributions and that period is not met? It's an operational failure to follow the plan's terms, but is it also a prohibited transaction (i.e., impermissible extension of credit)?

Are most out there fixing the prohibited transaction issue through VFCP, Form 5330 or both?

Rev. Proc 2006-27 adds new loan failure correction methods, but indicates that the corrections only apply if the failures are submitted under VCP. Since EPCRS usually provides that self-correction is available if the correction methodology specified in the rev. proc. is followed, this seems a bit out of step. Has anyone heard anything different on this issue or received any indication that the IRS may reconsider? We have a loan default in a plan with a large number of participants...seems a shame to have to correct under VCP and pay a huge fee just to correct one loan failure. Hmmm...

DB plan will be terminating 12/31/06. Client will be filing for a favorable determination letter as part of the termination process.

1. Would former participants otherwise eligible for a distribution from the plan (i.e., attainment of early or normal retirement age) during the FDL process be eligible to receive a distribution or must distribution wait until the FDL is received? If former participants must usually wait, is there an operational failure to follow the plan's terms?

2. Would participants active as of the termination date have to wait until the FDL is received?

3. If either or both categories must wait until the FDL is received, how should this be handled if part of the plan includes a cash balance element and the FDL could take much longer than normal?

Thank you in advance.

The new timing rules under the proposed 415 regulations provide that certain amounts payable within 2-1/2 months after severance will not fail to be 415©(3) compensation. Employers may presently rely on this timing rule. If an employer wanted to rely on this rule now would it have to adopt an amendment or could the employer merely adopt this rule in operation?

an ER has a fringe benefit plan that provides for an $8K relocation reimbursement to be used within 12 months of the date of transfer.

the client wants to hire an EE who potentially would not use the relocation reimbursement for 5 years (spousal job and house issues). so, ER proposes to make an exception for this potential EE whereby he can get $7K (notice, it's $7K; not $8K as specified under the SPD) to be used at his discretion over a 5-year period.

1) can a side letter accomplish the ER's goal of, what is in effect a modification of the fringe benefit plan, changing the relocation policy just for this one EE;

2) what about the constructive receipt of the $7K?

it would be much simpler if the EE knew he would be using the $7K relocation reimbursement provision w/in this or next year, but to have a 5-year window in which to exercise the right?

thanks for any help you can provide.

Do i need to report all the financial custodians and institutions if the plan has more than 10?I noticed that there are 10 fields for it. Do we have rulings if the plan ahs more than 10 custodians?

As an attorney, I assist a plan administrator in determing whether DROs are qualified.

I'm about to 'reject' a proposed Order that purports to amend a QDRO accepted in 2000.

In 2000, at the time of divorce, the ex-wife/Alternate Payee expressly waived (in the QDRO) any interest in the pension, but did take in interest in the 401(k) Plan.

Now, 6 years, later, participant's Pension is in pay status already, and ex-wife has submitted a proposed amending order seeking a 100% INTEREST IN THE VALUE OF HIS PENSION AS OF THE DATE OF HIS RETIREMENT.

Since he's already in pay status, I'm planning to reject on the basis of the Order requesting benefits not available under the plan. (Some of his pension has already been paid to him, so she can't get "100% at this point).

This feels funny in other ways, though. He's now in a nursing home. His two kids' names are on the order as his "agent" (but her attorney drafted the amending order.).

Plan is inclined not to accept any amending order, even if they refine it to a permissible benefit.

This is under Pennsylvania state law.

Any ideas on the kind of documentation, etc. Plan Administrator could say it would require before considering approving such a request?

Thanks for any insights.

In the meantime, sorry, Alternate Payee. This one's a no go.

In reviewing the PPA information on adding an automatic enrollment feature to a 401(k) Plan, it states that contributions must be placed in a multi-asset class default investment if the participants do not direct the investment of their elections.

I deal with a handful of plans where a new plan participant receives a brokerage acccount with a designated brokerage company, and then he or she is responsible for calling the "plan broker" to place investments within the account. If I wanted to add automatic enrollment to a plan such as this, what is my default "multi-asset" class investment?

Thanks for any replies.

Safe harbor plan uses a matching formula which satisfies both ADP and ACP safe harbor. The plan also includes an additional Match which is "not" intended to satisfy the ACP safe harbor. This additional match has a last day requirement attached to it. Is this permissible under the '04 k/m regs. and just test this under ACP?

I know the new regs. clarified the fact that an additional match that is intended to satisfy ACP safe harbor can not have an hours or last day requirement. But what about the additional match that is not intended to satisfy ACP safe harbor? Seems odd that a nonelective safe harbor plan can have a match with the restrictions and test under ACP but this would be prohibited.

a client and his brother own several companies with one of the brother's daughters. the brothers want to split up the companies so, at the end of the day, the two brothers own four of the companies and the daughter owns three of the companies on her own. currently, all 7 companies have a single 401(k) plan. as part of the exchange, all of the contracts have to be bifurcated, including the 401(k) plan.

i am thinking that the best option is a termination of the 401(k) plan. i have looked at the controlled employer regs and affiliated service group regs, which i don't think apply. the daughter found an investor who is going to run the companies with her, so that she and the investor will be 50-50 owners. the brothers are going to own their own companies 50-50, so none of the 80%/50% controlled employer requirements will be satisfied and the companies are not performing services for each other, so the affiliated service group regs are not implicated.

does anyone have any thoughts? am i overlooking anything?

thanks to anyone who can help.

under PPA, does the normal form for a single person have to be straight life or can it still be the actuaries decision (like life and 5)?

Prepare to waste your time...

http://us.mms.com/us/dark/index.jsp

ZERO - number of runs scored by Yankees in the 3rd game of the playoffs

ZERO - number of runners advance by the Yanks in the same game

ZERO - number of World Series won by the Yankees in the 21st century.

ZERO - oh wait - A-Fraud did get a hit afterall.

gotta love those results.

especially for a payroll over 200 Million.