I have a client that had two seperate plans - a Money Purchase and a Profit Sharing Plan. They elected in July 2005 to amend the MPP to have a 0% formula and terminate. There are two participants in each plan (the same two). They each have an individual account at AG Edwards for each plan. We had advised them to keep both accounts open (one that was the MPP money and the other that was the PSP money) at AG Edwards; we would roll the MPP into the PSP and leave the sources segregated (so now the PSP has two sources - PS and Old MP). The segregated MP $ would be subject to the J&S rules, but the PS $ would not. Well, I have just discovered that in February of this year, this client closed each of the MP accounts and rolled them into each PS account. So the PS and MP money has been mingled at AG Edwards, but I am still tracking it seperate in our software system. Would the PS money be subject to the J&S rules?

Thanks for your opinions!

I have heard that companies may have one type of welfare plan (with SPD) for all employees, while creating separate welfare plans (without SPDs) for the benefit of only highly comp'd employees. Are there any legal problems with this or reasons for employes not to create this type of arrangement?

Thank you.

Can an exspouse who receives employer stock from a qualified plan due to a QDRO elect to utilize NUA? If so where can I find this information in writing?

The DOL is saying publicly now that you can only use the DOL calculator if you file under VFCP.

However, we've had clients ajudited by the DOL, where the auditor goes so far as to fill out the interest calculator for us as an example of how to correct??

I'm curious what other people are finding. Is it just a few higher ups pontificating, or are the field investigators applying this stupid standard as well?

A 401(k) plan has a non elective company contribution (fixed percentage of pay) that goes to all eligible employees. In addition to that, there is an additional company nonelective contribution that is allocated weighted for service and compensation.

When testing for 410(b) and 401(a)(4), can/should both contributions be combined, or must each separate allocation method pass each test on its own? Does the answer change if the eligible group of employees who receive these 2 separate contributions differ?

I'm just starting to study Roth IRA's so please forgive me if this question is completely off the wall.

I've been told that it is possible to make the down payment on a home using Roth IRA funds... then after selling the home, (flipping it quickly for a profit) you can deposit both the original Roth IRA funds and the profits back into the Roth IRA without tax consequences. Does anyone know if this is possible? Thanks.

1.409(p)-1T has some definitions and examples that are confusing (to me anyway.) In the definition of disqualified person relative to the 10% test it refers to a person's deemed-owned shares. Relative to the 20% test it refers to the person and members of his family. It then goes on to repeat that expanded definition of family that we love. Under attribution rules it says the rules of 318(a) apply to determine ownership of shares including deemed-owned and synthetic, but in applying section 318(a)(1) the larger 409(p) definition of family applies. Finally, it shows an example where a husband and wife each own less than 10% but are determined to be DQPs because their combined ownership exceeds 10%. Their combined ownership does not exceed 20%.

In every seminar I've seen the 10% test is applied individually and the 20% is applied to family groups, with most of the attention focused on the groups. However, the reg example does not do this. Because their individual percents do not exceed 10 and their combined does not exceed 20, I think in days gone it's likely they would not be classified as DQPs (by me anyway.) I'm sure the percentages used in the example are no accident. Does the example mean that some sort of family aggregation applies to the 10% test? If so, is it 318(a) or 409(p)? If 409(p), it doesn't seem like the 20% test has much meaning.

I hope I'm missing something. Any help would be appreciated.

QUick non-plan-related question for securities law experts out there: can a labor union be considered an "accredited investor?" Looking at the definition in Rule 501(a) (particularly (a)(3)), it seems as though it only contemplates 501©(3) orgs (a labor org is a ©(5)), corporations, certain trusts or partnerships. Thanks

Anybody know if this has come out yet? I have a client asking me, since they are an off plan year.

I am thinking the answer is that we won't hear until the fall, but I wanted to make sure......

We are working on a typical small plan that offers actuarially equivalent annuity options along with a lump sum option that is subject to 417(e). In determining relative value, it seems clear that the annuity options are all 100% of the QJSA option using plan actuarial equivalence. However in determining the relative value for the lump sum, do you (1) take the lump sum value determined at 417(e) rates and divide by the lump sum valued at plan act equiv. and make the resulting pct. the relative value, or (2) take the lump sum value determined at 417(e) rates and divide this by the present value of the QJSA at payment date using 417(e) assumptions?

A strict reading of the IRS regs seem to support #2 but I though many practioners were using the approach in #1. Opinions are welcome.

well, its time to embaress yourself and show your age or tv viewing habits by identifying the following shows based on a line from their opening theme song.

Hey, I waited until Friday so I wouldn't 'mess up' anyone's week. ha.

ok, ok. even I knew and watched a bunch of these.

good luck.

#1: "Darlin', I love you but"

#2: "So go ahead, enjoy the view"

#3: "Enjoying each other's joys"

#4: "California is the place you wanna be!"

#5: "If you find some girl to love"

#6: "We've finally got a piece of the pie!"

#7: "Songs that made the Hit Parade"

#8: "And suddenly make it all seem worthwhile"

#9: "And oh what heights we'll hit"

#10: "And those with too ready a trigger"

#11: "They're altogether ooky"

#12: "Lots of curves, you bet!"

#13: "It sure isn't you!"

#14: "She may be pint sized"

#15: "Keep smilin' until then"

#16: "When the country was fallin' apart, Betsy Ross got it all sewed up!"

#17: "Daughter Judy"

#18: "Let's ride with the family down the street"

#19: "A hot dog makes her lose control!"

#20: "Brave, courageous and bold"

#21: "Tossed salads and scrambled eggs"

#22: "The youngest one in curls"

#23: "Tale of a fateful trip"

#24: "Watch out for that tree!"

#25: "Unless of course"

Just found out a client has MP & PS plans floating with Fidelity. No contributions for years, total of the two plans is under $100,000.

He now has a business (100% owner) with employees and a PS/401k plan.

Ignoring the GUST restatement issues, are the plans aggregated (say via controlled group rules) so that the two frozen plans are required to be filed?

I see in the instructions that an EZ would be unavailable due to controlled group, but are the assets aggregated to determine the filing requirement status on the dormant plans?

Thanks

I am attending a employee benefits conference this week in Cincinnati. Martin Pippins from the IRS stated that the DOL & IRS differ on how to calculate the "amount involved". The IRS position is that the "amount involved" is the interest & the DOL position is that it is the principal. He indictaed that guidance would be issued within the next few weeks, but would not tell what the guidance was going to say. Has anyone heard what that guidance will say?

Thanks in advance

Is there a requirement that a plan have a financial advisor? Client is a law firm and are choosing a daily trading recordkeeping platform that has educational tools and asset monitoring tools built into the website. Could they avoid the fees and simply go at it alone? Would the answer change if it were a small manufacturing company?

Note this is not a should they...but a could they question.

I have a client with 48 EEs. They have a Blue Shield fully insured HMO and PPO plan.They have one EE that has a spouse on Medicare that is also covered under the Blue Shield plan. In 2003, Medicare paid over 50K in claims as primary payer for the EE's spouse. The providers did not advise Medicare or did not know that another payer was involved or that Blue Shield should have been primary. Rather than contact the employee, CMS sent all the claims addressed to the employer saying that they were responsible since the group insurance should have been primary and Medicare paid in error.

CMS has hired a collection agency that has been harassing the employer. The employer did not even know that the employee had a spouse with serious illness and contends that they should not be held responsible. I sent the claims over to Blue Shield however my concern is that the claims are over one year old and they may decline payment. Also, the letterhead and the letterhead were CMS letterhead addressed to the employer. Could this be a sneaky way for a hospital to get payment or is it legit?

How can the employer be responsible when they were not aware of an individual medicare status or condition?. They cannot go to the hospital with the EE and their spouse in order to police their submission of the Blue Shield card along with the Medicare card. They cannot control what the provider does either and they are not aware of everyone's medical condition.

I contacted the collection agency and they told me that since the employer has a group insurance policy, they are responsible to pay back Medicare! zIt is fully insured so I don't know why that would be the case when insurance is not mandatory in Californua.

Blue Shield representative told me that they have had 3 cases like this in the last month and they have never seen it before. Is this how we are paying for the Medicare D prescription plan? It makes no sense to me. It would seem that if the statute of limitatons does not require Blue Shield to pay, that the EE would have to bear the responsibility. OR, does CMS realize that the employer will handle this in a more timely fashion and use this as a strategy to recoup the funds? Or is this a scheme where the provider and medicare collude to help the provider get back the funds? Would the employee/employer receive the Blue Shield contracted for aged claims (the contract was in force at the time of the claims)

No one has seen this before in my area, if anyone has an answer or any direction on this, please advise since i am sure there will be more cases like this one. Typically the employee is put into collections for claims not paid by the insurer and are the ones required to submit claim. Is this one of those bills that was attached to other legislation for the hospital lobby or something of that nature or the Medicare Reform Act 2004 that no one noticed but that will have serious repercussions to the employer? Thanks for any help in this. The employer doesn't want to hire an attorney yet since they are afraid they will be stuck with the bill.

I know this is probably a dumb question, but...

A participant in a 401(k) plan paid appx. $8,000 in UBTI from his earmarked account. He had an LLC as one of his investments that generated the UBTI. Was this OK to pay the tax from his earmarked account? As a general rule, who should pay the tax (e.g., the Plan Sponsor, the Plan, the participant)?

Thanks for any input!!

I work for a small firm that uses a cafeteria plan. There's been talk recently that we can use our cafeteria plan to pay college/graduate school tuition, which would be nice since several undergrads and graduates work here. I'm told the code at least opens the door for this possibility, but I can't find it. Does anyone know anything about this?

Does anyone know of a reason why a nonqualified pension plan cannot be amended to allow survivors a choice between installments or lump sum payment upon death of the employee? The plan presently only allows for installment payments. They would like to amend the plan to also allow for a lump sum payment and give the survivor a choice. Can the survivor make the choice upon the death of the employee? The way I read the deferral timing requirements of 409A, they only apply to the "service provider". Am I missing something? Any guidance would be greatly appreciated!

"A" and "B" (both corporations) constitute a controlled group of corporations. "A" sponsors a qualified retirement plan. "A" has authorized "B" to adopt "A's" plan and "B" has done so.

Due to a change in ownership, as of June 1, 2006 "A" and "B" ceased to constitute a controlled group of corporations. "A" and "B" do not wish to co-sponsor what would now be a multiple employer plan. "A" wants "B" out of "A's" plan and "B" wants to terminate its portion of "A's" plan.

Does anyone know the steps "A" and "B" must take in order to bring about the desired result?

A consultant has recommended that "B" implement its own plan and then spin-off the assets in "A's" plan attributable to it into the newly-established plan (and then terminate the newly-established plan). This seems unnecessary.

I currently own a small TPA Shop that specializes in defined contribution plans. A very good friend of mine owns a TPA Shop that specializes in defined benefit plans. During the normal course of events it came up that we should know what the value of our firms are, and what values should be applied to other "books of business" we might like to buy. Is there a standard formula that is used for this purpose, allowing for a reasonable estimate? I have heard values like 1-3 times annual revenue plus receivables. While I know that this type of transaction should only be done after consultation with some expert (who???), it would be nice to be able to have such an estimate going in. Anyone have any comments?