A plan sponsor's 401(k) plan was badly mismanaged by the the new (and now former) investment agent, complete with money not being invested timely, bad information being given to the participants, etc. A few participants have requested that their current 401(k) contributions cease, at least until this situation is resolved. Can the sponsor temporarily stop all 401(k) contributions, for maybe 4-5 months, until these problems are fixed, and then resume contributions again for all who are interested in re-starting?

If I am downrange in a tax exempt area from 1 Jan until 31 Dec, can I still max out or even contribute to the Roth IRA. I will have been considered to have no earned income according to my W2. Thanks

SGT McDonald

Partner's can't participate in a premium only plan, but don't they get to exclude the premiums on their returns? If so, that sounds like a wash. What am I missing?

Okay, I've read that if I purchase another company by stock purchase and that company terminates their retirement plan prior to the stock purchase date that the term plan participants can take their money in direct distribution.

But.... (isn't there always a but....) ..... do I have to have all the monies paid out from the terminating plan before the date of the stock purchase?

If I don't, does my current company plan b/c a successor plan......

Hmm.....inquiring minds......

John Doe, age 55, made no prior contributions (elective or catch-up) in 05'. The plan is a fiscal year ending May 31, 2006.

Assuming no plan document restrictions and no testing violations, I have two questions.

#1 Can John

1) Defer 14,000 on 12/31/05;

2) Make a catch up of 4,000 on 12/31/05;

3) Defer 15,000 on 5/31/06; and

4) Make a catch up of 5,000 on 5/31/06

#2

If #1 is yes, does this mean his 415 limit for 5/31/06 is $44 k plus the $9 k in allowable catch-ups.

Tx. for any feedback.

Mark.

Where can I find some credible survey data, by industry, geographic region and employer size on this subject (presumably we are looking at an average ranging from the first day of the month after 30 days of employment to the first day of the month after 90 days of employment)?

Many thanks in advance!

I am working on a Plan Termination form 6088. This form requests the top 25 participants in order by their three year average comp. My problem is that this is a dollar per year plan, therefore no comp history was provided. Is it necessary to fill out collumn (e) on the 6088 for dollar per year plans? If not then how would I determine the top 25 EEs?

Thank you!!

This is a 412i plan , but the question relates to any type plan. We have an employer who wants to amend their plan document to exclude a current participant from the plan. This participant was eligible to participate in the plan 1/1/05 and accrued a benefit in 2005. They will not accrue their benefit for 2006 until they complete 1000 hour of service. Ideally, the client wants to exclude them from the 2006 accrual, but will be willing to start the exclusion in 2007.

This participant is close to being a highly compensated employee due to the compensation level. The plan would pass 410(b) and 401(a)26 excluding her, whether or not she is highly compensated. She is the only employee in her particular job classification.

The issue I am having with this...can you exclude someone once they've become a participant? Would we just amend the plan to exclude her job classification for future accruals?

It is my understanding that upon termination of a self-funded/self-insured plan, any assets left over can be used to fund premiums in the fully insured plan. (Fully insured plan is replacing the self-funded plan).

Is that correct? If so, is there a citation that I can refer to. Thank you.

I had a broker ask me this question, and I had no idea what the answer is. I'm not having any luck finding anyone who knows for sure, so here I am.

We know that profit sharing and 401(k) ("non-pension") plans don't need spousal consent for distributions (and the same goes for pension plans where the distribution is <$5,000) if the document so provides. But why those kinds only? Why does a participant with a $6,000 money purchase plan balance need to have her spouse sign a consent form, but not a participant with the same balance in a profit sharing plan?

Any help? Thanks for the illumination...

I am in the process of terminating a PBGC-covered 412(i) Plan. There are two matters that have arisen.

First, is a 412(i) Plan subject to IRC 417(e)? Two of the three participants in the plan have cash surrender values greater than their so-called 417(e) minimum, but one does not. What to do? Make an additional er contribution for him to bring him up to speed?

Second, the plan's benefits were frozen as of 4/06, so there would be no 2006 accrual. However, the plan sponsor has not made the 2005 contribution yet, and does not want to do so. Is there a way around it? Is the 2005 contribution considered a minimum funding requirement, a receivable as a part of the definition of the cash value (read: accrued benefit), as well as a part of the exemption from the remainder of IRC 412? Does this lack of the 2005 funding mean that the Plan cannot terminate as a standard termination?

I called the PBGC, and they had no idea. One final question: what's so simple about 412(i) plans if a standard termination of such a plan requires an enrolled actuary's signature on unknown matters like this one? Or am I missing something?

Any thoughts or ideas would be appreciated. Thanks! Carol Caruthers

Can anyone provide a resource documenting that hardship distributions are NOT protected benefits and can be removed from the plan?

As I sit here working this evening, listening to the Sabres v Hurricane game, watching Idol, and looking forward to Lost...guess that explains why nothing gets done when I work from home...anyone have an opinion as to who will win the Cup?

In my opinion, it has to be Buffalo. Sure we can't win the Super Bowl and already lost the cup once...but I have to believe this is our year!

Recently, a TPA asked me how to respond to a subpeona they received from the attorney for a plan

participant. I am not an attorney, so I am looking for advice.

It seems to me that the TPA has no direct fiduciary duty to the participant. Any disclosure would require the permission of the plan sponsor or plan administrator or plan trustee.

No participant data would be released on any person except the plan participant. Amounts of distributions, compensation, service, etc. that were not the direct records of the participant would be off limits unless the other participants gave express written approval to disclose the information. This would include information on the timeliness of participant loan payments.

Any other guidelines I should follow?

Is a SEP IRA Plan or a Simple IRA Plan subject to Title I of ERISA?

Please reference any resources stating your case.

I have a situation where the trustee name was filled out incorrectly on the SS-4 and the client wants it fixed with the IRS. Anyone know how to proceed with doing this?

I have heard from multiple sources that cash contributions to an Roth IRA can be withdrawn at any time for any reason, not matter what, hands down, black and white, no penalty, no additional tax. For example, if today I put $1000 into the Roth IRA and tomorrow I have an emergency I can remove the same $1000 with out any other cost to doing so? Is this true? It seems my financial institution was unsure of this point... they kept talking about 5 year minimum this and qualified withdrawl that (home purchase, etc.). My understanding is those criteria are only on the earnings, right? Contributions are "liquid," yes? If withdrawn do they ever have to be paid back? Please set me straight if I am somehow confused.

Another possibility I guess is that my bank may have a different policy... is this possible? I thought the rules are universal? Could the bank have some fee for doing this?

I have a plan with a benefit formula of 500% X compensation reduced 1/25 for years of service less than 25 years, limited to 100% compensation. Accrual is pro rata based on participation.

A participant has 5 years of past participation and 30 years of future participation. His compensation is $1,000/month.

His projected benefit is calculated as $1,000 X 500% X 25/25 = $5,000 limited to $1,000. His accrued benefit is $1,000 X 5/35 = $142.86.

Does this meet the safe harbor under 1.401(a)(4)-3(b)(4)(i)(2) which begins "The normal retirement benefit under the plan must be a flat benefit that requires a minimum of 25 years of service at normal retirement age for an employee to receive the unreduced flat benefit, determined without regard to section 415...." and which ends "......An employee is permitted to accrue the maximum benefit permitted under section 415 over a period of less than 25 years, provided that the flat benefit under the plan, determined without regard to section 415, can accrue over no less than 25 years."

A client’s DB plan is terminating. One of the assets of the Plan is a Limited Partnership that they cannot liquidate. In order to get all the Plan’s assets liquid, it would be nice if the client could purchase that Limited Partnership asset from the Plan so that the Plan would have liquid cash. However, the client cannot do this since that would be a prohibited transaction (i.e a Plan doing business with a party-in-interest).

The client also has a Profit Sharing Plan that they are not terminating. The Profit Sharing assets are pooled. Here’s our question: Can the Profit Sharing Plan buy the limited Partnership asset from the DB Plan? Would that be or not be a prohibited transaction?

Can a 401(k) plan that is not using a safe harbor for either the ADP or ACP tests provide for a suspension period of more than 12 months for those participants that take a hardship withdrawal? Alternatively, could the plan provide that a participant that receives a hardship distribution could start deferring again after 6 months, but provide that they would not be eligible for matching contributions until 12 months after the hardship distribuiton?