Has anyone ever run a non-discrimination test on a DB plan with a cash balance component where employees hired after 1/1/xx are cash balance only but those employed as of all prior years are greater of cash balance or FAP (grandfathered)? The FAP was safe harbor.

Not sure how to run the test.

All of the pre-acquisition subsidiaries of a bank holding company are covered under one discretionary profit sharing plan. The Holding company has acquired a new subsidiary bank that has two plans: (1) money purchase pension plan and (2) 401(k) Plan.

The Holding company desires that all employees of all subsidiaries be covered under the existing discretionary profit sharing plan. The Holding company would also like to establish a 401(k) plan. The current Holding company profit sharing plan's assets are held by a trust. The assets of the acquired bank are all held in insurance contracts.

Even though there is a money purchase plan in the acquired bank, is it corect that the assets of both plans could be (1) merged into the discretionary profit sharing plan or (2) merged into the discretionary profit sharing plan and/or the new 401(k) plan ?

If the insurance contracts have termination fees, could that be mitigated by freezing the plan until those charges are no longer significant, while allowing the acquired banks employees to participate in the holding companies profit sharing and 401(k) plan or would you go ahead and merge while holding the insurance contracts as a seperate assets class until termination fees have lapsed ?

A c-corp. is adopting a psp for the plan year ending 8/31/06, they want to ultimately have a CODA added. Question is can the document be drafted to incorporate the CODA retroactively to 9/1/05(beginning of first plan year)or MUST it be restated when they decide to add it? I'm thinking that it will need to be restated at least 30 days prior to allowing the participants to defer.

A 401(k) plan has a loan policy that allows a participant to repay missed loan payments within three months. It also indicates that the employer will inform the administrator of the missed payments and the administrator will allow a cure period for repayments.

In this case, the employer did not inform the administrator until eight months had passed after the participant had terminated employment and had made his last loan repayment.

A 1099-R was issued but no cure notice was provided.

What are the consequences of not providing a notice to the terminated participant before his loan went into default? Are there any penalties?

Thanks.

Can a company with 2 employees have a safe harbor match of 6% where the only employee deferring is the owner? The plan will be top-heavy - will they need to make a 3% nonelective since NHCE is not getting safe harbor contribution? There are additional profit sharing contributions going into the plan for both employees.

I am taking over a plan 10/1 that was not managed with a professional recordkeeping system. The trustee kept all the individual participants in segregated accounts and says "the employer (law firm) was responsible for compliance testing".

In creating the recordkeeping back to 1/1/04 (when the profit sharing plan added the 401k and safe harbor features) I discovered that the employer had incorrectly been taking away all employer contributions made on behalf of an employee who terminated before the end of the plan year. Of course, the safe harbor 3% nonelective cannot be subject to a last day rule, so a terminating employee was entitled to the 3% nonelective year-to-date up to termination. Unfortunately, I'm discovering this not only effects 2006 (my initial thought) but evidently there were 2 employees who terminated in 2004 to whom the employer did not pay the 3% safe harbor contribution.

Opening up a can of worms here. Where do we start to fix this? I know these employees have to get these contributions. Other issues? 2004 Form 5500 is wrong (?) 2005 hasn't been filed just yet, it's on extension. I assume I'm looking at venturing into the EPCRS?

Thanks.

If the plan administrator merely forgets to hand a 401(k) enrollment form and spd at time of entry to a new participant, does the IRS view this is an operational failure, subject to the required employer QNEC. The participant didn't know her rights under the plan, but she was never denied the opportunity to enroll.

I think I know the answer, based upon Rev Ruling 2004-13, but need someone to help clarify.

Safe harbor CODA (satisfies with 3% NE), no match but allows for and currently has ee's making after-tax contributions. Based on my research, it appears that the contribution of after-tax $'s would subject the plan to top heavy rules as this is a non-safe harbor 401(k)/401(m) contribution.

Thoughts??

What is the obligation / procedure for getting benefit information from a Pension Plan (this is a Teamster Plan in NY) in order to collect child support arrears?

My CSE agency was refused the information and dropped my case. I expect that I will need to get an attorney at this point, but would like to know if he/she will be able to get this information.

My ex- had disappeared for all the time my children were growing up; he resurfaced after he began to collect retirement benefits. I will not get help from him willingly.

Also, how is the amount to be deducted determined - is there a maximum that can be deducted from a pension benefit for child support arrears?

Assumptions: Salary reductions only. Fixed interest annuity.

Does the amount borrowed come from the general assets of the insurer or the individual's annuity account balance?

A controlled group has a single welfare benefits plan the covers multiple varieties of benefits, such as medical, dental, and life insurance and different versions of coverage for different companies in different states. For example, company A in Maine provides medical and dental insurance to its employees, and company B in Florida provides medical, dental and life insurance to its employees. The coverages and the insurance companies are different in Maine and Florida.

From "Section: Line-by-Line Instructions for the 2006 Form 5500and Schedules" of the instructions to Form 5500:

"A separate Form 5500, with box A(2) checked, must be filed by each employer participating in a plan or program of benefits in which funds attributable to to each employer are available to pay benefits only for that employer's employees, even if the plan is maintained by a controlled group.

A 'controlled group' is generally considered one employer for Form 5500 reporting purposes. A 'controlled group' is a controlled group of corporations under Code section 414(b), a group of trades or businesses under common control under section 414©, or an affiliated service group uner section 414(m)."

How does one reconcile these successive contradictory paragraphs? Does company A file a Form 5500 for its two coverage and company B file a Form 5500 for its three coverages? That squares with the first paragraph. But the second paragraph says that a controlled group is considered a a single employer for purposes of Form 5500, whcih suggests that one Form 5500 is sufficient.

Later instructions say to check box A(2) if the Form 5500 is for a single employer plan, also defined as "an employee benefit plan maintained by one employer ***." So does one plan, the umbrella plan for the controlled group, maintaineed by one employer (a collection of controlled companies), file more than one Form 5500?

Has anybody had this issue and come up with a correction method acceptable to the IRS?

The ADP test was done using the wrong compensation for the last several plan years (not what the Plan said to use). Refunds were made to HCEs to correct. Using the right compensation would have resulted in lower refunds to the HCEs.

Thanks.

Can a plan exclude "non-exempt" employees from a 401(k) plan, as long as 410b is satisfied?

If a DB & DC plan are permissively aggregated then under the (a)(4) regs does the vesting schedule have to expressly be the same under both plans, or just tested as non-discriminatory on the current avail/effective avail test ? I don't see in the (a)(4) regs where it states that they have to be the same. I would assume though that having only NHCEs in the DC plan and it having a lesser vesting schedule than the DB plan, though still a statutory schedule, would be discriminatory ? any thoughts ?

Can an employee max out her 401(k) contribution ($15,000) and then continue to put more after-tax money into the plan, as long as 415 is not exceeded (other ER contributions and forfeitures counting toward 415 as well)? Do after-tax contributions count toward the 402g limit?

Thanks

TPA firm in COLO interested in acquiring an additional TPA firm and having difficulty finding that type of information. Would anyone have any advise on direction, or know of any firms up for sale at this time?

For a plan that pays the full value of the accrued benefit on death at any time prior to actual retirement, how should the actuarial increase be calculated from age x to x+1 for a deferred retiree? It always seemed to me that the accumulation should be done using interest only, since there is no forfeiture on death. To accumulate with interest and mortality would be a double dip. But other people have recently told me otherwise, saying that the post-retirement actuarial equivalence factors include interest and mortality, so you have to accumulate with both because that's what the plan says.

Looking for clarification.

Determination Year = 2006

When I rank my employees by wages for 2005, the prior year, one employee who earned say $120k also terminated in 2005.

First - I assume I still include the terminated guy in my ranking.

Assuming I do that, I end up with say 10 employees that equal 20% and the guy that teminated in 2005 is included in that group.

Since one of the 10 employees terminated in 2005, do I take the next guy on the list to get to 10, or do I just have 9 HCEs for 2006?

Pete

Does anyone know if a DB plan has 401(h) accounts for post-NRA medical benefits, are the benefits ultimately distributed to the retirees considered taxable income to the participant ? or is it more like an employer-paid benefit that is non-taxable ?

Two questions on 410(b) testing:

First, if a U.S. citizen is transferred to a foreign subsidiary (say in Japan), my understanding has been that the employee need not be included in the ratio percentage test. However, a recent question has raised a question in my mind as to the authority for this result. Is this the correct result and can anyone provide the regulatory authority on this issue.

Second, if a foreign citizen transfers to the U.S. parent and is working in the United States, the foreign citizen becomes a resident alien employee and as an employee that is not a nonresident alien, my understanding has been that the employee must be included in the ratio percentage test. Is this the correct result?