We have a Plan that has a 1 year waiting period and the employee is eligible on the first of the month following that date. The company has an employee that meets all other eligibility requirements except the 1 year service requirement. The individual's work history with the company is as follows:

Hired August 2004

Laidoff January 2005 (5 months of service)

Hired June 2005

Laidoff December 2005 (6 months of service)

Hired April 2006

When would this employee be eligible?

I have a money purchase plan (Old plan) which I contribute 8% of my salary. I Also have a SEP which I have been contributing 5% . I would like to raise the limits on the SEP , Is this allowed by law?

Calendar year plan terminated 1/17/06 and all plan assets were distributed by 2/28/06.

What do I use to prepare final filing if there are no 2006 forms available?

The plan in question is a DB plan that was frozen with respect to benefit accruals, new participants. In addition, the plan states that rehires cannot resume participation under the plan. However, if a participant left employment and was rehired before incurring 5 break in service years, the plan would have to give the participant credit for past service, but would the plan have to let the rehire continue to earn vesting service upon rehire (even if the person wasn't eligible to participate in the plan going forward?). The plan allows those who continue their employment to continue to accrue service for purposes of vesting.

Can someone tell me how to determine the 20% rule for top heavy testing. If you have 10 eligible particpants of which 5 are key (4 owners and the other a highly paid officer). I think you take 20% of 10 which is two. Then do you choose the two highest paid key participants who are defined as key employees? Or do all of the owners have to be considered (meaning all 5 keys would have to be considered)?.

a 401(k) had an account in the name of a ex-wife of the president of an auto dealership. balance as of 12/31/04 was just over 30K. they had been divorced for a few years and the wife's status was terminated and had been listed on the schedule SSA for a few years as well. in 2005 a check was cut to the still employed ex husband for the full balance of the ex-wife's account. no taxes were with held. ex husband was 55 at time of distribution. in a situation as such were the ex husband is our client, how much should we pry to determine legitimacy of such distribution? seems as if such distribution would be directed in a QDRO. ex-husband has yet to return calls to explain transaction.

There are recent notices going on from the IRS regarding the "period of relief" for Simple IRA plan document to be updated...if a plan was terminated in 2005....do you think there still needs to be an updated plan document? I am assuming so b/c I believe this "period of relief" reflects GUST?

Anyone else seeing these come through their offices?

My institution's attorney tells me that an employee who has requested a hardship distribution to repay/defray credit card debt that her ex-spouse incurred in her name must document how the debt would lead her to eviction to qualify for the distribution. She is newly divorced, has custody of two young children, and has already taken a loan to pay bills that are coming due. Any suggestions for how we should proceed?

Corporations X and Y constitute a management affiliated service group as defined by Code § 414(m)(5). Corporation X sponsors a new comparability plan. Participation in X's plan has not been extended to employees of Corporation Y. Smith is an employee of Corporation Y and owns 7% of Corporation Y's stock. Smith, if employed by Corporation X, would be a participant in X's plan. For purposes of the ratio percentage test, Smith will be treated as a nonexcludable, nonbenefitting employee. However, is Smith an HCE or not? Smith owns 7% of Corporation Y, but owns no part of the plan sponsor, Corporation X. Thanks in advance for your thoughts.

A client authorized his retirement plan to payout a terminated participant who terminated in early 2005. The document calls for payout to occur as soon as administratively possible AFTER plan year end (12/31 for this client's doc). The payout was made in May 2005. Discovery was made by the TPA once the 12/31/2005 valuation was being completed. The plan had earnings for 2005 (not losses). The TPA feels 2005 earnings should not be paid as the distribution was already made. The participant is still due a small payment of the 2005 contribution.

What type of possible problems exist and what type of correction can be made, if any at this point. Should the participant be made "whole" receiving 2005 earnings on his 12/31/2004 balance?

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.