We have a non-standardized SH 401(k) PS. Some non-highly compensated employees have irrevocably opted out of plan. Where will they need to be counted in coverage and non-discrimination testing?

Thanks!

Our plan gives the greater of final average pay or cash balance for any grandfathered participants. All new participants are cash balance only. The Pension Protection Act requires 3-year vesting for hybrid plans. Any thoughts on how this might apply to our plan?

I have a tiny Traditional IRA (~$2k) with a Vanguard index fund. It's doing fine but I wasn't qualified to make contribution in 2005 due to my AGI. I just married someone with a good income and I don't see us falling below the joint $70k AGI anytime soon (and that would be financially distressing, so I doubt we'd contribute to the IRA).

My question: is this IRA pretty much stranded? I'm paying $20 a year in custodial fees, which equals about 5% of the growth. I pay$10 for an IRA under $5k and $10 for account under $10k. It will be years until my account goes above $5k if I can't contribute to it.

Should I just leave it or should I look into converting to a ROTH?

If I can't convert into a ROTH due to income restrictions, is there anything I can do?

Thanks!

If an employer is subject to COBRA and provides an HRA that permits post-employment expenses against the HRA credits otherwise unused at the time of termination, is the 'loss of coverage' under the HRA for COBRA purposes (a) termination of employment, when the employee no longer accrues new HRA credits, or (b) when the HRA credits are all used up (or some other time post-employment, per the HRA design, when HRA credits can no longer be used)?

Congress Approves Legislation to Clarify Source Tax Law

http://www.watsonwyatt.com/us/pubs/insider...ArticleID=16352

I decided to pull one last arrow out of my quiver.

That arrow being "rate grouping".

SInce I am working with a DC plan that is being cross tested, there are many different benefit rates and restructuring did not seem advantageous and based on the rate groups the plan did not pass the non discrimination tests. Though there were only about a dozen HCEs that would need to have their allocations limited by small amounts.

So I decided to employ rate grouping to see if I could get the plan to pass the tests or at lest make it come closer.

The results were vastly improved, as only 3 HCEs would need to have their allocations limited by a little.

In using the rate groupings, I varied the ranges for different groups. For example one grouping was based on the range 10.5 to 11.5 and another grouping was based on the range 7 to 7.4.

I did not see any restriction against such a strategy. Does anyone know if it is acceptable to vary the ranges? Of course each range met the 5% rule that the endpoint of the range be no more than 5% from the midpoint.

Thanks.

Is there a firm DOL rule for the rate charged to a 401(k) plan participant when taking out a loan? I've heard the rule of thumb being 'Prime plus one or two points', but haven't seen anything to support it. We have just set an arbitary rate of 'Prime plus .5% up to a max of 8.5%', and I want to be sure we're in compliance. Thank you.

We have a husband/wife profit sharing plan where the wife owns 100% of the stock of the sponsoring employer. There is also a participating employer who has adopted the plan that is owned 50% by the husband and 50% by the wife.

Both fathers of the husband and wife work for the sponsoring employer that is owned 100% by the wife. The husband's father is over 70-1/2 so a minimum distribution was calculated for him however, the question has come up that the husband's father is not a deemed owner since his son doesn't directly own any of the stock of the sponsoring employer so he is not required to take the minimum distribution as he has not yet retired.

Is this correct? He is not required to receive the minimum distribution since he is not deemed to be an owner of the sponsoring employer?

Is it permitted for a plan sponsor of a 401k plan who chose to contribute the safe harbor 3% NEC as of the beginning of the plan year switch to the safe harbor matching contribution during the year?

The owner of Company A has his wife on the payroll and sponsors a 401k plan. The wife owns Company B which has nothing to do with her husband's company and does not have any plan. She is paid $100K by Company A and receives $50K from company B. I believe this is a controlled group situation and the combined compensation of $150K from both companies can be used for purposes of Company A's plan. I always thought Company A can make and deduct the resulting contribution based on the $150K, but have recently spoken to someone who insists that the deduction has to be split between the two companies based what each company paid her. Which method is correct? All help is greatly appreciated.

I know there has been a quite exhaustive discussion on these boards about the 25% of pay limitation when combining a DB and a DC plan together. I have done the 404(a)(7)©(i) research. I realize there has been discussion about people flip flopping between the plans and issues with having an account balance in a profit sharing plan or possibly even just deferring to the 401(k) component of a profit sharing plan also.

I am trying to convince someone that it is acceptable to go over the 25% of pay deduction limit as long as their is no single person participating in both plans. It is my understanding (from a gentleman on this board) that this topic was covered at an ASPPA conference in 2005. Does anyone have a copy of the Q&A that covered this that I can use to add to my case? My goal is to design a proposal that has a class of employees receiving a DB benefit and a different class receiving a DC benefit. Right now I am being told that "they" don't think I can do that.

I don't know if this board will let you send attachments through their email system to other users, but if you shoot me an email I will reply. Thanks everyone.

I have a restated plan with a short initial plan year (9 mo). The definition of average comp is high 5 consecutive plan years. The definition of comp for the short plan year seems to imply a 9 month comp period because it is defined as "comp for a plan year" and the plan year definition indicates an initial short plan year. The ave comp definition does not address the short plan year. Based on that, it would seem that you would treat the short plan year pay as just another plan year without taking into account it is only a 9 month period, effectively averaging 57 months of pay over 60 months. That doesn't seem right though. I can't remember the last time I did a short plan year val, can I get some input on average pay and a short plan year? Are there guidelines in the Code? I couldn't find any. Thanks.

If anyone went to the Vegas WPBC/ASPPA conference last month, I thought I heard a comment from one of the IRS speakers that the service had come to a decision that in their reviews (I think determination letters) that they needed to be consistent with previous treasury guidance in confirming the QJSA is the most valuable benefit under a pension plan. I'm trying to remember the context of of this statement, assuming I'm even remembering it correctly. Was the context regarding the calculation of the MVAR under general testing ? If so, I assume it would apply to all plans subject to QJSA requirements so maybe we wouldn't need to test the 417(e) GATT subsidy under the MVAR ? just the QJSA subsidy. I could be totally wrong on how I took the comment though so I'd appreciate if anyone can confirm or correct me on this.

Does anyone see any fiduciary issues resulting from limiting investment options in a 401(k) plan to a series of target retirement date funds and a stable asset fund?

Does anyone out there use WinflexOne? How do you like it?? Anything you can tell me would be great.

Has your company ever had a Section 125 Audit? How in depth was it? Did the IRS conduct the audit? What other facts can you tell me about Section 125 audits?

Company B was a wholly owned subsudiary of Company A. On 07/31 Company B is sold to one of the employees in a stock sale. Prior to the sale Company A sponsored a 401(k) plan, Company had also adopted that plan. The buyer of Co. B contacted us yesterday & wants to spin-off the assets into a new plan sponsored by B. Company A's position is that since the new plan was not effective as of the date of sale, the assets cannot be transferred & that there is a distributable event. Ideally these issues should be decided prior to the sale, but I'm not so sure I'd go as far as Company A's position. I've researched & I just can't find anything definitive enough to satisfy me.

Thanks in advance for any guidance.

Has anyone seen any guidance on whether the grace period for the health care FSA could cause the FSA to fail to the HIPAA portability exemption and thereby the limited COBRA exemption?

Company X maintains a cafeteria plan for its employees which includes both a health care FSA and a dependent care FSA. H is an employee of X and participates in its health care FSA, contributing $3,000 for 2006. If W divorces H as of July 1 of the plan year and the plan entitles all qualified beneficiaries to elect COBRA for the remainder of the plan year, is W's election for $750 (1/2 or $1,500) or can W elect $1,500? The latter number seems unfair since the employee still has the obligation to make contributions for the rest of the year and nothing has happpened that impacts his coverage. If W can elect $750 for the balance of the year, can H's remaining contributions be reduced by 50%?

Hi,

Have a question in regards to how a discretionary matching contribution feature can be applied to bonus deferrals. We have a client that allows participants to make bonus deferral elections separate of their 401(k) elections. They have a discretionary match definition. They include bonuses in the plan definition of compensation. Does the client have leeway (i.e. discretion) in making matching contributions on the bonus deferrals? They seem to think they do, but I would tend to disagree, since bonuses are included in definition of comp.

Thanks for any help!