Company X has a commissioned sales force to sell its products. Historically, Company X has maintained one self-funded medical plan with several options for all of its employees, which has been funded in part by a VEBA. In 2005, to induce greater productivity among its commissioned sales force, Company X has proposed to peg its subsidy of the commissioned employee's medical benefits upon reaching certain minimum sales goals based on the employee's level withint the Company. To comply with self-funded medical plan nondiscrimination testing, Company X has placed their medical benefits (other than prescription drugs) into an insured arrangement providing substantially similar coverages (other than state mandates) to that provided to salaried employees. In addition, Company X has establised a separate 125 plan for the commissioned employees. As a result of these changes, the Company's account limit for commissioned employees is limited to the incurred but not paid claims for prescription drugs and dental coverage. In order to have these changes respected, Company X is considering whether it needs to either (a) place its liability for incurred but not paid claims for prescription drug and dental benefits attributable to commissioned employees into a separate VEBA or (b) establish subaccounts under the existing VEBA for the saleried employees versus the commissioned employees. What are the pros and cons of each approach and which approach do you consider more likely to result in treatment as separate plans and/or funds?

Started here on 12/1 and just found out about this. We have two individualized safe harbor 401(k) plans (one for union and one for non-union), one defined benefit plan and an excess benefit plan. I know about needing to amend the 401(k) plans and the DB plan for the auto rollover rules by 12/31/2005 (effective 3/28/2005) and the minimum required distribution rules (if applicable change) by 12/31/2005 - but I am perplexed on the 401(k) and (m) regs, the suspension of benefit regs, the 409A changes, as well as the last round of EGTRRA changes. Want to know if I am off base or if I have time to find counsel and work through these amendments.

Re 401(k) and (m): If I read RP 2005-95 (pulled it off of this outstanding web site) it looks like I have until the later of 12/31/2005 OR the end of the plan year in which the (m) and (m) regulations are implemented by the Plan. From what I can tell, they have not been implemented by either plan - so I think this means that I have until 12/31/2006 to amend for these regulations (b/c we will have to use them starting 1/1/2006, etc.).

Re EGTRRA, if I read RP 2005-66, it looks like I have until the end of the cyclical remedial amendment period to finish those amendments (at the earliest January 31, 2007 if we are a Cycle A plan) and submit for a determination letter by January 31, 2007 as well.

Re suspension of benefits (DBP plan): If I read RP 2005-76 correctly, I have until 12/31/2006 to do these amendments for implementation/administration on 1/1/2007.

Re the 409A changes, it is my understanding that the new proposed regs extended the Notice 2005-1 relief and because these are plans that are linked to plan that I have until 12/31/2006 to amend these arrangements.

Am I not hitting the mark(s) with this? Please help - a lot to have to handle my first few weeks on the job.

when exactly must an employer contribute the 3% safe harbor non elective contribution? If the employer offers the safe harbor basic match, when must that contribution be contributed

I am a little confused with the interplay of the 403(b), 402(g) and 415©(1)(A) limits.

I have a 403(b) plan whereby an employee must make a mandatory contribution of 4% of pay. The employer than makes a mandatory contribution of 20% of pay. (Obviously, pay is limited to the 401(a)(17) definition). The 4% of pay contribution is made by salary deferral (i.e., on a pro-rata basis from pay over the year).

The employee then wants to defer as much money as possible into a voluntary 403(b).

I always thought that the mandatory contribution - 4% - did not count against the 402(g) limit because it was not an "elective" deferral. Therefore, it seemed to me that the employee had the full 402(g) limit (including catch-ups) to defer into the voluntary 403(b) - SUBJECT to the 415©(1)(A) limit (which would also include the sum of the mandatory employee and employer contributions to the other 403(b) plan - but would not include any catch-ups).

Am I just wrong? Is the 4% of pay actually counted against the 402(g) limit because it is made on a salary deferral basis, even if it is mandatory?

Thanks so much for any thoughts.

If a DB plan and a PS plan are being permissively aggregated for testing and the PS plan has a 59.5 NRA while the DB plan has a 65 and 5 YOP NRA, is that a BRF issue? The PS plan covers everyone but the DB plan excludes a group of NHCE's. Thanks.

Upon termination of employment, can a plan be written to prohibit rollovers out of the plan? Allow just for lump sum (cash) distributions?

. . . for all of the participant's qualified employer securities portion of his account in cash? Does the note have to have adequate security like ESOP sponsors must procure in amortizing its put option pay out?

WL

koreambear@yahoo.com

I am wondering for the non-ESOP portion of a KSOP, would holding a note similar to the ESOP's put option total distribution + a 5 year note provision -- be a PT? In other words, are all parts of a KSOP subject to ESOP rules?

Corollary question: if a participant in a 401(k) has some closely held employer securities, upon lump sum distribution, could the Plan issue cash + a employer's note? Or, could a PT be avoided by issuing a lump sum in-kind distribution? But then how would the repurchase work?

WL

koreambear@yahoo.com

notice 2005-1 suggests that "to the extent that" an arrangement grants a recipient a right other than to purchase stock at at defined price and such additional rights allow for the deferral of compensation (for example, a tandem arrangement involving options and sars) the entire arrangement would provide for deferral of compensation. the proposed regs don't address the point.

can we design a fmv option/sar arrangement where there is no deferral and therefore be exempt from 409A?

A prospective new client has one employee (about the same age as the client). Client wants a new class allocation profit sharing plan for 2005 and wants max 42000 for himself and wants to give the employee something but nothing overly generous. Client says employee was paid $80,000 in w-2 and $30,000 in 1099 earnings for 2004 and will get about the same in 2005.

So how much do I need to obsess about this 1099 income.

On one hand, I say that 1099 income doesnt count and I should ignore it.

But on the other hand, I say that this $30,000 probably isn't legitimate 1099 income and should've been w-2 income.

On the other hand, If the client's accoutant said that this 1099 was ok, who am I to sugget otherwise.

Obviously for the client, if there was some way to include the 1099 for 2004, the employee would be an HCE and would only need to get 3% top heavy for 2005, otherwise employee as an NHCE will need to get like 17% for the client to get his 42000.

Is there any way I can include the 1099?

If I don't include it, do I need to do anything to cover my ***.

I would also like to know, in your expeience, what would be a real life example of an employer paying his employee both w-2 income and 1099 income legitimately.

Let's say that a plan has been amended and a SMM was given to the client to distribute to the employees. They hire a new employee and they want to produce a SPD that reflects the changes because they do not want to give the SMM to that new employee. Can you go into the plan document to make that change so that the SPD reflects the amendment?

Hi,

I have a long standing profit sharing plan and a separate individual k plan that was established a few years ago. The plans were never merged and 2 separate 5500 ez's are filed every year. I am over age 50 and therefore, eligible for the additional 4k catch-up.

It seems that I can put 25% of my compensation in up to 42k this year in the profit sharing plan and would have to put 4k into the individual k plan to max out at the 46k. Is this correct or can I put the 46k into the profit sharing plan?

I've also read that you may contribute up to 100% of "eligible compensation" to a plan. But I am unclear as to the meaning of "eligible compensation" and the relationship to the 25%. For example, if my wages are 46k, can I put the entire 46k into the profit sharing plan or am I constrained to 25% of 46k to the profit sharing plan and an additional 18k to the 401k?

Thank you for your help.

Steve

Company has a 6/30 pye for dental plan. Last october they switch providers. Old company provided Schedule A up through September 30. New company changed policy year from 7/1 to 10/1. I realize that for ease of recordkeeping I should have changed the plan year end to 10/1 back then...but since I didn't hear about it until now, I'm way past that.

What's required for me to change in terms of participant notice, plan amendments, and filings. Is it so simple as no notice necessary, 1 page amendment, and filing for short plan year through 10/2005? Or even easier? No notice and no amendment...

I have to say this filing is rediculous and a colossal waste of time. 2 entries on a Schedule A hardly seems worth the effort.

If a participant had 100% of his account transferred to his former spouse, pursuant to a QDRO, and it was later discovered that a corrective distribution needs to be applied to some of the transferred $'s (e.g. - adp/acp, 415 failure, etc.), does anyone view a transfer from the AP's account back to the participant for distribution, as a violation of the QDRO? I don't think it is, because the monies associated with the corrective distribution are not qualified retirement plan assets and need to be taxed to the participant (not the alternate payee).

Thoughts?

I have never needed to complete a 990T... I may be needing one. Is there a site.. or some literature that explains these forms (besides the instructions) and how to complete them for pensions.. an "Idiots" guide?

Thanks!

Doing a projection

Top heavy 401k

QNEC very small .733% to NHCE

8 NHCE - 3 terminated - no top heavy for these 3 but top heavy for remaining 5

keys also get 3% min - all benefiting

Pass (a) 4 on allocations basis with top heavy and QNEC

Without QNEC fail on allocations basis- HOWEVER, if I test onan accrual basis, 3 that term'd aren't showing up in gateway and plan passes 401(a) 4 on accrual basis

Is this possible and allowed?

A mutli-employer plan is considering spinning off one of the two employers. The spun-off employer will be setting up a new 403b Thrift Plan. Is the spin-off considered a partial plan termination and should the spun-off participants become fully vested in their accrued benefits?? Thank you.

Question can a someone in a goverment pension plan the New York retirement system, be force to retire on a given date by a QDRO ?

Greetings-

I am the CFO for a nonprofit in LA, California. My Foundation currently has 7 employees and needs to establish a Health, Eye, Dental and possibly a 401k plan. Looking for advice from individuals who have crossed this bridge (and lived to tell about it!)

This is a small Nonprofit, are there special groups that provide employee benefits for the nonprofit community?

Any advice would be greatly appreciated!

Nick Batch

PS: This same topic is posted under "Small Business" forum, but this seemed an appropriate location for my topic.

Greetings-

I am the CFO for a nonprofit in LA, California. My Foundation currently has 7 employees and needs to establish a Health, Eye, Dental and possibly a 401k plan. Looking for advice from individuals who have crossed this bridge (and lived to tell about it!)

This is a small Nonprofit, are there special groups (coalitions) that provide employee benefits for the nonprofit community?

What about going directy to Pacificare, Kaiser, Blue Cross ect? Is there benefit to going through as "broker"? There are thousands of Brokers, how do you decide?

Any advice would be greatly appreciated!

Nick Batch