We are a medium sized TPA which still runs a few quarterly valued balance forward 401(k) plans. When election changes are made, we do estimated transfers of 80% of participants balances as of the last valuation date and complete the transfers when the current valuation is done. For example, a calendar year balance forward plan permits election changes quarterly. A participant completes a election change form in June, to be effective July 1st. On July 1st, we transfer 80% of his or her account balance as of March 31st, the last valuation date, and the rest when the June 30th valuation is complete.

When we instituted this procedure 8 years ago or so, we had many more balance forward plans. The 80% amount was the industry standard at the time. We are now reviewing a number of our procedures, including this one, and wonder it is reasonable and still the industry standard. Any thoughts from you balance forward TPA's out there?

Thanks

I am designing a safe harbor 401(k) plan that utilizes the 3% SHNEC.

The plan will also have a profit sharing component.

I would like for the plan to qualify for cross testing through the use of a gradual age or service schedule.

If my profit sharing schedule (which we'll assume meets the requirements of 1.401(a)(4)-8) starts at 3% of pay, can this minimum 3% contribution satisfy the SHNEC and the top-heavy minimum required contribution?

Alternatively, must the plan make a flat 3% contribution and then make an additional profit sharing contribution with its own age or service schedule (for example a schedule that starts at 0.5% or 1.0%)?

Greetings to all members, I am currently a law student doing research on this particular topic and any insight would be of great assistance. This question is in regards to the opinion letter issued by the DOL stating that anyone that provides 401(k) Plan participant advice is considered a Plan Fiduciary. Are there currently any cases that anyone is aware of, where a person has sued a financial planner for breach of fiduciary duty?

Has anyone ever heard of this? Corporate PS plan being audited by the IRS. Auditor maintains the plan is discriminatory because the compensation from the W-2 is rounded to the nearest dollar, and for the year in question, the HC and 2 NHC got rounded up, and 12 NHC got rounded down. By my estimation, given the percentage of compensation that was contributed, this would result in 9 cents being reallocated among 12 people.

If this were April 1 I'd think it was a joke. However, apparently it isn't.

There's always something new in this business...I never thought I'd be asking such a question, but does anyone know of any statutory/regulatory authority that allows rounding of the compensation. Sheesh.

I am confused please help. The company I work for was sold during 2005 and a new Corporation was formed. Does the 401(k) Plan need a new EIN number? Also, should the audit of the plan be for the period from the sale to the end of the year (7 months)? Finally, do the assets need to be transferred to another account if we are keeping the same custodian and trustee? Thank you for your help!!!!!!!!!!!!!!!!!!!!!!

I need to have an explanation in layman's terms as to related party transactions as it applies to prohibited transactions in qualified plans or IRAs.

Can someone give me some examples of these types of prohibited transactions?

For instance if a client has an IRA and wished to purchase stock from his son's business inside his IRA is he able to do that or would it be considered a prohibited transaction?

And if a client has an IRA and they want to purchase the building that his son uses for his business inside his IRA is this a prohibited transaction?

Any other examples that you could think of to help me would be greatly appreciated.

If a participant terminates at the end of the prior plan year and is not included in the 5500 Count and is rehired in the next plan year, is that participant included in the count at the beginning of the plan year for 2005, even though he was hired in May, 2005? Thanks.

An employer is to implement a defined benefit and defined contribution plan.

The employer has 10 NHCE and 4 HCE (including owner).

An eligible employee is defined as 21 & 1. And the above 14 employees are all eligible employees.

The employer would like to include himself and 5 NHCEs in the DB plan. This would result in the minimum participation requirement of 40% being met (6/14 = 43%).

The employer would like to include himself and all 10NHCEs in his 401(k) 3% safe harbor plan.

The above plans have no problem passing coverage since only 25% of HCEs participate. And assume for purposes of this illustration that the non discrimination tests are passed as well.

For employees in both plans they will meet TH requiement with 3% DC and 2% DB offset benefit.

For employees in the DC plan only, they will receive DC TH requirement of 3%.

1. My understanding is that ALL ELIGIBLE NHCEs (i.e. all 10) must receive 3% SH contribution from 401(k) plan. That is, none of those employees can be excluded from the DC plan. Is that correct, or can some NHCEs be excluded from DC plan and not receive 3% SH?

2. Otherwise, are there any problems with excluding the HCEs all together? And excluding 4 NHCEs from the DB plan?

Thanks.

I need some clarification regarding loans and safe harbor plans.

Do I consider the participants account balance, including safe harbor account balances prior to age 59 1/2 in determining 50% OR do I not consider safe harbor.

Thank you,

Linda Michals

it is an odd question but do Plan Administrators have any discretion to require that distribution request documents are notarized by the participant. in this case they are suspicious that maybe the participant is not at the address and they when they call someone else answers the phone.

Does an arrangement where the employer reimburses employees for their deductible need a plan document. It is essentially an HRA, correct? Or is it ok to just have an arrangement to do this without a more detailed HRA document?

Is it eliminated only when the ERISA full funding limit applies?

Eliminated when either the ERISA FFL or the RPA 90% override FFL applies?

There are several Gray Book questions that address the elimination of the amortization bases when a FFL applies (bases are eliminated when either ERISA or RPA override applies). Only one GB question addresses the elimination of the RA, and suggests that it is eliminated only when the ERISA limit applies.

If the RPA 90% override FFL applies, and the amortization bases are eliminated for the following year but the RA remains because it is not eliminated (because the ERISA FFL did not apply), then the Rev Ruling 81-213 "experience loss" base would need to be established as

Credit Balance + Reconciliation Account + Unfunded Liability (limit 0).

Critiques?

Must employers of employees resident in Texas who may cover their children in fully insured group health plans cover those dependents until age 25 regardless of student status?

In review of the description of contents to be included in the Notice of Plan Benefits, I have written up comments to be included. I am curious if there is a sample out there with wording that I could compare it to and then make adjustments. I am attaching below the draft of what I have written up but I'm more curious to review other samples and then keep working on mine, rather than necessarily having mine reviewed. Thank you.

----------------------------

Please note that these amounts are estimates, final values will likely differ and may be greater than or less than the estimates.

Other forms of benefit available include lump sum and, to married participants, 50% Joint & Survivor, 66 2/3% Joint & Survivor, or 100% Joint & Survivor. There is also a pre-retirement death benefit for married participants.

As detailed in section 1.02 of the Plan Document, the present value of accrued benefits is calculated using the mortality table published by the IRS in Revenue Ruling 2001-62, 2001-53 C.B. 632 with the interest rate being the 30-year Treasury rate for the second month before the year in which the lump sum is distributed. The applicable interest rate may change before the distribution date. Interest rates are calculated using your mortality from your current age to normal retirement age. They are then multiplied by your annual benefit to produce the present value. The use of higher interest rates results in smaller lump sum amounts. Lump sums up to $1,000 may be paid without the consent of the participant or the participant's spouse.

Note: Every effort has been made to provide you with an accurate statement of benefits.

In the event of an error, the appropriate plan provisions and records of the Company are controlling.

If you do not contact Mr. Johns at xxx-xxx-xxx at the Company (999 Downtown Street, Chicago, IL 12354) by July 31, 2006, we will assume you confirm the information used to determine your benefit.

We have a client that made a large profit sharing contribution to a 401(k) plan on 1/3/06 for the 6/30/05 plan year. Deferral contributions did not start until 10/01/05. Can we skip the 6/30/05 plan year filing and file the initial 5500 for a new plan with the plan year ending 6/30/06 since that is when all cash contributions started? Thanks.

I am able to pruchase most trade association directories from the associations thenselves, but unable to do so with CEBS. I am currently doing a few senior level searches for Health and Welfare, Managed Care, and Insurance professionals. Should anyone out there want to advise me to a directory for sale or sell an older copy to me, I may be reached as follows: kmerrell@premiereassociates.com

I have exhausted my search of normal research channels, and have been frustrated by the lack of information on what constitutes a master trust and how one is formed/operated. Hoping someone here can help me.

I have an employer who wants to set up a separate plan at each of his two sites. He works with a couple of brokers, and likes to do recordkeeping himself. He wants to have a "balance forward" arrangement where all participants in each plan share in trust activity, and the recordkeeping is done once a year. I believe this would constitute a master trust because it is 2 different plans maintained by a single employer, with assets not segregated between the two plans.

What do I need to consider in this arrangement? I assume a separate trust agreement needs to be written for the trust, but does that trust need to file anything? 5500s?

Any insight would be appreciated.

The AGI limit on IRA to Roth IRA conversions will be repealed this week for a 5 year period.

Aside from the fiscal wisdom of Congress (for adopting it) or particiipants (for converting to Roth), does anyone see any issues with amending our profit sharing and matching contribution provisions to allow in service distributions for participants with 5 years of service and for contributions made at least 2 years ago.

The idea would be to allow participants to take an in-service distribution of non-401(k) funds and roll to a traditional IRAs that they could then convert to Roth IRAs.

Is the 5 year/2 year rule that easy?

Is there some discrimination issue if only HCEs somehow are the only ones taking the distributions?

http://www.ca9.uscourts.gov/ca9/newopinion...pdf?openelement

Miller v Xerox Corp. (9th Circuit 5/8/06), at the above link, deals with offsetting the accrued benefit in a floor-offset plan for an earlier distribution from a defined contribution plan. Miller requires limiting the offset to the "accrued benefit attributable to the distribution" within the meaning of 1.411(a)-7(d)(6)(i). Miller requires, I think, calculating the accrued benefit the lump sum value of which, on the date of the earlier distribution, equals the earlier distribution. My question is, where the earlier distribution was a lump sum, is this actuarial equivalence to be calculated using the plan's interest rate and mortality table for lump sums or the plan's interest rate and mortality table for annuities? The logic of Miller seems to require using the plan's interest rate and mortality table for lump sums.

We are considering a move away from Datair, after more than 20 years with that firm. There are a few requirements that a replacement system should meet in order to be suitable for us. First of all, it must be small-plan friendly. We have about 100 DB (including 412(i) plans), and the largest plan has about 30 participants. We have about 400 more DC plans, with the largest plan having perhaps 3,000 participants.

We also need a decent proposal system as a part of this. The output need not be beautiful, only readable. However, it absolutely must accomodate the type of creative plan designs that we have come to know to and love. (PLANGEN and like services need not apply. FYI, PLANGEN is not only restrictive as to plan design, it is only an assist to manually computed actuarial valuations. I'd never get through 100 plans yearly if I hade to do more than half of the work manually.)

Also, Datair provides documents, which would be a plus, but not mandatory.

Does anyone have any ideas on a suitable replacement system for our firm? What about document systems (prototype and volume submitter), as well as proposal and valuation systems? Any ideas or recommendations about past experiences would be appreciated.

Thanks in advance! Carol Caruthers, MSPA, EA for E. Dominic Firmani