Can ERISA 403(b)'s qualify for 404©? I don't see anything that would stop them.

Can a 401(k) plan offer immediate vesting on employer matching contributions but have a 5 year cliff vesting on employer discretionary profit sharing contributions?

Can a 401(k) plan offer immediate vesting on matching contributions but a 5 year cliff on discretionary non-elective profit sharing contributions?

Can an employer make the same HDHP/HSA available to its employees in Hawaii as is available in other states?

Proposed Answer for Discussion and Comments (see below). Does everyone agree?

Generally no. The state of Hawaii has a unique exception from the preemption provision of ERISA that allows it to regulate directly the terms of ERISA health plans, including self-funded plans. ERISA § 514(b)(5). Hawaii’s Prepaid Health Care Act (“PHCA”) requires employers to provide health benefits to Hawaii-based employees who are employed at least 20 hours per week for 4 consecutive weeks. Haw. Rev. Stat. §§ 393-3(8), 393-4, 393-11. In addition, the PHCA also sets forth various requirements concerning plan benefits and cost-sharing. Haw. Rev. Stat., ch. 393. Accordingly, an HDHP offered by an employer in Hawaii, whether self-insured or insured, must satisfy the requirements of the PHCA.

An employer in Hawaii essentially has three options in deciding how to satisfy the PHCA's benefit requirements: (1) the employer may buy health insurance coverage that has already been pre-approved by Hawaii Department of Labor and Industrial Relations (“DLIR”); (2) the employer may seek DLIR approval for a health insurance policy not yet approved by DLIR; or (3) the employer may seek DLIR approval for self-funded plan coverage. At present, there are not yet any pre-approved HDHP/HSA products available on the Hawaii insurance market. If an employer offers a plan that has not been pre-approved by the DLIR, it must submit an application to the state and request approval. It appears, based on informal comments from the DLIR, that in order to view the HDHP as satisfying the requirements of the PHCA, the DLIR may require significant employer HSA contributions to ensure that most of the high deductible is covered by the employer, not the employee.

I've got a daily val 401(k) Profit sharing plan with a 1000 hour requirement for a person to share in that year's profit sharing. I was always under the impression that if you have a 1000 hour requiremnt or a last day requirement that you could not fund INTO the participant's accounts DURING the year (i.e. put a litle in Jan, Feb etc...).

Recently, i was told that my views are too conservative.

Anyone have an opionion?

thanks

Alan

I have an employer who allowed for a hardhip distribution without requiring the employee to exhaust their after-tax accounts first. I know this is a violation of the hardship safe harbor which the plan has adopted. What would be the proper correction method under the VCP? Is the VCP even a possibility?

The only expample in the Rev. Rul. deals with a plan that doesn't yet have a Hardship provision. In that situation you just retroactively amend the plan to include hardships. That wouldn't work here. If anyone has any thoughts, please let me know. Thanks.

Is anyone planning on charging more in fees to plans that add the Roth 401(k) provisions? I am looking at this and I don't think it will actually cost me more to administer or recordkeep the plan due to the software handling it. Something I may be missing? Any ideas or comments are appreciated.

are they included in total compensation even though they do not appear on the employee's W2?

i assume since it is not on the w2 you dont use it but do you use it for testing purposes?

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I have a client who owns both a for profit and a non-profit business. There are 3 owners who currently max out contributions for the 401k and are inquiring about their options to increase contributions. My first thought is to suggest a 457 plan for the non-profit, so they can max out contributions to that as well. Any thoughts or suggestions? Any things I may have not thought about?

Hello,

I would appreciate some opinions/advice on the following scenario.

I am 38 and have 13-1/2 years in as an officer on a fire department. I am currently vested to receive 24% at age 60. I presently earn approx. $74k a year with annual 3% raises. If I stay 20 years, I will receive 50% collectable at age 50. Big difference.

I have an offer from a global 50 organaization, which will pay me 20k-30k more than my current salry by year 2. They offer a 401k match dollar for dollar up to 6%, plus a cash savings retirement plan at no cost.

From a retirement/security standpoint - would this be a bad move?

Thank you

I prepared flash cards for the exam based on the required readings and read them every day for several months. I received an 8 on the exam last May. If anyone is interested in these flash cards then please email me. Otherwise they will probably be discarded.

What recourse does the participant have for the following:

Plan allows for loans to be repaid by terminated participant. Participant made erradic payments through the course of the loan due to financial issues but felt they never were in default by more than 3 months

Participant paid the plan for the loan in the first quarter of 2004. The participant was not sure of an exact amount to repay the loan because he never received an annual valuation or a payoff amount. After several unanswered requests to the plan administrator for the payoff amount the participant made a calculation of what he thought the outstanding amount was, paid it, then rolled over the balance into an IRA.

2 years later the participant receives a 1099 for interest on the loan. The participant argues that if there were a loan offset it would have been in 2004, and so the 1099 should be corrected. He also raises the issue of never receiving a payoff amount after several requests from the plan admin, or an annual valuation to make certain the balance was paid in full.

What should the participant do about the 1099 for 2005? Does he have any cause for legal action against the plan administrator?

What recourse does the participant have for the following:

Plan allows for loans to be repaid by terminated participant. Participant made erradic payments through the course of the loan due to financial issues but felt they never were in default by more than 3 months

Participant paid the plan for the loan in the first quarter of 2004. The participant was not sure of an exact amount to repay the loan because he never received an annual valuation or a payoff amount. After several unanswered requests to the plan administrator for the payoff amount the participant made a calculation of what he thought the outstanding amount was, paid it, then rolled over the balance into an IRA.

2 years later the participant receives a 1099 for interest on the loan. The participant argues that if there were a loan offset it would have been in 2004, and so the 1099 should be corrected. He also raises the issue of never receiving a payoff amount after several requests from the plan admin, or an annual valuation to make certain the balance was paid in full.

What should the participant do about the 1099 for 2005? Does he have any cause for legal action against the plan administrator?

Last year under the advice of our investment person my husband and I converted our traditional IRAs to Roths. Find out this year that our MAGI was to high to except the total conversions. From some research it looks like we can accept up to 4000 each of the converted IRAs as a ROTH contribution and would only have to reconvert the excess of 4000 plus the earnings on this. Is this correct? Thanks for any help.

The Disability Income carrier for our association group replaced its own policy in 4/2003. The replacement policy has revised 'other income offset' provisions that are more favorable to a claimant. The coverage is voluntary through salary reduction.

For some reason, the association did not begin to actively market, sell and enroll employees into the replacement policy until January, 2005. The carrier continues to pay claimants benefits under the terms of the old policy, despite the replacement policy's effective date of 4/2003. There is no difference in premiums for the old and new (replacement) policies.

Should the carrier be paying claims under the provisions of the new (replacement) policy? If so, what issues or liabilities may arise from this situation? Thanks.

Company X maintains a 401(k) plan permitting employees to contribute on an after-tax, pre-tax 401(k) or Roth 401(k) basis from 3% to 40% of compensation to the plan, except that HCEs cannot elect to contribute more than 10% on a pre-tax 401(k)/Roth 401(k) basis and up to an additional 3% on an after-tax basis. If an employee contributes a minimum of 3%, the company provides a matching contribution of 4%. Finally, if the employee's pre-tax 401(k)/Roth 401(k) contributions reach the 402(g) limit during the year, the employee is deemed to have elected to contribute after-tax contributions for the remainder of the plan year.

I have read the series of posts dealing with the application of the annual compensation limit on 401(k) and matching contributions. My question deals with after-tax contributions. Are they subject to the annual compensation or are they treated like 401(k) contributions? For example, let's say Executive A elects to contribute 3% of her compensation to Company X's 401(k) plan on a pre-tax basis and during 2006, her compensation is equal to $1 million. Once the employee's compensation reaches $500,000, she will have reached the 402(g) limit and all remaining contributions will be made on an after-tax basis. Can A contribute an additional $15,000 on an after-tax basis?

Assuming that Executive B earns $2 million during 2006 and elects to contribute 3% of his compensation on a pre-tax 401(k) basis. Once B's compensation reaches $500,000, he will reach the 402(g) limit of $15,000. Can B make after-tax contributions on the remaining $1.5 million up to $20,200 (15,000 + 8,800 + 20,200 = $44,000)?

I have a DC plan where benefits are paid in the form of a lump sum distribution. No other distribution options are available. I believe I can apply the 5-year distribution rule in every case where the participant dies prior to receiving benefits, including distributions to the surviving spouse and a designated beneficiary. Is that correct or are these categories entitled to elect the life expectancy option? Some secondary sources seem to suggest that they are entitled to elect the life expectancy option. I can't believe that we would be required to give them the life expectancy option when the only form of distribution under the plan is a lump sum. I was always under the impression that benefits could always be paid out more rapidly than the MRD rules.

Can a Section 125 plan be established for a family's Nanny so that she can use the plan for medical reimbursement pre-tax (medical FSA)?

Can anyone direct me to education classes/ seminars/ conference on 401k? I currently work on the employer side, and have plan assets just over $30 Million. We are an organization in growth mode, and administration of the plan has changed over to my group. I do not want a high level - I am looking for a course that will provide real value. Thanks.