A DB plan for a small non-profit has been around for nearly 30 years. Their financial statements have been issued with the caveat they are not intented to comply with FAS 87. They simply put the information in accordance with FAS 35 and the aforementioned caveat.

They want to entertain complying with FAS 87 going forward. Any thoughts as to how to accomplish this? Obviously, they are not interested in going back and recreating 20 years of work to get to a starting point.

Good morning,

We have a top-heavy profit sharing plan that specifically excludes "compensation earned while in union pay status" for allocation purposes; however, since the plan is top-heavy, I believe that we must include this "excluded" compensation when calculating if each participant has received the 3% top-heavy minimum. Is this correct?

Thanks for your help!

A church association wants to sponsor a 403(b) plan that will cover all of the churches that are members of the association. I assume this is okay to exclude certain member churches if it is desired. Anyone have any comments or anything else I should be aware of?

My question is concerning the combination of the DB ebars with the DC ebars for the general test when the DC plan provides the combo plan gateway of 7.5% of pay, but where the DC plan is only based on 7 months of pay in the first year. The client is adopting 2 new plans this year, they've never had qualified plans before and their fiscal year is a calendar year.

If the DC plan is a short plan year, say June 1, 2006 to 12/31/2006, but the DB plan is the full 2006 year, when we convert the DC contributions and divide by DC comp for the DC ebar, are we OK to use the short year DC compensation to achieve the DC ebar? The DB ebars will be based on full 2006 compensation - so when we add the two sets of ebars together, I'm concerned that we are adding apples to oranges to arrive at an invalid result, or is this legitimate thing to do?

PS, yes I know we could lower the 7.5% a bit because of the DB accruals, but we are just concerned over the short plan year DC here.

I did not find guidance, but I could have looked harder I suppose.

A 401k PS plan was written to provide for lump sum distributions only (no J&S). The plan also allows for hardship withdrawals. Would the hardship w/d forms still require spousal consent, even though it is not needed for other distributions?

I am interested in understanding prevelance of dedicated in-house ERISA legal counsel at larger companies (5,000+ employees). The key word here is "dedicated" -- not an in-house employment/labor attorney who does benefits on the side.

We are trying to look at this from many angles and are particularly interested in views from Comp & Benefits Managers "out there".

What might there be to gain &/or lose by sticking with our current outside counsel at a large law firm versus bringing all the work inside? By the way, service and quality from our outside law firm is outstanding, but as you've likely guessed by now the bills are substantial.

Any insights welcome and appreciated.

Cole Stevenson

CPA has asked the question... I have a plan where an employee moved from being a union EE to a management EE (non union). The Union EEs have their own plan and the management EEs have thier own plan. For eligibility purposoes, when would we start counting the hours for the EE who just became management? From the beginning of the year or from the point where she became management forward?

"Erroneous actuarial computations" and "actuarial error" are two phrases which annoy me.

The first appears in the 1956 Treaury Reg. 1.401-2(b)(1), as the basis for the exception allowing an employer to recover surplus assets.

The second phrase appears in other literature as a synonym for the first.

The phrase is intended to recognize actuarial assumptions and methods are intended to approximate reality and rarely will duplicate the expereince of a plan.

Actuarial assumptions are used to estimate the costs in advance and we expect and hope the projections will come close to the truth. Reasonable actuarial assumptions, no matter how well developed and used will rarely, if ever, develop a fund which exactly meets the liabilities upon termination of a plan.

There is no "error" involved.

If I were to call something an "accounting error" or a "legal error", it would be a slap in the face of the accountant or attorney....and I might be subjecct to a law suit.

Yet, we actuaries allow the world to use the perjorative phrase.

So, I ask your help to develop a phrase which will replace the offensive ones.

To start the ball rolling, we have

actuarial deviance

experience adjustment

experience deviation

experience disparity

or

as a result of Al Qaeda..

A participant has asked about reimbursement from a limited scope health FSA for a medical expense that is not covered by medical insurance at all - ie, speech therapy.

I do not see a way in which a limited scope FSA could be designed to allow this medical expense to be reimbursed.

Or would a post-deductible health FSA be able to reimburse the speech therapy after the medical deductible has been met (even though the therapy would not apply to the deductible)?

Am I missing something? Ideas? Opinions?

I just started a new job with a company paid retirement plan. After six months company pays 12% of annual salary into retirement plan. Fullly vested after five years. I didn't want to ask the HR person cuz I didn't want to look like an idiot. If someone could explain to me how this works or direct me to an explanation I would greatly appreciate it.

Thanks in advance.

I did a quick search on this and found a topic that began to address it but it petered out before any resolution could be found...

Given full disclosure to the plan sponser and plan participants, can 12b-1 fees be allocated back to the participants as income?

Plan sponser is using a financial advisor that is using R-2 shares. We do not want to accept any 12b-1's (even to offset fees) as we simply would rather remain neutral as to assets (in this specific case there are cheaper recordkeeping opportunities that offer r-5's and thus no 12b-1's and savings to the participant) Since 12b-1's are really a reduction of income, I'm wondering if we can allocate them back as income to the same individuals...in essence making them whole? or do we run into the issue of them being labeled as "fee reimbursement" and thus a contribution and thus having to be allocated as such.

I am a Payroll Coordinator who is trying to set up salary deferral limits crorrectly in the in-house payroll program.

My new employer (a hospital) has several plans. Two Tax Sheltered Annuities have been offered for many years to which no employer contributions are made (non ERISA 403(b)). A 401(k) Plan was established last year to which employer match and disretionary contributions are made.

My question is - what is the maximum salary deferral amount for an employee (under age 50) for 2006 ? Is it a total of $15,000 to all 3 Plans ? Or is it $15,000 to the TSA's and $15,000 to the 401 (k) for a total of $30,000 ?

I've seen what looks to me like conflicting answers to similar questions on this board. I'm thinking that whether or not the 403(b) is an ERISA plan may make a difference.

Thanks in advance

An employer has begun reimbursing their PS trust for the quarterly investment management fees of the pooled trust. Its my understanding these reimbursements are to be treated and allocated as contributions, since they are deductible under IRC 404. Comments anyone? thanks

Can someone site for me the code or a treas reg where it states a non-spouse beneficiary cannot roll from a qualified plan where they are a beneficiary into a beneficiary IRA?

Plan sponsor filed in 2001 and noted on Schedule I Part II question 5(a) that yes, a resolution to terminate the plan had been adopted. I see no record of a "final" form 5500 being filed ever (the 2001 version was not marked as the "final" report). In 7/2005, the employer started a new plan and transferred the assets of the old plan into this one. Balances from the old plan appear to have been rolled over into this one in September. (We are new recordkeeper/outsourced for the trustee as of 1/1/06, but I'm responsible for the 2005 Form 5500.) Need I be worried that there should have been an "old" plan final Form 5500? The "old" plan is filed under plan #002, but this "new" plan is 001. That looks odd to me. Any thoughts? Thanks.

I don't (fortunately or unfortunately) do a lot of work in the governmental 457 plan area, so I am hoping someone can point me in the right direction.

Question: Does the 457(g) requirement that assets be held in trust for the exclusive benefit of participants require that the 457 plan provide that the plan benefits are not subject to assignment and alientation (similar to that required by 401(a)(13) for 401(a) plans)?

An attempt is being made to attach a participant's account under the 457 plan to satisfy a state court tort judgment against the participant. The plan terms do not address this.

We have a client whose defined benefit plan covers 174 participants: 150 active and 24 vested terminees. The NOIT was n supposed to be given out 4/30/06 with proposed termination date of 6/30/06. Client called this morning to say that NOIT had been given to the actives, but not to the vested terms. Looking at PBGC reg. 4041.6 it says the PBGC may impose a penalty of $1100/day, and may also issue a notice of noncompliance. The operative word appears to be "may", which implies that there may be some wiggle room. Does anyone have experience with such a situation? The plan year end is 9/30, so it wouldn't be a major problem to issue a new notice with a later termination date, but client would rather not.

Can anyone tell me (or point me to something official) if the CalSTRS DB program causes our IRA deductions to phase out due to participating in a "retirement plan"? It would seem to me that since it is not voluntary, that it shouldn't be considered. My new tax guy says that my wife's IRA is not deductible because she is a FT teacher contributing to CalSTRS. (we've always deducted it in the past and she is not contributing to any other plan like 403b or 457)

Steve Walters

Our plan year runs 1/1 through 12/31. An employee just contacted me yesterday (June 7) to say that both she and her husband have elected the annual maximum $5000 for dependent care. She is requesting to stop her contributions because their combined contributions YTD will reach $5000 by July. As of June 1st no claims had been paid by our TPA from her DCAP account.

Has anyone ever encountered this situation before? How did you/would you proceed? Thanks for your input.

Can a plan be top heavy the first year?