Is governmental plan status determined only by looking at the participating employers and employees under the plan? Unlike elsewhere in the Code and ERISA where the term "employer" is used and includes the employer's controlled group, the definition of governmental plan seems to focus on the employees for whom the plan was established and the entity that established and/or maintains the plan (the term employer is not used). If a governmental political subdivision or instrumentality maintains governmental plans but then operates a non-governmental for-profit subsdiary, does the mere fact of the subsidiary's existence jeopardize the governmental plan status even if the subsidiary's employees are not eligible for participation in the plans? Under the literal reading of the statutes, this does not seem to be the case (meaning that governmental plan status is determined just by looking at the employees and participating employers in the plan itself). Although there are a number of IRS rulings on governmental plans, I have not been able to find any on this particular point. There are some rulings that discuss how having a de minimis number of non-governmental employees in a governmental plan does not jeopardize the plan's status (at least for DOL and IRS purposes -- PBGC may have another take on this), but those facts are not totally aligned with the issue I am reviewing. Thanks in advance for any input.

Just an FYI, the following question was raised at the "Dialogue with Treasury and IRS" session:

If an employer contributes to a DB plan for participants who also have an account balance in a DC does the 25% limit come into play or do they actually need to receive an annual addition in the DC plan during the current year.

Harlan Weller answered "that is a fairly messy topic and we have no answer at this time"

I find his none answer very enlightening. I guess I will need to tread a little lighter with my advice to clients.

Hi

I am under the OPERS system and I work for a local govt non profit agency. I want to take control of my 403 b plan. is there a way i could do so . my employer tells me that i cannot withdraw any money from my plan until i am employed with them

any ideas would be appreciated.

thanks

Currently any match on an excess contribution must be forfeited

How would that work in a Roth 401k plan where the test fails and Roth 401k amountis to be refunded.

Assume plan matches Roth 401k

If a plan contains the prior year testing method provision and a plan amendment is processed to change the definition of compensation used in the ADP/ACP test, does the prior year test need recalculated with the new definition in order to obtain the ADP/ACP percents to use on the current year test?

Example: Plan amendment in 2006 for compensation provisions (to change from Simplified 415 pay to W-2, or to include only pay while eligible or to exclude fringe benefits from ADP/ACP comp). Do I have to go back to my 2005 test and calculate the 2005 averages using the new definition?

The ERISA Outline Book, 2005 Edition, Chapter 11: 401(k) and 401(m) Testing - Section VI (Performing the ADP test): Part C.2. (Section 414(s) compensation)

2.b.2) says 'yes', but I can't find a regulation to back that up.

Thanks in advace for the help!

Schedule C income. Sole prop passes away in December. Can his spouse make a SEP contribution for 2005.

I think yes.

Thank you

First off, I've posted a few times in the past few weeks and each time I've gotten great advice. Thank you to all!

Now that I am positive I want to begin a Roth IRA, I'm not sure if I should begin it before April 17th for this past years taxes or after? Or does it matter?

I would be looking to contribute $3000-$4000. Thanks in advance!

Distributions were being made to a participant's beneficiaries for what was supposed to be a 10 year period. However, the checks kept going out for 2 years beyond the 10 year period before somebody discovered the error. Now the employer is asking for thousands of dollars back. Of course, the beneficiaries have been paying tax on it all along.

I understand that the employer has a duty to restore the plan to where it should have been, and in a perfect world the beneficiaries would hand it over. But I have a feeling that in the majority of cases, the employer ends up making the plan whole. Does anyone have any real world experience with this type of situation?

I have studied the ERISA outline book on this numerous times but still can’t understand it.

I have a client who is switching from counting hours during the plan year to doing elapsed time for vesting. Does anyone have a grasp on how we are supposed to give credit after the switch?

Here is my actual situation:

Plan year is 11/1 – 10/31. Client is making the change on 5/1/06 to amend to use elapsed time.

I realize that each participant will have a different scenario because they all have different hire dates . Do we account for this by just giving all of them an extra year of service at the time of the switch? Also, the ERISA book seems to indicate that we should calculate the elapsed time going forward based on either the 12 month period starting with the date of the switch (5/1) or the beginning of the plan year (11/1) – I’m confused on this point.

Any help you can give on this would be GREATLY appreciated!

DOL Opines that the purchase of a policy from the plan by the participant for its cash surrender value meets the PTE 92-6 class exemption. Nothing new here. However, DOL goes on to mention recent IRS guidance regarding the fair market value of such policies in Rev Proc 2005-25, and that if the 2005-25 FMV is greater than the CSV, such amount is a taxable distribution. DOL then goes on to say:

"This amendment to the IRS regulations provides for different tax consequences than those described in the preamble to PTE 77-8,(7) the predecessor of PTE 92-6. In this regard, it is the view of the Department that this amendment to the IRS regulations does not affect the relief described in PTE 92-6, or any of the conditions contained therein."

What does this mean? If the IRS changes do not affect "any of the conditions" in PTE 92-6, does that mean that to comply with the class exemption the policy transfer must be done at CSV? And if the 2005-25 FMV is greater the participant is stuck with a taxable distribution? If so, then such could only be done when the participant is due a distribution under the plan. So, for example a DB plan could not do this as in-service distribution are not permissible unless the participant was at NRD or otherwise eligible for a current distribution. If so, this is going to make it a lot more difficult to unwind 412(i) plans, as the only choice would apparently be to surrender the policy.

We use Ohio National as one of our investment providers. They are now filing as a DFE. Do I still list each fund that the plan invested in on the Schedule D or do I now just list "Ohio National Life Insurance Company Portfolio C" and put the total plan assets in the dollar value section?

Can someone point me toward a good resource to answer some questions. I've surfed the web but can't seem to find these addressed.

Firm currently has an FSA which runs calendar year.

Firm may change to a HDHP and offer an HSA starting 7/1

1) What happens to the money already deferred from paychecks into FSA? When people made their FSA elections last fall they were deferring for all of 2006. Now half way through an HSA may be offered.

2) Does the FSA cease to exist on 7/1 if we move to an HSA?

There must be guidance somewhere as not all HSAs are implemented 1/1, but I can't find anything that speaks to what to do about the FSA.

a plan whose document defines comp as w-2 wages, allows participants to defer from 2% to 17%. there are no comp adjustments except the period of the plan they were not a participant. there is a special deferral election with respect to bonuses that participants may make. a part. may elect to defer up to 17% of pay. a 2006 bonus was issued. no deferrals were taken out. would it be ok to allow the participants to go back and elect NOT to defer from this bonus? would this be ok, even if the part. deferred let's say 10% during the normal pay periods? basically, i feel the plan sponsor should go back, give the part. the option to defer any amount they wish from the bonus and adjust their bonus checks accordingly. any thoughts?

I have a fical year (September 2006) Safe Harbor 401-K. One of the participants (a physician) is going to retire in August 2006. The corporation is going to be paying money due to him (receivables) sometime after he retires.

If the corporation pays him a portion of his receivables anytime during Oct-Dec of this year, can he then defer this into the 06-07 plan year? His hope is to keep delaying these payments so he can contribute them to the 401-K for the next few years. It doesn't feel right to me but I thought I'd run it by the board.

Any thoughts would be appreciated.

Scott

If an active non-owner participant has exceeded the HCE compensation level for 2002-2004, but earns $80,000 for 2005, is that participant a HCE for 2006?? Thanks.

Are different types of weight loss programs covered under an FSA? For example, bariatric surgery, programs such as Jenny Craig or Weight Watchers, OTC pills, prescription pills? I feel that there is some merit to covering some of these, but balk at covering Jenny Craig meals or Weight Watcher's meeting fees.

Does anyone know why the termination dates for non-eligible employees doesn't show up on the Employee Status Report with Termination Dates? Or I should ask, has anyone figured out how to get the term dates to show up? Do you have a customized report? The only way I've been able to get the report to show the term dates for non-eligible employees is to re-import term dates after I've posted eligibility.

Background: Used the statutory exclusion option to pass the 401(k) and 401(m) nondiscrimination test. Understand that my coverage testing for these components must reflect this as well. Do I have the ability to test the profit sharing component of the plan w/o carving out the statutory exclusions for my 401(a)(4) nondiscrimination test (rate groups) and coverage test. The profit sharing component passes the coverage test using the ratio percentage test, but the issue is the rate group testing. Can I test each component for nondiscrimination and coverage differently? Believe me including the employees in my nondiscrimination testing that have only been employed for 6 months would definetly help my rate group testing.

Any clarrification would be greatly appreciated

Employer sponsors a 401k plan and a MPPP. The assets of both plans are held in one trust with an insurance company. I need to clarify if this insurance company meets the definition of a "regulated financial institution" as found in the F5500 instructions and the ERISA Regulations. A review of DOL Advisory Opinion 93-21A leads me to believe that the insurance company, may, in fact, be a "regulated financial institution" and I'm thinking I have to meet the F5500 filing requirements for a master trust. TIA.

I tried searching this. Under final regs, does anything change with the following. Participant leaves company(not voluntary) and is given severence pay for the remaining year. In other words is not performing services and really isn't earned compensation. Can this person continue to make 401(k) contributions from this pay?

Thanks