I have a nonqualified retirement plan that does not meet the top hat exemption. Plan contributions are made to a secular trust and participants have the authority to direct investments. Since we are subject to Part 4 of title 1 of ERISA, we should make efforts to comply with 404© to avoid liability. Even though everything is telling me that we should comply with 404©, it seems very odd to me that we need to worry about 404© when the amounts are held in each employee's secular trust. Any comments?

I know the proposed regs did not cover everything we need to know but can they be relied upon since these plans can be effective Jan 1, 2006?

Who is permitted to make investment elections when one 401(k) plan is being merged into another existing 401(k) plan?

The prestigious New England Journal of Medicine (NEJM) weighs in on the issue of Health Savings Accounts (HSAs).

From an article in the NEJM, by Dr. James C. Robinson, Ph.D., a professor of health economics and chair of the Division of Health Policy and Management at the University of California, Berkeley, School of Public Health:

"...the HSA represents a milestone in the ongoing debate about health care reform."

"... Today, the most visible embodiment of this goal in the health care sector is the health savings account (HSA), which reflects a philosophical shift in emphasis ...

NEJM_Article.pdf

A portion of Company A's plan is spun off into a new plan for a new Company B. Company B then restates its plan on a new document by a new provider. It makes sense that the beneficiary designations from Company A's plan would continue over to Company B's plan and would continue through the restatement, but I cannot find legal authority for that argument. Is the beneficiary designation a protected benefit? How do I get a designation to stick for assets that were transferred over from Company A's plan as well as assets accruing under Company B's plan?

When did the FICA witholding regs go into place on ER contributions for 403(b) plans. Was this in the 1/1/06 regs?

A business owner has five employees and wishes to adopt a Safe Harbor 401(k). They will do the basic matching to satisfy the Safe Harbor requirements . In addition to the basic match they will match up to 6% of compensation(anything above the basic match will be discretionary) . Will this satisfy the ACP testing?

We have taken over administration of a 401(k) plan that allows for participant loans. The prior TPA told the plan sponsor, and a participant with an oustanding loan, that payments should come out of the participant paycheck on a Pre-tax basis. The plan sponsor had taken a number of payments out of the ee's paycheck on a pre-tax basis. Oops!

I am having a hard time convincing the participant that the payments should be after tax. I can't find a cite in the code/regs that specifically says "repayments should be made on a post-tax basis". I read through the loan regs and, although they talk about creating basis when you are repaying a loan after it has been deemed, the participant doesn't understand. He needs something clear and preferably official.

My latest response to him was "Have the prior TPA give you a cite that allows for loan repayments to be made pre-tax". I would like to provide something more concrete. Does anyone know how to win this argument before the participant, and possibly the plan sponsor, spend money on an attorney (not that I have anything against attorneys!) ? Any cites or articles???

We are looking at a takeover plan401(k) plan.

It has a match formula that is tied to the medical insurance program. The document simply says the match is discretionary (no details).

Here are the facts- small business owner is short on cash for all benefits. He decides to match the deferrals based on how much he pays for the employees' insurance premiums. If the participant's monthly premium is less than $100 per month, he matches $1 to $ up to 8% of comp. If the premium is over $100 per month, he matches $1 to $1 up to 5% of comp.

Is there a problem with this? There are no highlys in the plan.

Do the document need to spell the formula out?

Appreciate any help here.

Pat

In the situation where the alternate payee is also an active participant in the plan, can the alternate payee rollover the portion of their account attributed to the QDRO?

Dr. is a 12 1/2% owner of a medical group corporation that has a 4/30/05 year end. Corp has a 401(k) Safe harbor plan with a 3% contribution, year end employment is required for match and profit sharing. Dr. received a full contribution for the 4/30/05 year and continued to defer through 8/31/05 when he terminated to accept a position (under and independent contractor agreement) with a local hospital.

He wants to start up a defined benefit plan for his new sole proprietorship. For 1/1/05 through 8/31/05 he has deferred about $13,000 and will receive a safe harbor contribution. There will be no employees in the sole proprietorship.

For the 2005 year, what effect will the (1) deferrals have on the db plan and (2) the corporate contributions have on the sole proprietorship db plan?

We are looking at modifying the vesting schedule for our money purchase plan. The current schedule is 100% immediate with contributions beginning after a 22 month waiting period. The new schedule would likely be a 5-year cliff with no waiting period; contributions beginning upon hire. Can someone tell me what the requirements would be for making this type of change. I believe we would need to allow anyone with three years of service to elect which schedule they would fall under, but are their other requirements? Would we just begin making contributions for employees with less than 22 months of service that elect the 5-year schedule upon adoption of the plan amendment? Any retroactive contributions? Any unforeseen pitfalls?

Thanks for any insight!

Would anyone be willing to share their version(s) of Automatic Enrollment Notices for participants covering these situations:

1. Newly eligible employees only

2. Newly eligible employees plus employees already eligible for the plan

3. Automatic deferral increases

In addition to the initial Notice, is anyone planning on recommending annual Notices to those participants who were automatically enrolled as suggested by Rev. Rul 2000-8?

Can you provide me links to where I can perform searches when I need to look up a Section or regulation??

I always have the hardest time finding them.

thanks

This question relates specifically to the administration of DC FMLA under which employees are eligible for 16 weeks of leave in a 24 month period. We use a rolling-back method. We have an employee who's medical issue started on August 14, 2003. Over the last 24 months, she used her 16 weeks of FMLA intermittently for a health issue. She exhausted her leave on August 17, 2005. How should her leave entitlement be evaluated at this time to provide her additional protected leave? The medical issue has not been resolved, and she is still looking to use intermittent leave.

I have a plan where an ineligible employee contributed ee deferrals. We are forfeiting the account balance, and the employer is repaying the salary deferrals to the employee through payroll with corporate funds.

My question is, do I still include the 2004 deferral amount in my ADP test? I am thinking yes, but I dont know why I am thinking that. I did a search but everything I found dealt with how to return the deferrals, I cant find any discussion about the testing.

Thanks

We want to make eligibility for the company HSA contribution contingent in two criteria being satisfied:

1. Employee must enroll in our HDHP

2. Employee must open an HSA account with our HSA trustee

We are hearing that #2 above may be an issue. Specifically it's believed that the comparability rules may be violated if we do not recognize for eligibility purposes HSA accounts that employees may have established on their own. I have searched the comparability guidance and see nothing that explicitly precludes restricting eligibility for the company HSA contribution in this way.

The plan design objective of the #2 criteria is to ease administration of the company HSA contribution. That is we only wanted to establish a single employee data (& funding) interface. It would seem if we have to deposit to *any* HSA established by a given employee that the administration becomes exponentially more complex. What is common design around criteria for company HSA contributions in these early days of HSAs? Is this compliance issue being raised one that others have wrestled with?

Thanks in advance for any reactions or thoughts.

I am preparing a 2004 Form 5500 - can someone tell me if the 20% referred to in question 4i includes contribution receivables? The instructions are vague.

I have a prototype document client who has a 401k w/ Profit Sharing component. They would like to make an integrated PS contribution each year.

The problem is that they wish to exclude certain forms of compensation from the calculation and their prototype document does not allow for a definition of compensation that requires 401(a)(4) rate group testing (which would be required here because of the comp exclusion).

The options include:

1) use a non-integrated formula which allocates less $$ to the HCE's

2) switch to a custom doc which means added costs

Can anyone think of another option they might have within a prototype environment that I might have missed? Thanks!

If the plan sponsor, the financial advisor and the participant have all lost their enrollment forms....who's responsibility is it ultimately to keep them? Shouldn't it fall onto the participant?

There is a participant who claims they elected to defer 3% each pay period, and they have noticed now 9 months later, that they are only taking out 2.85%, but there is no proof of the 3% to make any adjustments b/c the enrollment form is missing.

I would think its the participant's fault for losing the forms, not the employer, and tell them they have to wait until the next entry date to complete a new form b/c the plan document only allows changes 1/1 & 7/1.

What do you think?