An employee (non-5% owner) is a participant in a 401(k) plan that is terminating. He is over age 70-1/2. He wants to roll over his plan distribution to an IRA. Is he required to receive a required minimum distribution from the 401(k) plan prior to the rollover, even if he is still working?

Hi, gang -- I have a request from our site's sales manager to find more pages on which to display banner ads for advertisers who want to reach employee benefit professionals (you!). These ads on other pages of our site are an important part of our revenue (which goes to cover salaries and benefits for four employees, server costs, etc.).

Could you live with seeing a banner ad in the top-right corner of the message board pages?

The banners would involve only services or products for employee benefit professionals (no off-topic ads like computer products, etc.). It would be stuff that we think an employee benefit professional would like to know about.

The load time would be practically nil for users with high-speed connections; even with dial-up connections they'd cause a delay of only a couple of seconds.

The banners would not place a "cookie" on your computer or otherwise track you if you decide to click on one for more information. (Per our strict privacy policy.)

Please let me know if this proposal causes stomach-churning for you (post a message in this thread or email me at davebaker <at-sign-here> benefitslink.com). And if you're OK with it, let me know that, too.

THANKS!

Dave Baker

Webmeister

According to Section 515 of ERISA, a pension fund can enforce the collection of delinquent contributions based on the terms of the collective bargaining agreement or the terms of the plan. What happens if those documents are inconsistent and there are no provisions within either stating which controls in the event of a conflict?

Is there a penalty for a delay in depositing employer contributions. In this situation, the employer makes a 2% contribution into the individual 401(k) account irregardless of participation. It has been brought to the employers attention that some hourly employees rates were incorrect and in fixing that problem, they now have to go back and contribute additional funds to the base contribution they make each pay period. So my questions are:

1. Does the ER have to determine any interest lost on the late contributions?

2. Is there a point where if the contribution amount is considered negligible - no action required?

I have handled this with 401(k) employee contributions, but am unsure of employer contributions that are not match related. If you can also suggest a website where I can find additional informaiton that would be great.

Thanks for your assistance.

I'm currently researching what the term "principal residence" may be defined as with respect to a hardship withdrawal. A participant is currently incarcerated and as a result, his spouse's home is being threatened with foreclosure.

There's a concern that intrepreting the term too broadly may allow others to request withdrawals that might violate the plan. Such as, if principal residence is the residence which you return to each day, etc. then the correctional facility would be it. However, I have come across case law which says that because it is not voluntary, for purposes of diversity at least, the correctional facility is not the residence. Any help would be appreciated.

I'm simply looking for any regs. , rules, opinions, that authorize a public employer to contribute both to its state pension system and a union fringe benefit fund. I've already found authority under the state's laws, but simply need to cite to something specific related to the Code or ERISA. Everything I've come across discusses governmental surplus or supplemental plans, and governmental plans in general. Since the fringe benefit fund would cover nonpublic employees- it's not a governmental plan. Any help is appreciated. Thanks

It seems accepted that if a 4975(e)(2) disqualified person exercises a put option, the plan has to obtain a current stock value to make the payment. The question is, does the current value requirement only apply to the put option or any cash distribution of shares in a disqualified person's account? 54.4975-(11)(d)(5) says in the case of a transaction between the plan and a disqualifed person, value must be determined as of the date of the transaction. That would seem to require any payment made to a disqualified person for his shares not be done until a current value is obtained. I don't recall seeing this in documents (except relating to the put option), but we know that doesn't necessarily mean anything. Any thoughts would be appreciated.

We have a taken over a plan that filed their 5500 lasr year about 15 days late. Its a large plan & they did not attach an audit (doesn't sound to me like it was completed.). They did not use DFVC. They received a notice form the IRS today assessing a penalty of $175. (Evidently the IRS hasn't noticed yet that the audit is not attached.) The Department of Labor has not sent any notice. If they hurry, can they get the audit completed & refile under DFVC? I've reviewed the program & seems to me that they would be O.K. to do that as long as it is done prior to the DOL giving notice.

Thanks in advance for any guidance.

The instructions to the 2006 5500 state no sch P required. The form isn't included. Apparently doesn't exist for 2006.

See instx HERE

How does a plan correct for a late profit sharing contribution?

1 Do they have to put earnings in as well?

2 How are the earnings calculated - is it the plan average or a rate determined by the IRS?

3 Do they have to file a 5330?

4 What about deductibility - they lose it for the plan year it was intended for, does it count for the year that it is actually deposited?

5 What about the earnings they are depositing - are they deductible?

Thank you for any feedback!

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!