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

Are there any instances where IRAs are allowed to make loans?

ERISA 4219©(4) permits an employer to prepay withdrawal liability, but it doesn't say anything about discounting the stream of payments to arrive at a lump sum factor. Interest is only referenced in terms of a defaulted amount or overpayment. Can a withdrawing employer apply an interest factor to arrive at a lump sum amount.

I have an S Corp with basis of about $400,000, this Corporation has been my sole source of income for 30 years. I anticipate in possibly having losses this year in the S Corp of about $150,000. I also anticipate having W-2 income of about $60,000, and long term capital gains of about $125,000, interest income of about $10,000. Do I qualify to convert my IRA to a Roth?

I have an employee who was recently legally separated from his spouse (I have the court decree.) No QDRO has been sent in, nor does the legal separation document mention the 401(k) plan.

However, the employee has turned in a new 401(k) beneficiary form to remove the wife. I am not sure about accepting the beneficiary change due to the fact that he is still considered as having a spouse. Has anyone else come across this issue?

Say a plan has a normal ret date of age 50 and the plan allows for in-service distributions after normal ret.

One participant plan.

Say the PVAB at age 50 is $500,000.

Is there any reason why the plan cannot allow for the participant to withdraw say $50,000 one year, then say another $25,000 in three years, etc. as long as the participant does not exceed 415 and meets RMD?

All the distributions will be rolled into an IRA. Otherwise, I believe there would be 10% penalty for early distribution, since this is not a periodic annuity type of pension.

Thanks.

Gary

A guy is over 70 and is still actively employed and receiving his RMD since he is a 5% owner.

His plan was frozen and at the time his AB was 100k, but the 415 $ limit limited his pension to 60k (due to short length of plan participation), the 415 comp limit is 100k too.

He is receivning an annual RMD.

When computing his pension does it seem reasonable to compute a gross benefit based on the 415 $ limit, increased for COLA and significantly increased for increasing age, thus allowing his gross benefit to approach the 100k AB. The gross benefit is then offset by the accumulated value of the prior year distribution.

In other words a couple of things are being addressed:

1) can a pension that has already commenced be increased if the 415 $ limit increses due to COLA?

2) can the 415 limit also be adjusted for age over 65 if the person has commened his RMD? If he commenced recieving his total AB then such a 415 limit adjustment would not be allowed, but in this case he is only receiving the RMD.

Thanks.

Does anyone know: Has there been any further clarification on Election changes under 409A?

Specifically, if a participant changes his election from a lump sum to an annuity within the 12 month effective/in-advance time period, is this considered subject to the 5 year change in form requirement? Or, similarly, if a participant lengthens his annuity payments from, for example, 5 to 10 years, is this subject to the 5 year change in form requirement.

Is there anything to hang my hat on out there?

It's been a while since anyone has posted on this board. Is there anyone else out there taking this exam this fall?

While preparing the Accountant's Opinion the CPA discovered that the loan interest rate used for a couple of loans was incorrect (prime rate had changed, loan rate should have moved with it but did not). As loan procedures are made part of the document by reference, it seems that this may be a qualification issue. Maybe not?

As one loan has already been paid off, with $150 too much, and the other still out there, what are the remedies? Must (or should) the overpayment be returned? It seems as though a Participant has technically contributed after-tax dollars which are not allowed in the plan, and these should be fixed. But as always, what am I missing?

I'm new to administering ESOPs and I have a general question. The ESOP has investments in mutual funds and some GNMA bonds. I'm wondering when it comes to allocating earnings on these non ER stock is the allocation made on a participant's total account including the ER Stock or account minus the ER Stock? I'm going to read the document carefully to see if it specifically addresses this but thought someone who administers these on a regular basis could give me some guidance.

Our 5500 preparer is telling us that it is no longer acceptable to create an attachment to the SSA, allowing one to put 50 people on the same page. As a result, we are looking at a SSA filing that is 600 pages long.

I thought this might have come up before, but my search turned up nothing that was on point.

Confirmation or rebuttal?

As we all know, one contributing factor in the decline of DB plans is the lack of understanding/appreciation by the individual participant. Since most actuaries are keenly aware of this, and since many of us have a hand in producing a yearly “pension statement”, I suggest we consider how that statement can improve employee understanding and appreciation. Thus, I suggest using existing materials as a vehicle for this improvement.

Specifically, when you produce a statement that shows a benefit projected to NRD, I suggest including a short message on every Statement. This can also be expanded to the production of benefit calculations and estimates. The purpose is a simple method to alert the recipient to the value of the benefit. For example:

"The plan benefit is payable for your lifetime. You cannot outlive your pension income. Looking at this another way, if you receive the projected pension benefit for 20 years, you will receive a total of $xxx,000 from the Plan."

Comments? Suggestions?

We are trying to work out an arrangement where a bank would accept these accounts. Their IRA service provider advises that they can only accept these accounts from "recently" separated participants and not "lost" participants. So, the bank wants to define "recently" which we understand is not defined in the final regulations. Other providers I'm working with do not make any distinction between "recently" separated and "lost" participants. They will accept accounts as requested by Plan Sponsors with whom they have agreements to provide this service. Reality indicates since the forced IRA rules are so new, plan sponsors may have a backlog of participants who may be "lost" at this point. Can anyone shed any light on this?