Hi all - I have found an investment plan that appeals to me, but I want to make sure I am doing this right, any help is appreciated.

I have a Roth IRA through Vanguard that is 100% invested in the Vanguard International Growth Fund. I was wondering if there are any consequences to changing the fund to a GNMA Bond Fund or other similar Vanguard funds during periods I wish to have more security with my money.

My chief concerns are: are there any tax consequences to changing the fund, and do I have to report these changes as sales to the IRS, even though my account still would always remain a Roth IRA with the Vanguard company, regardless of the fund it's invested in.

PS - I understand Vanguard doesn't like these kinds of changes to occur too frequently, and there are penalties associated with the VIGF being redeemed too early, but I'm cognizant of these.

Thanks!

I'm afraid this is a stupid question, but I will ask, anyway.

When calculating a required minimum distribution, is the cash value of a life insurance policy which is part of the participant's account added to the investment balance for the calculation?

Thank you.

In a DC plan, the participant was divorced in 1991. He has no contact with his ex-wife. The ex-wife appeared in the divorce action pro se. Neither the judgment of divorce nor the Findings of Fact and Conclusions of law make any reference whatsoever to the participant's pension nor do they make an reference to any other property issues.

The participant wishes to receive his pension in a lump sum pursuant to the plan's terms. The member states in an affidavit that he cannot find his wife and does not know where she is and has not seen or spoken to her since November 1991. He further states that the last time he saw her he asked how she was doing and where she was living. She gave him her address and said she was thinking of going to Puerto Rico becuase her health wasn't good and because she had family there.

He has since gone to the last address where she lived and a few tenants said that the last time they saw her she said was moving to Puerto Rico. He has since provided the fund with an affidavit from a newspaper in Puerto Rico stating that he put a an ad in the newspaper which ran for two days asking his ex wife to contact him and stating that it was urgent. There has been no response to this ad.

Can the fund pay the participant his lump sum or does he need to do more to find his ex wife?

Is the failure of a plan administrator to provide a notice of early termination of COBRA coverage subject to penalties under ERISA 502©?

New start-up plan. Employer employs a number of seasonal employees. Generally hires them in March and then lets them go in October. They complete 1000 hours of service during that period. The employer then re-hires most of those same individuals back the next March.

Those employees hired back will have completed a year of service so a year of service for eligibility won't keep them out.

Have thought about reducing the eligibility service requirement from 1 year to 6 months and just one entry date (January 1) which would keep employees out since they wouldn't be employed on the entry date (1-1) BUT for those have completed a year of service (which is most) and are re-hired the next March, they will become eligible as of their date of re-employment regardless of the plan's entry date.

Plan won't pass coverage using ratio percentage test but haven't reviewed for ABT.

Any suggestions on how you may have dealt with these seasonal situations? Thanks

In a DC plan, the participant was divorced in 1991. He has no contact with his ex-wife. The ex-wife appeared in the divorce action pro se. Neither the judgment of divorce nor the Findings of Fact and Conclusions of law make any reference whatsoever to the participant's pension nor do they make an reference to any other property issues.

The participant wishes to receive his pension in a lump sum pursuant to the plan's terms. The member states in an affidavit that he cannot find his wife and does not know where she is and has not seen or spoken to her since November 1991. He further states that the last time he saw her he asked how she was doing and where she was living. She gave him her address and said she was thinking of going to Puerto Rico becuase her health wasn't good and because she had family there.

He has since gone to the last address where she lived and a few tenants said that the last time they saw her she said was moving to Puerto Rico. He has since provided the fund with an affidavit from a newspaper in Puerto Rico stating that he put a an ad in the newspaper which ran for two days asking his ex wife to contact him and stating that it was urgent. There has been no response to this ad.

Can the fund pay the participant his lump sum or does he need to do more to find his ex wife?

Any help would be appreciated.

Thanks.

JOEL L. FRANK

Retirement Analyst

PO Box 148

Marlboro, New Jersey 07746-0148

(732) 536-9472

New Jersey’s public employEEs are under the mistaken belief that their mandatory 5 percent contribution to their Annuity Savings accounts provides only a fraction of their lifetime pensions. On the contrary, a simple analysis reveals that the employEE may very well fund much more of his or her Defined Benefit pension than led to believe.

EXAMPLE 1: Assumptions: 62 year old member of Public Employees Retirement System (PERS); 35 years of service; starting salary of $8,000 with 6 percent annual increases; final average salary (FAS) of $54,720. The member is entitled to a Maximum pension benefit of $34,822 calculated as follows: 35/55 X $54,720. The Division of Pensions and Benefits establishes a Pension Reserve of $320,361 (9.2 X $34,822) to guarantee this member, beginning at age 62, $34,822 annually for life.

The employEE’s Annuity Savings account balance goes towards the funding of the actuarially required $320,361 Pension Reserve with the State making up the difference. The employEE, however, doesn’t know the balance of his/her Annuity Savings account because the account is never credited with the investment return generated by the multi-billion dollar investment portfolio that his or her Annuity Savings account is co-mingled with. If we assume an average annual rate of return of 9 percent over the past 35 years, at age 62, the Annuity Savings account balance is $177,841 which represents 55.5 percent of the required Pension Reserve of $320,361. The State guarantees the balance of $142,250.

Recognizing this deception public employEEs should, at the very least, have the option of rolling over their Pension Reserves to an Individual Retirement Account (IRA). It is a moral outrage to compel an employEE to accept lifetime annuitization ($34,822 annually for life) of a Pension Reserve predominantly funded by the employEE.

OF NOTE: In the event an in-service member severs employment before attaining 3 years of credited service a refund of his or her Annuity Savings contributions is made with no interest. Should an in-service member sever employment after attaining 3 years of credited service he or she is entitled to a return of his or her Annuity Savings contributions with 2 percent interest. Should an in-service member die after having attained at least 3 years of credited service the employee’s beneficiary(ies) is entitled to a return of the employee’s Annuity Savings contributions with 4 percent interest.

EXAMPLE 2: Assumptions are the same as Example 1 except the 62 year-old employee is a

member of the Alternate Benefit Program (APB). The APB is the primary (401(k) type) Defined Contribution plan for the staff at the State institutions of higher education. The APB requires the employER to contribute 8 percent of salary with the employEE contributing 5 percent. The employEE’s individually owned Annuity Savings account balance, at age 62, is $462,469 which is 44 percent more than the Pension Reserve requirement in example 1 ($462,469 divided by $320,361).

Bob

Sue

Is this a controlled group?

It seems that if Sue is in the tests then it is a controlled group, but if Sue is not in the tests because she owns 0% of A, it seems that it does not meet the effective control test.

Thanks for any input.

An employer maintains two plans; one for union employees and one for non-union employees. I can't find anything regarding coverage for maintaining two separate plans - only information if one plan covers both employee classes. I'm assumming that each plan would be tested separately for all annual testing - is that correct?

How come nobody is talking about whipsaw being eliminated with the enactment of PPA'06 (immediately). I have not had to do any cash balance distributions recently, but someone has......what is being done? What if, for arguement sake, a plan had a 3% interest crediting rate, would you just pay out that cash balance amount, forget about 417(e)? Are distributions being held up until guidance is issued and we are told what "reasonable rate of interest" means? How can you do that? Help!

If the current value of plan assets is less than 70% of the current liability under the plan, the percentage must be disclosed in the SAR [ERISA Sec. 104(b)(3)]. I could use some technical guidance:

1. Is the percentage reported as "Additional Information", or is it disclosed in another section of the SAR?

2. The DOL regulations don't seem to prescribe any language for this disclosure. Can anyone suggest how the disclosure might be worded?

I have a one-participant plan that had $90k at the end of '05. However, the owner made a $42k contribution in March for the '05 plan year.

Does that put me over the threshold to file an EZ?

The instructions aren't very clear on that.

Someone was unaware that DOL will no longer accept a Schedule SSA attachment. That person created an Excel spreadsheet to report several hundred Schedule SSA individuals.

For obvious reasons, I don't want to enter the data manually. I believe it's possible to import data into Relius from an Excel spreadsheet. If I'm correct, does anyone know how to do the import? I can't find any instructions in the Relius user guide.

Small insurance broker has a profit sharing plan and is the broker of record on the self-directed plan assets (their accounts as well as the participants) - therefore, receiving the commisssions.

Is this a prohibited transaction or is there an exemption?

Scenario: Calendar year Non-Safe harbor 401(k). All HCE deferred. Prorata employer allocation method. All contributions are made for the same allocation/plan year.

HCE1

HCE2

HCE3

ADP testing is performed in January. Test is failed and a refund to HCE3 is used to correct. HCE3 is not eligible for catch up contributions. Money is distributed from the plan.

In September employer makes a profit sharing contribution. Allocation to HCE1 and HCE2 exceeds 415 limitations. A portion of their deferrals equal to the 415 excess contributions are then recharacterized as catch up contributions to solve the 415 violation. Because the deferrals to HCE1 & HCE2 are now lower, the plan no longer fails ADP testing and no correction is called for.

The plan has to test early to avoid penalties on the excess deferrals but once all contributions are made there turns out to be no excess deferrals so the correction to HCE3 was not necessary. So what do you do?

I have a question on filing for fringe benefit plans, and am still confused by the filing requirements. Client has plan #1 - self insured medical with stop loss coverage, covers over 100 participants. Plan # 2 - separate cafeteria plan collecting pre-tax contributions for medical "premiums" and unreimbursed medical expenses. Contributions are sent to general assets of the employer and again has over 100 participants.

Rules seem to indicate that the medical reimbursement feature of the 125 plan makes it a welfare benefit plan that must file a 5500 if over 100 participants. Is this correct? Also appears that if it is, we would only be filing 5500 and Sch. C, as no insurance and no audit/Sch. H required.

The prior posting seemed to indicate that the 125 filing could be combined with the other plan, even though they were separate plans. Did I read that correctly? Thanks for any assistance.

Hi-

Is there ERISA guidance for when or how often a Plan Sponsor request RFP's with respect to due diligence?

Thanks,

G

I get to be one of the first to draft church plan language making the 415(b)(1)(B) compensation limitation inapplicable except with respect to "highly compensated benefits." My joy is compromised by the lack of clarity in the second and third sentences of the new 415(b)(11) language. The second sentence restricts "highly compensated benefits" to accruals during or after the first year of HCE status. But the third sentence states that all benefits are taken into account in applying the limit to the highly compensated benefits.

As I get over thinking that it's nonsense, this language seems necessary to avoid giving the HCE the whole (b)(1)(B) limit just for benefits accrued after attaining HCE status--the intention being to stack the highly compensated benefits on top of previous accruals to apply the (b)(1)(B) limit, but not to cut anything but the highly compensated benefits.

For example:

Assume that X's high 3 years compensation at retirement is $80,000. At the beginning of year 1, when his accrued benefit is $70,000, he becomes bishop and thus a 5% owner of the corporation sole that sponsors the plan. By the end of year 5, when he retires, his accrued benefit is $100,000. Under 415(b)(11), his benefit is limited to his high 3 years compensation of $80,000.

However, if the facts were the same except that H had accrued a benefit of $90,000 at the beginning of year 1, then (b)(11) would only reduce his $100,000 accrued benefit to $90,000 by eliminating the $10,000 in highly compensated benefits.

Are there other interpretations for these two sentences? Or other thoughjts or comments?

Thanks!

Company offers a straight profit sharing plan. Assets are managed and are not employee directed. Assets are split into 5 different brokerage accounts. Each account has a different investment philosophy so that when combined offers a diverse investment portfolio.

Each time there is a sell of an asset the brokerage houses turn around and buy shares in a Liquid Asset Fund (MM fund) to house the money instead of leaving it in cash. Then when they buy a new asset they sell the Liquid Asset Fund to generate the cash needed to pay for the new asset. This is all automated....

Auditor is claiming that these buys and sells of the Liquid Asset Fund constitutes a series of transactions and are reportable.

This can't be right, is it??? Trust is 10 million so it only takes 500k in transactions throughout the year to reach this point...only a few buys and sells plus a bond maturing to hit it.

A gov't entity is considering terminating a pre-erisa money purchase plan that contains salary defferals. Are there specific rules to follow to shut down this type of plan? What other factors need to be considered?

Also, the client is considering immediately establishing a 457(b). Would this be considered a successor plan?

Is anyone aware of any publications/literature referencing pre-erisa money purchase plans.

Thank you