Can a DB plan have different definitions of service for benefit accrual and 415 limit?

For example, suppose a plan requires 1,000 hours for benefit accrual. A participant will have 9 1/4 years of participation at NRA. The dollar limit would be multiplied by 9/10ths. Could a plan be designed to credit a year of participation for 415 purposes on 1 hour of service? In this case there would be no dollar limitation reduction.

Small employer has a 401(k) plan but, after several years has decided he no longer wants to allow 401(k) contributions. He wants to eliminate the 401(k) feature, but keep the discretionary PS piece. Is a CODA a protected benefit and therefore, is he prevented from eliminating it? Also, since this is not a plan termination, the participants could not take distribution of their 401(k) monies, correct?

Finally, since 401(k) language is throughout the entire document and SPD, if the above is permitted, would you restate the entire document and SPD, or handle the change via a 1-2 page plan amendment, with an SMM?

Thank you

This is a two part question

For a plan that was amended to reduce the involuntary cashout limit to $1000, is there a required amount of time to wait for signed distribution forms before paying out a participant in this situation? Does this rule mean that if I quit and my vested account balance is $800.00, the Plan can cut me a check for $640 and send the rest to IRS without asking me? Is the plan required to have signed distribution forms on file for me (this usually comes up in the annual 5500 audit of some large plans we have).

Secondly, if participant's vested account balance is between $1000 and $5000, the Relius distribution forms have a section for "Proposed Distribution Date". What period is considered reasonable to enter here?

thank you

I received a claim for anesthesia related to a cosmetic breast augmentation. Can I reimburse the anesthesia, or do I consider this part of the cosmetic procedure? Opinions, please.

I have a participant who would like to roll her voluntary after-tax money, including the interest, out of her employer's Profit Sharing Plan. She is not 59 1/2.

I was told it is acceptable if the distribution consists of pre-1987 $$, which it does not. It's all post-1987 $$.

The plan document states that in-service distributions may be made at or after normal retirement age.

Can this be done?

What is the account balance for determining maximum loans in a balanced forward plan if a participant has been paying on a current loan? Is the participant's loan interest paid as of the most recent valuation date added to the account value on this valuation date?

Loans are a participant directed fund.

I didn't see this covered in any recent posts... I'm debating withdrawing some of the contributions I've made to my Roth IRA, but was told the following by Fidelity:

"Whatever dollar amount is not returned back in 60 days, then that money is taxable for that calendar year.

For example, you take out $5,000 from your IRA. You return $4,000 within the 60 day time frame. Then $1,000 is taxable for that year. You would report it as regular income. Also, you would be liable for any early withdrawal penalties on that $1,000."

Is this right? Hasn't the money I paid in already been taxed as income when I first earned it??

It was my understanding that I could withdrawl contributions at anytime with no penalty.

Thanks,

K

Has anyone ever heard of this?

On the one hand, it sounds like it could be a disabled life mortality table.

On the other, it sounds like it could be a recovery from disability table.

I understand ers can fund an HSA, and if they do, they have to make comparable contributions. I can this this on a monthly basis.

1. Can the plan allow the employer to pre-fund an HSA based on an appeal where the ee has a large expense and the HSA doesn't yet have enough $$ in it to cover the deductible? HSA new this year.

2. If so, I think I would have to make the same contribution to other eligible ees in the same classification.

Any thoughts?

Cathy

are loans included in a participant's account balance for top heavy purposes?

I work for an employer who has both a pre-tax health insurance plan as well as a Sec. 125 health spending account. I recently tried to cancel my health insurance and was told that since the plan is a Sec. 125 plan, and the premiums are pre-tax, I cannot cancel my coverage unless there's a qualifying event. I didn't realize that "qualifying events" applied to regular health insurance. Here's what our HR department says:

"When premiums are paid on a pre-tax basis through the Flexible Spending Account, you may only terminate coverage on you and\or your dependents at the beginning of a plan year (January 1) by completing a new enrollment\change form to decline coverage. Mid-year changes are only allowed when certain qualifying events such as a change in employment or family status occur and the change request is received by HR within 30 days of the qualifying event date. If you pay premiums on an after-tax basis, you may terminate coverage at any time."

Is our HR department interpreting the cancelling of health insurance right???

If an employer provides a $50 Amex gift card to employees who complete the HRA, is that somehow taxable income to the employee?

The vendor handles the distribution of the cards, and does not provide a list of employees who received the incentive, citing HIPAA.

I've pretty much decided that I want to begin a Roth IRA with Vanguard (target-date retirement fund) but they require a minimum deposit of $3000. My wife and I have about 10K in our savings, but would like to keep that as our emergency fund. My grandmother had bought me 5 shares of stock in Pfizer as a child and they've grown to over 120 shares now at about $26/share. I was wondering if it would be a bad decision to cash the pfizer stocks in order to begin my Roth IRA. They are worth about $3300. Any suggestions??????

I have the following situation:

ESOP started in 2004. For the 2004 stock was released from the suspense account and allocated among participants. In 2005, a dividend was declared. The document states that dividends on allocated stock are allocated based on stock account balance and that dividends on unallocated stock are allocated based on account balance in the "other investments" account. There are no participants with an "other investments" account balance, as all of the accounts consist solely of company stock.

Does anyone have an idea of how to proceed with the allocation of the dividends on the unallocated stock? Since the terms of the Plan do not address what to do if there are no account balances in "other investments," could the Plan be amended now to address the way in which those dividends will be handled?

Thanks!

I have a small medical group consisting of 3 doctors and their staff. The three doctors are equal partners. The partnership sponsors a Safe Harbor 401(k) Plan using the SH Match and a SS Integrated Profit Sharing Allocation. We are obtaining K-1 information from this partnership to calculate the earned income for the doctors.

We have just discovered that the doctors all own equal shares (33.3%) of another partnership. The second partnership owns the building that their practice is in. The doctors each receive additional k-1 income from this partnership from the rental of the space in the building.

The question at hand is...can the doctors include their compensation from the second partnership for plan allocation purposes. My thinking is that this is a control group so they could use their compensation from the second partnership if that partnership signed on as a participating employer to the plan sponsored by partnership #1.

Your Thoughts...what am I missing?

I am interested in investing money to pay for an education for my five year-old grandson. I've told that traditional college fund investments will not pay for an education if he doesn't attend a four year college. Please help.

Jasmine

I am trying to determine what constitutes "ownership" under the definition of key employee, particularly with respect to stock options that had been granted but were not vested. I need to determine if this employee was key for Top Heavy Contributions:

This employee had compensation over $220k in each of last 5 years (so he passes the earnings threshold); but , with respect to 5% or 1% ownership:

He had stock options worth > 5% of the company's shares on a fully-diluted basis. These stock options were granted but only vested upon a change of control.

Internal Revenue Code Section 416(g)(4)(H)(i)(1)(B) provides that in determining whether someone is an owner of the corporation for key employee purposes, it is any person who owns (or is considered as owning within the meaning of Section 318 of the Internal Revenue Code), more than 5% of the outstanding stock of the corporation. This provision is referenced to Code Section 318 for determining ownership. Code Section 318(a)(4) provides that if any person has an option to acquire stock, such stock shall be considered as owned by such person.

I have also heard that the stock options needed to be for shares that had already been issued in order to meet this criteria.

Can someone on this board please give some advice?

Thanks

a partner in a medical practice has a tiaa/cref annuity from a former medical group that he wants to rollover to a ira. half of the present tiaa account must be paid out in a taxable annuity payment to him, which will be about appx. $10,000 per year. he is 56 so he would have taxable income plus, i think the 10% penalty for about 3 years.

his current practice maintains a safe harbor 401(k) and he wants to maneuver his income from this practice to help offset the taxable income from the annuity. i understand the max he could defer for 2006 is $20000. any thoughts on helping him save a little more? should he elect to defer that $20000 as roth 401(k)?

thanks

My church client wants an easy deferred comp vehicle for its CFO --one of its few highly compensated employees. The church has a qualified DB plan covering full-time employees, including the CFO.

All its employees can contribute to 403(b) contracts or 403(b)(7) accounts, but there is no 403(b) "plan" and no employer contributions.

Since church 403(b)'s aren't subject to the nondiscrimination rules of section 403(b)(12), employer contributions to a 403(b)(7) account for the CFO seem like a good solution.

Am I missing anything here?

An employer has a Money Purchase Plan and a 401(k) plan without a Profit Sharing option. They terminate the MPPP at 6/30. They add a PS option to the 401(k) plan at 7/1.

MPPP has immediate eligibility; age 21; no last day req.; 1000 hours to receive a contribution. Contrib formula is 10.4% of base comp plus 5.7% in excess of TWB.

PS has age 21; 1 hour of service; enter 1/1 and 7/1; requires 1000 hours to receive a contribution; contribution is integrated with TWB. Uses participation compensation for PS allocation.

Should MPPP and PS allocations and eligibility be calculated totally independently? If a participant doesn't reach 1000 hours before 6/30 - then no MPPP contribution? If the TWB isn't reached either in the first or in the second half of the year, then no excess contribution?

Is there no pro-rating of the TWB or the hours like you would with a short plan year?

Is this above an unintended consequence of terming the MPPP rather than merging it into the 401(k)? It seems that the contributions calculated separately are lower than they would have been had they received the MPPP on the full year or the PS on the full year.

Any assistance in helping me understand what is going on here would be appreciated.