Employee retires at age 60 and begins to receive joint and 50% survivor annuity. 5 years later he divorces and former spouse disclaims her interest in the 50% survivor annuity in exchange for a lump sum settlement outside of the plan. The plan has a "pop-up" provision if the spouse dies before the employee. Can the parties do a QDRO to assign the survivor benefit back to the employee and "deem" the former spouse deceased??? any thoughts?

How would you all handle an employee who begins service after age 70 1/2? Does 401(a)(9)©(iii) require us to actuarially adjust back to a period when he wasn't even working, and thus not accruing benefits?

Does anyone know where to find an annual notice for plan opting automatic enrollment?

An investment option in our K plan is company stock. Our plan allows in-kind distributions of the stock. The question we've been kicking around is how to determine the cost basis. I've received conflicting info from two large mutual fund companies and our outside attorney. I'd like to throw this out there and see if anyone else can shed light on this for us.

Since April 2002 the stock has been held in a unitized fund. Participants do not own shares directly, rather they own units of the fund. These units have a mathematical relationship to the number of shares owned.

The IRS in a private letter ruling states that

“….if a security was earmarked for the account of a particular employee at the time it was purchased or contributed to the trust so that the cost or other basis of such security to the trust is reflected in the account of such employee, such cost or other basis shall be used.”

I can send anyone who is interested the PLR mentioned above. One of the issues here is what does 'earmarked' mean? Does it mean that the participants need to own the shares directly? Or does it mean they can own units of a unitized fund, whose units translate into actual shares?

This is an important question for us. Our 401k administrator holds the stock in a unitized fund. If we cannot use the actual cost basis described above, we need to average out the cost basis for the fund as a whole - which results in a very different number.

I know many participants take in-kind distributions - would be interested to see how others determine the cost basis.

Participant terminates from Employer #1 within a multiple employer plan & goes to work for Employer #2 who also participates in the same plan.

Plan doc references that all dates, service, vesting, etc. will carry from Employer to Employer within the group - no problem.

However nothing I can find in plan doc references distribution in this instance, doc just contains standard "distribution as soon as administratively feasible following termination.."

is this participant entitled to a distribution of his account from Employer #1?

An employer desires to purchase stock from its ESOP to provide cash for distributions to participants that elect to receive cash instead of stock. The employer purchase of stock from the ESOP and the cash distributions to participants would take place after the year-end valuation is received, which is several months after the end of the year. The stock price used would be the year-end valuation price.

(1) If the employer purchases the stock using the year-end valuation price, is this a problem with the requirement that transactions between the plan and a disqualified person (in this case, the employer) be valued at the time of the transaction? (Participants are not prejudiced, as they are to receive the value of the stock as of the most recent valuation date.)

(2) If so, how do employers that purchase stock for this purpose deal with the disconnect between the year-end valuation date and the date the valuation is actually received?

Hi to all

As all of us know there are constant solicitations from recruiters within our industry. We are such a specialized field that many companies go straight to recruiters.

I have a recent experience I want to share with everyone so that this does not happen to anyone else..

I went through CPS and was initially looking nationally; relocation seemed the best option... I was assured that my expenses (ie. rental car and food) would be reimbursed for the trip regardless if I accepted the positions (I interviewed at two separate companies during the trip).

Fortunately, or unfortunately depending on your POV, my spouse was offered a great opportunity in our local area which made relocating obsolete. (We did not find out this information until we were coming home from my interviews.)

The trip was taken the last week of July it is now the beginning of October (over two months later) and I have received NO reimbursement or information regarding the status of the reimbursement from CPS.

Please take the warning to heart and make sure you can afford to lose all the money spent to interview if you decide not to take the positions! I am out approximately $600 because of this situation.

Good luck to the rest of you in your job search.

Is there a maximum number of employees that a company may have to be able to have an age and gender related health plan with an insurance carrier? Like below the ERISA cut-off? Or are such plans okay under ERISA and the federal anti-dsicrimination laws (Title VII, ADA, etc.) no matter how many employees?

Follow up. May an employer who pays 75% of the premium under an age and gender related health plan with an insurance carrier require each employee to pay 25% of the premium attributable to that employee or must the employer set a fixed amount for types of coverage? For example, say all the employees have either single coverage or family coverage - must the employer determine a set rate to charge all employees for the single coverage regardless of their age and gender and another set rate for all employees for family coverage regardless of age and gender (rather than determining 25% of the actual premium for each employee which varies based on gender and age)? Or isn't that necessary under federal law?

Thanks in advance.

Hello!

In absence of an answer in the plan document, could anyone point me in the direction to find the answer to this question...

Two companies, one plan. One company in this ASG has forfeitures for the PY which need to be reallocated. Is it appropriate to reallocate among all plan participants, or only to the participants in the company that originated the forfeitures.

Thank you!!

Can a 401(k) plan simply add the matching contributions (100% immediate vesting provided) to the employee deferrals and just run an ADP test?

Thanks for any advice....

Would electrolysis be covered under a health fsa?

A particular medical condition promotes facial hair growth. Normally, cosmetic procedures would not be covered, but the condtion is due to a specific illness. Would a letter from the doctor explaining the relationship be beneficial?

If you think this can be covered, please provide any authority that you are aware of - thanks.

Does anyone know what an employer should do if they have not satisfied the universal availability rules?

There are no HCEs in this plan. The employer would like to base match on participant's age. The match will actually be greater as the participant gets older. Can we do this?

Employer sells assets of company to another entity effective 10/1/2006. Same employer is contracted by purchasing entity to run the company through the end of the year. All payroll will be run through the payroll of the selling company but will be paid for by the purchasing company. Any payment of benefits (premiums) will be handled in the same manner.

Who do these employees belong to? Is this a plan termination now? Or on 1/1/2007. All employees are continuing their employment in exactly same manner as they did on 9/30.

Plan was Safe Harbor Plan. If they notify the employees now of the impending termination and their intent to discontinue the matching contribution what does that do? Obviously the plan is no longer Safe Harbor but do we simply test and move on? Matching contributions are made quarterly and are current.

Has anyone looked at the effect that the new SEC proxy disclosure rules will have on the determination of who is a "covered employee" for the 162(m) 1 million dollar deduction limit?

Specifically, e.g., if a CFO's comp must be disclosed under SEC rules, would he be a "covered employee" under 162(m) even if he is not one of the high four?

What, if any, amendments are needed by the Plan and by the separate employers that are no longer going to adopt the multiple employer plan? I'm thinking a resolution by the employers leaving would be sufficient? Would it even need to be a corporate resolution?

As I read the PPA I believe that the combined plan deduction limit is now the defined benefit plan's funding requirement plus 6% to a defined contribution plan. If I am reading this right a firm could fully deduct contributions to both a DBP that has a funding requirement of 40% (I just picked this value for example) of compensation and a 401(k) Safe Harbor Matching Plan that uses a Match of 100% of the 1st 4% deferred. In fact, if I am right, the employer could put in another 2% (assuming 4% is all used up under the SHM) and deduct that contribution too. Regardless of other potential problems, is this right?

Under the PPA of 2006, participants must be permitted to diversify account balances invested in employer securities. Would this rule apply to a trustee directed account which invests in part in employer securities?

Help...I'm looking for a good online calculator to show an employer the tax benefits of adopting a 401(k) plan. Basically, what I am looking for would show them what their overall financial position would be if they 1) don't adopt a plan and simply invest their money after paying taxes or 2) adopt a plan, make employee contributions and invest the remainder tax-deferred.

Example: Hsband and wife can contribute $70k to a plan and the employee cost would be $10k. The client has said, "why don't I just pay tax on the $80k and invest everything after tax, since I will have to pay tax on the $70k later?"

Thanks!

Another question:

Suppose a company maintains a DB and a DC plan. We are cross-testing the two plans in order to pass nondiscrimination. Basically, all the NHCEs participate in the DC plan and receive a 7.5% gateway contribution.

The two owners participate in the DB. Enough NHCEs will participate and receive meaningful DB benefits to qualify under 401(a)(26).

The question is: Under this scenario, is it permissible to determine who participates in the DB plan according to a cutoff date for hire? In other words, for example, could we say that anyone who was hired before 1/1/95 is a DB participant and anyone who was hired afterward is not?