A plan's definition for final average compensation is the average of the highest 60 consecutive months out of the last 120 months.

A highly paid participant has less than 60 months of service. The participant earned $40,000 for two months in 2003, $210,000 for 12 months in 2004, and $100,000 for 5 months in 2005.

Should the average be (40,000 + 205,000 +100,000)/19*12 = $217,894, or should it be limited to the (210,000 + 205,000 + 200,000)/3 = $205,000?

Thanks

1) non standard protoype doc was never updated for gust/egtrra/401(a)9

and

2) new client did not want to apply for VCP under EPCRS, but wanted to terminate plan

would you...

A) prepare final 5500 with schedule P. showing assets liquidated

or

B) run from this "dog".

Note: plan is profit sharing est jan 1995. two participants. less than 200k in assets. any "benefit" to filing schedule p, since if it does get audited, they would be in world of hurt regardless?

HAs anyone seen or heard of any IRS or DOL relief granted to Disaster Area victims of Katrina? I've seen the PBGC notice and notices regarding regular income taxes from the IRS.

Has there been any notice regarding Pensions or IRAs such as relaxing requirements for signed receipt of notices and waivers etc. Generally we see relief regarding 5500 filings which I haven't seen either.

Also, are any of you in the institutional trustee/custodian business changing procedures to assist disaster victims?

Thanks for any information

JEVD

I have a situation where we (institutional trustee) detected almost 2 years worth of uncashed checks. We assumed she was deceased, but found she was not. Instead we learn from the TPA that she is collecting, but not cashing the checks to avoid (attachment) by the IRS. In addition, apparently there is some form of alert across our bank (on which the payments are drawn) to flag when she attempts to cash the checks. Its quite easy to and we will be cancelling out all these checks and restoring the funds to her account in the plan, however:

1. What is our obligation to continue making her periodic payments, given what we know and

2. How can we force her to take these payments? Is her refusal to accept the payments enough to be considered instructions to stop her pension payments?

Anyone been down a road as murky as this one?

Most of the QDROs I review are not cut and dried in terms of discerning whether the intent of the author is that it be deemed a separate interest or a shared payment. I understand the difference between the two methods, however, is there a surefire way of determining whether a QDRO is one or the other? Obviously, there are implications in term of survivorship issues which leads me to my next question. In the case of a defined benefit plan, does the alternate payee ever have the right to designate a beneficiary, and if so under what circumsatnces?It seems to me that if this were the case, figuring the alternate payee's benefit would be contingent upon her/his beneficiary which would really influence the actuarial calculations and perhaps, given the beneficiary, call for an actuarially increased benefit to the alternate payee. If you can't tell, I am new at this. Any help would be appreciated.

If a distributing plan has grandfathered and non-grandfathered after tax contributions and the accepting plan only has non-grandfathered dollars (e.g., original effective date of the plan was after 5/5/86), does the accepting plan need to mirror the distributing plan?

If yes, the accepting plan must account for the pre-87 and post-86 after-tax contributions and permit the distribution of the grandfathered dollars first. If no, all the after-tax dollars would be subject to the basis recovery rules.

Usually rollovers come into a plan clean, but the roll over of after-tax dollars are a direct trustee-to-trustee transfer.

Does anyone have experience on how to recordkeeping the rolled over after-tax contributions?

Thanks!

I have searched everywhere that I can think of and cannot find the answers to these questions

Would it be okay for an employer to terminate a SIMPLE IRA mid-year?

Also would it be okay for an employer to change employee eligibility requirements mid-year for the current year?

For a calendar plan year, suppose an employee's last day at work is Dec 24th yet gets paid through Dec 31st because he had several vacation days he hadn't used. So he physically did not go to work after Dec 24th, yet received a paycheck in the mail in Jan for days through Dec 31st. He chose to use his remaining vacation days during the last week of Dec rather than go to work. The plan has a last day requirement to receive a match. Does he get the match?

Scenario:

The payroll system maintains home addresses for employees. The payroll system indicates the state in which the employee lives has a state income tax. At retirement, the employee provides a W-4p (withholding info for pension payments) indicating a home address in a state with no state income tax. As a result, the retirement distribution has no state tax withheld.

Does the employer have any liability if the retirement payment is based on the W-4p home address, even tho the home address in the payroll system shows a different address ?

Anyone else run into this problem ?

I'm sure you've all gotten a smart alecky post from Tom Poje at some point in your Benefitslink travels. He's a year older today so we're sharing our birthday wishes with all of his friends on Benefitslink.

Plan allows for directed investments for participants no matter what the vested percentage. Plan to be amended to provide that 100% vesting required in order to direct investments. Any protected benefit issues? If allowing directed investments is not a protected benefit, then it would appear that the conditions for being able to so direct would also not be protected. Thanks.

Seller and Buyer are enterining into an asset deal (substantially all of the assets). Both have 401(k) plans w/ various payment options. The agreement provides that Buyer is not assuming Company A's 401(k) plan, but Buyer will ensure that its plan will accept direct rollovers of accounts from Seller's 401(k) plan with regard to employee that transfer from Seller to Buyer (they will not be in the same controlled group after the transaction).

Sooooooooo,

1. given the changes to the same desk rule (now distributions are allowed from separation of service - and assuming the seller's plan has been modified for this)

2. Given the changes to the protected benefit rules and the direct rollover rules,

3. If Seller gives the employees the option of taking a lump sum or taking a direct rollover to Buyer's plan, an IRA or another retirement plan (so this is a voluntary direct rollover),

is it safe to assume that the protected benefit rules would not apply to the amounts directly rolled over from Seller's plan to Buyer's plan?

I know if there was no transaction taking place - then it would be deemed a direct rollover and no PBs - but I wasn't sure if the fact that there is a transaction taking place would change all of that? Any thoughts would be appreciated!

I have a traditional IRA (from a company roll-over), can I open a Roth IRA as well?

If so can I make contributions to both? If not what are the limits?

Thanks

Am I missing something here. We just bought a company (Company A) and assumed that company's 401(k) plan.

I have been going through the plan document and amendments (to acquaint myself, etc.) and noticed that five years ago, Company A bought Company B in December. Company A then amended Company's A Plan (the one we just assumed) - but the resolution and the amendment are signed the NEXT August.

The amendment basically incorporates the provisions of the asset purchase agreement (recognizing eligigiblity and vesting service for the acquired employees, etc.).

My question - this appears to be a retroactive amendment. Shouldn't this resolution and amendment have been done prior to the closing date of the sale - or is there some extended amendment period?

I'm mainly concerned because we assumed the plan - which means we take on the plan's past liabilities, etc. Should I be concerned?

Employee with FSA no longer living with spouse - has filed for divorce, however, with court dates and whatnot, probably will not be finaled until about march or april of 2006. If letter from the lawyer stating that divorce has been filed can that be considered change in status?

Employee is having financial difficulty. Employer is willing to terminate the employee so that he can receive a full distribution from his 401(k) and then rehire.

What are the risks?

Plan document says forfeitures are used to reduce company contributions. However, that is not workable in a leveraged ESOP with almost no cash available to buy the forfeited shares from the participants. We are thinking of reallocating, however there is no authority for that in the document. The other option is to amend, but there might be some retroactive amendment issues. I would appreciate any suggestions.

Searched for an answer on this but the responses didn't necessarily related to my situation.

New employee eligible to enter plan on 8/1. EE completes salary reduction form and is enrolled in the plan. Due to mixup by payroll dept. in notifying payroll processing company about new deduction this employee did not have 401k deducted for 2 August payrolls. Going forward they are setup correctly.

Since this was due to an administrative oversight (mis-communication) we are allowing the ee to 'make-up' the missed deductions. Is a suitable correction method just to allow the employee to double up the missed deductions and have that withheld from the upcoming paycheck?

Does anyone know of a company specializing in assistance to employers/sponsors with qualified retirement plan distributions? I'm not looking for a TPA, I was thinking of a company that would be more specialized.

A new client to me, has a 403b plan and 401k plan. I haven't yet received the actual plan document for the 4k and I presume the 403b is salary reduction only based on their tax exempt status. My questions are what is the benefit to offer the two plans and are there any circumstances where these two plans are combined for testing purposes and/or contribution limits, other than 402g?