I have an hourly plan and a salaried plan with the same sponsor - each had under 500 lives reported on the 2005 PBGC Form 1 - but in total there were over 500.

Do these plans need to file a PBGC Form 1-ES ?

Just a general question. I am retired and i recive a pension. Can I open an IRA? My account said I can't because i collect a pension. I am sorry but I dont understand Can anyone help with this question?

A broker contacted our self insured group about implementing predictive modeling to identify potential future high cost claimants. We have considered this for disease management but his approach is also removing these future high risk claimants from the plan and providing them with alternative coverage. The broker would be paid a percentage of the "savings" and we would benefit with lower reinsurance premiums and claims costs. The trick is that before he would disclose all details of this we would have to sign a confidentiality agreement of which we declined. Evidently, it would involve replacing the participant's group coverage with alternative coverage. He alluded the other coverage may be a type of high risk MERP and that the participant would actually have better coverage than the group plan so they would have no reason to refuse. We certainly thought this would be discriminatory but another group in our state that he called on that we are familiar with is looking further in to this and their attorney said that it passes all DOL and state requirements for not being discriminatory. Of course they signed the confidentiality agreement and are reluctant to share the details with us. Has anyone heard of such an arrangement that would be advantageous to a self insured plan and not discriminatory? Frankly, we don't want to go near this one but are wondering if someone has tapped in to a new cost containment strategy.

Participant elected to defer 18,000 in 2005 (14,000+4,000 catchup). Payroll stopped deferrals at $14,000. Participant got W2 and is not happy. What is recommended course of action?

Plan has 51 NHCEs and 8 HCEs. A DB plan is proposed to primarily benefit 2 HCEs (other HCEs excluded) and the required minimum number of NHCEs needed to pass discrimination testing. I think my NHCEs coverage on a 410(b) ratio/percentage basis is 17.5% (2/8 * .70) which is about 9 NHCEs. However, 401(a)(26) will require 24 employees (.40 * (51 + 8)).

Since my 410(b) coverage requirements is much less than 401(a)(26), can I give the 9 NHCEs required for 410(b) the same accrual level as the two (2) benefiting NHCEs to pass 410(b), but give the remaining NHCEs only a 0.5% accrual rate (or something like that) sufficient to have a meaningful accrual for 401(a)(26). Do I then have to general test it or is this a component plan (restructuring) opportunity where each accrual rate can be tested as a separate plan and presumably the lower 0.5% passes since no HCEs are in that component plan. Any issues ?

This is more of a grievance. I have plans in which the HCEs would be able to contribute more to a Traditional IRA than they can to the 401k plan. I think the rules need to change such that an HCE should at least be able to contribute the IRA maximum limit to their 401k without concern that a portion of it is going to be refunded. Thus, lets assume the IRA limit is 4k for 2005. I have an HCE who contributed 5k and the test results indicate a refund of 3k - all EE. I say, let the HCE keep at least 4k in the plan and refund only the 1k (5k - 4k). Does anyone see a problem with that?

I'm an international student at a US business school and plan on working in the states for a while after graduation. Am I eligible to open an IRA (either Roth or Traditional)? Depending on how long I work in the states and what my rate of return is on my investments, paying the 10% penalty may be worth it to enjoy tax-free compounding. Thoughts?

If an employer decides mid year that they want to offer an employer contribution to their Health FSA plan, how can they do this at this point. If employees were eligible during open enrollment (calander year basis), and elected, lets say $1500.00, can the employer add $500 to each participant at this point and make their new annual election $2000.00? What about the employees that were eligible during open enrollment and declined enrollment at that point, shouldn't they be able to receive the ER Contribution? Does this have to be prospective? Is this a qualifying event to enroll?

I am running a cross-tested 401(k) calculation for 2005. One HCE owner, 3 NHCEs. Top heavy plan, SH Matching with 500 hours/last day rule. If 2 of the NHCEs termed in early 2005 with less than 500 hours, although they deferred a small amount and will receive a match they should not be getting a profit sharing contribution from the employer. I am having difficulty with coverage testing. Any suggestions on how to pass testing?

What (if any) testing issues can a plan run into if it uses the 415 definition of compensation but excludes bonuses, overtime and commissions?

I am 25 and finally a little late deciding to start investing. I have done alot of reading and will be investing this year in a traditional IRA. My question is if I invest 4,000 for myself and 4,000 for my wife in a traditional IRA I will get an additional $2,000 back on my refund, 25% of 8,000.

So my question is can I mark that I am putting money into an IRA, and then wait for my refund to come in, then contribute to an IRA before April 15th. If so how does the IRS get confirmation that I actually contributed and does it matter if I file my taxes before putting money into an IRA as long as the money gets put in by April 15h?

Thanks in advance for any advice.

I seem to recollect the general vesting requirements in the event of a standard plan termination as follows:

(1) All participants required to be deemed vested if the sponsor receives or expects to receive a reversion.

(2) Vesting not required otherwise (except that the normal vesting rules would still apply, of course).

Question: Is this accurate? Or, must all participants be vested no matter the other facts of the case? (i.e., standard with reversion and standard without)

Corporation A purchases Corporation B, now a wholly owned subsidiary of A. Both A and B sponsor defined contribution profit sharing plans. Corp A disolves Corp B. Ideally, we would like to merge the plans. Are there any considerations that would make freezing plan B the better option? We are not aware of any plan B problems that would taint A, but there's always that possibility.

I spend alot of time looking at 5500's on Freeerisa.com. Can anyone give me any tips as to what to look for on these plans. I am new to marketing 401K and other qualified plans and would appreciate any insight to looking at the filed 5500's. For instance, someone told me to look at the code on the 5500 and make sure that they had a 2A and a 2F. They really didn't tell me why.

I see alot of plans that distributed all assets during a year, but didn't check the termination box. What's up with that.

On schedule I, what is the other income usually comprised of. Is it rollovers or what?

I thank you in advance for any help and insights.

Mike

A client with a Defined Benefit Plan wants to amend their plan to exclude an employee by name effective prospectively. This employee had entered the plan in 2001. The Plan started in 2000 and has always been top-heavy (and will continue to be top heavy). If the employee is excluded, we believe that the plan will still pass the 410 ratio percentage test for coverage, and they will pass 401(a)(26) for participation.

Can you think of any plan qualification problems that might occur doing an amendment like this?

Will this employee no longer be eligible to accrue any future top heavy minimum benefits?

Can his future compensation be excluded when considering his average pay for top heavy purposes?

Since the plan passes ratio percent, is it ok to exclude him by name, or does that not even matter?

Should the plan provide a 204(h) notice to this employee?

My client is currently having the plan participants pay all the Admin fees through an additional "wrap" or asset-based fee calculated by the insurance provider.

Is there any benefit to the plan sponsor if the vendor bills the recordkeeping fees directly to the company (and eliminates the "wrap" charge that participants are paying)? They are an S Corp.

Are these recordkeeping fees deductible?

I've got a controlled group (technically a group under common control, since at least one of the entities is a partnership) where the same four individuals each own 25% of each entity H, G, and S. H and G each have their own plans, which are mirrors of each other (deferrals only), while poor S has no plan at all.

Luckily, S is a staffing company that provides per diem employees to H and G, and both H's and G's documents specifically exclude per diem employees, so the vast majority of S's employees are not eligible by class, and since most work less than 1,000 hours, they would never meet the statutory guildelines and therefore don't impact the coverage testing. I know there are issues with long-term employees from S possibly being considered employees of H/G after a year, but that's a question for another thread (though it may be coming soon!).

From reading Tom Poje's responses in this thread:

http://benefitslink.com/boards/index.php?showtopic=29893&hl=

it sounds like I have to make the same aggregate/disaggregate election for both coverage (410(b)) and 401(k) testing, but am free to select either option. Have I got it right? Are there any circumstances that would force my hand one way or the other (besides, of course, that doing it one way fails and the other passes!)?

This is my first time dealing with something of this complexity, so if I'm overlooking anything else, please feel free to let me know.

ee from date of initial participation could have worked 42 years NRD = 1/1/30

they worked 5 years, quit 1 year then returned and worked another 12 years. (thus when they returned they could only work 36 more years to retirement)

[entered plan 1/1/88, quit Dec 92, returned Oct 93, calendar year plan]

what is the fractional accrual?

rev ruling 81-11 seems to say you would calculate as follows:

first accrual period + second accrual period

5 / 42 + (1 - 5/42)(12 / 36) = .4127

so this person comes out ahead of someone who never quit and worked 17 straight years?

e.g. 17 / 42 = .4048.

the second method under this rev ruling looks like you would have

17 / 41 = .4146

If a plan qualifies for transition relief from coverage under IRC 410(b)(6)©, can they test otherwise excludable employees for nondiscrimination purposes? In other words, if the plan does not formally run coverage testing on the otherwise excludable employees due to transition relief, can they disaggregate their adp/acp tests for those who meet the statutory minimum requirements and those who do not?

Employer owns two subsidiaries and would like to set up a safe-harbor 401(k) plan to cover them. Because the subs have very different workforces, Employer is considering setting up the employer contribution differently for each. Specifically, it would like to use the "mandatory 3%" safe harbor for one of the subs and the "100% of the first 3% plus 50% of the next 2%" safe harbor for the other.

Employer's question is, can it use both safe harbors in the same plan? If not, can it have two valid safe harbor plans within its controlled group, but use different safe harbors for different subs?

Thanks for any insight.

LJ