I have a client that maintains both a 401(k) and defined benefit plan that covers both union and nonunion employees. The union employees are covered by a collective bargaining agreement. The benefits provided under the 401(k) plan were not subject to good faith bargaining but the benefits under DB plan were. Since the k plan was not included in the bargaining, would the union employees meet the definition of an excludable employee under Section 410(b)-6? The section indicates "a collectively bargained employee is an ee who is included in a unit of ee's covered by an agreement....provided that there is evidence that retirement benefits were subject to good faith bargaining between ee representatives and the employer". Must the specific plan be part of the bargaining or does any plan of the ER that is bargained qualify the employees for the exclusion under 410b?

I have a large client (4000 plus employees) that will be terminating many employees over the next few years (the number of terminees and the period over which they are let go are unknown). The terminations will be involuntary. The client sponsors a DB plan. Virtually all of the terminated employees are participants in the DB plan. Some of the terminated employees are HCEs and some are NHCEs (the vast majority are NHCEs). Some, both HCEs and NHCEs, will be close to early retirement when they are let go. Early retirement under the plan is attainment of age 55 and completion of 15 years of service. The client would like, AT ITS DISCRETION, to be able to grant service to selected terminees so that they qualify for early retirement. For example, Bill and John, both NHCEs, are terminated at age 56 with 12 years of service. The client might want to grant Bill (but not John) an extra three years of service so that Bill is entitled to the plan's early retirement benefit when he is terminated. The client wants the ability to pick and choose who receives additional service credit on a case by case basis.

This proposed strategy just doesn't smell right to me, but I am having trouble putting my finger on the reason why.

I am somewhat familiar with the early retirement window rules which generally, as I understand them, are designed to provide incentives for eligible participants to elect EARLY retirement. This situation is different enough from my understanding of the early retirement window rules that I want to solicit ideas or opinions on such a practice.

I am most worried about the following aspects of this proposed practice:

1. The period over which the practice will exist is largely undefined (the "next few years" is about the best anyone can do); and

2. The arbitrariness of who is granted extra service (whether HCE or NHCE) seems unlikely to run afoul of the nondiscrimination rules (probably), but more to call into question whether the benefit is definitely determinable (although maybe not).

3. Since those eligible for early retirement are subject to distributions earlier than other participants, it also seems like the employer is picking and choosing who can get a distribution when in an arbitrary way.

Maybe I am trying to find a problem where there is none.

Thanks, in advance, for any ideas, comments or suggestions.

I know that if a plan files a Form 990 they may be eligble for another month on the Form 5500, until November 15th, but I can't find the citation.

Any help?

Thanks!

I remember a discussion which was pretty lengthy on this board on this topic. I cant find it, and need to re-read it. It was a discussion about why setting up a Safe Harbor 401(k) was better than a SIMPLE IRA due to contribution limits, deductions to owner & wife on the payroll being less expensive, even taking into account the cost of administering the SH 401(k) and the slightly larger contribution in the SH 401(k).

Anyone know where it is? I went back to 2002 but cant find it. It had a pretty big number of responses and a pretty lengthy debate, if I recall.

Thank you!

Can the safe harbor match count towards the gateway minimum? I know this should be an easy question, but I couldn't find a thread referencing and all of my cross-tested clients, to date, were using the SHNEC and are top heavy...I seem to remember something about 'non-electives' being counted, so I thought maybe the SHMAC doesn't. Any help appreciated.

Hi! I posted this message on the Form 5500 topic board but I did not receive a response - my assumption is either I am asking a really basic question, a difficult question or one that has a touch of gray so I thought I would try this board. My question was:

I am aware that a limited scope audit can be performed if the investments are with a bank, insurance company or that is a 103-12 investment.

What I am not as clear on is if a bank, trust company or insurance company issues a certification statement on the investments that a limited scope audit can also be performed - is this regardless of the assets or do the assets have to be of the type stated in the first paragraph?

For example, a plan with 150 participants, assets are all invested in mutual funds. Plan has a directed Trustee listed in their plan document as "ABC Trust Co.". If ABC Trust Co. completed certification statements of the assets for the auditor, would the plan be able to have a limited scope audit?

I appreciate the assistance.

Plans eligibility requirements are less than the statutory 1 yos/age 21. 1 HCE falls into the under group for coverage testing purposes, but is in the over group for adp/acp testing purposes. Client wants to use a nonsafe harbor definition of compensation for adp/acp testing, so 414(s) testing needs to be performed.

A literal interpretation of the 414(s) Regulations indicates that the employees counted in the testing are "the same employees taken into account in satisfying the requirements of the applicable provision for the determination period" (e.g. - apd/acp testing) and who are deemed "benefiting" under Regulation 1.410(b)-3(a). Since we disaggregated the coverage groups for the 401(k) and 401(m) portions of the plan, where would this 1 HCE be tested (e.g. - over or under group). Since the HCE is not deemed benefiting in the over group, would we keep them out of the 414(s) entirely?

Accudraft documents require a Resolution and Notice to adopt the Safe Harbor provisions for a plan year. We have a plan that wants to do the Safe Harbor "Maybe" notice for 2006. Do we (a) have to do a resolution before January 1st, 2006 or do we (b) have to do the resolution before December 1, 2006, when we send the second notice to the employees that the employer has decided to utilize the Safe Harbor povisions or © December 1, 2005 before the employees receive the Safe Harbor "maybe" notice.

For those affected by Katrina, has the IRS extended the minimum funding deadline beyond the 10/31/05 extension provided in Notice 2005-60?

The filing and tax payments etc, deadline was extended to 02/28/06 but I can't find if the deadline for the minimum funding was extended beyond 10/31/05.

Does anyone know if there is a model amendment available for Roth Contributions yet?

Thanks much.

Can an APC (Professional Corporation) adopt a traditional COLI-funded Non-qualified deferred compensation plan? I have two attorneys (age 60) who are seeking a way to grow their income on a tax deferred basis until retirement.

Any other thoughts on a different vehicles that they can use to get the same tax deferred growth until retirement?

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?