I am in a discussion with my client's financial advisor who says you can have a "last day rule" in a Cross Tested 401k plan with a 3% non-elective SH. This plan has age 21, one year of service for eligibility. No early entrants.

I have explained to him that all terminated participants must receive the Gateway Allocation since they are receiving the 3% SH contribution. In the case of this plan the terminees would need to receive an additional 2% PS contribution to reach the Gateway.

This financial advisor says that out of all the TPA firms he works with, our company is the only one requiring this. I know I'm not crazy, but can anyone give me a cite to show him?

I've searched several times, but haven't had any luck finding what I need to prove my point. Thanks.

My client is questioning how (and whether) to comply with a NMSN. The facts: Client has a collectively bargained group health plan. The Plan provides health coverage for union employees and their dependents, as long as the dependents are truly dependents - that is, the employee has to provide more than 50% of the dependent's support. There are provisions in the Plan for making a determination that a dependent is in fact eligible for coverage under the Plan. Employees have to provide birth certificates or otherwise prove the required level of support. The problem that has arisen is with NMSN sparked by a custody battle, where the Employer (also the Plan Administrator) has received an NMSN for a child, and they have no record of the child's status as a dependent of the employee, so they don't know whether the child is truly qualified to be a participant under their Plan. The NMSN doesn't give them many options - it's pretty much deemed to be qualified as long as it identifies the participant and gives names and addresses. Of course, the NMSN can't require the Plan to provide a benefit that the Plan wouldn't otherwise provide, but how does the Plan Administrator communicate that to the court or issuing agency using the NMSN? How can they just request additional information without being seen as failing to comply with the NMSN? Does anyone have experience with these?

Thanks for any assistance, and I apologize if this question has been answered elsewhere - I didn't find it through a search.

forfeitures are used to pay plan expenses.

is the penalty tax considered a plan expense for this purpose?

I have a rather large client who now wants to start paying out a bunch of his previous terminees. There is a guy who terminated in 1997, but is now in prison for life. What do I do now? I can't necessarily send him his distribution paperwork. Has anyone run across this before? No one here seems to have.

Any and all assistance you are able to give me is much appreciated.

I am preparing an application under the DOL VFC program as well as seeking an exemption under PTE 2002-51. My client failed to timely make participant contributions for one employee from mid-February through the end of March, 2004. All the contributions were made by March 31, 2004. I am trying to find out who are the "interested persons" that should receive the Notice to Interested Persons under the PTE requirements - just the one employee that was affected or all plan participants. And, if all plan participants, is that all current plan participants or all participants at the time of the breach? Thanks.

Does anybody know of a case wherein retirees sued for lifetime retiree health benefits claiming that such benefits were made part of the purchase agreement? I seem to vaguely recall reading something about this in the not so distant past, but i have been unable to find a case. Any help is greatly appreciated!

What is form 11 K and do all plans with employer stock have to file it with the SEC? I did a search on benefitslink as well as the SEC, but cannot find explicit instructions as to whether all plans need to file it annually.

My plan is a 401(k) with employer stock offered to employees through all sources (through deferrals and match)

thanks!

Now that the OBRA FFL is gone, what happens to the prior OBRA FFL bases? Do we continue to maintain them?

Also, suppose if the plan hit OBRA limit in 2003, should an OBRA base be established in 2004?

Questions:

1. Can I withdraw Roth IRA contributions at any time for any reason without penalty?

2. When I retire I will probably rollover my employer 401K to a traditional IRA. To convert this to a Roth IRA my adjusted gross inome will have to be below $100,000. Correct?

3. Why does the government insist on making this so difficult (income limits and way too many rules for too many products)? Are there significant changes on the way?

Thank you for your time. Doc42

Does anyone know of any 401(k) surveys that report common practices with respect certain plan provisions? For example, X% of employers use a 3 year cliff vesting schedule, or X% of employers permit catch up contributions etc....

Thank you.

Reviewing a DRO where the terms require that the check be made payable to the Alternate payee spouse & actually seems to prevent the possibililty of a rollover. 2 issues:

1. Although it seems odd that a DRO provision would preclude a rollover; the provision doesn't require that the Plan provide form of benefit not otherwise available, so in & of itself that particular clause doesn't prevent the DRO from being a QDRO. Any thoughts?

2. Assuming a QDRO, if the alternate payee spouse wants to rollover, I'm assuming that she can't. It seems to me that clause in the QDRO has to be followed. Thoughts?

Thanks in advance.

I've got a client where one of the owners/Trustees terminated, and as part of the agreement the lawyers drew up (without consulting yours truly, naturally), was that he was to receive $X of an employer profit sharing contribution for 2005, payable immediately.

It's a cross-tested plan, so we can put this guy in his own class, no problem. There's a last day requirement for a profit sharing allocation, but the remaning owner/Trustee has agreed to amend that out (it's a small company w/ almost no turnover, so he figures that it won't cost him very much). Individual accounts, so there's no issue of shared earnings. He's over the comp limit (even for 2005), and he got $X last year, so there's no reason to suspect that he would not be able to get the same amount this year. However, the "immediately" part is bothering me. I'm sure that prefunding the profit sharing contribution for one HCE only is wrong. I said as much to their CFO, and his response was, basically, prove it in writing and we'll get the agreement changed, otherwise, I've got the check in my hand ready to deposit.

So is there a specific something I can quote that says this is bad? Or is it just something that I have to say that we advise against because it may be considered discriminatory under an audit?

Thanks.

I have a ps plan (no 401(k)) that terminated 9/04. All paid out 4/05. The plan year was 3/1 to 2/28. The plan was top heavy. If I start a 401(k) today I assume it will be top-heavy. What if the Key's sit out a year?

Plan X is an individually designed plan on Cycle C. Its RAP ends 1-31-09. The 401(k) regs are effective in 2006. Even though Plan X does not have to be submitted until 1-31-09, must it adopt a good faith amendment in 2006 to incorporate the final 401(k) regs?

What about adopters of a volume submitter plan? The specimen plan will include final 401(k) regs, but the adopting employer does not have to submit until at least 2009 or 2010. Must this plan adopt a good faith amendment in 2006 to incorporate the final 401(k) regs?

Unlike GUST, where a plan was required to comply operationally during the RAP, it seems for this round the Plan must also comply in writing.

Any advice?

Our TPA company (admin only, no product sales of any kind) is working with a financial advisor who wants to forgo commissions on a new 401(k) plan and instead be paid a yearly financial consulting fee. It is a decent size plan, about 150 expected participants, with the intention that the participants pay the fees out of their accounts. Let's say we would charge $25 annually, and the financial advisor charges $50 annually. At the end of each year, $75 would come out of everyones account to pay for both.

What the advisor has suggested is that the $75 come out at once and paid to our company (TPA firm). From there, we pay him the $50/per and 1099 him at the end of the year. Does anyone else do this and does it seem OK? We want to check as to why 2 separate transactions can't be done; I.E., he gets his check for $50/per directly from the accounts and we get our $25 directly from the accounts. That would seem to be the best way to handle it. But assuming there is a good, legit reason for that not being workable, is there anything wrong "lurking" about if we proceed as he suggested?

Thanks for all opinions

We have a small new comp plan (1 owner/ 3 partricipants). The demographics changed whereby the owner is the youngest. To get it to pass, I have to give the nonowners 21% and the owner gets about 10%.

Is it possible to forget the new comp allocation due to failure and just run the allocation using a "traditional" profit sharing allocation (contribution/wage)???

We're using a Corbel doc and it appears to be silent.

In a pooled investment account, if a participant was overpaid upon terminating, and all reasonable attempts to get the money repaid have failed, which, if any, of the following options are acceptable and or preferable for making the plan and the remaining participants whole?

1. Having the plan sponsor repay the amount plus lost earning? - If this is acceptable, can the sponsor deduct it, and what form does it take?

2. Having the trustees who committed the error repay the amount, plus lost earning, personally?

3. "Transfering" the amount, plus lost earnings from the accounts of the trustees to the innocent participants?

Which, if any (or please provide other), would be required if going through a formal correction program?

We have many participants in a plan where we cannot find the current address. We have sent their SSN thru the IRS and they forwarded to the last known address. We have exhausted all possibilities of reaching these people. We still have about 16 people who we did not hear from. We would like to kick those participants out of the plan, however, our administrator has stated that we cant kick them out (ie. send the money to the state Unclaimed Funds).

Is that true? If the IRS cant find them, and we cant send the money to Unclaimed funds, then we have to keep them on the plan forever?

Thank you for any help you can give!!!

I have the following questions concerning the option to beneficiaries to repay an outstanding plan loan and about the person who would be taxed if such option were not offered or were offered and the loan went into default:

If a participant dies with an outstanding loan, does the plan offer to allow the beneficiaries to repay it? Can the plan limit the class of beneficiaries eligble to repay the loan to the participant's spouse? If the loan becomes defaulted because the plan did not offer a repayment option, is the participant taxable in his/her final income tax return or is her/his estate taxable? Would the result change if the option to repay the loan was offered to one or more beneficiaries and the loan was not repaid?

We submitted a terminating plan for a favorable determination letter, and the IRS discovered that we did not apply the plan's vesting schedule appropriately for a short plan year that occured many years ago (resulting in underpayment of benefits for several employees). We have been asked to correct using the "contribution correction method" (Rev. Proc. 2003-44, Appendix B, Section 2.03(1)(a))

This particular section does not specifically say how to adjust for earnings. Does anyone have any suggestions on how to adjust for earnings? I am new at this.

Thanks for your help. Any input would be greatly appreciated.