We have a plan under IRS audit - previously, the employer owed some unfunded required matching contributions, and the DOL instructed us to "forfeit" the trustees' accounts to fund those contributions. It did not instruct us to treat those amounts as taxable to the trustees.

The IRS says 1099-Rs should be issued, as the funds are considered "distributed" and then deposited to the plan from the trustees' personal finances. I disagree, as the benefits were treated as forfeitures and transferred within the trust, not actually distributed. In addition, though the trustees made pre-tax deferrals to their accounts, they will realize no personal tax benefits as they have forfeited those contributions.

I do realize that there may be problems with the corporate contribution deductions, if it took deductions for the trustees' 401(k) contributions, and again for matching contributions funded by those same 401(k) contributions... but that's not a plan issue.

Has anyone else encounted this issue with the IRS?

Thanks

Employer maintains SH plan with basic SH match, as well as fixed and discretionary matches that satisfy ACP safe harbor.

ER wants to discontinue fixed match. If plan is amended and timely notice provided to eliminate fixed match mid-year, e.g., 7/1/06, and fixed match is provided on deferrals from 1/1/06 – 6/30/06, will the fixed match be subject to ACP testing?

In the past, I've always been able to print out a listing of the required reading sections of the ERISA outline book....but I'm not able to locate the topic outlines with the required reading sections at asppa.org for the Spring 2006 DC-3 exam. Is there anyone who knows where I can find this info or has a copy of the prior reading listings from a past exam to help me study? I'd be extremely grateful!!!!

Thanks,

Vicki

What is the industry standard percentage withheld for automatic enrollment?

Do we have to write a new Plan Document every year?? Why or why not?

I posted this question on the Distributions Message Board, but no one seems to know the answer (or will respond). Since this is an annuity issue potentially involving the Norris case, perhaps I should have posted my question on this Message Board to begin with. Thanks, in advance, for any guidance.

A DC plan offers a single life annuity as a payment option. A participant has selected the single life annuity. Her vested account balance is about $17,500. If the DC plan elected to make the annuity payments itself, I believe, in order to comply with the Norris decision, it would have to compute the payments using sex-neutral mortality assumptions. Instead, the DC plan wants to purchase an individual annuity contract from an insurance company it selects (which is essentially what happened in the Norris case).

The largest monthly quote that we obtained from an insurance company provides the participant with a monthly payment of about $120 for life. However, the quote is based on a female-specific mortality table. A female-specific mortality table generally assumes higher mortality (higher when compared to a male specific mortality table) which means that a female recipient is presumed to live longer than a male and, as a result, to receive a smaller monthly payment than an identically-situated male would receive.

Is the DC plan required to purchase an annuity based on a sex-neutral mortality table? I don't know whether the Norris decision applies to the purchase of an annuity contract? Although, if the DC plan would have to make the annuity payments using a sex-neutral mortality table, it seems to me an annuity contract purchased from an insurance company would also have to use a sex-neutral mortality table (otherwise, the purchase of an annuity would be an easy end-run around the Norris decision). Can anyone help me here? How are other TPAs handling this issue?

A lawyer I spoke with says Norris doesn't apply--he didn't/wouldn't tell me why. An enrolled actuary I spoke with told me that Norris applied, but that virtually no insurance companies provide individual annuity contracts using unisex mortality assumptions.

ok, here is another use at your risk

this report should list anyone with deferrals, match or profit sharing.

it will indicate 415 comp and allocation comp, and show % of pay based on allocation comp. it will inicate ees who have different comp with **. e.g. ees enter midyear.

will also inicate hours if < 1000 and status if terminated. thus some ees may show with deferrals but 0 profit sharing due to last day or hours requirement.

DOH is also indicated if 1 year before plan year begin.

for example plan may have immediate eligibility for deferrals but 1 year wait for profit sharing. these ees will show with 0 profit sharing if they deferred.

sort by division, so if you run cross tested at least people are in groups.

well I'm sure it can't catch everything, but worked well on the last plan I ran.

I have a participant who has a loan and is currently out on their second leave of absence. Their one year was up in March and their current leave of absence began in April. Both leaves are medically approved.

Has anyone ever had this and how did you handle it?

I have looked at 72(p), but I do not see specific language addressing back to back Leave of Absences and whether or not you can grant another year of not making loan payments.

Hello im brand new to investing my money in any type of securities. I have about $10,000 that I want to put in a Roth IRA or whatever would be best. Im 30 yrs old. I basically want to put it in something high growth. I want to leave it in there for retirement and add to it whenever I can from now until then. I really have no clue where to start. Im thinking about going in and talking with a financial advisor but just wanted to get some feedback here. I dont know if stocks are the best, IRA's, mutual funds. Its really scary because I dont want to do the wrong thing. What kind of interest rates can i look for? What would be the best thing for me to put that 10,000 in to grow the most for me? Also if i just left the 10,000 in for say 30 years what could it turn into? Thanks for any help on what I should do and who you would advise me to go talk to.

Is a Common Law spouse considered a tax dependant for FSA Plans?? Help!!

Can a 501c3 NPO have a 401(k) plan alone, or do they have to have a 403(b)?

My wife and I just purchased into Vanguard's Emerging Markets Stock Index Fund (VEIEX) via our Roth IRA's. The VEIEX fund has a purchase and redemption fee structure of 0.05% for each move in or out of the fund.

I was wondering if anyone knows how this fee is handled in terms of taxes:

- is it written off as an investing expense?

- or is it written off against any gain/loss upon sale?

Thanks for all of your help in this matter.

TnGuy

I am trying to match results for a 401k safe harbor cross-tested plan between Datair and Relius.

I pass the Gateway Test and the Ratio Percentage Test.

On Datair the plan passes the Average Benefits Test by the Equivalent Annual Benefit Basis with PD. Relius also passes this test with the same percentage.

I am having problems with the 401(a)(4) test. When the test is done on Datair it passes based on both the Equivalent Accrual (Acc-to-Date) with and without permitted disparity. It does not pass the rate group based on the Equivalent Accrual (annual) with PD. Relius also does not pass the rate group based on the Equivalent Accrual (annual) with PD. On Relius under the General Nondiscrimination Reports, there is a DB tab which contains the options for the Actuarial Equivalent Accrued-to-Date option. Relius has told us that this option is not available for DC plans. It has been my understanding from conversations with Datair that you only have to pass 1 of the 6 rate group tests to pass the 401(a)(4) test. I am confused as Datair and Relius seem to be contradicting each other.

I'm hoping that someone can clarify what is really needed to pass the 401(a)(4) test.

Thanks,

A DC plan offers a single life annuity as a payment option. A participant has selected the single life annuity. Her vested account balance is about $17,500. If the DC plan elected to make the annuity payments itself, I believe, in order to comply with the Norris decision, it would have to compute the payments using sex-neutral mortality assumptions. Instead, the DC plan wants to purchase an individual annuity contract from an insurance company it selects (which is essentially what happened in the Norris case).

The largest monthly quote that we obtained from an insurance company provides the participant with a monthly payment of about $120 for life. However, the quote is based on a female-specific mortality table. A female-specific mortality table generally assumes higher mortality (higher when compared to a male specific mortality table) which means that a female recipient is presumed to live longer than a male and, as a result, to receive a smaller monthly payment than an identically-situated male would receive.

Is the DC plan required to purchase an annuity based on a sex-neutral mortality table? I don't know whether the Norris decision applies to the purchase of an annuity contract? Although, if the DC plan would have to make the annuity payments using a sex-neutral mortality table, it seems to me an annuity contract purchased from an insurance company would also have to use a sex-neutral mortality table (otherwise, the purchase of an annuity would be an easy end-run around the Norris decision). Can anyone help me here? How are other TPAs handling this issue?

A lawyer I spoke with says Norris doesn't apply--he didn't/wouldn't tell me why. An enrolled actuary I spoke with told me that Norris applied, but that virtually no insurance companies provide individual annuity contracts using unisex mortality assumptions.

Thanks in advance for your help.

they are not required for 403(b) plans with annuities only, correct?

Greetings,

I have only basic knowledge about the IRA's.

I already have a Tradirtional IRA, but I want to open up an Roth IRA too.

Should I keep my Traditional and open up a Roth and just continue to put money into the Roth IRA?

In other words, my current Traditional IRA would continue accrue with the funds already in it. But then I would open a new Roth, and begin to contribute only to it.

Or should I convert the traditional into the Roth and start from there?

Make sense?

That way I wouldn't lose the money to taxes by converting the traditional to a Roth.

Am I overlooking anything?

Thoughts please?

Thanks!,

Hairfarmer

trying to determine correct procedure on the following: a 401(k) had two participants with outstanding loans. they received hardships in may 2005 and discontinued making payments on their loans as well. the tpa at that time nor the financial manager advised the client of the deemed distribution that would occur. in dec 05, the plan changed tpa's and it was discovered in march when doing the 2005 py admin, the participants had deemed distributions on their loans. should the plan sponsor issue 2005 1099-r's to the participants and have them refile their tax returns or what would be the consequences of issuing 2006 1099's?

client is a law firm where each partner has his own PA which also adopts the plan. in the past (before we were hired) the sponsor allowed each PA to fund their PS contributions during the year but the corp funded the contribution for the law firm at the end of the year. the IRS is auditing the plan and they are requesting support for this position... to me it sounds discrminatory as well but if anyone thinks it is ok and knows of some legal basis, please post. thanks.

I am a Benefits Manager at a large employer. My background is nearly 100% retirement with a heavy slant toward Defined Contribution Plans.

I am exploring the HSA portion of our 1/1/2007 H&W Plans Design. The strawman I'm working today includes us supporting pre-tax payroll deductions with some extra "match" or employer contributions on a monthly basis. Given this we'll be selecting the pre-tax provider for the Savings portion of the design. I find this to be an overwhelming task given the accounts are individual accounts. If we ever want to change providers we will leave our employees in the lurch. This means getting this right is so very important. We need someone with flexibility and strength in order to meet our needs - now and in the future. I don't believe our current health providers nor their "partner" banks get it. Or, maybe I don't get it.

I believe the majority of utilization of our HSA will be highly paid, healthy individuals. This will result in money flowing in but rarely flowing out. I've seen studies that state we should expect 20% to use this like a Flex account but the rest will not tap it for years to come. Given this theory I believe we must deliver a product which allows much more investment flexibility than what I've seen thus far.

I find the delivery and design of the current HSA environment troubling to say the least.

1. Banks - The heavy fee environment and lack of vision many players have displayed concern me.

2. TPA - would love to find a TPA with a shell bank to run cash in/out of same or similiar instituational funds (or other low cost Mutual Funds) our K Plan offers. I would really like to find a mutual fund window option given the demographic of this goup.

3. I realize this is a start up plan with no assets so I will not be able to delivery the same level of low cost fund options I can in our jumbo K plan today, but I'd like to think we can keep the total fees south of 100 basis pts for our employees in year one.

Any tips, hints or otherwise?

Company A (which employs about 95 people) sponsors a qualified retirement plan (the plan uses the calendar year as the plan year). On January 15, 2005, Company A acquired 100% of the stock of Company B (which employs about 35 people). Company B does not sponsor a qualified retirement plan. I know that Code Sec. 410(b)(6)© provides a coverage transition period for Company A's plan through 2006. On February 6, 2006, Company B acquired 100% of the stock of Company C (which employes about 150 people). Company C does not sponsor a qualified retirement plan. On April 13, 2006, Company B sells 100% of Company C to an unrelated entity. Does Company A's plan now get another extension under Code Sec. 410(b)(6)© through 2007? As I read Code Sec. 410(b)(6)©, Company A's plan gets an extension through 2007 if (1) it passes 410(b) on February 5, 2006 (the date immediately before the change--which it barely does) and (2) coverage under Company A's plan is not significantly changed during the transition period (other than by reason of the change).

Help!!!