I would appreciate others' thoughts on whether an exercise price for an option that is not established until some future date will be subject to 409A if the terms do not clearly prohibit the future exercise price from being below FMV on the date of grant. For example, if an exercise price is to be set in the future in a manner that makes it very very very very very very unlikely (but not technically impossible) that the exercise price could be below FMV at the date of grant, is such an option considered a "discounted option" subject to 409A out of the gate? Is there any ability to withhold judment on the 409A aspect until actual exercise in order to determine if the option really did operate as a discounted option.

I note that the preamble to the proposed 409A regulations provide as follows:

"Thus, an option with an exercise price that is or may be below the fair market value of the underlying stock at the date of grant (a discounted option) is subject to the requirements of section 409A."

Based on that language, it seems any option where the exercise price is not set at grant and could potentially end up below FMV at the date of grant would have to be considered a discounted option when granted no matter how highly unlikely it is that the exercise price would actually end up below FMV on the date of grant.

Whether it was the food or the drink

No one quite knows what to think

But it can be plainly seen

The company dinner turned Tom green.

OK I was totally dumb, and I didnt get it. I signed up for a flex plan (medical) with my new employer. when I calculated the amount I wanted to contribute, I thought it was for the whole year (not just the amount I would spend from the time I was eligible). Anyway, when I found out that I was wrong, I then thought I was ok because we have 60 days after the plan year to put claims in. What I didnt realize (and found out today) was that you had to have the services that you are submitting done before the end of 2005, you can only sumbit them for the 60 days after the plan year.

I now have a ton of money that I guess I am about to lose.

Is there anything I can do? I so regret putting money away now. What a waste.

Greetings:

If a public employer in California accounts and accrues a partial pay sick leave account for each employee (based on that employee's service), can the "wage hours" represented inside this account be eliminated once the employee retires?

Does such an accounting represent "compensable wages" owned by the employee (upon retirement) for either payout or roll over to the public agency pension plan?

My basic understanding is that accounted for "earnings" cannot be retroactively removed from an employee. I believe even equipment/uniform allowances become "wages" upon retirement. I think California tried to retroactively eliminate/reduce certain PTO account balances for its employees several years ago and lost in court or arbirtration.

Thanks for any input

I have experience with 401(K) plans but have been asked to look at a (long-existing) 403 (b) plan by a not-for-profit hospital. I am surprised by the differences and would appreciate some advice/direction...... and at first blush wonder if it's possible/advisable to change this to a 401 (k) --- here's why: They have nearly one hundred investment options with an average fund charge of 125bp. The "advisors" are salesman taking 50bp

of compensation ---- and who supposidely need to be on-premise once a month 12 months a year to communicate these funds to employees. Some employees re-balance MONTHLY with the "help" of these people. Only 15 of the funds in this grouping meet my minimal criteria of 5-year Lipper "B" performance.

I am used to conducting employee education meetings (or overseeing them for the plan sponsor) in the DB and 401 (k) arena and have zero experience with 403 b so I am reacting to this by wondering if a 401 (k) option on a conversion is even possible-------- any thoughts? This is my first time using this site. Stashu

We are a small sized pension-consulting firm. Our chief actuary (who is also the owner) has decided to outsource some of our work to a pension-consulting firm in India. I am looking into the phase out of the work. To start with we will be outsourcing benefit calculations, benefit statements and 5500s for our smaller clients. We plan to outsource the actuarial valuations of the smaller clients in the near future. (They are using DATAIR in their Indian office)

My boss has enough confidence that this will work. He has met the actuary of the India firm (who is an FSA I believe) and he seems impressed with their setup.

I want to know if anyone has had any experience with outsourcing to an Indian firm and what their difficulties have been. Good or bad, I appreciate you sharing all of it with us. The more we learn from others experiences, the better prepared we will be. This is a first time exercise for our company and my boss is pretty psyched about making it work since it means HUGE cost savings at our end.

You can also pm me if you feel you don’t want to share some information with everyone else.

My 401(k) allows withdrawals of after-tax contributions and earnings while employed with the company. I've been trying to make such a withdrawal for many months with no success - the plan website simply states that there is a hold on my account, and the plan reps I spoke with on the phone couldn't explain why. A few weeks ago I spoke with a rep who finally informed my that there appears to be a QDRO in place that is the basis for this hold...

It turns out that my wife filed a QDRO when we were in divorce proceedings for our first marriage many years ago. We've since remarried each other and have been living happily ever after. But what of the QDRO?

A few minutes ago I spoke with the attorney who handled our case but she has since retired. I asked her whether the QDRO was technically still in force in our (exceptional) case but she really didn't give me a clear answer.

What effect does a QDRO have when the parties involve re-marry eachother? And what exactly do I need to submit to my plan administrator in order to get this withdrawal hold lifted from my 401(k)?

Thanks...

Final Roth 401(k) Regs

http://www.treas.gov/press/releases/js3068.htm

Final Roth 401(k) Regs

http://www.treas.gov/press/releases/js3068.htm

Nowafreeman..... you wouldn't happen to be a physician would you? Just a guess.

My boss just asked me to post this here:

We have a new client that has an existing SIMPLE-IRA plan. The client provided the needed notification prior to the 60 day deadline. Subsequent to that notification, they decided to implement a 401k plan. The financial institution told them they have to wait for 2 1/2 months before they can do this. They did not provide a cite and I couldn't locate anything in Sal's book [The ERISA Outline Book] that indicates this limitation exists.

Here's what they want to do:

1 Stop contributions to the SIMPLE-IRA effective 12/31/05.

2. Start a new 401k plan effective 1/1/06.

Can this be done?

Any thoughts? Thanks for the help!

We sent out 1165 cafeteria forms and received 809 back. There is a change to the health plan payroll deduction, so we required forms to be returned. A line in the letter accompanying the election form stated if the form was not returned, your medical election would default to your 2005 choice. Now we need to get forms from the people who we will keep their medical coverage due to the payroll deduction change. Any tips on how to correspond with these people to get them to return their forms?

this is my first

looksee at 10...

Nondiscrimination report: Overall Report

The sort is by RateGrpID, which appears to assign a number to each HCE alphabetically.

however, when my report prints, it sorts in the following manner

1

10

11

12

13

2

3

4

5 etc.

Thus people at the end of the alphabet get sandwhiched between the other employees. I imagine there is someway to set something in Crystal to make this work, but since I don't know how....

fortunatelly the report is in Crystal so easy to modify. In fact I was able to add an item that will tell how many additional NHCEs are needed if the nondiscrim classification test fails on an individual. well heck, an idiot like me finds that useful.

Plan uses the 3% NEC safe harbor design and client wants to terminate plan asap. It seems that this calendar year plan would have to remain in existence until at least 12/31/06 given that IRS Notice 98-52 requires a safe harbor plan year to be 12 months long. Would making the 3% contribution in October based on estimated total 2006 compensations be allowable so that the plan can distribute all benefits by the end of the year? How is this normally done? All help is greatly appreciated.

We are looking for a vendor of plan management software. What we need is a system where we can input all of the various features of our client plans, and then run reports based on one or more fields, for example, plans with fiscal year plan years, plans that offer loans, plans that have adopted the 401(k) safe harbor, etc. Is anyone aware of anything like this that is available for purchase? Thanks.

I got an unexpected bonus this year that will put me well above the $95,000 max for contributing the full $4000 to a Roth IRA, but I have already contributed $3200, more than will be allowed. The best remedy that I think is available and legal, according to the 2004 IRS Form 590 (page 57 and 58) http://www.irs.gov/pub/irs-pdf/p590.pdf, is to withdraw the excess contributions and associated net earnings before April 15, 2006 and pay tax on the earnings as regular income for 2005. By withdrawing before April 15, "the contributions are treated as if never made them" according to 590.

Basically, this rule would seem to allow anyone who contributes to a Roth IRA during a year to decide the following April 14 that they need to liquidate, and as long as contributions and all earnings are redeemed, and regular income tax is paid on the earnings, there is no penalty.

The problem is, my mutual fund firm won't acknowledge this rule and says I will have to pay a 10% penalty on the earnings because I am not 59 1/2 but am making a withdrawal. I am worried that even if I am right, how they characterize the withdrawal could impact how the IRS views the transaction.

Any comments? Thanks.

Is there a way to find out at what rate your non-deductible contributions to an Traditional IRA will be taxed at upon distribution? My assumption is that 100% of my contributions will be non-deductible due to income restrictions and that they will have to be filed on the FORM 8606. Also, I'm assuming that the distribution will occur after I'm 60 without early withdrawal penalty.

In general, I'd like to have an idea as to the benefits of contributing non-tax deductible funds to an IRA vs. just contributing to a brokerage account, but it is tough to quantify without knowing the back-end tax implications of the Traditional IRA.

Thanks again for your assistance. I'm very pleased to have found this forum.

A client that has previously filed a standard termination with the PBGC has now decided they can't make the plan sufficient and is planning on filing a distress termination. The employer is also going through bankruptcy. Until the plan officially files for the distress termination and the PBGC takes the plan over, should distributions to participants entitled to distributions be made from the plan in accordance with the terms of the plan or should distributions (except for annuities) cease?? Thanks.

A client is looking into setting up a cafeteria plan for himself. He is the only non-bargained employee of 15 person company. He would like to set up a Health Care Reimbursement account to pay for the uninsured medical expenses. As the others are bargained, they would be excludable from discrimination testing leaving only himself. Is this ok? What reporting requirements are there? Is it something he could administer himself easily enough? any pitfalls?

Company X maintains a defined benefit plan and a 401(k) plan for its employees and for the employees of a number of subsidiaries. Two other subsidiaries, Y and Z, (which are both subs of X) maintain their own plans and do not participate in X's plans. Company H is the parent organization and is merely a holding company with no employees. Section 10.06 permits the parent of a parent-sub controlled group to elect to file all of the plans under the remedial amendment period cycle determined by the last digit of the parent's EIN. Can X, Y and Z treat X as the parent for this purpose and have X make this election?