Here is my story ... Hopefully someone can help me.

I was employed with a company for 5 years and I was in their 401k plan. I left this company and totally forgot about the money in my 401k plan. A few years later this company was bought out by another comapny and the 401k plan had to be terminated. At the time of termination I had $5068 dollars in my old 401k account. The plan administrator made a distribution for me (I was considered a lost particpant) and not until 2 years later, when the IRS tried to match 1099r's with my tax return from 2003 did I have any idea that a distribution was made for me. The distribution I got was 96 shares of the company that bought out my old company. Unfortunatley since this was in the general sense a distribution I owed the IRS additional tax along with the 10% penalty (approximately $1400 all told).

My questions are ... Can the pa do this since my account was over $5000? Is there any legal action I can take against the pa for not making an effort in trying to find me? (All they had to do was do a google seach on my name and they would find my current address). I though it was their fiduciary responsiblity to a make a responsible effort in locating participants. ( they could have ask the IRS or SSA for my current address)

The other funny thing I forgot to mention is that of the $5068 dollars in my account when the plan terminated, $97 went to some holding company while $4971 was distributed for the other company's shares. This was the amount on my 1099r. That why I am asking about the $5000 limit.

Thanks for any feed back

I learned recently that a lot of fees were being paid for services that were not needed. We are submitting a plan we aquired, how many of you know the fee structure for the form?

Any help would be appreciated

We have a husband and wife plan with no employees that want to fund for post-NRA medical benefits. They still have 10 years before the assumed NRA so as I review some of the summaries available on these medical accounts I'm not sure how to fund for these benefits since they must be "reasonable and ascertainable". Probably the "ascertainable" issue bothers me the most as I'm not sure how future medical benefits are easily ascertained, unless maybe I just fund for the current medical insurance premiums with maybe a COLA assumption (not to exceed the 25% aggregate cap). I'm assuming the discrimination rules don't preclude them since they have no NHCEs. Does this type of funding typically take an actuarial funding approach or more of a pay-as-you-go approach for only those in retirement ? From the limited info I've provided can anyone suggest whether it's even reasonable to continue to pursue and research this, or am I'm blown out of the water for some reason from the limited facts given.

An employee at a company has maxed out on his 401(k) deferral. This individual also has a consulting business where he earns additional income. Can he establish a SEP for the consulting business in order to defer more than the $14000 max? If yes, how much does the 401(k) limit the amount he can put into the SEP?

Okay, I have a very odd situation. For a number of reasons, which I would rather not get into, I have a nonqualified arrangement that does not meet the top hat exemption because it is considered to be a funded plan. Amounts contributed to the plan are directed to individual trusts (created for each participant) and those contributions are taxable to the plan participants in the year in which they are contributed (these are employee-grantor trusts). Those individual trusts operate under the terms of a general or master trust document.

I believe that we only need one 5500 for this plan. Is that correct or does the fact that we have mulitple trusts change that? Assume that we only need to file one 5550 since it is one plan, what would happen if we added a second plan that used the same master trust...would we then be required to file a second 5500 for that plan?

Told you it was odd.

If an employer has a frozen account balance grandfathered plan, and it adopts a new account balance plan in 2005 (subject to 409A) for basically the same employees, can the new plan allow for initial elections in the first 30 days? or does the grandfathered plan mean that this is not a new plan for the purposes of the 30-day initial election period?

I have a participant who in 2005 became a more than 5% owner and an officer. In 2004 he was only an HCE no ownership or neither was he an officer. For the 2005 Top-Heavy test determination date 12/31/04, is this employee considered a key employee? In summary is his 12/31/04 balance counted toward the balance of the key employees or the non-key employees?

Assume a plan offers more than one coverage option (example, HDHP and traditional PPO) and allows active employees who have a change in status under 125 to change their elected coverage consistent with the change in status. Assume further that the plan provides that a significant change in the cost of coverage is a recognized change in status and that the employer subsidizes premiums for the plan for active employees but not for COBRA beneficiaries.

When an employee has a COBRA qualifying event, does he need to be offered the ability to elect cobra coverage under either of the coverage options (and not just the option that he was in).

The 125 rules aren't really applicable because the premiums are all paid with after-tax money by former employees (or non-employee dependents / former spouses). But, since an active employee whose premium cost more than doubled would have a status change that would enable an election change, I think that the "identical to the coverage provided under the plan to similarly situated beneficiaries" requires the offering of both coverage options.

What do you think?

Posting under a new name but still me -- Jduns

Hello all!

We prepared a proposal for one of our TPA clients for a husband and wife plan. Before the plan could be adopted, the husband dies. Can the wife still adopt the plan?

I know that this depends on what the business structure was (the client's receive earned income, so I have the TPA verifying the business structure), but are there any other pitfalls to be aware of?

Thanks!

Dennis

Would anyone happen to know if there is a text book/publication that provides instruction on contribution methodologies?

Is it ok for an employer to approach a Medicare eligible employee and request that the employee waive off the group medical plan and enroll in Part A, Part B, etc.? The reason is to reduce the employer's premium expenses. If so, is there an issue with the employer paying for a portion or all of the Medicare Supplement plan? Does it make the Medicare Supplement plan a group plan subject to ERISA?

Under Rev Proc 2003-44, Appendix B, 3.01(3) (b) and © it gives optional methods for determination of rates of return for the fund. One of the methods given is a pro-rata portion of the fund return.

There is a discussion in our office as to the precise meaning of the statement, to wit:

The fund return is the return of the fund in the plan (read specific mutual fund(s) selected), or;

The fund return can be taken from published sources (annual, year-to-date) and a pro-rata alloction of the published return.

Obviously calculating the return vs. taking published returns creates a BIG difference in time and cost.

How have others been treating this option?

Is there any known guidance, official or unofficial, on this method?

Thank you all.

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.