John Hancock used to process distributions with our (TPA) signature, or the sponsor's signature, but without the participant's signature, for up to $5,000. Now I'm being told that we need the participant's signature if over $1,000. The (new) rep was quoting something that referenced the direct rollover rules, eff 3/28/05, and I'm not sure if she was confusing the new law with John Hancock's requirements.

Can anyone confirm that Hancock changed their policy and dropped the max paid w/o participant sig to $1,000?

Is is possible for an HCE to opt out of a DB plan (without making it a CODA) and still participant in a DC plan? If not, what is the citing/authority. Thanks in advance.

I have a client that did not make the required 401(a)(9) distributions for the 2003 calendar year. The missed distribution amounts were $2,000 to NHCE’s and $6,600 to HCE’s (> 5% owner). The distributions ended up being made on January 26, 2004. To my knowledge, none of the participants reported the late distributions and paid the associated penalty tax. Also, no VCP filing was done.

The plan has received notice from the IRS that the 2004 plan year (calendar year) will be audited. I am sure the IRS will have questions about the distributions that were made in January and I am at wit’s end trying to figure what can be done, if anything.

Anybody have any suggestions on what we can be done at this point or do we just wait and see what the IRS says and go from there?

Thanks for any thoughts.

I wrote a seven-page paper, and I am planning to add a set of numerical examples, entitled "Theories of Dynamic Actuarial Optimization." It includes everything from Social Security, other entitlements, and long-term care insurance, to a specific Dynamic Programming mathematical model for optimal retirement (DB as well as DC) plan design.

I would like to submit this for the 2007 Gray Book for the 2007 EA meeting, as well as possibly get Core Credit for having done all of this. Does anyone out there know how I can go about doing this, and to whom I ought to send it for review and approval? Thanks! Carol Caruthers, MSPA, EA

Please review topic under the 401(k) board and respond - I'm trying to build a provider list.

Thanks.

401(k) Board Topic Link

Posted for a collegue:

QUESTION

"IF you have non-deductible carryovers from prior years that were the result of amounts necessary to meet 412 minimum funding (but greater than net compensation for those years), CAN you deduct these amounts in the current year IN ADDITION TO the 412 minimum funding amount for the current year (even if the total is greater than the otherwise determinable maximum under 404) AS LONG AS the current year's deduction is no greater than the current year's net compensation?"

COMMENT

We think the answer is YES, because of the language in 404(a) which says (emphasis added):

"contributions…..shall be deductible under this section, subject to the following limitations…in an amount determinated as follows:

404(a)(1)(A)(i) the amount necessary to satisfy the minimum funding standard provided by section 412(a) for plan years ending within or with such taxable year (or for any prior plan year), if such amount is greater than the amount determined under clause (ii) or (iii) (whichever is applicable with respect to the plan)"

Thanks for your comments.

Is a prepaid legal services plan that is funded solely by a portion of fees collected by a union, not an employer subject to ERISA?

It is intended that those union members who choose to participate will contribute a flat fee per month, a portion of which will go towards funding this plan.

If I'm not mistaken, as long as participation is voluntary, there are no employer contributions and the sponsor is the union and not an employer, it is not subject to ERISA.

Please advise if I am correct.

Thanks.

Under 1.401(a)(4)-5(a), a plan cannot be amended in a way that discriminates significantly in favor of the HCEs. THis is based on relavant facts and circumstances. Does anyone have any guidance or opinion with what the IRS would view as significant or insignificant here?

Here's the situation: the plan requires 1000 hours for a year of vesting service, they have 5 HCE doctors and 9 or 10 NHCEs. They usually have 1 to 3 NHCES leave each year and they are replaced by rehires. This year, 1 doctor left with under 1000 hours and was only 80% vested, the 20% nonvested portion is over $40,000. Two of the other 4 HCEs are still not yet 100% vested either, but they're still working. Some of the NHCEs are fully vested, some are not.

Would it be a significant favor to the HCEs if the plan is amended to only require 200 hours for vesting only for 2006? (Assuming 1 or 2 nonvested NHCEs also leave with over 200 but under 1000 hours)

Or would it be a significant favor to the HCEs if all participants' vesting was bumped up by one year (this would now increase 3 HCEs, not just one, but it would help several NHCEs).

Any other ideas?

Consider the following data for a participant (with completely made-up numbers that may not make sense):

Monthly Accrued Benefit BOY: $100.00

ABO last year: $2,000.00

PBO last year: $5,000.00

Termination date: October of year, after benefits have been earned

Vesting %: 20% BOY, 40% at termination

Monthly Accrued Benefit @ term: $150.00

ABO, PBO end of year, $2,500.00

ignoring partial vesting:

Questions

1) what benefit is used for the ABO increase for the year? $50? Or $-40? ( $150.00*.4 - $100*1) Is there any guidance in FAS 87 as to whether you can have a negative ABO increase?

2) What is the PBO and ABO as of the valuation date of December 31st (after the October termination) for this particular individual? $2,500, or 40% of $2,500? Any guidance on this?

I believe these questions are dealt with under FASB 88 - correct?? Somehow, the prior ABO/PBO numbers are adjusted so that at the end of the current year (when the vested accrued benefit is only 60.00).

Any takers on the proper method of calculating the decrease?

Have a health care reimbursement account for 2006. Terminated employment with employer on Jan31st of 2006. By that time I had "deposited" $ in my HCRA. In mid Feb, made claims exceeding the amount in the HCRA which fell into 3 categories:

1. Expenses incurred 1/30 or prior

2. Expense incurred 1/31 (my last day)

3. Expense incurred 2/8

HCRA administrating company paid:

1. All

2. Denied saying "incurred following account cancelation"

3. Denied, same as #2

I called them, they agreed #2 was an error but were unclear as to why #3 would be denied saying something about "termination" but unable to point to law or prior supplied information that would support that view.

Neither the company information packet nor the administrator's web site speaks to any restrictions other than the well known "use it or lose it" restrictions. And I had though that, while my termination might stop any contributions, any expenses incurred during the plan year would be eligable to be reimbursed from what had already been "deposited" into the HCRA account.

Insights anyone?

Do these forms need a signature or was this requirement suspended in 2005?

If my plan document has me eligible for my pension at 10 years credit service, what good does it have me vesting at 10 continuous years under my welfare plan

i know you can withdraw your original contribution w/o any penalty or tax consequences.

but how do you document it on the tax return.

what forms do you fill out to say that the distributions reported on the 1099R are the original contributions?

i'm not finding any clues on the irs website,nor is my tax software helping either.

help!!!!!

i'm fustrated.

Can anyone give a legally correct answer to this question and provide sources to support the answer. I currently have a funds in a QDCF plan (Qualified Deferred Comp Funded plan). I would like to start taking distributions now. However, the form requires "spousal consent" because my spouse is the beneficiary. It doesn't seem fair that I can not even retrieve my own retirement funds if my spouse doesn't care to cooperate. Is this requirement legal or just an attempt to retain my funds and cover themselves. I don't know if this is considered a 457 plan or not.

Thanks

Can anyone give a legally correct answer to this question and provide sources to support the answer. I currently have a funds in a QDCF plan (Qualified Deferred Comp Funded plan). I would like to start taking distributions now. However, the form requires "spousal consent" because my spouse is the beneficiary. It doesn't seem fair that I can not even retrieve my own retirement funds if my spouse doesn't care to cooperate. Is this requirement legal or just an attempt to retain my funds and cover themselves. I don't know if this is considered a 457 plan or not.

Thanks

Is it permissible to amend a plan at any time to change the stability period for determining lump sums from one year to one month? We have a plan that we would like to terminate and would like to take advantage of the recent higher 30-year Treasury yields.

When I was like 14 someone gave me 2,000 into a Roth IRA with charles schwab. Well the money went down to like 400 bucks and I withdrew it. I didnt pay any fees or penalties. Atleast not that I know of? I was like 14. Will that have any effect on my current Roth IRA that I have with T.Rowe price now that im 23. Also when I hit 59 1/2 would what I did when I was 14 and withdrawing that 400 dollars effect me in any way? Or am I ok?

thanks! Dave

Employee age 55 made 14K in deferrals. Can we allocate 32K as PS cont for a total of 46K and still consider the 4K overage as catch-up?

Please advise.

When do you have to file a 5500 for a 125 Plan? What are the requirements?

If a participant has a life insurance policy within their Profit Sharing Plan and dies - and let's say the death benefit is $70K and the cash value at the date of death is $25K - would the difference of $45K be considered the tax free amount? Thanks!