Have any of you looked into the method of investing in personal real estate "outside" of the IRA? I can find lots of articles saying it is great but I can't find anything that downplays it.

Since 457f is nonqualified, once the employee vests, he is subject to income tax on the entire FMV, n'est-ce pas?

This may be a simple question, but can you tell me if separate dental and/or vision insurance plans are considered "medical" insurance, so as to be considered a welfare benefit plan under ERISA (thus possibly requiring the filing of an annual 5500)?

The new 401(a)(9) rules for DBs are in effect for 2006 and I see lots of unanswered questions. Some issues worthy of discussion:

1. What distribution method works best for most clients? I have come to think that term certain with a payment period equal to the "uniform lifetime method" may work best because (a) it produces a lower minimum than the normal annuity options, (2) it allows for a death benefit whereas it appears that the other annuity options only allow for whatever the option calls for (i.e., life annuity would have NO death benefit) (3) you could change payment options at any time rather than just at retirement or plan termination.

2) Is spousal waiver out of QJSA required for any payment option except QJSA? Must we give a full range of payment options or can the plan choose one method without employee selection?

3) Must the plan document, when amended to the new rules by the EGTRRA restatement date, specify the exact option?

Would welcome any feedback of this preliminary analysis

The case:

Wife died, and husband is sole beneficiary of her 403(b) annuity.

"The plan will treat the spouse bene as if they were the participant" ???

Details:

The husband is not and never has been employed by a 403(b) sponsor. The wife's plan was sponsored by a public school, funded via salary deferral only.

Question:

Can the 403(b) annuity be put into the husbands name? If so, can the husband take a loan?

We are new to the Relius Daily ASP system and I was wondering if anyone had any suggestions on some best practices to use when building the Data Valaidation Center (DVC) to allow Employers to upload their own payroll and census data. I am specifically concerned with Relius' use of the "Status" and "Status Date" fields to process Eligibilty. From my experience it can be diffiucult for an Employer to get their payroll provider to provide more than a Termination Date and/or a Rehire Date for their payrolls. But you would not want to upload either of these dates directly to those fields on Relius as the Eligibility Transaction would not process correctly. Rather I think you would need to set up some custom DVC rules to convert these dates to the appropriate Status and Status Date for them. But I am having trouble building the logic in the DVC Custom Rule Set Up. Does anyone have any suggestions?

Also, if anyone has any comments or experiences (recommendations and/or common pitfalls?) they can share about the DVC that willl help me prepare for rolling this out, would really appreciate it. THANKS!!!

A Trustee of a Multiemployer Pension Plan is also a member of the Local Union. The Trustee seeks to have the time his spends working on plan matters at the Local Union Office reimbursed by the Plan to the Local Union. Is this expense legitimate?

Employer wants to provide for early retirement subsidy in its own qualified pension to subsidize reduced benefits on account of early retirement under separate pension. Employer is considering this option to accomodate early retirement needs of employees while staying away from ADEA issues by stopping benefits at a certain age. Anyone considered whether you can have the subsidy set out in a qualified plan separate and distinct from the general pension? I cannot seem to find any discussion of this one way or the other. The employer is a governmental entity so I am not concerned about other issues which could normally arise in the private employer context--just the separate plan issue.

Governmental employer wants to provide for early retirement subsidy in its own qualified pension to subsidize reduced benefits on account of early retirement under state public retirement system. Governmental employer is considering this option to accomodate early retirement needs of employees while staying away from ADEA issues by stopping benefits at a certain age. Anyone considered whether you can have the subsidy set out in a qualified plan separate and distinct from the general pension? I cannot seem to find any discussion of this one way or the other.

For ADP Testing when disaggregating, can we exclude compensation earned prior to July 1st for Participants who would not have entered the Plan until July 1st had there been a year of service requirement?

Specifically, even though the Participant was deferring for the entire year, can you still exclude the compensation earned through June 30th?

As an example, say John was hired on July 1, 2005 and begins deferring in 2005. For the 2006 ADP Test, John "enters" the Plan July 1, 2006. For his Actual Deferral Ratio for 2006, can we use TOTAL 2006 deferrals and compensation for the period 7/1/2006 through 12/31/2006?

In a multiple employer plan when a new employer adopts the plan as a sponsor and has no look back year to determine HCE status based on compensation then absent any 5% owners I assume there are no HCE for the ADP testing that year for that employer.

But if a participant from another employer who sponsors the plan transfers to the new employer, does his compensation from the other employer in the look back year determine if he is an HCE in the new employer? From what I've read it seems not, but ....?

A new governmental defined contribution plan has a leave conversion feature for retirees -- automatic conversion for certain employee groups and conversion through pick-up contributions for other employee groups. The plan also has ongoing contributions. The plan has been submitted to the IRS for a determination letter.

The IRS has just informed the sponsor that the DL submission will be delayed because the Service is seeking "technical advice" on whether leave conversion plans violate the tax laws.

We are aware that, in December 2004, the IRS sent out notices to volume submitter sponsors of stand-alone leave conversion plans indicating that those plans may run afoul of the "recurring and substantial" requirement under the profit sharing plans. However, it appears that the IRS is rethinking its position on individually-designed plans with leave conversion -- even if they are not "stand-alone" plans.

Does anybody know what the IRS' concerns are? Or, is anyone familiar with plans that have a leave conversion feature, and if so, is the plan sponsor taking any action in response to this new IRS initiative?

Thank you.

Are we required to include elective contributions made to a nonqualified deferred compensation plan as "compensation" when determining HCE status? My thought is yes, since I don't see anything in the regs that permits the exclusion. However, plan administrators are telling me they do not include. Thoughts?

Can an employer pay Form 5330 preparation fees out of the Plan's forfeitures? the employer failed to submit employee deferrals to the Trust within the proper timeframe.

Thanks in advance for the help.

Tax exempt 457(b) plan holds assets in a rabbi trust. The deferrals are fully vested when made. Does the nature of the rabbi trust create enough risk of forfeiture that FICA should not be withheld at the time of the deferral?

Can the employer pay the plan audit fees and then have the 401(k) plan reimburse the employer?

Does anyone know if Texas restricts a municipality's ability to cut retiree medical benefits under a group health plan?

Thanks.

Can a Co. who incorporates lets say June 30th start a new plan as follows:

Owner is obviously an employee from day 1. Can a plan be drafted where anyone employed on 7/1/06 be automatically eligible for the new plan and any EE's hired afterwards would go through normal eligibility - 1yr for example. So, what if the hire date of the few Employees of the new Company have a hire date of 7/5/06. Therefore the only one eligible for the first plan year and second plan year would be the owner.

Problems?

I don't know if this make sense but I would like to know are there any significant diffrence on the type of Roth IRA that you would invest in a company Such as the "target funds" and regular funds? Thanks.

Just got back from attending the Western Pension and Benefits Conference summer meeting in Las Vegas. The final session was about fiduciary duties and was conducted by S. Derrin Watson. In his slide presentation he gave as an example of a PT the case where a qualified plan purchases a piece of real estate at fair market value (as set by independent valuation agreeable to both parties) from the sister of the owner of the Employer corporation. Although he acknowledged that the sister is not a party in interest (or disqualified person), he insisted that the transaction was a PT because the owner of the business certainly would not have had the plan purchase the real estate simply as an investment for the plan, but would only have entered into such a transaction to benefit his sister.

He asserted that the trustee who caused the plan to enter into the transaction would be liable for the excise tax relative to the transaction. (Presumably the transaction would need to be "corrected" as well.)

"I strenuously object." Congress obviously didn't agree with Mr. Watson's view or they would have named siblings of parties in interest or of fiduciaries as parties in interest in their own right. Has anyone run accross an IRS or DOL agent applying such specious logic to commercially reasonable transactions not involving a named party in interest? Does anyone agree with Mr. Watson's specious reasoning?