Anyone know of an insurance company who will sell a fidelity bond covering a Puerto Rico plan?

My 401(k) plan is a large plan filer. All of my plan's assets are participant directed and held in 20 pooled seperate accounts at an insurance company in a group contract.

Do I have to check line 4i "YES" - I have assets held for investment purposes?

If I check yes and fill out the schedule - would I list each indivdual fund on the schedule or can I aggregate all the funds and list them as XYZ Insurance Company PSA?

Also, can you tell me is the insurance company a "Party-In-Interest"?

I think I need to complete the schedule but I am not certain what they mean by party-in-interest with respect to the schedule. The investment of the assets in the insurance company is not a prohibitted transaction, is it? Why would I indicate "party-in-interest?"

Just not sure what this is referring too or what is trying to accomplish by indicating or not indicating "Party-In-Interest."

Any help would be greatly appreciated.

Just discovered that a client has drawn some interest from the DOL regarding its 401(k) plan. The plan is of decent size (a few thousand participants) and permits company stock investments. The agent has asked for the usual laundry list of plan documentation, which we are in the process of collecting. However, we just got what I took to be an unusual request from the agent. As many public companies have been doing, the company recently assessed its stock option practices to verify that it didn't have any backdating problems -- didn't find any. Plan sponsor put out a press release to that effect. Now, the DOL is asking for back-up for the investigation.

My initial inclination is to tell the DOL to buzz off. They don't have jurisdiction over stock option plans, and it was not immediately apparent what relevance any of this could have for the 401(k) investigation. As I thought about it, the only basis I could come up with was as a sort of offshoot from the Enron situation. If the plan sponsor actually did have backdating problems and put out a bogus "all is well" press release that was subsequently shown to be inaccurate, presumably the jack-booted SEC and DOJ troops would soon be knocking down doors and cracking heads. This might have have a negative effect on the value of company shares, including those in the 401(k) plan. Seems like a bit of a reach to me, particularly since the DOL is not in a position to do anything about options backdating issues nor is it really (IMHO) qualified to assess whether the accounting and securities issues involved were correctly analyzed. Still, I can see the issue, and it seems to be in line with the positions they've taken in the "stock drop" cases.

I have since heard that the DOL has actually been doing some prospecting in this area for some of the companies that have reported backdating issues. Moving outside of that to check up on companies that have not had backdating issues suggests that the DOL may have too much time on its hands.

Has anyone had any experiences of this sort with the DOL lately? How have you handled -- cooperative or not? Usually, I'd be cooperative with the DOL, but I am not really inclined to faciliate a fishing expedition in this area.

After an absence of working with DB plans I'm now starting to learn again about these plans and need to know if I'm on the right track regarding interest rates for Lum Sum Distributions.

When calculating an LSD that is below the 415 maximum (prior to the PPA of 2006), the interest rate stated in the plan must be compared to the applicable GATT rate and the lower of the two rates would apply. So for example, if the plan rate is 5% and the the applicable GATT rate is 4.68%, then the payout is based on 4.68%.

When calculating the maximum 415 benefit (again prior to the PPA of 2006), a flat rate of 5.5% is used if the plan rate is below 5.5% for the 2004-5 years. This rate would not apply for benefits below the 415 maximum.

I know that the PPA of 2006 will change how these distributions are calculated and extend the PFEA rules with modifications, but I wish to know if I have missed anything with regard to the calculation (prior to the PPA of 2006). Thanks.

Hello! I am wondering about the effect of the changes in the Pension Protection Act of 2006. If a person is already deceased but the IRA has not yet been distributed to the non-spousal beneficiary, my reading of the law indicates that the beneficiary could elect to take the distribution under the old law prior to 12/31/2006, or could roll it over into his or her own IRA, etc. if the distribution is taken after 12/31/2006. Is that correct?

Also, I am not clear on how the new law impacts the required distributions - media reports state that under the new law the distributions will be based on the age of the deceased, rather than the age of the beneficiary (which I think is the case under the existing law).

Finally, I am told by the financial planner who set up the IRA originally that the distributions must be taken by the non-spousal beneficiaries within 5 years. Is that true, and does it change under the new law? Thanks for any and all advice! JWIRA

Company owner has a DB plan, is a deferred retiree and is taking annual required minimum distributions. RMDs were calculated by the previous TPA using Treas. Reg. 1.72 tables. The amounts paid were usually significantly less than what his annual benefit was. My first question is, aren't those tables only for calculating RMDs for DC plans? I thought that just paying out the annual plan benefit in a situation like this would suffice as the RMD and no actuarial adjustments are needed. If this is correct, would his current benefit have to be actuarially increased to reflect the under-payment of his previous RMDs? All help is appreciated.

We have several clients with DC plans that have terminated participants (with account balances less than $5k but more than $1k), which they would like to force these individuals out of their plans. We were thinking about creating a Group IRA Trust account to handle these balances and I was wondering if any other RIA/TPA firms have created a similar account for automatic rollovers? If so, what concerns or challenges have you faced?

This is a separate question from the qualified automatic contribution arrangement under the PPA.

Currently many plans that utilize the automatic enrollment feature also use an automatic contribution escalation feature. The automatic enrollment feature is a plan provision. What about the automatic contribution escalation feature? Prototypes have the automatic enrollment provision but haven't seen any with the automatic contribution escalation feature.

Do you think the ability to automatically increase deferrals must also be a plan provision? Or do you think if a Prototype (which gives the participant the ability to change deferral amounts) simply provided for language to change deferral amounts such as "at such times as established by the Plan Administrator in a uniform and nondiscriminatory manner" AND an annual Notice (included in the AE notice) is provided to employees describing their ability not to have the contribution escalation applied to them would be acceptable? If not, how are Prototypes currently dealing with the automatic contribution escalation feature?

One, two, three... check one, two

Cash balance plans can now have interest credits no more than a market rate of interest. I was surely hoping it would be the true return of the plan but I haven't been able to get a handle on what is meant by this because of this passage:

(III) MARKET RATE OF RETURN.—The Secretary of the Treasury may provide by regulation for rules governing the calculation of a market rate of return for purposes of subclause (I) and for permissible methods of crediting interest to the account (including fixed or variable interest rates) resulting in effective rates of return meeting the requirements of subclause (I).

Anyone heard what this will mean?

Wholy owned subsidiary of corporation has a 401k plan that is identical in all features with the exception of investment options to the parent company. Subsidiary wishes to move from parent company recordkeeper/consultant, maintain a mirrored plan and use their own recordkeeper consultant. Parent company's consultant wants to charge a large fee to do combined testing if data is not on their system. If the plan is identical what combined testing is required? ( both are safe harbor match plans). Any input appreciated!

It appears with the recent Pension Reform Act that a non-spouse beneficary of an inheirited qualified plan account can now roll the distribution into an IRA rather than taking RMD. Question: if Plan participant rolled entire account into an IRA and added no additional funds....dies, leaving account to Spouse who transfers account to her name....when Spouse dies, can the kids roll their distribution directly to an IRA rather than taking an RMD? Thanks in advance for any replies or thoughts on this.

I know this has been asked before, but I can't find the links and there is conflicting information out there (no surprise).

We have a 401(k)/PSP, with an integrated PSP contribution and safe harbor match (100% of the first 4% of comp deferred). Last day/1000 hours required for PSP.

A participant is employed on the last day, but no 1000 hours, so he is entitled to the top heavy minimum instead of the full PSP allocation. He is deferring and receives the match.

QUESTION: Does the safe harbor matching contribuiton made on his behalf count toward the satisfaction of the top-heavy minimum contribution he is entitlted to? I know the answer is yes for non-safe harbor matching.

Most of what I find references the EGTRRA provision that matching contributions that are used to satisfy top heavy are still treated as matching contributions. I just need confirmation that safe harbor matching contributions that are used to satisfy top heavy are still treated as safe harbor matching contributions.

Thanks.

P.S. This is one of those times when you know that you know the answer, but you can't put a finger on why.

I recently joined a company that participates in a multiemployer plan covering its union employee. The employer has been paying its contributions and was recently told by a representative from the plan that the plan was frozen and that they should continue with its contributions while it is determined whether contributions are increased or a "mass withdrawa"l is determined. I asked for Plan documents and other subscribed agreements but I am told that they don't have any. In addition to consulting a qualified attorney, what documents can we request from the Plan that supports the amount of contribution . Shouldn't the plan issue an ERISA 204(h) notice on the freezing of the plan. Any guidance to determine what documents the company can request from the Plan is appreciated.

I noticed that my last few posts, including some tests ones that I deleted, are automatically closed, i.e. they do not allow responses by other members.

Can anyone say why? Did I click some button that I should not have?

I noticed it also occurred with posts for a few other members.

Of course, this may mean that you cannot respond to this message, and may need to start a new thread with your response

Thanks

Denise

ok, 24 more. I wouldn't want WDIK and company to be bored on the weekend.

it is either this or read the 900 pages of new pension law.

hmmmm. tough choice.

An architectural firm with 5 employees has sponsored a DB plan for 5 years. The 100% owner (an Architect) bought a non professional service employer business (self storage business) with 10 employees. Since the owner has a controlling interest in both businesses, employees of both entities are covered by the plan.

Would they still qualify for exemption from coverage? Perhaps we should get a determination from PBGC. I just wonder if "the principal function" of the business is performance of professional services at this point. The storage business now brings in more income than the architectural business.

Question: I am curious as to what other employers do with regard to crediting service for eligibility for rehires when they have incomplete prior employment records?

In a situation where there are a large number of hourly, high turnover employees who were previously excluded from the plan and the employer wants to include these previously excluded employees with a year of service requirement for eligibility, how does an employer comply with the requirement that all rehires receive credit for previous service (when they were properly excluded from participating in the plan) if the employer does not have records of the prior service.

Thanks in advance. Any thoughts on this are greatly appreciated.

We have several clients with DC plans that have terminated participants (with account balances less than $5k but more than $1k), which they would like to force these individuals out of their plans. We were thinking about creating a Group IRA Trust account to handle these balances and I was wondering if any other RIA/TPA firms have created a similar account for automatic rollovers? If so, what concerns or challenges have you faced?