A participant in a DB plan received a large lump sum distribution 3 years ago. Recently, the participant received a letter saying that nearly half of the distribution amount must be returned because there was an error made when the distribution was calculated. After all this time, he is able to return the money.

I know that the plan has an obligation to try to get back the money. However, it is my understanding that the employer is responsible to make the plan whole when it is unable to recoup money from the participant. It is unfortunate that the error was discovered after so many years.

Does the participant have any recourse?

An individual is a sole proprietor 1st half of year and maximizes SEP contribution at 41,000. Becomes a partner in an unrelated entity second half of year. Can he max out ps in partnership. ( Assume comp cap not an issue in both entities).

Can a participant take a loan during the period that the plan is under review for determination of plan termination? There has been no determination received yet?

401K plan is under review for determination of plan termination. Can a participant take a loan from the plan during this process, we have not recieve determination letter yet??

Quick Question:

Has anyone ever ran into the situation where deferral checks were timely submitted to the investment company, and for some reason they sat on the checks for a while and did not post the dollars to the account until the checks were "found"? (about a 3 to 4 month lag - small plan, only about 4 ee's deferring)

I'm specifically wondering the client liability for 5330 excise taxes and late interest due to the participants for the error.

Thank you!

I was wondering what information might be available with regards to considering a plan to allowing highly compensated employees to "donate" money to help offset the costs of the lower tiered staff's health insurance? Some the things I am wondering need further considerations include:

Ø What the tax consequences would be (if any), if a voluntary "deduction" for staff were created?

Ø Would this be an after-tax or pre-tax deduction and/or contribution?

Ø Would it be considered taxable income for the staff that receives it?

Ø Might there be any roadblocks to such a proposal?

Ø Any thought as to any issues that might need to be considered if something like this were enacted?

Thank you!

Has anyone worked with a search firm locating missing participants that you can recommend at a reasonable fee??

We have a 401(k) plan that is being audited by the IRS for the 2002 plan year. We have several participants that terminated employment in 2005 and will be due a distribution after the end of the plan year.

If the audit is not finalized, is there any reason we should not go ahead and distribute assets to terminated participants?

Hello,

I am currently contributing to a 401 (k) which I will likely roll over to a Roth IRA in 3-5 years when I resign from my job to move. I know that you can use a Roth IRA towards purchasing your first home however, I have a technicality. I may be getting engaged soon and would likely be married at the time of the home purchase. My significant other is currently a homeowner. Would I still be able to use my Roth IRA to purchase the home or would I be disqualified due to previous ownership by my prospective wife?

Thanks for any help.

Joshua Dix

Imagine, if you will, a tax-exempt employer that maintains both a flex plan and a 403(b) plan; the 403(b) plan is of the "conduit" variety (i.e., employee contributions only, minimal employer involvement). Some of the communication materials distributed to employees could be read to suggest that opting out of medical coverage under the flex plan will send the amount that otherwise would have covered the medical premiums to the 403(b) plan. These materials also could be read to suggest that there is no cash option available under the flex plan.

Potential oopsie #1: impermissible flex plan benefits (i.e., 403(b) contributions). Potential oopsie #2: no cash option in the flex plan. Potential oopsie #3: blowing the ERISA "voluntary plan" exception by sending in deemed employer contributions (i.e., the opt-out money coming from the flex plan).

The consequences of Nos. 1 and 2 are pretty unappetizing to behold. No. 3 is fixable (at least w/r/t annual reporting), but not without tacitly conceding that you screwed the pooch on Nos. 1 and 2.

The alternative is (assuming there is something -- anything -- to back up the idea that the flex plan and 403(b) really were separate and that opt-out flex plan dollars were not getting remitted directly by the employer to the 403(b) vendor -- and I think there may be) to, well, not read the prior employee communications materials this way, revise them going forward to be really clear about how the opt-out money will flow (it goes to the employee as additional cash compensation and can then be -- at the employee's initiative -- directed in whole or part into the 403(b) plan), and hope that the statute runs before anybody from Harry Beker's office drops by for a visit.

Anyone have any bright ideas about this?

My company has a VEBA plan adopted. Variable Life Insurance plans were purchased FBO employees. There is no cash left in the trust account. All contributions were made over several years. It had 3 employees participating in VEBA.

Two employees retired 2 years ago. Income is too low for business to sustain operations. So business has to be shut down.

1) Need advice & help on planning the termination of the VEBA plan.

2) Anyone you can refer in California (Orange County or San Jose).

3) To avoid tax consequences, I understand that if the policies are rolled into a Lifer Ins Irrevocable Trust, it will be best. Does each employee set up their own Life Ins Irrevocable Trust ?

4) Any alternate choices or feedback is welcome.

Thanks in advance.

Sean

An employer maintains a DB & a DC plan and the two plans are aggregated for 410(b).

DB plan covers the Owner and owner's Spouse [spouse was included to pass 401(a)(26)]. Spouse took a nominal salary for plan yr 1 and accrued a benefit. For plan yr 2, the spouse took no wages and as a result did not accrue additional benefit during plan yr 2 (because her average comp was halved – benefit formula is flat % with fractional accrual).

For 401(a)(26), did the spouse benefit under the plan for plan yr 2?

A nonprofit org. has a 457(f) plan that is linked to 401(a) plan, which provides benefits lost under qualified plan due to compensation limits. For 409A reasons (plan previously used rolling vesting and not sure how to reconcile), the org. is thinking of terminating 457(f) before 12/31/05 deadline w/o paying benefits. What types of alternatives are people recommending to replace this type of benefit, or is 409A seen as prohibitive in t/e executive comp. area?

In California, Employers that offer group health insurance to eligible spouses must also make coverage available to registered domestic partners. In addition, if the employer is providing a contribution for eligible spouse coverage, that same contribution must be made to domestic partners. However, the premium the employer pays for domestic partners is to be considered imputed income to the employee. My question:

How does the employer show the imputed income? Is it calc'd at year end and added to the employee taxable income?

I read prior discussions on this topic on this Board and have couple of question.

Prior discussions and Pension Answer Book appear to say that, in general, any partially vested participant paid out prior to the plan termination date need not become 100% vested.

Is there a minimum period between the payout date and plan termination date for this to apply?

Suppose, in a calendar year plan, some partially vested terminated participants were paid out in March, June, August and October 2005, say.

1. If the plan is terminated in November 2005, say, is anyone of the participants paid out in 2005 required to be vested 100%?

2. What if the plan is terminated January 2006, the plan year following the plan year during which the distributions were made?

3. What if some of the payees had 1+ year of break in-service and some did not as of the plan termination date?

I am looking for additional sources of information for my clients who enroll in either a HRA or HSA. Right now I can direct them to the carrier, but that information is somewhat limited. Does anyone know of sites, or even products/services I can purchase to help?

I have a small plan where non-ower doctors are an excluded class.

I pass 410(b) for coverage with him excluded.

Is this non-owner doctor still in the 401(a)(4) testing (as a 0) or no?

Thank you for any help!

Can anyone point me to a study of the costs an employer pays for actuarial services on a pension plan? Our contract with our actuary is to be renewed shortly and we are trying to determine how much a plan of similar assets and participant size would pay. We are reluctant to perform a RFP due to the time and costs involved. At this point, we just want to make sure what we pay is at least reasonable.

Thanks

If there are two Puerto Rico employees who are eligible to defer in a US -based 401(k) plan, when testing the Puerto Rico part of the plan, do you have 0 or 1 HCE (1/3 of 2 is .6667)?

I thought that you rounded to the nearest integer, so if there are at least 2 Puerto Rico employees, you will always have at least 1 HCE.

???