Good morning,

Can an employer amend the frequency of their safe harbor match from a per payroll period to annual basis for the current year (2006) without losing their safe harbor protection or can they only amend it to be effective for 2007? Their safe harbor notice does not identify the frequency however the SPD does.

Thank you!

added catch-up language (though that can be supressed)

a little more detailed language under 'distribution and vesting.'

of course, this is a minimum. you have to modify references to the SPD and be pretty specific what section is being referred to. and certainly add anything more you feel comfortable with. still looks like 2 maybe 3 pages depending on if plan has both SHNEC and SHMAC.

same instructions as before

alpha numeric User fields in plan specs:

#20 deferral changes can be made (e.g. quarterly or monthly, etc)

#21 is compensation definition (e.g. Total or comp less bonus, etc)

#22 and #23 distribution conditions (e.g. upon termination) and added #24

#25 contact person (e.g. Blunky the one eyed newt)

#26, #27 and #28 vesting schedule

#26 2yrs 20% 3 yrs 40%

#27 4 yrs 60% 5 yrs 80%

#28 6 yrs 100%

#29 hours for vesting (this might only be available on version 11.0) I added this after the fact. I figured it can't hurt.

The preamble to the final (k) regs (Section F) says the ADP/ACP testing provisions may be incorporated by reference and if there are any optional choices, "the plan must provide which of the optional choices will apply". Does this mean all testing options must be in the plan, even if testing is not incorporated by reference.

In the past, plans that I have worked with have not addressed many of the testing options. A few examples:

1) If there are several plans in the controlled group, must the plan identify any and all plans with which it will be aggregated and/or not aggregated?

2) Must the plan state whether it will or will not be disaggregated for participants who have not met the minimum age/service requirements? (as opposed to saying the plan will be disaggregated at the election of the Plan Administator)

3) Must a plan state whether it will or will not recharacterize elective deferrals? (again, as opposed to giving the power to recharacterize to the Plan Administrator or a Committee.)

Thanks in advance.

When deferred shares are repurchased by the company from a recently terminated employee, is that money taxable for the employee for federal withholding & FICA?

Plan calls for employer match to be deposited on a per payroll basis with year-end true-up. Former attorney apparently told plan sponsor that it was required to add interest to the year-end true-up contribution. No one can find anything in writing from the attorney, nor did anyone note the reasons that the attorney may have given as the basis for this opinion. I can find no basis for requiring interest, but, admittedly have not researched the issue to death.

Any thoughts on this issue? Any cites would also be most welcome.

Are the rules the same for retirement plans and IRAs in regards to when Unrelated Business Taxable Income when there is debt-financing ? I believe under IRC 990-T and regs "some" structure of debt-financing will not automatically trigger UBTI on the rental income, but if the debt is not structured in standard fashion (i.e., variable interest rate tied to profits, or seller carry-back agreements) then it will trigger UBTI rules and not be exempt. Is this the same for IRAs ? or is any rental income earned from debt-financed property in an IRA going to be subject to UBTI.

The PPA states a participant directed DC plan must provide quarterly benefit statements and the statement now must provide for the vested accrued benefit (among other things).

The PPA (Sec. 508) also states the requirement that the benefit statement show the vested accured amount can be satisfied if the plan provides an annual "alternative notice."

Question - I understand the new rules for the benefit statement are effective for plan years beginning in 2007. Does that mean for the first benefit statement for the 2007 plan year?

What if a plan is going to use the alternative notice to satisfy the requirement to disclose the vested accrued benefit. Am I correct in assuming that using this alternative notice will essentially give plans until the end of 2007 (or whatever the plan year is) to tell participants what their vested accrued benefit is since it will satisfy the "annual" requirement?

My current provider send out delinquent notices monthly based upon 2 criteria

1- No payments for 30-60-90 days

2- Outstanding balance will not be paid off by end date ( part went on leave & came back, payments restarted but no payment to catch up the amount due was ever recieved by the Co.

Thier practice is that if they never get the lump sum payment to catch a participant up, they default the missed payment amount.

Aren't they obligated to re-amortize?

Client did not press the "Submit" button when posting 2004 Safe Harbor Nonelective contributions online in September 2005. Error was realized in January 2006, and contributions were appropriately "Submitted" then.

I don't find any correction examples in EPCRS specific to safe harbor plans. I am assuming because this is a safe harbor plan there are more issues than meet the eye.

Can anyone point me to something that deals with this kind of failure.

Thanks.

Getting ready to create plan documents for a new plan. Intent is for plan to be a safe harbor matching contribution plan. Plan year ends 12/31/2006 so we can't be safe harbor for this initial plan year and it's not necessary as the company has 1 owner and 1 employee. Employee won't be eligible until 7/1/2007.

Can I create the documents as a safe harbor plan and the amend the plan so it's not safe harbor for the first year?

Or must I create them as a non-safe harbor and then amend it to be safe harbor on 1/1/2007?

A governmental contributory defined benefit plan covering full-time employees of participating employers equires participants to contribute 5% of compensation. Participant contributions are separately accounted for and credited with a fixed rate of interest set by the trustees of the plan.

If as a result of reduction in hours a full-time employee becomes a part-time employee, he/she is deemed to be an inactive participant and all employer and employee contributions cease unless and until the participant again becomes a full-time employee.

If a participant remains in inactive status for more than 2 years (but is dstill employed with a participating employer as a part-time employee), the plan provides that 100% of his/her mandatory contributions plus interest will be involuntarily cashed out if less than $1,000, or rolled over to an IRA if $1,000 or more.

As the participant in inactive status has not terminated employment, wouldn't such a cash-out provision violate IRC section 401(a) which prohibits distributions from a pension plan prior to retirement, death, disability or other termination of employment? (Assume that the cash-out provision does not apply in cases of participants who have attained normal retirement age and participants who are vested.)

Are people waiting until the Final 403(b) regulations come out before amending 403(b) plans for the Final 401(k) regulations, or is everyone amending now?

A governmental defined benefit contributory pension plan provides that if a participant terminates employment within 6 months of his/her commencement of participation in the plan that all employer contributions made on his/her behalf shall be returned to the employer. Would such a provision be in violation of the exclusive benefit rule of Internal Revenue Code Section 401(a)(2)?

Consider the following facts:

Single employer, Non-PBGC covered Plan

3 owners are only participants.

Plan is underfunded and cannot pay unrestricted lump sum.

1 owner is retirement age and wants lump sum distribution. He would be willing to take lump sum equal to non discriminatory, fair share of allocated assets if plan could pay unrestricted lump sum.

Clearly the plan could terminate and each could receive a lump sum distribution equal to non discriminatory and fair allocation of assets. A new plan could be adopted for the remaining 2 owners. However, the 2 remaining owners do not want to terminate plan and potentially lose future contributions based upon prior accrued benefits (i.e. IRS position that benefit for 415 purposes attributable to prior plan distribution is not based upon actual lump sum but accrued benefit in prior plan).

Any problem with spinning off the 2 remaining participants into a new plan, allocating assets between the two plans, terminating the original plan and paying the lump sum equal to allocated assets?

Must the allocation of assets follow the priority class allocation or is another reasonable allocation available (document just indicates that benefits after spinoff are equal to amount payable before spinoff if plan terminated)?

Assume other restricted benefit payment options (restricted IRA, escrow, bond) are off the table. Assume administrative cost of spinoff, termination, and new plan are not relevant.

Any thoughts are appreciated.

Can a cash balance plan can be merged into a 401(k), or would it have to be terminated with participants having the option to roll over?

If a merger is possible are there any unusual issues invovled?

What do you think about the following:

In the past, a multiemployer pension plan has always used an (actuarial) assumption of 8% in calculating withdrawal liability.

Is there any reason to believe that the trustees, who have reserved the right in the trust agrmn't to calculate employers' withdrawal liability w/o reference to a specific % number, could not change how they calculate it for 2006?

For example, if an ER withdrew in January 2006 and was assessed a liability based on an 8% assumption, is the trustee potentially estopped from changing the rate for employers who withdraw in November 2006?

Also, is the trustee required to use an actuarial value? (Can they never use a higher value?)

Thanks in advance for your help.

A trustee was removed and the reason given was that there had always been an executive board member of the union as a trustee. This is not spelled out in the trust agreement. Is this a valid reason to remove a trustee?

Does anyone have a listing of all the required amendments since GUST for both DC & DB plans?

A company with calendar fiscal year maintains a PS plan with calendar plan year.

For the 2005 plan year, the TPA prepares an allocation report based on the amount of discretionary contribution the company wishes to make. For some reason, the company doesn't deduct those contributions on its 2005 return. It files the return before any contributions are made for the plan year, and plans to deduct the contributions on its 2006 return.

What is the latest date that the company could make the contributions?

This question relates to ESOP fofeitures and when are they allocated to remaining participants, basically a timing question.

We have an ESOP whereby its distribution policy changed from paying out 100% of vested amount upon termination to paying out to 20% of the vested amount over a 5 year period.

With the old policy forfeitures were allocated either upon distribution or after 5 years if the terminated participant had not requested a distribuion.

Now the plan has changed paying out only 20% of the vested amount over a 5 year period. When do forfeitures get allocated out....is it 20% over a 5 year period or upon the entire vested amount being paid out.

The plan document indicates that for the 401(k) forfeitures will be paid out upon the entire vested balance being paid out or after a 5 year period if the terminated participant has not requested a distribuiton.

of which the 401(k) is paid out at 100% at upon request after the plan is valuated for the end of the end of the plan year.

continuing....when the plan document gets to the forfeiture section of the ESOP part of the it states how forfeitures are allocated and then states to refer to the above section.

Please note this plan is an ESOP with a 401(K).

What would be the determining factor of when to allocate forfeitures? thanks.