We have been advised to recommend to a plan sponsor who offers its common stock as an investment in its participant-directed 401(k) plan to consider "unitizing" the stock. The stock is traded on the NASDAQ NM exchange. What is the difference in unitizing the investment from just purchasing (and selling) shares, at current market value, as contributions, distributions, investment exchanges, etc. occur in the course of normal plan operations? How does one go about unitizing the stock? Thanks.

A company sponsors a 401(k) plan for its participants. The plan is intended to comply with ERISA Section 404© and offers a number of funds as part of the plan's core funds for which the company's investment committee is responsible for selecting fund managers and monitoring their performance and a self-directed brokerage window, through which participants may choose from a universe of several thousand mutual funds.

A participant has written to the plan administrator requesting information on whether any of the plan's existing core funds or any of the mutual funds available through the brokerage window are designed to comply with Islamic law. According to the participant, a fund would be in compliance with Islamic law if it did not include investments in any business manufacturing or serving alcoholic beverages, providing pornography or charging or collecting interest, among other criteria.

Does anyone know of any Islamic based funds or any type of mutual fund that would otherwise satisfy the requirements of Islamic law?

Such worries!

Participant received a lump sum pursuant to a termination and as provided in the Plan. Problem: participant did not receive a lump sum of the entire amount.

Suggestions?

Please confirm which HCE threshold is used for 2005 tax year ADP Test. 2004 gross wages are used for HCE determination, but it's unclear whether 2004's $90K or 2005's $95K is to be used.

I got a response from IRS 401K department. However, they didn't seem confident in their response. It's hard to tell what the original 414 (q) (1) $80K base year was because that threshold remained constant from 1997 through 1999.

ASIDE: also, if you know...why did the threshold drop drastically from $100K in 1996 to $80K in 1997? 2006's $100K is quite low compared to the current job market wages high escalation (a lot of line staff, non-management, in oil & gas field are exceeding that with big 2006 raises needed just to keep necessary staffing levels).

When calculating earned income, it is necessary to allocate forfeitures between the employees and the owners. How is this done? Pro-rata based on the contributions allocated to employees? Profit Sharing only, or would you include all employer contributions (i.e., including safe harbor)?

Is there any published guidance on this?

An HCE is in the qualified election period and is able to diversify his plan holdings. A question has come up about whether or not he MUST make the election during the first 90 days of the plan year. Is he limited to that time period? If so, why is that the case?

A self-employed individual has earned income from a real estate business. She also has self-employed income from another business that she has. She has a solo 401(k). Does she need to include income from both entities to determine the maximum that she can contribute?

I've got a 457(f), DC plan where the executive vests in earnings each year. Because they are vested, the earnings get taxed each year. But what about the earnings (that are vested) on the vested earnings already taxed? I know they are not subject to employment taxes under the 3121 regs, but what about income? I can't find any guidance out there. Is it ordinary income or capital gain? I assume it is ordinary income under a plain reading of 457(f). But could it be capital gain taxed at liquidation of the assets, i.e., at distribution. Any thoughts?

I just got our new quote for e&o coverage for our tpa firm. premiums up 45% from last year? I realize that the premiums increase when our annual revenues increase, but this is unbelievable.

is this standard practice? a $15k deductible is in place and the vendors we work with (Nationwide, Hancock)_require 1million in coverage...

in business for 6 years and 25 years of admin. experience and no claims... this seems unreasonable.

any comments? thanks.

Client made 200K plus for 20 years. In 2005, starts a new DB plan with initial funding contribution of 110K/yr (50 yoa). However, in 2005, w2 income drops to about 50K per year. Client funded full contribution in 2005, now I'm uncertain how to fund for 2006 and 2007,etc.?

If a plan sponsor deposits their profit sharing contribution into a holding account in the plan in installments throughout the year, are the earnings on that account considered to be Annual Additions for 415 when they are allocated to the participants? Specifically, there are several participants at the 415 limit already--can they get an allocation from the holding account earnings?

Hi all:

I'm new here, and just looking for some advice. My company ( I am an officer and plan administrator) filed chap 7 BK about a year back and terminated all the employees. We were current with all 401K obligations at the time of BK, but the recordkeeper has refused to "decertify" the plan, and has kept piling up the billing anyway. Most, but not all of the employees have rolled out of the plan, but there are still 2 in it, that have not done so (despite my urging). I would like to leave this cleanly, but I am not going to pay the recordkeeper $3K+ just so they will decertify the plan (which, if they had done so at the beginning, they would not have racked up the $3k+)!

If the recordkeeper will not decertify, what are my options? Can I just walk away?

Thanks in advance for any and all suggestions Chris J

There are several active (non owner) participants who turned 70 1/2 in 2003. The client thought they had elected to defer receiving benefits, but we have determined that they never made such an election.

1. Must they be offered an election at this time, effective as of age 70 1/2, or can we simply wait until they retire?

2. If they are offered an election, and they choose to begin receiving benefits, must payment be retroactive to age 70 1/2 or can they simply start up at 4/1/06?

Can someone educate me on the proper calculation of Self-Employment Tax and earned income? Do the deductions for contributions to employees and for the self employed individual come before the calculation of the self-employment tax or after?

does anyone have a handy spreadsheet for calculating the SET & earned income when a self employed person has employees?

Thanks.

Expected changes to EPCRS Revenue Procedure 2003-44 included correcting the problem of excluding eligible employees from making deferrals. The expected change required a make up contribution of only 50% of the ADP for the employee’s category. Does anyone know if you can rely on the proposed change before it is finalized?

Could someone in laymens terms, define the difference between an HRA and a Section 105 medical reimbursement plan? I have an employer that wants to move from a $500 80/20 medical plan to a $2500 100% medical plan. Which vehicle would be the best to use. Also, he already has a 125 plan with FSA reimbursement, could he not just make employer contributions to fund the difference and utilize the 125 plan? He intends to keep the employees portion at $500 and 80/20 to $1,000 out of pocket. Thanks so much.

Wisln

Hi,

We are trying to phase out our DB plan and put in a new 401(k) plan. We are divided on how to structure the allocation forumla. Since there are so many long term employee here, some of the committee members want service to be the only variable in deciding allocations and they want to increase allocations as service increasses. (Funny, they will all benefit from this formula). I, however, disagree with that rational. I have been with the organization not quite a year and have brought with me over 25 years of experience and education to the position. I feel that the committee needs to find a blend between long service and age to take into account the more recent seasoned hires. For example, I would need to work here until close to retirement to take advantage of the increased contribution. What seasoned employee would be OK with that situation? Trust me, this has occured since my hire. But at least I am on the committee and get a say.

I want to propose giving 1 point for each year of service and 1 point for each birthday. Then stager the allocation by points. Those under 45 points get 2%, 55 points get 4%, etc... I am not sure they will buy it.

Can anyone think of any creative yet simple formula out there that would accomplish a more fair allocation?

Is there such a mandate for chiropractic services? If so, what is the enabling legislation (a statutory citation would be appreciated)?

Isn't there something the employer had to do before the beginning of the year to be able to amend the 401k to be a Safe Harbor 401k in the middle of the year. I thought I remember something about having to give a 3% nonelective and some other requirements.

I am trying to find the table that is described in a current valuation report as "Adapted from 1964 OASDI experience (male rates)".

I have written to the Social Security Administration, but it will take several days. Might anyone have something like this table available, or point me in a promising direction?-Thanks