Hello:

We are working through the information required to be reported on a W-2 for the new rules under 409A.

Since the new requirements as indicated in the Instructions for Form W-2 reflect as follows: "Code Y—Deferrals under a section 409A nonqualified deferred compensation plan. Include current year deferrals under a section 409A nonqualified deferred compensation plan. Any earnings during the year on current year and prior year deferrals must also be reported here. See Nonqualified deferred compensation plans on page 6."

If I am reading this correctly, it will require a calculator to determine the earnings on both the current year deferrals and earnings on the the immediately preceding year's deferrals but not earnings on years earlier.

Is this something that anyone has actually decided can be done? Culling out only the current and one prior year's deferral earnings seem to be incredibly onerous from a recordkeeping aspect.

Any thoughts will be appreciated.

Sincerely,

Andmik

ok, here is a test for a real live crystal report

allocation report, will show def match profit sharing, and % of pay for profit sharing.

sorts by division

I have been using this for cross tested plans.

just made some recent modifications which I hope havent screwed anything up.

who knows, sometimes when you tweek something for one thing you break it in another area.

used Freezip to compress the file if that makes a difference.

I am changing the measurement date from 12/31 to 9/30 for FAS87. The employer's fiscal year is 1/1/05 to 12/31/05. I left the service cost as a full year but I pro-rated the interest calculated to 9-30-05. The audtitor says that the net periodic pension cost has to be for the full 12 months although the gains/losses are calculated to 9-30-05. I can't do that because the numbers all tie in together. What is the correct way to make this change? Is there anything in writing?

Can an employer that maintains a frozen 401(k) plan and is a participating employer in a multiple employer 401(k) plan terminate the frozen plan and "park" the frozen accounts in the multiple employer plan? Or must either (i) a plan merger occur or (ii) wasting trust be created?

Is it permissible to crosstest two plans, if one is a DC plan with NRD=55 and the other a DB plan with NRD=65?

In looking at the regs, it appears that it is OK to do this, with testing age =65.

Am I correct? And if so, do any adjustments need to be made to take the disparity of the NRDs into account?

The final 1.408-8 MRD regulations require an IRA custodian to report certain information to affected IRA owners for MRD purposes. Could you please tell me when this must occur and where I can find the guidance (e.g., revenue ruling, notice, etc.). Thanks.

Plan permits any participant with account balance =>$10,000 to have a segregated, self-directed account. Everyone else stays in a pooled account with Trustee investment direction.

Currently 65% of the NHCEs have the ability to self direct. 100% of the HCEs have the ability. Is this discriminatory?

Is there a specific percentage of NHCEs that would have to be allowed to self direct that would not be discriminatory?

I am preparing a 5500 form. This is a single employer plan. The assets go into a brokerage account . The broker usually makes the decisions on where the funds are going.When the market was soft the trustee put the assets in to a certificate of deposit with the bank.

Question for line 8 Only the secretary/trustee and president is making this decision.There is one more employee participant who really has no say. Should box 2g be checked ( Total participant directed account plan be checked) or 2 h partial participant directed account plan be checked.

Thanks

Can anyone point me to any commentary that discusses the impact of 409A on self-funded retiree medical plans that discriminate in favor of highly compensated individuals?

I know, I know. This topic has been discussed before. But I came away from a client meeting scratching my head this afternoon. We are setting up a new 401(k) plan for a client with a DB plan that they are on the cusp of terminating. They are using a sophisticated, worldwide actuarial firm and high-brow law firm. The actuary is advising them that those not eligible for the early retirement benefits as of the Plan termination date will only be eligible for the unreduced benefit at age 65 and any subsidized factors will not apply since they did not qualify for them on the date of plan termination. The Plan does not have a lump sum option and they do not intend to add one

Rev Rul 85-6 seems to preclude this, and our firm has terminated several plans over the last several years, and always preserved the subsidized benefits in the annuity form of benefit. In fact, I believe Form 5310 asks the Plan sponsor if "the benefits upon termination include any subsidized benefits..."

Has something changed recently that would permit a Plan sponsor to not allow a "grow in" to the subsidized benefits? If yes, and it is now permitted to do this, I have a couple of "terminations in waiting" that will proceed quickly.

I did not want to object too strenuously to the Plan sponsor, given that the worldwide actuarial firms have access to vast research resources that we do not have.

Any opinions would be appreciated.

If an employer has a predecessor plan, then a new plan cannot exclude service prior to the new plan's effective date.

What if the employer maintains two plans concurrently? For example, an employer has a 401(k) or a Profit Sharing plan which will continue in existence. The employer now wants to establish a DB Plan. For vesting, can the DB plan exclude service prior to its effective date?

What happens if the non-DB plan is terminated after 2, 3, 4 ... years?

May participants in an ESOP also participate in a Cafeteria Plan?

Physician practices medicine through a professional association (a specialized type of corporation for professionals if that doesn't mean anything to you) he is the sole owner and only employee.

I want him to be able to reimburse himself for health care expenses that are uninsured without being treated as compensation to him. I know these are probably basic - stupid questions but (1) can I do this (2) what documents do I need (3) will anyone share them with me

I'm an attorney but please assume (correctly) that I know nothing about employee benefits law.

I am trying to get a sense of what other people are doing with HRA account balances when someone goes on COBRA. Lets say Employee, Spouse and Kids are all covered by a HRA that has a balance of $5000 on the day of the COBRA Qualifying Event.

If the Employee terminates and the family elects COBRA, it is clear that the family would start with a $5000 account balance.

If Employee and Spouse divorce (or Kid graduates college) and Spouse/Kid elects COBRA, does Spouse/Kid start with a $5000 HRA account balance while Employee's $5000 account remains intact.

Any citations would be appreciated.

Two dentists cost share employees and office space on a 50/50 basis. Each dentist works two days a week while the employees work 4-two days per week for each dentist. Dr. A decides to move her practice to another local office. Of the four eligible shared employees, she offers two employment at her new office for three days per week (and maybe four days). These two declined the positition. The other two eligible employees were not offered employment at the new office.

With regard to the later two, I think a partial termination has occured and 100% vesting is in order. With regard to the former two I'm leaning towards no partial termination. They were offered a continuing job with their employer Dr. A. working 3 days at the new office. They declined and therefore it was not the employer action that resulted in their termination of employment from Dr. A but the employee's refusal of the position. Looking solely at Dr. A, the employees worked 2 days a week for her before the split up and at the new office it would be 3 days. The employees need 4 total days of employment to pay their bills.

But, how does Dr. B come into play? Let' say she is unable to "pick up the slack" and keep the employees employed 4 days per week and they have to go to a completely different office in order to maintain their income level. Then Dr. A's action resulted in their termination also.

Thanks

Our company is new to Relius and although I've seen some messages posted about a contributions report broken down by participant, I have another question on the issue. We had a wonderful report in Blaze SSI that listed by participant compensation, deferrals, deferral rate (as a percentage of their comp), match, match rate, safe harbor 3%, profit sharing, profit sharing rate and then total contributions and total contributions as a percentage of comp. This was a great report to check deduction limits, 415 limits, the 3% SH calculation and comparability percentages. Relius is having a difficult time coming up with something similar and we feel it will be very difficult to live without that report. Does anyone have anything that's similar that they would be willing to share?

Another report we're having a hard time getting is just a 1-2 page summary of plan provisions report. In Relius, you have to print off a page for each type of plan spec, but I'd like something that summarizes the highlights on 1 or 2 pages.

Thanks.

If it is possible, where can I find information on migrating/converting a DB plan to a DC plan?

There is a client in hurricane ravaged Mississippi who has a 412(i) plan that has several NHCE's along with a couple of owners. They need to terminate the plan but have been told that for the owners to be able to waive any part of their benefit they must first convert the plan to a traditional defined benefit plan. They were told that after the conversion the owners can waive but not while it is a 412(i) plan.

Not being a 412(i) expert I have not been able to advise whether this is true or not. Does anyone know one way or another and if so, is there a cite?

Any help is appreciated. Thanks.

I'm looking for the new 403(b) regulations in regards to plan documents. Honestly, I don't even know what they would "look" like. I tried an internet search which led nowhere. I've also scoured this board hoping to find something that would jumpstart a search. And if I input only "403(b)" in trhe BL search engine, I end up with too many links to look through.

Thanks!

I know this is fairly common issue, but I wanted some clarification from different previous posts. I apologize in advance for the length, but wanted to drill deeper into this issue. 401(k) Plan Sponsor has not been taking deferrals on Bonuses for a number of years. Plan document INCLUDES Bonuses in definition of Compensation.

FIRST QUESTION

Is this specific situation covered under Rev Proc 2003-44 Appendix B Section.02 - "Exclusion of Eligible Employees"? Specifically, is the "Expansion of Correction Method to Partial Year Exclusion" meant to correct the exclusion of deferrals from periodic bonuses (that were otherwise allowed to participate) or is this section meant only to apply to situations when a participant is excluded from participating at all for a portion of the year.

Many posts here seem to indicate that the proscribed correction in this section (using ADP and ACP % of respective employee group) would be appropriate.

Others indicate that the failure is not following the employee direction (i.e. standing deferral %) and that the correction would require using the actual employee deferral election in effect (under the general principle of putting the Plan in same position it would have been in).

Has anyone had specific interaction with the IRS on which correction is proper?

SECOND QUESTION

If you believe that the ADP and ACP %'s should be used, I have some clarification questions.

It is my understanding that using the ADP% and ACP% is suggested because this would ensure that the plan would still pass the ADP/ACP test and not need to be recalculated (e.g. if correction is for prior years).

However, in the case of bonus corrections, does this mean that ALL eligible employees would receive a corrective contribution (at the ADP%) or only those employees that have been otherwise deferring (on all other non-bonus Compensation).

For example, assume you have 3 NHCEs with the following Deferral %s

NHCE 1 10%

NHCE 2 2%

NHCE 3 0%

Average ADP for Group = 4%

Under the Correction in Appendix A & B, would all 3 NHCE's receive a correction equal to 4% of Bonuses or would the 4% only be given to NHCE 1 & 2? If the latter is used, it would seem that this would change the overall average ADP of the NHCE group (which contradicts the reason for using the ADP %).

To keep the Non-Discrimination Test results the same, it would seem reasonable that you would use a "modified" ADP% for "participating employees" in this situation (10% + 2% / 2 = 6% Average) and give 6% to NHCEs #1 and #2.

FINAL QUESTION

If using the ADP% for a correction under Appendix A Section .05, which ADP% would you use if the Plan is restructured for testing purposes? Would you use the ADP Test Results before or after restructuring? Language at the end of the Section .05 seems to indicate that you would use test results before restructuring (please clarify this reading is correct).