Cash balance plans can now have interest credits no more than a market rate of interest. I was surely hoping it would be the true return of the plan but I haven't been able to get a handle on what is meant by this because of this passage:

(III) MARKET RATE OF RETURN.—The Secretary of the Treasury may provide by regulation for rules governing the calculation of a market rate of return for purposes of subclause (I) and for permissible methods of crediting interest to the account (including fixed or variable interest rates) resulting in effective rates of return meeting the requirements of subclause (I).

Anyone heard what this will mean?

Wholy owned subsidiary of corporation has a 401k plan that is identical in all features with the exception of investment options to the parent company. Subsidiary wishes to move from parent company recordkeeper/consultant, maintain a mirrored plan and use their own recordkeeper consultant. Parent company's consultant wants to charge a large fee to do combined testing if data is not on their system. If the plan is identical what combined testing is required? ( both are safe harbor match plans). Any input appreciated!

It appears with the recent Pension Reform Act that a non-spouse beneficary of an inheirited qualified plan account can now roll the distribution into an IRA rather than taking RMD. Question: if Plan participant rolled entire account into an IRA and added no additional funds....dies, leaving account to Spouse who transfers account to her name....when Spouse dies, can the kids roll their distribution directly to an IRA rather than taking an RMD? Thanks in advance for any replies or thoughts on this.

I know this has been asked before, but I can't find the links and there is conflicting information out there (no surprise).

We have a 401(k)/PSP, with an integrated PSP contribution and safe harbor match (100% of the first 4% of comp deferred). Last day/1000 hours required for PSP.

A participant is employed on the last day, but no 1000 hours, so he is entitled to the top heavy minimum instead of the full PSP allocation. He is deferring and receives the match.

QUESTION: Does the safe harbor matching contribuiton made on his behalf count toward the satisfaction of the top-heavy minimum contribution he is entitlted to? I know the answer is yes for non-safe harbor matching.

Most of what I find references the EGTRRA provision that matching contributions that are used to satisfy top heavy are still treated as matching contributions. I just need confirmation that safe harbor matching contributions that are used to satisfy top heavy are still treated as safe harbor matching contributions.

Thanks.

P.S. This is one of those times when you know that you know the answer, but you can't put a finger on why.

I recently joined a company that participates in a multiemployer plan covering its union employee. The employer has been paying its contributions and was recently told by a representative from the plan that the plan was frozen and that they should continue with its contributions while it is determined whether contributions are increased or a "mass withdrawa"l is determined. I asked for Plan documents and other subscribed agreements but I am told that they don't have any. In addition to consulting a qualified attorney, what documents can we request from the Plan that supports the amount of contribution . Shouldn't the plan issue an ERISA 204(h) notice on the freezing of the plan. Any guidance to determine what documents the company can request from the Plan is appreciated.

I noticed that my last few posts, including some tests ones that I deleted, are automatically closed, i.e. they do not allow responses by other members.

Can anyone say why? Did I click some button that I should not have?

I noticed it also occurred with posts for a few other members.

Of course, this may mean that you cannot respond to this message, and may need to start a new thread with your response

Thanks

Denise

ok, 24 more. I wouldn't want WDIK and company to be bored on the weekend.

it is either this or read the 900 pages of new pension law.

hmmmm. tough choice.

An architectural firm with 5 employees has sponsored a DB plan for 5 years. The 100% owner (an Architect) bought a non professional service employer business (self storage business) with 10 employees. Since the owner has a controlling interest in both businesses, employees of both entities are covered by the plan.

Would they still qualify for exemption from coverage? Perhaps we should get a determination from PBGC. I just wonder if "the principal function" of the business is performance of professional services at this point. The storage business now brings in more income than the architectural business.

Question: I am curious as to what other employers do with regard to crediting service for eligibility for rehires when they have incomplete prior employment records?

In a situation where there are a large number of hourly, high turnover employees who were previously excluded from the plan and the employer wants to include these previously excluded employees with a year of service requirement for eligibility, how does an employer comply with the requirement that all rehires receive credit for previous service (when they were properly excluded from participating in the plan) if the employer does not have records of the prior service.

Thanks in advance. Any thoughts on this are greatly appreciated.

We have several clients with DC plans that have terminated participants (with account balances less than $5k but more than $1k), which they would like to force these individuals out of their plans. We were thinking about creating a Group IRA Trust account to handle these balances and I was wondering if any other RIA/TPA firms have created a similar account for automatic rollovers? If so, what concerns or challenges have you faced?

Hello. It is very new to me to be working with 403(b) plans, so I am hoping this is an easy question. I am running the ACP test for a 403(b) plan. There is a terminated employee (HCE) in the plan who should be in the test. If I leave his termination date in our system, he is excluded from the test. If I delete his termination date from the system, he is included in the test. Needless to say, I would like him in the test.

Should terminees be excluded from the ACP test? Is there somewhere I could look for this answer?

Thank you!

I have a situation where the participant recently died. She had a 401(k) and an interest in a life insurance plan through her employer. At the time of her death she was common law married to a man whom the employer/administrator was unaware. Therefore, at the participant's death, the benefits were paid to the beneficiary, her children from a previous marriage. My question is, does the administrator have any liability? What rightes does the common law surviving spouse have. Remember he did not consent to the other beneficiaries. Also, is a life insurance plan covered by the spousal consent rules? I do not beleive that it would be.

Are all Section 125 plans subject to ERISA?

We have a letter from the TPA regarding stale reimbursement checks and the way the returned funds are to be handled depends on whether or not ERISA applies to the plan.

A DB plan sponsor reduced the plan's mandatory cash-out amount from $5,000 to $1,000 effective March 28, 2005. It did so at the time for a number of reasons including (1) it was unclear what the fiduciary obligations were with respect to amounts between $1,000 and $5,000 that were transferred to an IRA and (2) it was unclear whether there would be any such IRA providers. Now that both of those two issues have been resolved, the plan sponsor wants to increase the mandatory cash-out amount from $1,000 back to $5,000. Can the cash-out limit be increased by to $5,000 without violating 411(d)(6)'s anti-cutback rule (in the sense that participants may no longer be able to elect payment of their benefit in the $1,000 to $5,000 range as an annuity)? Thanks!

If a client is looking to give a more guaranteed contribution to their employees, what affect does writing into a profit sharing document that the contribution will be 10% of pay?

Typically you would just list it as discretionary and then allocate an amount that would equal 10% of pay. If the document actually dictated that the allocation would be 10% of pay, and then the client did not contribute 10% of pay what are the consequences? Are you in effect creating a Money Purchase Plan subject to minimum funding if you write in the 10% of pay?

You can ammend a plan within the couple months after the plan year, but when MPP were a little more common, we would tell employers that once someone worked the 1000 requirement they were entitled to the contribution. So you couldn't really change a MPP formula past mid year.

I am trying to determine the difference between a Profit Sharing plan with the contribution fomula written into the document and a Money Purchase Plan.

A single employer sponsors our 5 401k/PS plans that co-invest their assets in privately managed portfolios that are custodied by a banking institution. It is clear to me how file the 5500 for the MT and the plans with regards to these investments.

However, these plans also co-invest their assets in a mutual fund, two money market funds, and an ETF custodied not at the bank, but at the mutual fund's sponsoring the investment. For these assets, do I include or exclude them as part of the MT filing. If excluded, then am I correct in assuming that I then have to report each plan's interest in these investments on each plan's corresponding line on schedule H?

Thank you in advance.

Need a copy of the industry classifications published by the IRS in Rev. Proc. 91-64, 1991-2 C.B. 866.

Rev Procs available on the IRS website only date back to 2000. Tried calling the IRS..."Due to high call volumes, we cannot answer your call at this time...." Have Googled the heck out of it and produced nothing. Any ideas? Thanks.

Are prevailing wage contributions included in the determination of the 25% deductible limit under 404(a)?

For a 6/30 Plan Year End 401(k) plan with a failed ADP test, do EEs that terminated prior to 6/30/2006 receive a QNEC as part of the test correction process? Thanx.