My client just requested benefit summaries in spanish from their insurance carrier in reference to their fully insured plan. The national carrier responded they don't provide them........isn't there some federal law that requires the alternative language materials?

Thanks for your help.

A company with foreign subsidiaries has a 401(k) that excludes nonresident aliens with no US-source income. A foreign employee is moving to the US and will have US-source income. He will be eligible for the 401(k) after relocating.

The question I have is will he receive service credit for his time with the overseas subsidiary, for participation and vesting purposes? (There is a 90-day eligibility period for the plan, and a vesting schedule for matching contributions.)

The minimum participation standards at Code §410 and ERISA §202 refer only to "employees." ERISA's definition of employee does not differentiate between US or foreign status. Code §411(a)(4) allows certain service to be excluded for vesting purposes (such as service prior to age 18), but does not mention nonresident aliens.

I suspect that service by the nonresident alien while working for the overseas subsidiary will count for participation and vesting purposes, but I am not familiar with foreign employee issues and am concerned that I might be missing something.

Thanks in advance for any thoughts.

2 401k plans, common ownership, always administered separately, 2 tax returns. Client informs me the smaller company will be merged into main corp in March, 06. Both plans use prior year testing. When I test the main corp plan end of 2006, how is the adp test affected when 2 plans merge? I understand I have to terminate the small plan and potentially, not all participants will roll their account to the main corp plan.

Thank you!

Linda Michals

Never have run into this situation before - 401(k) with Flexible Safe Harbor provision - plan has 3 HC/1 non-highly - non-highly does not contribute to 401(k) - 3 HC always have contributed max and, until '06, has had the Guaranteed Safe Harbor provision - changing to Flexible for '06 - all HC are 50+ - can they each contribute $5000 as catch-up contributions assuming the non-highly continues to defer no salary? anxious to hear what you gurus have to say about this! Thanks in advance

My firm has taken over a DB plan which i understand is a change in funding method in itself. We were able to match within less than 10 percent the prior actuary's 2004 valuation numbers. Is a filing for approval necessary or an attachement to the 2005 Schedule B when prepared?? Thanks.

I received an invitation to join the College of Pension Actuaries (COPA) which is "a newly formed organization devoted exclusively to pension actuaries in good standing with the JBEA". Their objective is to "serve the professional needs of our members".

I notice several significant names associated with this new organization so I refrained from immediately "filing" it.

Since Mike Preston is listed as a director (as well as Kevin Donovan, Ed Burrows, Larry Deutsch and others) I wondered if Mike could share a few more details about its purpose. Since most of the names appear to be "ASPPA People" is this new organization somewhat in response to ASPPA's drifting away from pension actuaries?

What is the mission? How can you "serve" your members better/differently than all the other organizations (Society, Academy, CCA, ASPPA, etc)?

The mailing was fairly generic and I wondered what the real drive of the new organization will be. I think this could be a good thing, but I wanted to know more about its goals.

In my research, it appears that when a PBGC covered plan terminates, it looks like in the year of termination, you can deduct the full amount of the contribution necessary to cover the plans benefit liability (with a few exceptions...of course!).

What happens if you make the contribution to make the plan sufficient in the year of termination, and something happens to delay the distributions into the next plan year. Let's say that the applicable interest rate in the new year causes lump sums to increase, and thus another contribution is required to again make the plan sufficient.

How does deductibility of these contributions work? Is it one of those 10 year amortization instances? Any ideas where I can begin my search? In my example, there are no majority owners, so no one is able to waive receipt of benefits, so they would have to make the contribution in order to terminate.

Thanks!

Dennis

A participant who has taken out a loan before getting a hardship withdrawal has now requested another loan? Does anyone see a problem with that? Particularly since the rule is that all loans must be taken before a hardship withdrawal is made.

Has anyone ever hear of a split dollar life insurance agreement between a NQDC plan and a plan participant? This seems very odd to me. Is this even possible? I have practically no experience with split dollar arrangements.

Are there any exceptions to the rules regarding taxation of life insurance benefits or other benefits for volunteer firefighters? Specifically, does the $50,000 limit still apply to volunteer firefighters? I know that there are a few bills in Congress right now that may exclude from income and employment taxes and wage withholding certain benefits, but is there anything else?

Thanks.

KETRA provides relief from the 10% early withdrawal penalty for individuals who resided in an area designated as eligible for Individual Assistance. Queries: does the relief (from the 25% early withdrawal penalty) extend to distributions to individuals who participanted in a SIMPLE IRA for less than two years? Does it matter if the employer no longer exists? (In this case, the employer is no longer in business.) Thanks for your input.

If a participant that is over age 70 1/2 (not an owner) terminates during the plan year, but is then rehired during the same plan year, are they required to begin receiving minimum distributions?

What if they are in pay status and then are rehired in a following plan year, do they have to continue to receive the minimum distributions since they are in pay status or can they opt to stop once they are rehired?

Am I reading the final 401(a)(9) regs properly in that minimum distributions from a cash balance plan (5% owner over age 70 1/2) cannot be made under the 1.401(a)(9)-5 rules for individual account plans but only in the form of an annuity?

With the language in A-1(e) of the proposed 1.401(a)(9)-6 now gone, it seems minimum distributions from cash balance plans could only be made in the form of an annuity.

The only key employee of a 401(k) PS plan is now responsible for 80% of the plan assets. His contribution level is 0% on deferral and therfore 0% on match. He does not make a PS contribution plan. He has no intentions of ever contributing or giving his ee's more than a 1% match. As long as this is a fact, he has no top-heavy contribution to make. Is there any reason to go to a safe harbor format. He has been approached by another TPA telling him that because of his TH situation, it would be better for him to go SH.

In a leveraged ESOP prior to the 415 limitation calculation a participant receives a contribution of principal only in the amount of $51,250. The shares released to him based on the principal/principal method is 2500. The value per share is $30 so the total value is $75,000.

If the 415 limit is $42,000 what is the number of shares can he receive so that he does not exceed the 415 limit? Is it $42,000/51250*2500?

Thanks.

Can an employer voluntarily offer COBRA even if it is not required (i.e., there has been no qualifying event)?

My employer is making a health survey a requirement for eligibility. If I refuse to complete the survey, I will not have fulfilled the eligibility conditions, and then cannot enroll in the plan. If I am dropped from coverage due to not fulfilling the eligibility requirements, it is not a COBRA qualifying event, but can my employer voluntarily offer me COBRA?

After filing Form 5500 for a client's health insurance plan, we received a correction from the insurance provider informing us that when they sent us the information for Schedule A, they overstated the commissions paid (they doubled them in error). How crucial is it to re-file Form 5500 correcting this error? I hate to incur additional expense for the client if the information is only used for statistical purposes. The plan has 200 participants and the actual commissions were $11,000 instead of $22,000 as reported.

We are seeing plan designs that cover 100% of HCE's and as few as 25% of NHCE's with the NHCE's chosen simply as those in a particular compensation band. For example, only NHCE's making less than $5,000 receive a contribution.

There are no other plans being aggregated with the plans in question, so clearly it is represented that "employees earning less than $5,000" is a reasonable classification under 1.410(b)-4(b). Otherwise, the plan would not pass the nondiscriminatory classification test of 1.410(b)-4 and thus cannot pass the average benefit test of 1.410(b)-2(b)(3). We of course cannot have a qualified plan if we do not pass either the ratio percentage test or the average benefit test.

Does anyone have any evidence one way or the other as to whether "those earning less than $5,000 this year" is a "reasonable classification"? I say it clearly is not, but ERISA attorneys in the Cleveland area allegedly say it is. Am I wrong or are they just lucky to be finding reviewers who are not familiar with one of the oldest and most fundamental rules of qualified plans?

Thank you.

I have a participant who is making extra loan repayments. As an example the amortization calls for payments of $60.00 and he is having payments deducted in the amount of $100.00.

If he were to make 4 payments, totaling $400.00 would I then take the balance of the loan per the amortization at 4 payments and reduce the balance by the difference (400-240). If I do this all the extra is principal. Is this the correct method of handling excess loan repayments?

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