The owner of Company A has his wife on the payroll and sponsors a 401k plan. The wife owns Company B which has nothing to do with her husband's company and does not have any plan. She is paid $100K by Company A and receives $50K from company B. I believe this is a controlled group situation and the combined compensation of $150K from both companies can be used for purposes of Company A's plan. I always thought Company A can make and deduct the resulting contribution based on the $150K, but have recently spoken to someone who insists that the deduction has to be split between the two companies based what each company paid her. Which method is correct? All help is greatly appreciated.

I know there has been a quite exhaustive discussion on these boards about the 25% of pay limitation when combining a DB and a DC plan together. I have done the 404(a)(7)©(i) research. I realize there has been discussion about people flip flopping between the plans and issues with having an account balance in a profit sharing plan or possibly even just deferring to the 401(k) component of a profit sharing plan also.

I am trying to convince someone that it is acceptable to go over the 25% of pay deduction limit as long as their is no single person participating in both plans. It is my understanding (from a gentleman on this board) that this topic was covered at an ASPPA conference in 2005. Does anyone have a copy of the Q&A that covered this that I can use to add to my case? My goal is to design a proposal that has a class of employees receiving a DB benefit and a different class receiving a DC benefit. Right now I am being told that "they" don't think I can do that.

I don't know if this board will let you send attachments through their email system to other users, but if you shoot me an email I will reply. Thanks everyone.

I have a restated plan with a short initial plan year (9 mo). The definition of average comp is high 5 consecutive plan years. The definition of comp for the short plan year seems to imply a 9 month comp period because it is defined as "comp for a plan year" and the plan year definition indicates an initial short plan year. The ave comp definition does not address the short plan year. Based on that, it would seem that you would treat the short plan year pay as just another plan year without taking into account it is only a 9 month period, effectively averaging 57 months of pay over 60 months. That doesn't seem right though. I can't remember the last time I did a short plan year val, can I get some input on average pay and a short plan year? Are there guidelines in the Code? I couldn't find any. Thanks.

If anyone went to the Vegas WPBC/ASPPA conference last month, I thought I heard a comment from one of the IRS speakers that the service had come to a decision that in their reviews (I think determination letters) that they needed to be consistent with previous treasury guidance in confirming the QJSA is the most valuable benefit under a pension plan. I'm trying to remember the context of of this statement, assuming I'm even remembering it correctly. Was the context regarding the calculation of the MVAR under general testing ? If so, I assume it would apply to all plans subject to QJSA requirements so maybe we wouldn't need to test the 417(e) GATT subsidy under the MVAR ? just the QJSA subsidy. I could be totally wrong on how I took the comment though so I'd appreciate if anyone can confirm or correct me on this.

Does anyone see any fiduciary issues resulting from limiting investment options in a 401(k) plan to a series of target retirement date funds and a stable asset fund?

Does anyone out there use WinflexOne? How do you like it?? Anything you can tell me would be great.

Has your company ever had a Section 125 Audit? How in depth was it? Did the IRS conduct the audit? What other facts can you tell me about Section 125 audits?

Company B was a wholly owned subsudiary of Company A. On 07/31 Company B is sold to one of the employees in a stock sale. Prior to the sale Company A sponsored a 401(k) plan, Company had also adopted that plan. The buyer of Co. B contacted us yesterday & wants to spin-off the assets into a new plan sponsored by B. Company A's position is that since the new plan was not effective as of the date of sale, the assets cannot be transferred & that there is a distributable event. Ideally these issues should be decided prior to the sale, but I'm not so sure I'd go as far as Company A's position. I've researched & I just can't find anything definitive enough to satisfy me.

Thanks in advance for any guidance.

Has anyone seen any guidance on whether the grace period for the health care FSA could cause the FSA to fail to the HIPAA portability exemption and thereby the limited COBRA exemption?

Company X maintains a cafeteria plan for its employees which includes both a health care FSA and a dependent care FSA. H is an employee of X and participates in its health care FSA, contributing $3,000 for 2006. If W divorces H as of July 1 of the plan year and the plan entitles all qualified beneficiaries to elect COBRA for the remainder of the plan year, is W's election for $750 (1/2 or $1,500) or can W elect $1,500? The latter number seems unfair since the employee still has the obligation to make contributions for the rest of the year and nothing has happpened that impacts his coverage. If W can elect $750 for the balance of the year, can H's remaining contributions be reduced by 50%?

Hi,

Have a question in regards to how a discretionary matching contribution feature can be applied to bonus deferrals. We have a client that allows participants to make bonus deferral elections separate of their 401(k) elections. They have a discretionary match definition. They include bonuses in the plan definition of compensation. Does the client have leeway (i.e. discretion) in making matching contributions on the bonus deferrals? They seem to think they do, but I would tend to disagree, since bonuses are included in definition of comp.

Thanks for any help!

I was wondering if anyone has any experience with outsourcing/offshoring any of their data processing work. If so what kind of benefits do you see and what pit falls? It seems that this is an unused area in the industry and i'm wondering why. Thanks

I'm an advisor to a non-profit who currently has a 403(b), employee contributions only with a mutual fund co. I believe the arrangement is done on an employee level whereby they simply fill out some forms. I believe you refer that to a non-ERISA 403(b)?

Now they want to add some Employer contributions, so here are my questions.

They are having a plan document drafted with all the provisions. Does that make this an ERISA plan now?

They want to add the employer money to the existing employee 403(b) accounts. Is that advisable?

If they do comingle the employer with the employee, does that become a problem. Like vesting issues and distributions. I think the employee would be able to liquidate the funds under current arrangement and that would be a problem if they are not vested.

Can anyone offer some suggestions with the above scenerio. Perhaps you have had this sitiuation already.

Thanks.

I have an employee who stopped participating in our medical FSA due to qualified change in status. He has a balance remaining in the account and no pre-termination medical costs to see reimbursement for. He did have pre-approval for medical care from his physician before terminating, but was unable to actually receive the medical treatment before he terminated participation in the FSA. Can he seek reimbursement under the FSA for the pre-approved treatment he received after his participation stopped?

About 18 months ago, the company I worked for at the time was acquired or bought out by another. I now work for a different employer with a new 401 plan.

The old plan has not been terminated yet but since I am no longer employed with the company shouldn't I be allowed to take a lump sum distribution? They have the ERISA compliance department looking at this for me. I can't figure out what the hold up is - I am no longer an employee under the old plan!!

Any help would be appreciated!

I know that there are several cases out there where scrivener's error was used as a defense to ERISA claims for benefits. I have yet to see a case or other guidance where scrivener's error was raised in the context of correcting plan qualification failures. Does anyone know of any?

Maybe I'm wrong, but it seems like the traditional doctrine of scrivener's error does not have a place in the context of qualified plans when plan document failures can be corrected under EPCRS. Any thoughts?

My brain has decided to take a break, so I figured I'd post this. New PS plan started for 2005. To determine HCE for 2005, I need to get comp for 2004 to see who earned $90,000 because it is not a new company, just a new plan? Thanks.

I have a Defined Benefit plan that covers bargaining employees only.

I'm completing Form 5300 for a favorable determination letter.

I'm confused on how I should answer Line 14, which asks "Is this a request for a determination regarding a design-based safe haror under section 401(a)(4)?"

Does anyone know how I would determine how to answer this? Thanks much.

I understand that for single-employer plans for 2006 and 2007, the maximum deduction limit under unfunded current liability is changed to 150% of the plan's current liability, less the plan's assets.

Let's assume no amendments in the past two years and that we're not talking about a terminating PBGC-covered plan.

I'm stumbling on the interest rate that can be used to determine the current liability for this purpose. For 2004 and 2005, we could use the lowest interest rate in the old OBRA current liability range (so 4.59% for PYB 1/1/05). My reading of the PPA leads me to conclude that for 2006 and 2007, the lowest interest rate we can use for this purpose is now 90% of the weighted average of the corporate bond interest rate (so this would have been 5.49% for PYB 1/1/05 if in effect then and will be somewhere close to 5.15% for PYB 1/1/06). I arrive at this based on the fact that PPA removed IRC 404(a)(1)(F).

Does anybody else agree? Thanks much.

Folks;

I am curious about any conflicts you may see between these 2 entities.

According to Sec. 2791(d)(3) of the Public Health Service Act, a bona fide association, with respect to health insurance coverage offered in a state, must meet the following requirements:

1. Must have existed for 5 years.

2. Been formed for purposes other than obtaining insurance.

3. A person must not have to prove health to join.

4. Must be a member of the association to obtain insurance.

5. Meets any additional state requirements .

A VEBA is formed in order to obtain insurance for the participants.

Wouldn't this conflict directly with the first 2 requirements of a bona fide association?

Don Levit