A small DB plan participant terminates employment October 31, 2005. He requests a lump sum distribution to be paid on April 30, 2006 (a Sunday). The employer agrees to this in writing. The participant completes all benefit elections and provides them to the administrator by April 10, 2006. The administrator provides a letter of instruction for the trustee to make the distribution. However, the trustee does not make the distribution until May 8, 2006.

This is only a delay of a week and does not seem like a problem. However, the lump sum benefit (per the document) is based on the 417(e) rate for the month prior to the distribution. If the distribution would have been made by April 30, 2006 it would have been based on 4.73% not 5.06%. The administrator recalculated the benefit based on 5.06% before the distribution was made.

Is the trustee in trouble for this slight delay in making the distribution?

Thanks much.

When determining if a church can provide employer contribuitons to non-ERISA 403(b)s it states first to check state and local statute. Does anyone know of a way an employer can find this information?

Company has an off calendar DB plan and a calendar K plan. Call the DB plan 7/1/2005 to 6/30/2006.

The plans are top heavy and the documents say that the DB provides the minimum.

Which year goes with which year for top heavy minimums? Or does something say that the differing years make this arrangement impossible?

The DB was recently frozen so this is a real issue.

The aggregation rules for testing are clearly defined in 1.416, but I have not as yet found anything that correlates the minimum benefits.

Anybody have a cite? Thanks.

Can someone confirm whether or not a SEP is solely funded by employer contributions. Are employee contributions allowed?

If only employer, does the employer decide how much to contribute and am I correct in saying this amount would be contributed to every eligible employee

If both contributions are allowed, is the employer only contributing to whomever is deferring slary??

Thank you for any help.

Well, FASB has decided to bury its head in the sand and has approved the PBO being placed on the balance sheet as representative of the liability a defined benefit plan. This was done despite strenuous objections from employers and actuaries explaining why this was not a good measure of liability.

Is it possible under the guidelines set out by the American Academy or other actuarial bodies to attach a letter to the FASB numbers when provided stating that they should NOT be used for the purpose intended by the FASB board?? (I am just wondering whether we as actuaries have a responsibility knowing that the numbers are not good for the stated purpose to let the client know under the rules of conduct.)

Any opinions??

Gang,

What annual administrative services does or can a TPA offer to 457(f) Non-Qual Deferred Comp. plans?

I understand the obvious document and document compliance services, but what about:

Recordkeeping of any "informally funded" Rabbi Trusts?

Some sort of annual employee benefit statement?

Some sort of plan valuation report for the employer?

Can anyone attach samples of above to their response, or e-mail them to me (jesposit@smlny.com)?

Sincerely,

Espo, QPA

Plan is a 401k that is part of a much larger controlled group. Plan stands alone for coverage but has different match rates for different groups and many eligibles that do not receive a match. Is Benefits Rights and Features tested on this plan only or on a controlled group basis? Any help appreciated.

For a non-audited schedule I, are people attaching a schedule of late deposits in order to demonstrate that the correction has been made?

Or are you just filling in line 4a, since the schedule is not required anyway?

Looking for some opinions on this subject. The question raised was, "Can you use 412©(8) to increase the formula retroactively?"

This really seems to break down into two issues - first, can you do it, and second, if so, is it deductible for the prior plan/fiscal year. For example, let's say that you have a calendar year 2005 plan and fiscal year, with a 12-31-05 EOY valuation date.

Can you, on 3-2-06, amend the plan to increase the benefit formula for plan year 2005?

In reading 412©(8), I find myself sitting on the fence. It appears to me that the purpose of this is to allow for retroactive amendments to REDUCE minimum funding requirements, but it also seems to leave room to increase benefits with a retroactive amendment. So, do you believe you can, or not? I'm inclined to lean towards the interpretation that you can.

Second, assuming that you can, what about deductibility? Is it deductible for fiscal year 2006, or not until 2007?

Thanks in advance.

Working with a new 501c3 client that is a social service Organization. They have two 403b arrangements with their employees. One is for Union employees and the other is for non union employees. They have 220 union employees and 120 non union employees. The Organization, independent of whether or not the employees (both union and non-union) make a salary reduction contribution, makes the following contribution for the employees. 3% of wages for union and 4% of wages of non-union. There is vesting for the Organization piece. Doing a little research it comes to my attention that once the Organization contributes this makes the arrangement subject to ERISA. The funds are invested in mutual funds. If this is true, would it then mandate the organixation to have a formal plan, file a full 5500 and most importantly have an annual audit. I have been told by some yes others no, but not real comfortable with my answers so far. Thank you!

I know this is a DB board, but wanted to submit this here, since many DB practioners/actuaries also administer DC plans.

A law firm has two plans.

One for Associates - 401k only

One for Partners and support staff and some other attorneys - 401k, 401m and PS

Under the ABT for the partners plan (for eg.) when computing the allocation (or benefit accrual for cross testing) my understanding is that all non-excudable employees, are given an employee benefit percentage and included in the ABT test, as opposed to just the participants in the partners plan, even if the partners plan is to perform the general test on an individual plan basis?

And furthermore, all allocations (or benefits) are combined from both plans, including elective deferrals?

And that the rate groups for PS non discrim testing are based on just the participants in the partners plan and exclude elective deferrals (just PS allocations included)?

For coverage testing the 401k, the 401m and the PS portions of the partners plan are all tested separately and must each pass?

Thanks and interested in any differences of opinion (if they exist).

This question has come up before but after MUCH searching, I'll be darned if I can find it.

Say a plan and its sponsor co-invest in a piece of real estate. Because of certain minimums, the sponsor would have been unable to invest in that property without the co-participation of the plan.

I seem to recall that the conclusion on the missing post is that this IS a problem because a disqualified person is benefiting (in terms of ability to participate) from the transaction.

Can anyone elaborate?

We will be hiring a new employee who will pay COBRA premiums to hhis previous employer during our pre-ex period. We are considering reimbursing the employee for the COBRA premiums. It appears that Rev. Rul. 61-146 allows this to be done on a non-taxable basis. Correct? Anything else I need to know before we say we're going to do this?

Thanks,

Ken Davis

Plan Year End is 6/30/06.

Owner's D/O/B is 10/7/35, therefore becoming 70 1/2 in May, 2006.

When I calculate his first RMD, can I use the 6/30/05 valuation ending balance, or do I have to do a special valuation to figure out his 12/31/05 balance and calculate it from there? What account balance date would I use for the first RMD and then what would I use from that point forward?

Any thoughts?

Hi, I am in the process of closing out a plan that now has two ppts. One of them cannot be found. I've done my due diligence with search firms and the SSA letter forwarding service. I have the form for the state of Ohio's unclaimed property dept.

My question is: do I submit the gross amount of the account or have Fed withholding taken? Either way he won't receive the 1099-R unless he happends to come forward later this year, which is unlikely. If he ever claims the money from the state, he'll need to remember to include this on his tax return as the state isn't going to issue a 1099-R.

Thanks!

Is there a rate group issue with establishing Employee Groups by compensation level?

A new plan has 620 participants at the end of its initial year.

Can the plan file a Schedule I, instead of a Schedule H? We determine a "small plan" by the number of participants at the beginning of the year. For a new plan, of course, the opening count is 0.

Can I use Schedule I, or would that be cheating?

A 200-participant 401(k) plan is contemplating moving from Fund Company A to Fund Company B. Fund Company A has indicated that it will impose a fee of 1% of the last 12 months of purchases of some of the fund shares, with the total fee being roughly $8,700. The plan sponsor is willing to absorb this cost.

Fund Company A is also indicating that it must assess these fees directly from participant accounts. If it does so, and the plan sponsor immediately makes the affected participant accounts whole, would these reimbursements be considered plan contributions (thus subject to 415 and 404 limits, etc.) or sponsor expenses?

My research turned up nothing directly on point. This does not seem to be quite the same situation as revenue Ruling 86-142 (payment of commissions on securities transactions within a plan are plan contributions, not sponsor administrative expenses.)

Any insight and thoughts would be much appreciated.

Can the trustees of a multiemployer plan force a withdrawal of all employers, thus triggering withdrawal liability? Do the employers have the right to refuse this forced withdrawal imposed by the trustees?

Can anyone give insight on how they set their benefit credits for their full cafeteria plan? Our client is using years of service but wanted to see other options. Thanks!