I know I should know the answer to this, but am drawing a blank.

When determining the HCEs for 2005 (determination year) ... comp greater than 80,000 in lookback year, as indexed... would you use the COLA adjusted amount in effect for 2004 ($90,000) or 2005 ($95,000)?

For example if employee's wages in 2004 were $90,000, is he an HCE for 2005? Thanks.

There are 412(i)/profit sharing carve out arrangements being presented in the marketplace. It appears that the way the plans are meeting general testing is to calculate the accrued benefit at retirement in the 412(i) plans by taking the guaranteed interest and mortality in the contract, let us say, for example, 3% pre retirement and 1.5% 2000IAM at post retirement, and then comparing this with the profit sharing contribution projected at the mandated 7.5%-8.5% and 1983GAM mortality. My first question is how the folks doing 412(i) plan out there are addressing the most valuable accrued benefit issue (if the participant can take a distribution in the form of a lump sum). My second question is how the rights, benefits, features issue is being handled.

Since everyone's tires of talking about 412i plans...ummm...I mean 415 limits....can we talk deduction problems?

Here's my situation:

Client has both DB & 401(k). Outsourced actuarial firm (us) never new about the 401(k) plan. By random chance, in our annual data request from the TPA, we saw a note hinting to the existance of a 401(k) plan. After discussion with TPA, we discovered that matching contributions were being made to the 401(k). Client had coincidentally decided to make a very large contribution to the DB plan.

The DB minimum was far below the 25% deduction limit. The DB minimum + the Matching contributions were below the 25% deduction limit. However since they contributed well above the minimum in the DB plan, they now have a non-deductible contribution.

I know that in the case of a lone DB, there is an exemption from the excise tax if the DB contribution is less than the Accrued Benefit Full Funding Limit (which is the case here), but I don't know what happens when a DC plan gets thrown into the mix.

I did see in the ERISA Outline Book that there is also an exemption on the DC side if the non-deductible does not exceed matching contributions made for the year (or something like that), but I'm just to green to properly advise on this situation.

In the end, I advised the TPA to work with the client's CPA to find the best solution, but I would like to know better for next time.

Thanks for any input!

Have a 4 participant DB that terminated 12/31/2005. It is a PBGC covered plan and they would like to terminate as a standard termination. PVAB's are $2,700,000 and assets (after 2005 contribution) are $2,400,000. The company owner and his wife are entitled to 80% of the benefits. They wish to fund the difference (approx $300,000) now. We always thought that a contribution (in the year of termination) would be deductible. After all, it is a necessary business expense to make benefits whole in the pension plan. Why would it not be deductible?

The 100% owner could waive benefits if necessary but would prefer not to.

Thanks much.

We have an LLP (taxed as a partnership). For 2005, the owners received a W2 and Schedule K1 income and are looking for us to add the two amounts together to get the plan compensation. We think the W2 compensation should be changed from W2 income to schedule K1 income. Is this correct? What should be used as plan compensation?

where would one start a roth IRA without a fee,if there is such a thing.also in layman's terms explain the difference in a roth and a conventional ira. thanks

We have been approached by another TPA firm about our interest in purchasing it. We are not in an acquisition mode and might not be again, but at first glance this one seems to fit. Does anyone have a resource for us to find out due diligence procedures, reasonable price, etc. Are multiples of core revenue or the like used to determine price? Any assistance will be appreciated.

Assume that you have a nonqualified wrap plan. Participants in the plan can elect to have a portion of their nonqualified deferrals transferred to a 401(k) plan after the permissible contribution limits of the 401(k) plan are determined. For example, a participant elects to have $50,000 deferred to the wrap plan and then have that amount reduced by the maximum permissible contribution to the 401(k) plan. The PLRs that I have read all say that if a participant elects to transfer an amount that is greater than the maximum contribution allowed to the 401(k) (for example, the ADP results for the 401(k) prohibit a contribution greater than $8,000 even though the participant elected to contribute the 402(g) limit) that the difference between the permissible contribution and the elected amount ($8,000 and the 402(g) limit) will be paid to the participant in cash by March 15 of the following year. The cash payment apparently preserves the CODA requirement. My question is if this cash distribution is required, then what is the benefit of creating this type of arrangement? Why wouldn’t you just have a 401(k) plan and an unlinked NQ plan? Did I miss a PLR or something else?

Been a while since one of these questions has been brought to my attention so I am requesting your assistance. I think the answer is cut and dry but I've been wrong before.

Employee is married and elected family coverage in our medical plan but only lists one child Spouse has individual coverage at her current employer. She gives birth 2 weeks ago and is currently out on short term disability with her employer. Employee has requested one of 2 actions: (1) add spouse and newborn to our medical plan or (2) drop coverage entirely with us and join spouse's plan

Can he do either under HIPAA? With respect to #1, it is the addition of the spouse that has me unsure despite everything that I've read and for #2 it is dropping coverage outside of our Open enrollment period.

Your help/comments are greatly appreciated.

We have a plan where an ineligible employee made 401k deferrals back in October - December 2005. In 2006, we have forfeited the improper deferrals and instructed the employer to make the employee "whole" outside of the plan. The amount forfeited will then be used to reduce future employer contributions.

Does the employer need to revise the participant's W2 to reflect no deferrals for 2005?

Difference of opinion here - Participant elects a rollover of his Roth (k) account from Plan A to Plan B and held in a Roth Rollover account in Plan B. Plan B allows other non-Roth (k) rollovers in too and allows an employee to take an in-service distribution of their Rollover account at any time for any reason.

Is the Roth Rollover account able to be withdrawn at any time similar to any non-Roth Rollover account and then it's just a matter of determining how much is taxed (proposed regs)? Or, does the Roth Rollover have to follow the availability rules for withdrawal of before-tax deferrals and Roth deferrals (i.e. hardship, 59 1/2 etc.)?

I am 56, single, plan to retire in 5 1/2 yrs and it looks like my taxable income then will be sigificantly higher than it is now, so I'm thinking that I should cut back on my tax-defferred 457 account and get a Roth started. I have Scott Trade and Edward Jones accounts but with the investigation I've done it appears that the fees charged by using a broker would greatly decrease my return if I contribute monthly.

I'm wondering if I should just pick a fund family and invest directly within it. I would like to get this done before April 15 so that the time clock for withdrawal would revert to Jan 1, 2005.

Any information or suggestions (Including experiences with either option) will be appreciated.

Thanks

when is a key considered a former key? Upon his termination date or after his full distribution? Plan distributed partial to him after his term date, he still has account balance. Thanks.

Linda Michals

Does anyone know of any statistics out there that might state average turnover rates possibly by industry.

Thx much

Can you rely on the DOL's calculator for determining earnings on late deferrals even if you don't file under VFC?

I've recently been told by someone who's supposed to know that when the IRS audits a 125 plan, they are looking back 7 years. It was my understanding that audits look back 3 years, and if a major problem is found, then they reserve the right to go back another 4 years for a total of 7. Anybody know the correct answer?

Thanks!

We have numerous associates that miss benefit deductions because they are off work for various reasons, short term disability, workers' comp, layoff, FMLA.

We are looking for a software program that will allow us to invoice them monthly, send late notices, track multiple months of fees, has the ability to post payments, AND which will allow information to be downloaded from excel.

We use Travis COBRA and Travis T-Bill for other projects - so we would like something a little more versatile and indepth for this need.

Any suggestions will be appreciated.

Thanks

I received a quarterly statement for my Schwab 401(k) and notice that the share price listed on the 'Snapshot' for a particular part of the plan is considerably lower than the actual price of the stock. It is listed at $13 per share on the document when the NASDAQ price (as of today) is $48. This statement was for the end of the year and the share price has been no where near that low for a long time.

What I'm trying to do is calculate my plan value as the stock price rises and falls. I'm guessing its not that simple. Can someone please explain what this significantly lower share price applies to? Thank you!

The plan failed to make TH minimums for 4 plan years, 2001-2004. We computed the required contribution and made allocations and deposit plus earnings. Since this failure (at least the first 2 years) exceeds the 2 year correction period for self correction we want to go forward to IRS w/ SVP. This will be our firm's first SVP filing. I want to know from those of you who have experience w/ these filings, what can I expect from the IRS. Not specifics, of course, but in general, will they be reasonable and accept the correcton method? Will they want to dig deeper looking for any other issues, etc?

If an employer has the right demographics so that it can establish two separate plans - i.e., each plan separately passes coverage and discrimination - must the Gateway Minimum requirements under one plan be applied to the other plan?

Example: Company has 2 HCEs and 2 NHCEs. Employer creates two plans; one covers HCE 1 and NHCE 1; the other plan covers HCE 2 and NHCE 2. Both plans will be cross tested. However, Plan number one only provides 3% to the NHCE and 9% to the HCE. The employer would like to fund Plan number two at 5% for NHCE 2 and 15% for HCE 2.

Each plan separately satisfies minimum coverage. Assume that age disparity in each plan is adequate so that each plan passes (a)(4) testing.

I read the regs under 1.401(a)(4)-8 as requiring a "PLAN" to satisfy Gateway requirements. Thus, in the example above, each plan should be able to separately satisfy the gateway without regard to a different/higher gateway requirement under an entirely separate plan.

Does any one see a flaw in this approach? (Don't count the additional cost of administering two separate plans a "flaw".)

While we're at it: Would it be possible for one of the 2 plans to implement a 401(k) Safe Harbor election, and the other not? (I know catchup contributions require universal availability. But is there a universality requirement for safe harbor treatment in separate plans of a single employer, whren each plan passes all testing separately?)

Thanks for the feedback.