Is anyone 100% convinced that participants in a 403(b) plan will absolutely not be allowed to do a 90-24 transfer come January 1, 2006? Would you advise a client with a 403(b) plan who is switching providers to encourage participants, if they also want to switch providers, to do so NOW?

I was wondering if anyone had any insight:

- The assets of ABC Corp. are acquired by XYZ, LLC in April of 2005. ABC Corp. maintained a 401(k) profit sharing plan prior to the asset sale. The Plan used the prior-year testing method and, taking into account contribution rates for the NHCEs, the HCEs of ABC Corp. could have contributed 5% of pay (3% ADP for the NHCEs). XYZ, LLC took over the sponsorship of the Plan at the time of the acquisition.

Is XYZ bound by the prior year testing results of ABC? In other words, are the HCEs of XYZ limited to 5%? Or, because it was an asset sale, is the Plan treated as if there was no prior year (therefore allowing us to assume 3% for the NHCEs and 5% for the HCEs)?

And, for 2006, would XYZ use the ADP of the NHCEs for all of 2005 of just April-December?

Thanks!

For tax reporting purposes, how would you report employee contributions to a 401(k) Plan for an employee who is on military leave but is receiving compensation from his employer to supplement his military pay to make it equal to what the employee received while actively working for the employer? Would you use a W-2 or a 1099?

Has anyone gotten any input on the range of acceptable interest and discount rates (particularly from auditors) for SFAS as of June 30, 2005?

Sorry, I didn't think the first post went through.

Has anyone gotten any input on the range of acceptable interest and discount rates (particularly from auditors) for SFAS as of June 30, 2005?

Our firm works with many different financial advisors and performs only tpa services (no investment/insurance product sales). We are also approved/recommended tpa's for several larger fund families. Recently, we received an email from one of the mutual fund families requesting that we provide a fee quote on a plan that we already handle the admin for. An outside financial rep got in touch with the client and will be proposing new funds, options, etc, and the fund house contacted us requesting that we provide this rep with a quote.

Can anyone offer their advice on how to proceed? To do nothing would jeopardize our tpa role in the plan, and yet to offer a quote would seem to be going behind the back of the current financial guy who brought us in. Our fee quote would likely be less than what they are currently paying since the new investment structure and platform would reduce the services that we provide.

Any thoughts are greatly appreciated.

Company A has maintained a SIMPLE IRA since 1999. In 2004, Company A acquires another company and the total employee count now exceeds 100. The transition period runs out 12/31/06 to convert to some other qualified plan.

During 2005, a new entity is formed (Company B) which acquires the stock of Company A along with 5 other previously unrelated companies. Some of the employees of Company A will remain on that payroll, while the others will be moved to the payroll of Company B, the parent, during 2005.

Company B expects to set up a 401(k) for the entire group effective 1/1/06. But, for the balance of 2005 Company B wants to continue the SIMPLE IRA for those employees moved from Company A to its payroll.

Can Company B adopt a SIMPLE IRA now for the benefit of the transferred employees? Or, because Company B did not maintain a SIMPLE before the acquisition, is it precluded from establishing one now since there are more than 100 employees in the controlled group? If yes, how do they continue the SIMPLE benefits fro the transferred employees through 12/31/05? Can Company B just make contributions to the existing accounts without signing Form 5304-SIMPLE?

TIA

Can an employee assistance plan be paid for by employees using pre-tax dollars? A client wishes to attach the cost of the EAP to its medical plan, of which employees share in the cost.

If you do, would you be willing to let me ask you some specific questions off the board?

TIA

Plan has a terminated employee who cannot be located. He had a loan balance for which he should have received a 1099R for a defaulted loan in 2000. To date a 1099R has not been issued. For plan audit purposes is this considered a reportable event?

Sam adopts a profit sharing plan for his sole proprietership. The sole proprietership does not have any employees. The plan has less than $100,000 in assets. Sam also owns an LLC that does not have employees & does not adopt the plan. My understanding is that since we have a group under common control a 5500 must be filed. I do not see any exception merely because the LLC doesn't participate.

Anybody disagree? I just want to make sure I am not missing something.

Is anyone sending out EE notices regarding dependend child and tax issues to members?

I have seen this question answered several ways on this board. If a 100% shareholder in a corporation (with no other employees) sponsors a 401(k) plan with a 1/31/05 plan year end, can the individual who makes a CODA prior to 12/31/05 (plan year end of 401(k) plan) defer $14,000 on compensation earned by 12/31/05 and have compensation contributed to 401(k) by due date of corporation's 1/31/06 tax return (with extensions)? I'm guessing that this is the same riule for a sole proprietor that maintained a 401(k) plan. So the rules under 2510.3-102 do not apply in either case? Thanks. Ed

QB elects timely, sends initial payment within 45 days, however, the payment did not cover all three of the retro months owed at the time of payment.

My question is - does the initial payment HAVE to include all retro, or can the QB have the remains of the 45 days to make a second payment?

Trust document specifies that the initial payment must include all retro amounts, but we cannot find supporting law other than the initial payment must be made with in the 45 days.

Thanks.

We just received notice from out client that they signed and mailed out the form 5500 on Monday, August 1, 2005 for the PYE 12/31/2004. Since the deadline for this form (July 31, 2004) is on a Sunday, does the deadline date get exteneded to the next work day?

The Matching Contribution for 6/30 PYE 401k plan will be made after the 2 1/2 month penalty-free correction period which is September 15th. We know the ACP test will fail.

Other than processing the ADP corrections in time, how best to advise a client on how to proceed? They deposited a 2% match last year and that test failed also. Correction refunds were made after the 2 1/2 month dealine and the client was pissed they had to pay the 10% penalty. This was one reason they fired their prior TPA. We just took over TPA services July 1, 2005. Thanx.

I am aware of a cash balance plan that gives participants who terminated employment vested a 3-month time period to elect a partial lump sum. If the participant does not elect the partial lump sum during the 3-month period, it is forever lost (traditional DB options are available at the earliest retirement age).

I'd like to know if there any other plans that limit the time period when this can be elected.

Is anyone aware of other plans with a similar one-time window for a cash payment?

A formula is a frozen benefit plus 1% of hi 5 compensation based on future years from the date of the freeze. The plan also ratios the average compensation to the frozen average.

The following facts can be used to illustrate the issue and assumes the freeze just occurred:

Frozen benefit = 1,000

Frozen compensation = 10,000

Projected compensation at NRD = 15,000

Projected pension at NRD = 2,500

The question is how to treat the frozen benefit for purposes of FASB. I believe that since it was a benefit earned in a prior period that any compensation increases would just create gain/losses.

Service cost would equal 2,500 minus 1,000 * (15,000 / 10,000). This 1,000 would then be spread over the years.

Likewise the PBO would be 1,000 * (15,000 / 10,000) = 1,500.

Any disagreements??

Thanks for any and all comments.

Does anyone know if there is a rule of thumb as to how often a retirement plan's (profit sharing and 401(k) plan) committee should meet during the course of a year to discuss plan administration/operational matters and how often to review investment matters (appropriateness of funds, performance, diversification, etc.)? I have heard that some 401(k) committees meet every month, some every three months, and some only a couple of times per year. Is there a good rule of thumb as to how many times is sufficient and how many times would not be good enough?

Also, can anyone point me to any good articles or websites that would have a list of the kinds of items that a fiduciary committee should review every time it meets?

I appreciate any thoughts on these points.

Thank you in advance.

We have a situation wherein an employee has been missing several days of work. We requested that this employee supply a doctor's note for days missed to verify that the employee visited the doctor and the reason for the visit. The employee informed us that we could not request her to do this under HIPAA. At the very least I would think we can request a doctor's note verifying that the doctor has seen the employee and that the employee was unable to work for X days. Thoughts? Insights? Any regulation cites?

Thanks