The attached chart (a "pdf" file) was updated for the Tax Relief and Health Care Act of 2006 (H.R. 6111) on December 29, 2006. The chart was updated to reflect the 2008 inflation adjustments announced in Revenue Procedure 2007-36 on June 5, 2007.

The attached chart may be reproduced and freely distributed in its entirety by you or your financial organiation.---GSL

New_Cola_2008_REV_June_2007.pdf

Hello all. I had a quick question for you employee-benefits whizzes. I was wondering whether you could waive the vesting schedule for a highly compensated employee in a 401(k) plan. For example, in trying to lure an executive to our company, would it bust out 401(k) plan if we allowed him to immediately vest all employer contributions made to him on behalf of his plan. Therefore, he would get immediate employer vesting while other employees, including other highly compensated employees (HCEs) still had to wait out the vesting schedule. I assume such a situation would take us out of the safe harbor rules, and then subject us to year to year testing based upon our ADPs and other such tests. Is that correct? Is there any authority for allowing a one-time waiver to an employee that would allow us to qualify in the safe harbor? Thank you all!

I want to make sure I'm reading Rev. Proc. 2001-17, 6.02(1), 6.02 (4)(a) correctly. Does a loss need to be adjusted on a corrective distribution? Only a gain needs to be corrected?

Also what if an employer over contributes, employee contributes $18,000 and the employer contributes $30,000. How do we make the corrective distribution, and how does an employer record that?

An employer wants to add a Roth contribution feature to its profit sharing plan. Can the plan limit deferrals to Roth deferrals and not accept any deductible deferrals? If so, I assume that the employee's deferral election would have to acknowledge that the deferrals are non-deductible Roth deferrals to meet the "designated" requirement of 402A©(1)(B). Does 402A(b)(1) require the employee to have an election between deductible and non-deductible?

Thought it was a good conference. can always learn something.

compensation used for determining 25% deduction purposes. one session noted that in the past you could count anyone eligible to defer. now that deferrals do not count toward the total deduction, you could not use the comp of someone who deferred but did not get a match or profit sharing.

guess I am slow to pick up on stuff like that.

...................

highlight:

riding down on the elevator, stops on one of the floors and 3 ladies walk in. the one lady, looks at me and says "Oh, we were just talking about you"

turns out it was Kate Smith, PA, formerly Kate Smith, MD who way back when confused us into thinking she was a doctor rather than being from Maryland. what a laugh, what are the odds of actually ending up on the same elevator like that.

It was neat to see a few other faces from BenefitsLink, and one or two who referred to themselves as 'lurkers'.

..................

think my talk went well. showed off 'the devestator', hopefully there will be some pictures on the ASPPA website some day. of course, my talks include some very bad dry humor, including the following advertisement for an unmarried woman (Anita Haircut) that owned a chain of resteraunts that featured steak.

I have a situation where the owners of a company are also union employees. There are 15 union employees and 5 non-union employees. All non-union ees are NHCE's. All union employees other than the 2 owners are NHCE's. I am wondering if a DB plan can be set up that covers the non-union employees and the owners (regardless of the fact they they are in the union) but takes advantage of the allowable exclusion for the rest of the union employees. In other words the ratio % test would be 5/5 / 2/2 = 100%.

Company A & Company B. Not related to each other prior to Co. A buying Co. B.

100% owner of Co. B becomes employee of Co. A after the sale. But she is not an owner of Co. A. She is, however, over 70 1/2 (turned 70 1/2 in 2004). Sale happended late 2004. Transfer of assets to Co. A plan happened 1st quarter of 2005.

Question: Is she an owner for MRD purposes or not?

Okay - so it's Friday afternoon, and I'm ready to stump or try for the weekend. I'm looking forward to the replies on Monday.

We have a situation in a DB Plan, where the member/participant has deceased, and now, after auditing the employer's hour reporting, we discovered a discrepancy that is more than 2 years old (hypothetically, let's say the participants DOD was 11/1/04 and the amended hours reported due to the audit were for the 2001/2002 plan year).

While we have the ability to recalculate the pension amounts, is there a compelling argument or ERISA regulation (cite please) that states we MUST recalculate their benefits and pay there estate or, in the event we still have the spouse in pay status to increase that benefit? Our preliminary review shows that perhaps on the high end we owe the estates between $20 and $100 total.

Thanks for the 2 cents and IMHO

Let's assume that we have a partial plan termination. It is my understanding that the participants affected (those who are no longer employed) will be 100% vested.

Is there anything else that needs to be done to the plan.

Thanks.

If we have an HCE who is over 50 defers $15,000 in 2005. He has 1,000 402g catch up and $3,000 as a recharacterized catch up due to a failed ADP test. Would this HCE be eligible to receive in total contributions a total of $46,000. This would be 42,000 415 limit plus 1,000 402g catch up plus 3,000 recharacterized ADP catch up.

Hello everyone. This is my first post, so I apologize for my ignorance. After browsing these boards, I see there is so much information and smart people out there, its overwhelming.

My name is Mack and I have a few simple (probably stupid) questions about my Vanguard Roth IRA.

The account is titled "Vanguard 500 Index Fund Investor Shares (Roth IRA)". Is this the type of Roth IRA that everyone is talking about? I haven't contributed to it since I opened it, so the balance is not very high. My question is, should I be putting $4,000 annually into this one account? Is that the best use of this account for retirement savings?

I also have a Vanguard Windsor Fund (R/O-IRA) which I understand that I cannot contribute to right?

I'm prepared to invest $4k to an IRA and I want to make sure that if I place it in my exsisting Vanguard Roth IRA I'm doing the smart thing.

Thanks so much for any advice. Mack

[Yeah, that topic header is a mouthful!]

My client is an LLC taxed as a partnership. One of the members told me that they are going to have a reduction in income next year because he doesn't feel right charging one of their clients hundreds of dollars per hour for a service, so instead he will actually work there part-time, earning a W-2 from them. There will be no change to the structure of the LLC, and he will still work on other LLC business as time permits.

How will this affect his compensation? The plan is a safe harbor 401(k) with the 100%-on-first-4% match, so I need to know his comp to determine the match amount.

Since the W-2 won't be paid by an entity the is sponsoring the plan, it would seem to be excluded for plan purposes. Could it be that simple? What about any effects on the other members (since the LLC will have less income, they will each receive less, and therefore 4% of their compensation will be less)?

Thanks.

Does anyone know whether additional contributions to a safe harbor match (pre-tax) blow-up the SH status? For instance, if you are meeting the ADP/ACP portions of SH w/ match, etc. (basic contribution method) would a pension equalizer and/or other nonelective contributions (employer contribution w/ vesting sch) hurt the SH status?

is there any documentation requirement for distributions made under the Katrina legislation?

I am aware that a limited scope audit can be performed if the investments are with a bank, insurance company or that is a 103-12 investment.

What I am not as clear on is if a bank, trust company or insurance company issues a certification statement on the investments of the plan that a limited scope audit can also be performed - is this regardless of the assets or do the assets have to be of the type stated in the first paragraph?

For example, a plan with 150 participants, assets are all invested in mutual funds. Plan has a directed Trustee listed in their plan document as "ABC Trust Co.". If ABC Trust Co. completed certification statements of the assets for the auditor, would the plan be able to have a limited scope audit?

I appreciate the assistance.

I have a pye of 9/30/05. Employer makes the required 3% SH non-elective contribuiton and is interested in making a P/S contribution. It is cross tested with him in Class A (shareholders0 and everyone else in Class B (staff). He deferred $16,500 (no one else deferred).

I guess my question is whcih limit is the annual additon for the 9/30/05 PYE? $41k, since teh plan year begins in 2004, or $42k, as the plan ends in 2005? I can't seem to find an answer - this is a takeover plan and the document seems incomplete. Any thoughts?

Legally, does an employer HAVE to offer annual open enrollment on their group medical plan each year?

Is it legal or are there any other issues if a 350 employee company, decides that the employees do not get an annual open enrollment for their group medical plan? The only way an employee can get on the plan is if he/she signs up when hired, or if there is a life changing event... other than that, they do not have the option to get on it.

Is this allowed? Is it legal? Does this open the door to DOL issues?

Recently the 5th Circuit made a case ruling to say the practice of limiting the time frame for a QB to enroll in COBRA to no more than 60 days is illegal. We have been allowing employees to elect coverage during a 60 day period, and if they decided to elect coverage at 90 days, we do not allow it, and neither does the insurer. I interpreted the case ruling to say that this practice is illegal?

If a COBRA QB does not elect the coverage until 13 months later and shows up with the back premium - are we to accept it?

Issue- how to apply 1.401(a)(4)-12 to dc plan that excludes pre-participation compensation and uses calendar year compensation.

Not an easy question-any help appreciated:

Facts:

Regulations 1.401(a)(4) - 12 Plan Year Compensation Section (5) states that in a situation whereby an "employees' plan year compensation for a plan year is determined based on a 12 month period ending within the plan year under paragraph (3) of this definition, then the plan year compensation of any employees whose date of hire was less than 12 months before the end of that 12 month period must be determined uniformly based on either the plan year or on the employees' periods of participation during the plan year, as provided in paragraphs (2) and (4), respectively, of this definition."

A plan is permitted to exclude compensation prior to participation.

A plan is permitted to use calendar year compensation to define eligible compensation for a plan year.

Assumptions:

9/30/2005 PYE

Eligibility is 1 YOS; Age 21 with entry 10/1/2004 and 4/1/2005

Compensation computation period is defined as calendar year ending in the plan year.

2 new entrants: ("A") hired 12/31/2003 and ("B") hired 1/02/2004; both enter on 4/01/2005

Under these facts, rules and assumptions, in order to rely on a design based safe harbor under Section 401(a)(4), New Entrant A's compensation is determined for the period 01/01/2004 through 12/31/2004 and is $0.00 after excluding pre participation compensation. New Entrant B's compensation is determined for the period 4/01/2005 through 9/30/2005 (due to his date of hire not being 12 months before the end of the 12 month period (12/31/2004)).

Questions: Is this analysis correct? What about year 2 when New Entrant A and New Entrant B's compensation is defined as 4/01/2005 - 12/31/2005? Isn't it true that in the absence of this rule, each would have $0.00 compensation for their first year of participation and compensation from 4/01/2005 - 12/31/2005 for their second year of participation?

In addition, is the $0.00 eligible compensation a potential hidden eligibility under 410(a) even if the Plan satisfies 410(b) ratio?