I heard that the IRS had been targeting a 9/15 release date (before the ABA annual meeting). Does anyone have any recent intelligence?

A 3% SH 401k plan with a X-tested PS feature includes a last day rule for the PS allocation. If a participant terminates he is entitled to the 3% SH allocation. Does that mean he is subjec to the gateway allocation if it is more than 3% of comp?? Thanks.

A rehired retiree dies while an active employee. The plan says you restart the benefit he elected at 1st retirement but add in the additional accruals for the second term of employment. He elected a straight life annuity (SLA) at 1st retirement. He was married and his spouse consented. Do you offer the QPSA on all benefits earned or do you just offer the QPSA on the benefits earned during the second period of employment (since the spouse never consented to an SLA on that piece)?

A speaker at a recent conference advocated charging low balance fees to terminated participants with small balances as an alternative to locating missing participants. The speaker suggested $5.00/quarter until the account was zero.

We have a plan we tookover with more than 20 terminated participants with QNEC balances under $50 who terminated years ago. It is a reasonable assumption that the combined administrative costs between our effort and the client to locate these participants, issue checks and 1099's will exceed the distributable amounts.

Any thoughts or experience with low balance fees?

Hi,

I'm 18, and I'm very lucky to be in a situation right now where I don't have to pay for college, so I'd like to invest my earnings in a Roth. I have a few questions about that.

1--are there different kinds of Roths? Do I have the option of setting it up through different banks, etc.? If so, will some places charge different fees than others?

2--I made about $1000 in 'legitimate' paychecks this summer, jobs where I was actually on a payroll. However, I made another $1000 'under the table'--housesitting, babysitting, etc. Am I only able to deposit the $1000 from my "real jobs," or if I claim the other $1000 on my income tax forms, can I add that money to a Roth as well?

Thanks so much.

This looks like a simple question, but I'm stumped.

A client has 5 shareholders ... all doctors. The client is a hospital-based practice with no NHCEs. Also, there are no ASG issues. Four doctors maintain individual DC plans, while the fifth doctor sponsors a DB plan. Does the DB Plan satisfy Code Section 401(a)(26)?

Is one option for at least one other doctor to indicate that at least his DC Plan and the fith doctor's DB Plan are permissively aggregated to satisfy Code Section 410(b)? If that were to occur, then the DB Plan would also satisfy Code Section 401(a)(26).

Thanks in advance. Ed

I have a client with a 6/30/05 fiscal year-end. An HCE deferred the maximum $14,000 from 1/1/05 through 6/30/05. The ADP/ACP testing failed for the 6/30/05 PYE and this HCE had to take a $14,000 refund and received this prior to 9/15/05. Is there any way for this person to make any additional deferrals from his paycheck in the 2005 calendar year?

I have a client that needs to put a Safe Harbor in place for this year and I know October 1 in the dropdead date for starting the plan. However, no 30 day has ever been given. Is it too late as of September 16th to implement this plan?

IRS & Trreas issue Hurricane Relief for Qualified Plans and 403(b) a/c s

IRS Announcement 2005-70

I just got a call from a client who has a copy of a letter taht the SSA sent to a former ee of the plan. The SSA told her she MAY have $550 in this plan. We have been the TPA since 2002 and have no record of this ee (she term'd in 1991). My guess is that she was put on the SSA the first go around as an "A" and then never put on again as a "D" when she was paid out. If memory serves, when we were doing the C/R forms, we still had this SSA schedule.

What do we need to do to report to the SSA that this former ee no longer has benefits in this plan? I do not have a copy of the letter at this time, and we are working with the client to get valuations from the 1990s (free erisa had 5500s available back to 2000). Thanks for the help.

Heres the story....An Ex-employees is on COBRA and the wife was declared Disabled. So they get the 29 months. The wife dies. What happens to the Ex-employees COBRA. In addition, let me know what happens if she died before or after the 18 months. Thanks in advance

We have a client in a high-turnover/low wage industry who is considering adopting an automatic enrollment provision for their 401(k) plan. Current eligibility is age 21 and 30 days service, with entry at the beginning of the month coincident with or next following satisfaction of the eligibility requirements. One problem we identified is the difficulty of providing "reasonable" and "effective" notice of the opportunity to make an election, considering that the service requirement for eligibility is so short. Does anyone see a problem with a provision maintaining the current eligibility requirements, but providing that the automatic salary deferrals will begin at a later date, such as the first of the quarter coinciding with or next following the date of particiation date? (Example: DOH 1/15, entry 3/1, automatic deferrals begin 4/1). I realize that in some cases entry and automatic deferrals would happen on the same date.

Thoughts are appreciated.

Our loan policy states the term of the loan may not extend beyond the participant's normal retirement age as dfined in the plan. Is this requirement specific to our loan policy or is this a requirement?

If you have a 3% non-elective safe-harbor contribution that you're also utilizing in the cross-testing calculatins, can you still impute permitted disparity for the general test ? If you can't for the safe-harbor portion, can you still impute for the regular profit sharing piece ? (I realize logstically it might be a nightmare to impute for one piece but not the other, but still curious if it's available).

Under EGTRRA, top heavy accruals for non-keys are not required if no key employee benefits during a plan year.

What if the keys's accruals are less than 2%? Unlike DC plan, for DB plan, the Code says 2% regardless of the keys' accrual rates!

Just wanted to check if there is anything put out by the IRS which says otherwise i.e. the non-keys accrual can be at the highest accrual rate for the keys.

Have a safe harbor 401(k) client who offers the basic SH match to those who contribute. One participant has reached her employee deferral limit of $14,000. Will the company be required to continue the safe harbor match contribution off of her gross wages until the end of the plan year? Or, does the safe harbor match stop since she is no longer able to contribute her employee deferral amount?

HCE deferrals were limited to 8% earlier this calendar yr. Mid-yr we received a letter saying that is now up to 10%. However, even at 10% we will still be well under the $14,000 limit for the calendar yr, and would like to do a "catch-up" deferral to bring YTD deferral up to 10%. Plan administrator is saying that is not allowed. What do the regulations say? Is there a specific section of the regulations to which you could refer me?

June 30, 2005 year end, HCE defers $10,000 for the plan year. ADP test fails and $4,000 is reclassified as a 2005 catch-up contribution to avoid refund.

It appears that it would be necessary to advise the HCE that his 402(g) limit for the calendar 2005 year is now $14,000, not $18,000 as he may think. Would you agree?

If he continues to defer $18,000 for the calendar year, then it also would seem that he would have a 402(g) violation for 2005 that must be corrected by 4/15/06. Of course, unless the Plan Administrator advises him that his 05 catch-up was already used in the testing, he (and his accountant) would be unaware of the violation. Quite possibly, this would not be brought to his attention until the 6/30/06 plan year is tested. Thus the consequence would not be the "double taxation" as it usually is in the case of a 402(g) violation not timely corrected.

Am I missing anything here?

Suppose Joe has no accrued PTO, gets 2 weeks in a year from his employer, and decides he wants to donate this.

Does Joe work for 52 weeks, get paid 52 weeks of comp., with the employer paying 54 weeks of comp. in all--52 to Joe and 2 to Katrina victims?

Does Joe work for 50 weeks, get paid 50 weeks of comp., and take 2 wks. unpaid leave, with the employer paying its normal 52 weeks of comp., but with 2 of it now going to Katrina?

Does it matter--will either scenario work?

Are there other alternatives? Suppose Joe works for 51 weeks and takes one week of unpaid leave? Do the Katrina victims still get 2 wks. of comp. from Joe's employer?

Thank you.

Plan Sponsor has multiple payrolls (weekly, biweekly, semi-monthly). 401(k) contributions (& ER Match) are remitted to trust once per month, primarily to accomodate the fact that there are multiple payroll schedules. Contributions are therefore invested in participants' accounts just once a month.

Are there significant issues with DOL deposit rule re: "segregating from ER general assets in reasonable timeframe"? Payroll taxes are paid more frequently than monthly. Contributions could easily be segregated from general assets more frequently. What if contributions are remitted on payroll basis, held in a master trust account, and still invested only monthly? Should master account be interest bearing?

Anyone have any strong thoughts on this?