In researching COBRA, it states that ERs with 20+ EEs that are private sector and MOST state and local governments fall under COBRA regulations.

I can not find out information on what the MOST state and local government entails? Do basically all state and local agencies fall under COBRA?

I would appreciate any input.

I have a calendar year Profit Sharing 401k plan, 3% non-elective Safe Harbor, and a last day rule. We have several participants that terminated 12/31/05. Each of these participants received a full contribution for 2005.

Since they worked through 12/31/05, they each received a substantial paycheck in January 2006 which included vacation pay.

Even though these participants didn't actually work any hours during 2006, wouldn't they be entitled to at least the 3% Safe Harbor contribution on their 2006 compensation? This usually causes us to have to do a second distribution if they have already been paid out their 12/31/05 balance.

Now if they had a Cross-Tested contribution formula with no last day rule, wouldn't these terminated participants have to receive the Gateway Allocation for 2006 along with the Safe Harbor contribution?

Thanks.

Is anyone aware of any legislation passed recently, either at the state or federal level, that would allow plan participants to withdraw funds to cover flood damage costs? Participant has major expenses from the June flooding here in Upstate NY which are not being covered thru insurance or FEMA. Plan document only allows for safe harbor hardship distributions. If there is such legislation does it waive the taxation and/or early withdrawal penalties?

Does anyone have information on a top hat self funded medical plan for the exclusive benefit of highly compensated employees?

I have a plan that is being acquired in stock sale and is going to terminate the plan formally. Typically we have had clients wait until the positive determination letter on the plan termination is received until processing the distributions. The client would like to distribute the balances of the employees who will not retain there employment and wait and distribute the remaining balances after the letter received.

Any advice is appreciated.

MEWA will be established as a single self-funded ERISA plan (an association of bona fide group of employers is the sponsor).

Association needs to pre-fund to get it going. State insurance laws require certain reserves, etc. Association would like to loan the funds directly to the MEWA trust.

My feeling is that we need to follow the requirements of PTE 80-26 as amended and do this as an interest-free loan to the plan.

But, I was thinking, the plan does not exist yet so could the contribution merely be viewed as a setllor function.

Multiple employers contribute to a single trust established and maintained by an outside third party. Each employer determines which health and welfare benefits it needs for its employees. The individual employers have access to, but might not chose all the same benefits for their employees. This master trust has been filing 5500s as a DFE, and the participating employers have been filing their own 5500s as well. Now someone has asked if it's a MEWA.

Apparently, if it's a MEWA, it can't be a DFE. How do we determine if it's a MEWA or a DFE? And if it is a MEWA, what is the significance (other than it needs to file Form M-1)?

Mom dies in 2005 as the owner of a Qualified Plan. Adult daughter is designated beneficiary of the QP. No RMD has been made to Daughter for 2006 yet. QP Admin. is telling Daughter she must take a lump sum distribution or take distributions over 5 years. What are people doing to get the most benefit out of the new non-spousal rollover provisions in cases like these? After all, the new rules aren't effective for distributions made until after December 31, 2006.

It's likely that a plan offering health and welfare benefits to multiple employers is a MEWA. I see that they must file a Form M-1 annually.

It's an ERISA plan and files 5500s, as do the underlying employers.

My boss just asked me what the significance of being a MEWA is, and I realized that I don't know the answer. Help!

Hi all,

We are new to Relius Admin and are beginning to work our way through compliance testing. Does anyone have any guides/checklists or anything that might help someone that is new to the system work through the compliance tests? Its not that we are trying to avoid doing the dirty work by not developing on our own, we are looking for a little help to get us going in the right direction.

Thanks!

BCJ

Help! I have no had success determining which states assess a tax on the earnings portion of a roth 401k distribution? I would appreciate if someone could provide a list of states that assess the tax or a website that would provide this information.

Thank you

A participant in two different plans dies. The last beneficiary form shows the children as beneficiaries, however, the participant remarried, and the spouse did not waive. Therefore, the spouse is the beneficiary. The spouse is not a US citizen, and lives in South America. She has not responded to any attempts to contact her.

One plan is terminated. As long as we have documented the necessary steps to try to locate the beneficiary, is it okay to roll over the terminated plan's participant account balance to an IRA in the participant's name? Then the beneficiary could claim the benefit from the IRA rollover carrier if/when they appear.

The other plan is not terminated. According to the document, the spouse is not required to take the benefit until the participant would have reached age 70 1/2, which would be in the year 2025. Does the participant's account balance need to stay in the plan until that time? Or is there any way that this can be handled (rolled over to an IRA) earlier than 2025?

MEWA will be established as a single self-funded ERISA plan (an association of bona fide group of employers is the sponsor).

Association needs to pre-fund to get it going. State insurance laws require certain reserves, etc. Association would like to loan the funds directly to the MEWA trust.

My feeling is that we need to follow the requirements of PTE 80-26 as amended and do this as an interest-free loan to the plan.

But, I was thinking, the plan does not exist yet so could the contribution merely be viewed as a setllor function.

MEWA will be established as a single self-funded ERISA plan (an association of bona fide group of employers is the sponsor).

Association needs to pre-fund to get it going. State insurance laws require certain reserves, etc. Association would like to loan the funds directly to the MEWA trust.

My feeling is that we need to follow the requirements of PTE 80-26 as amended and do this as an interest-free loan to the plan.

But, I was thinking, the plan does not exist yet so could the contribution merely be viewed as a setllor function.

I am drafting a 115 Trust...if anyone has a form they would be willing to share I would really appreciate it! Thanks.

Client is completing an application to invest in a new asset. He is a single person plan investing in a limited partnership. One of the questions is below. How would he answer the question without being too vague (i.e. investor is a qualified retirement plan)

"If the investor is exempt from US Federal Income Tax, please indicate the basis for the exemption:"

Thanks!

I heard it mentioned at the ASPPA annual conference that there is a way to import data into Relius 5500's to avoid having to enter all SSA's into the necessary form. I read over the Help instructions in Relius briefly but they sounded foreign.

Is there anyone who is utilizing this feature, and can it be used for the Schedule of Assets schedule as well?

Is it just a matter of setting up your excel file properly? If anyone already has the format figured out, I would be very greatful if I could get a copy. Thanks.

I am drafting a Section 115 Trust...does anyone have a form they would be willing to share?

I hope I'm posting this question on the correct Board. I'm dealing with a self-directed multiemployer defined contribution plan. Currently participants don't show up for the offered investment education classes and thus about 80% of the plan's assets are held in the default fund. The Trustees want to provide a $25.00 gas card to those participants who show up for the education classes and select investments. Can these cards be paid for out of the Trust? The plan provides that plan expenses can be paid out of the trust.

I am new to DB plan general testing and cash balance plans. I've been trying to figure out how to calculate a normal accrual rate and equivalent allocation rate for a cash balance plan. In the text below, I've shown my attempt to calculate both rates. Can someone who is familiar with these concepts take a quick look at these calculations and let me know if they are correct and, if not, why not? I greatly appreciate any help--I'm largely operating on my own and don't have the benefit of working with an actuary or compliance testing specialist. Thanks again!

Data:

Mary Smith

Pay = $220,000

AA = 48

RA = 65

Cash Balance Plan Hypothetical Pay Credit = 7.5%

Hypothetical Interest Credit = 6%

Part 1--Calculating Mary's Normal Accrual Rate

 Using the current year as the measurement period.

 Since using the current year as the measurement period, Mary's testing service is equal to 1.

 Using current year pay as average annual compensation.

Step 1: Mary's hypothetical pay credit @ 48 = $16,500 (i.e., $220,000 * 7.5%)

Step 2: Mary's accrued benefit @ 48 = $16,500 projected to RA using hypothetical interest credit (6%)

= $16,500 * (1.06)65-48

= $16,500 * (1.06)17

= $44,431

Step 3: Convert the accumulated value of the hypothetical pay credit to a single life annuity ("SLA") payable at age 65 using the cash balance plan's definition of actuarial equivalence (assume GAM83 @ 6.5%)

= $44,431 ÷ 10.45

= $4,252 annual benefit

Step 4: Divide the annual benefit by Mary's annual pay

= $4,252 ÷ $220,000

= 1.93%

Normal Accrual Rate = 1.93%

(ignore Most Valuable Accrual Rate for now)

Have I computed this figure correctly? If not, why not?

Part 2--Calculating Mary's Equivalent Allocation Rate

Step 1: same as above

Step 2: same as above

Step 3: discount the $44,431 to age 48 using a standard interest rate (say 7.5%)

= $44,431 (1.075)-17

= $12,994

Step 4: Divide the discounted benefit by Mary's annual pay

= $12,994 ÷ $220,000

= 5.9%

Equivalent Allocation Rate = 5.9%

(ignore Most Valuable Equivalent Allocation Rate for now)

Have I computed this figure correctly? If not, why not?