Just looking for clarification on who actually is supposed to be given a Relative Value Statement for their benefits from a defined benefit plan. I was under the impression that any time there is more than one option available for payment of benefits, then a relative value statement was to be prepared. I understand that it is part of the QJSA requirements. Does a single participant who can take either a single life annuity or a lump sum have to be given the statement of relative value as well?

Also does an active married participant who is starting to receive an MRD and is being given a single life benefit have to be given a relative value statement?

Thank you.

If a plan terminates and makes two or three distributions that will span over two taxable years (for example a large distribution in December and smaller distributions in January) is there any limitation regarding rolling the distributions over? (Prior to 1983 the rule was that you had to make the distributions within one taxable year for them to qualify for direct rollovers. I believe this has changed and that the distributions would be deemed to be partial distributions and therefore could all be rolled over, but I cannot find any authority directly stating that.)

Is anyone Amending their plans right now? If one has a Defined Contribution Plan and the plan is not electing to have Automatic enrollment is there any urgency to amend? What is the time line you are all on for the PPA?

thanks

Does anyone know if HSA catch-up contributions are included in cafeteria plan nondiscrimination testing, or are excluded like 401(k) catch-up contributions?

We've got a plan that had the annuity and QJSA accidentally removed from the document during the GUST restatement.

Unfortunately this was found because the plan is going to be audited. Part of the audit request is that the spousal consent forms to waive the QJSA form is provided. I don't believe that form was provided to the particpants (Plan has been in existance prior to '89 and plan sponsor has never had an annuity payment) after all it was removed....

What should we do prior to audit to show we are trying to be compliant here.

We have a terminated employee who insisted on having his account balance transferred from our 401(k) plan directly to his IRA via a trust to trust transfer. Our current recordkeeper will not do trust to trust transfers; they issue a check to the IRA, send it to the participant, and then it's the participant's responsiblity to get it to the IRA or new plan. From what I understand, the majority of recordkeepers do not do trust to trust transfers. Now this terminated employee is threatening to sue us and our recordkeeper for lost interest.

I'm curious to see if my understanding that the majority of recordkeepers do not do trust to trust transfers is correct. Thanks.

This may have already been discussed, and I know there has been no guidance yet. But does anyone know how to handle participant statements where the participant is already receiving a monthly statement from their investment company? Would the investment company be responsible for adding the correct verbage, etc? I guess the TPA would have some responsibility/involvement since the investment company may not have vesting, etc. Just kicking it around. Thanks.

Assuming a SINGLE (for ERISA purposes) group heath plan subject to COBRA provides identical benefits to all participants including active employees and retired employees not eligible for Medicare, is it permissible under IRC Section 4980B(f) and Revenue Ruling 96-8 to separate the two classes of participants for purposes of determining COBRA rates (hence arriving at COBRA rates for retired employees materially greater than non-retired employees on an actuarially certified basis)?

Please accompany any responses with citations.

Happy Holidays, Ira

Does anyone have a listing of the Amendments since the GUST restatements for 401(K) Profit Sharing Plans and the deadlines for each?

Thanks!

Is there any regulatory requirement that a catch up eligible participant needs to make a separate election to have salary deferrals count as catch up? We currently have employees complete 1 salary reduction agreement with 1 deferral election. This election is then in place for the plan year and will continue until they meet the 402(g) limit and then our payroll system will continue deductions until they hit the $5,000 catch up limit (if over 50). Someone is telling me that we need to have catch up eligiblel ee's complete another reduction agreement and make a separate election for catch up. It's my understanding that salary deferrals are salary deferrals whether they are normal deferrals or catch up deferrals. Our plan matches all deferrals, normal and catch up.

I have read many of the post on this message board that talk about real estate in an IRA or qualified plan. I agree that in most cases, it's not a good idea. The specific question that I have is can a participant directly roll real estate held in their 401(k) plan to an IRA?

Assume for purposes of this question that the document allows for in-kind rollovers and that the participant has an IRA custodian that would accept/hold real estate in the IRA.

I know that former key employees are removed from the Top heavy test entirely.

However, do they get added back in after 5 years of not being a key ee anymore?

I have a plan that has a SHMAC. It also has a pro rata profit sharing formula with 1000 hr/last day rule. Is there any problem with respect to the safe harbor rules for amending the profit sharing formula before the end of the year? I can't find anything that says I can't do it but for some reason there is something in my head that tells me that this is not allowed due to the safe harbor rules.

hi everyone. just as a way of background, i work for a TPA that specializes in 457(e)(11) plans for volunteer firefighters. i have a math degree and have been mainly involved in the record keeping aspects but am getting more and more involved in the trust arrangements and the ideas of "trustee" and "custodian".

i don't have any formal schooling on these topics so i was wondering if i could be pointed to a site or information on what the technical/legal difference is between a custodian and trustee, as the terms seem to be used interchangeably but i'm sure they shouldn’t be.

thanks--hope i'm posting this in the right forum...........

Calendar year safe harbor 401k (3% qnec) to be terminated as of 12/31/06. Plan is a volume submitter doc relying on an opinion letter of the vol. sub. prac. Client plans to submit 5310 to IRS. As part of termination amendment, document to be amended at contributions section to 1) discontinue elective deferrals for all plan years beginning after 12/31/06 and 2) state that no safe harbor contirbution will be made by employer for plan years beginning after 12/31/06. Without such amendment the document clearly states that "For all plan years after ...2001, the Employer shall contribute a safe harbor contribution equal to 3%......." and would appear to be a continuing obligation under the plan doc. Since client is submitting 5310 the IRS will review the language of the amendment, there would be no issue here re document compliance. BUT if client were not going the 5310 route, then amendment of the plan doc. language would negate reliance on the opinion letter issued to the volume submitter practitioner. Thus, would it not almost always be a given that a 5310 would be submitted to get the IRS' blessing on the document's compliance?

(1) Grandfathered nonqualified plan provides for distributions upon a change of control. A change of control will likely occur next year, but participants do not want distribution.

Proposed regs indicate that reduction of an existing benefit, right or feature is not a material modification. The example given in the proposed regs is removal of a haircut provision. Also, the conference committee report provides: "As another example, amending a plan to remove a distribution provision (e.g., to remove a “haircut”) would not be considered a material modification."

Any thoughts on whether it would be a material modification to provide that no distribution due to that specific change of control? any change of control?

(2) For non-grandfathered plan, same issue. Any thoughts on whether participant could avoid distribution on the basis that transition relief permits a new distribution election for amounts payable in the next year?

It is clear that a retirement plan or combined plans cannot discriminate in favor of HCEs.

It is also clear that there is an objective numerical test to demonstrate that the plan accruals for a plan year are non discriminatory.

So let's say a company wants to implement a profit sharing plan or the company could perhaps implement a cash balance plan instead. Say the company wants to contribute 20% for some HCE owners and 5% for some other HCE owners. And consequently, the company might then need to provide 20% to a few NHCEs and perhaps 5% to the remainng NHCEs in order to pass the allocation rate ratio test (whether the plan uses the ABT or not).

It would thus seem that the plan would then have to provide some criteria or classification in order to provide one rate of pay to some employees and another rate of pay to others.

This seems a little bit subjective. With that said, I am curious to canvass what types of classifications practitioners use when designing such plans for small employers (i.e. less than 20 non excludable employees)?

Thanks.

Is there any kind of defined contribution plan in which a participant's annual addition (IRC 415) can be more than $46,000 for plan year 09/30/06 ?

I thought the max annual addition per individual participant (per plan) is $42000 + $4000 catchup = $46,000.

I recently had a guy who is both a notary pubic and termite inspector tell me that his employer's 401(k) plan allowed him to contribute slightly over $49,000 for plan year ended 09/30/06. Now I'm confused, I've always trusted his comments in the past. But now I have to believe that the TPA who calculated the contribution is off his rocker.

All I can do is to show him IRC 415 , as support for my belief that there is no way that his annual addition can be more than $46,000 (and that's only if he is over age 50).

Where do I find the newest list of required modifications for cross tested plan.

I know that this is a very basic question, but can anyone explain what coverage groups are typical for an insured group health plan?

We have always used a) EE only, b) EE and 1 dep., and c) EE and 2+ deps, but I understand that other employers have different categories that may work better. Does the insurance company dictate which one is used or it is all negotiable?

Any help would be appreciated. Thanks.