Company has PS plan with 401(k) feature.

Currently no investment choices. Everyone is in same conservative investment.

Company wants to add participant directed investment feature, as follows:

There are 6 options:

5 Lifestyle accounts (funds of funds) (geared toward time horizon)

1 Money Market account

Participant must choose ONE from the 6 choices.

Can this meet the 404© requirement of "broad range of investment alternatives"?

I feel it cannot due to language in 29 CFR 2550.404c-1(b)(3)(B)(4). That is, that the investments must minimize risk "when combined with investments in the other alternatives." So, because they cannot choose more than one alternatives, they are not properly minimizing risk.

Am I way off? I have seen some discussion about the unavailability of 404© protection where there are lifestyle accounts.

Any thoughts? Thanks.

Is there a specific timeframe a plan sponsor should notify employees of plan termination before actually terminating the plan?

Participant in PSP applied for a hardship distribution in June '04 on basis that house payment was behind and bank might foreclose. Participant again applied for a hardship distribution on the same basis in january '05. Now participant is back again presumably for another hardship distribution for the same reasons. The plan doc does not contain any restrictions on the number of hardship distributions that one can apply for. Assuming the participant can produce some documentation to the effect that the bank is going to foreclose or that the house payment is otherwise late, does anyone see a problem with the plan making the distribution? The only restriction that would be applicable is that the PSP is holding funds from a merged MPPP and no hardship is allowed from those funds.....

Plan covered by PBGC, wants to terminate, and is underfunded. As I understand the rules, we can do a standard termination and pay 'to the extent funded'.

Are there any traps or problems we should be aware of before proceeding? As a note the company is no longer in business so there will be no more contributions.

Thank you.

Can an employer (or employee) who sponsors (or whose employer sponsors) a "frozen" SEP contribute to an Individual IRA? Thanks

Errors were discovered in the 2004 ADP test resulting in additional refunds of $55 for each of 5 HCE's. The IRS correction program says $50 can be ignored. Does the plan have to distribute these?

Can someone please help me locate the final loan regulations. I understand it is under Treas Regs. 1.72 and final regs were approved in late (?) 2004.

An employer does not make the required Safe Harbor contribution for 2004. Therefore, the TPA ran the ADP/ACP tests because the plan is no longer a Safe Harbor Plan. As a result, the TPA returned excess contributions to the HCEs and is saying that tax and the 10% early withdrawal penalty is due on the distribution of excess contributions.

I just did some reading (2003 information) saying that a missed safe harbor contribution shouldn't be fixed that way. According to the piece I read, missing a safe harbor contribution could cause the plan to be disqualified and the contribution should still be made, plus earnings. It sounds like it needs to go in under the EPCRS program.

I wanted to get the viewpoint of other practitioners.

Are there any specific rules on how a plan can utilize the forfeitures from a health care and dependent care flexible spending account?

We are implementing a brand new NQDC Plan (we don't have an existing plan) which will be effective 1/1/06. Does anyone have any opinions on whether we can allow participants to elect to defer bonus payments for performance period ending 12/31/05 (paid in March 2006)?

I understand that the new regs require bonus deferral elections to be made 6 months prior to the end of the performance period. But, would this apply to a new plan?

A company consists of two pairs of husband and wife for a total of 4 employees and 4 participants.

Is it reasonable or allowed to value the plan using one set of assumptions (i.e. investment return assumption, sal scale assumption) for one couple (i.e. 2 participants) and another set of assumptions for the other two participants?

And report the assumptions in the Schedule B as a weighted average, much like the way a weighted average is used for assumed retirement age?

Of course another approach is to have the employer sponsor two separate plans, which is only a technical difference and not of any practical difference.

Curious to hear other views.

Thanks

Some years ago my company agreed to cover a handful of retirees indefinitely - not under COBRA and not under a retiree health plan, just continued coverage as if they were active. As we are self-insured we simply told the TPA to list them as covered.

Right now we have two of these retirees left, with one of them a board member. The problem is our plan document makes no mention of covering these employees. I am concerned about our stop-loss carrier refusing to reimburse us should their medical costs become significant.

I am trying to come up with a way to amend the plan document to include them, perhaps by specifically naming them or putting in some generic language such as 'cover ex-employees at company's discretion'. I'm not sure what the ramifications of this might be - our TPA said we'd lose ERISA protection from these two. We could live with that, if that is the only ramification - does anyone know if there are any other problems?

Facts: controlled group of corporations; one member to be sold to an outside party; before the stock sale, this member is ceasing accruals for its employees who participate in the plan; 40% of the active participants are affected by the cessation of accruals

Question: Is this single employer subject to the provisions of ERISA 4062(e)? If so, what are the requirements for notifying the PBGC of this event? (The employer is exempt from providing a Form 10 notification.) Has anyone ever encountered a situation where this provision applied?

Thanks in advance for any help on this matter.

Employee (over 65 at retirement) elected COBRA upon retiring and, now, (while still covered under COBRA) elects Medicare. If the retiree has a claim, what is the integration order of the two coverages?

A new client asked me to take a look at his retirement programs....I've uncovered a problem and would appreciate any advice inre solutions. He runs two businesses; in business A, he is the sole employee and he has a combo money purchase/profit sharing plan, to which he contributes the maximum.

In business B, he is a 50% owner, and in 2004 the company started a SIMPLE plan for its employees. He does not participate in this program.

This apparent control group violation doesn't appear in the paperwork for the DOL Voluntary Fiduciary Correction Program.

What are the appropriate steps to correct this error? Can the company that set up the SIMPLE (AG Edwards) be held liable for failing to ask about the existence of other retirement programs?

I have directed him to not make any 2005 contributions into any of the plans until this is resolved, but would appreciate any other thoughts.

thanks, mlm

We have encountered a situation were the failure of an ADP test was determined after the sole HCE required to take a distribution rolled over his entire account balance. It is my understanding that the Plan is in compliance because the excess contributions were distributed on a timely basis; is this correct? Obviously, part of the amount rolled over was not eligible, and the taxation for the participant was incorrect. Does anyone know what should be done at this time?

well, based on the CPI numbers for Jun/Jul/Aug I have the 'exact' comp limit at 219,800 and the DC 415 limit at 43,976. there is still one month to go, but based on that, it looks like we could be at 220,000 for comp and 44,000 for the annual addition in 2006. (unless there is something wrong with the spreadsheet I have)

Official numbers usually out by end of October.

Here is the Issue:

My client, Lets call him Mr. Doe, received RMD Checks regularly. But due to his sickness was not able to deposit them in his bank account. Mr. Doe dies, the checks are still not deposited from late 2004. Can his kids deposit those checks now, assuming that the checks will be honored? If the checks are not honored can they ask for the checks to be reissued? Will there be any kind of penalty or tax on late deposits?

Thank you all for your help.

I have a plan that employees a husband and wife. Recently the husband died. They are both over the age of 70 1/2 and both have accounts in the plan. MRD's were not started because they are still employed. Now that the husband has passed away, we are rolling over the balance in the spouse's account to an IRA for the wife.

The wife is still employed. Will the wife have to take MRD's from her husband's account? If so, am I right in saying that the first MRD must be made before the end of the year following the year the husband died? In this case 2006?

A new plan was established effective 1/1/2004, but there was no money in the plan at the end of the year and no receivable contributions. Does this plan require a 5500 for 2004? If so, do we have to attach a Schedule I and show zero assets? I have heard that this triggers a response from the IRS. If not, for 2005 are we o.k. filing a first return with the plan effective date of 1/1/2004?