Directors are given the option to take market value options or RSUs in lieu of their annual cash retainer. Does this create a 409A problem?

Employer just realized that they have not taken deferrals from one-time bonus paid earlier this year & over last few years. They will rectify going forward - are they required to make corrections for prior occurences? Employer would rather not unless regs require it. If they are required, what is correct procedure?

I've read through the 404(c ) checklists and commentaries from Fred Reish, David Pratt, and several others, and it seems like saying you intend to comply with 404(c ) (on the 5500) and actually jumping through all the hoops to do it are two separate things entirely.

That being said, can you even make a claim to be attempting to be 404(c ) compliant if all participants have individual brokerage accounts? The participants can invest in anything they choose, so I would think that there is no way the Trustee can provide education and information on everything available. Unless then this responsibility it assumed to be covered by the broker, but I don't know if that is OK. Thanks.

My manager has asked me to try to locate a sample letter we can send to a prospective defined benefit plan client to explain DB plans. We don't actually administer DB plans, but have an agreement with an actuary. I have checked these boards and another service we use, RIA, but without success. I have also sent an email to the actuary to see if he has any suggestions.

Any ideas?

Thank you.

Has anyone implemented a smoking surcharge for health plan coverage? We have been asked to consider this and I have explained some of the requirements due to HIPAA. I have several concerns/questions the first of which are (1) obtaining the information and maintaining privacy for employees and/or dependents, (2) if we were to require employees to enroll in a smoking cessation program to avoid the surcharge, are we responsible for the cost of the program? I would prefer to work on wellness in the organization with a positive spin with incentives for healthy behaviors - plus I would assume the smokers would question why we aren't targeting those with other unhealthy behaviors.

Any thoughts would be wonderful.

Can a plan always use 415 compensation to perform adp/acp testing? The plan has a nonsafe harbor definition of compensation to determine adp/acp %'s. Would the plan need to be amended, in order to be able to use 415 comp for this testing?

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?