I would like a plan to provide that upon the death of a participant, the spouse (or elected beneficiary) could decide at the time of benefit distribution, what form to receive the pension (the death benefit is at least equal to the QPSA and fully subsidized).

For eg. the plan allows for a lump sum payment as an alternate option.

So if a participant were to decease while actively employed and the spouse were the benny, the plan would of course allow the benny to commence pension at time participant would have been elig for early ret (as QPSA), but could the plan allow the benny to choose an option after death (at the time of ben commence), eg. receive an equiv. lump sum at any date after death? So since the plan provides a death ben equal to full PVAB, could it be paid as lump sum at any date after death. Bottom line is that these provisions are more liberal than statutory requirements.

Thanks.

For audit purposes, would Lincoln Life be considered a party in interest if they are the fund entity sponsor and the fund is called LL Balanced fund? (other example – John Hancock entity sponsor and John Hancock Conservative Portfolio).

A 401(k) plan was filed with the IRS for a determination letter application in October of last year. The IRS reviewing agent recently asked for a copy of the 401(a)(9) amendment. That amendment was never prepared. The document filed indicated that the plan would follow the proposed regulations under Code section 401(a)(9). Any thoughts on available options.

BTW, this oversight occurred prior to my joining the firm.

Thanks in advance.

Ed

Party in Interest question- For audit purposes, would Lincoln Life be considered a party in interest if they are the fund entity sponsor and the fund is called Lincoln Life Balanced fund? (other example – John Hancock entity sponsor and John Hancock Conservative Portfolio). Thanks.

Has anyone had any experience with VCP, or audit CAP (please specify which) in a situation like this:

Client (small employer Doctor practice) has a money purchase plan that provides for the maximum 415 contribution for the owner and amount necessary to satisfy integration for other employees (unusual but not my issue). Client adopts a DB plan. The Client is now subject to the 25% deduction limit. Advisor tells Client to reduce MPP contributions to the 25% limit (this happens for several years). The problem is that the plan does not provide for a reduction in contributions. Under the MPP, the Client was required to make the contributions as provided under the formula. The MPP did provide, however, that any contributions that were not deductible would be returned to the employer.

My take is that the IRS may require payment of the excise taxes, but should permit the employer to get a refund of the contributions (at least for the owner). Any ideas?

A question we're debating in the office here: is there any requirement to have the participants update their elections annually (or some other frequency, I suppose)? We're considering things like an election to not purchase life insurance, 401(k) deferral percentage, investment election, beneficiary designation, etc. Most of us believe that such things are in force until changed by the participant. I can't find anything on it for or against, so I'm willing to take the silence as a "no"...

Has anyone heard anything about when the IRS is expected to issue proposed Roth 403(b) regulations? When the proposed Roth 401(k) regs were issued, it was announced that the 403 regs would follow "shortly".....That was nearly six months ago, and the provision goes "live" on 1/1/06. Also, if anyone knows the status of the "Proposed 403(b) Regulations" (regarding such things as requiring a plan sponsor to adopt a formal plan doc), that info would be helpful as well.

Any insight would be appreciated.

Thanks!

We are looking at software to prepare benefits adminstration forms and to assist with the applicable filing requirements. What are your thoughts on Accudraft?

How does it compare with other administration/filing software?

If I have a retiree who has not paid their premiums in almost a year, do we have to offer them COBRA coverage back to the date of loss of coverage due to non-payment?

We have a small defined benefit plan (about 30 employees) that has been frozen since 1993. Because of the poor market since 2000 the assets have decreased substantially and the plan is severly underfunded. The liability on a termination basis is about $1,700,000 and the assets about $700,000. The owner, who is 4 years beyond his normal retirement age, accounts for slightly under half of the accrued liability.

Another actuary is proposing two changes to the plan which I believe are in violation of 411(d)(6). First, he wants to amend the plan to eliminate the post-retirement actuarial increase for highly compensated employees (i.e. the owner) retroactive to his normal retirement date.

Second, he wants the employer to begin contributing to his profit sharing plan and change the DB plan into a floor offset arrangement. He would be using profit sharing contributions made in 2005 and later to offset the benefits accrued in the DB plan prior to 1993.

Does anyone else think these changes are not allowed or are the okay and I am being to narrow minded?

If a 403(b) that has emp. deferral & makes employer contibutions did not forward funds to investment firm, can they just follow the VFC rules and get current?

An adopting employer of a multiple employer plan went bankrupt without funding the 3% top heavy contribution they owed. Can the Administrator of the plan use the account balance of the owner/key to redistribute to the other participants? Does it make a difference if the key agrees to the redistribution?

The Employer participates in a state retirement plan, which is a governmental plan under Code Section 414(d) (the "Plan"). The Plan has Participant mandatory contributions equal to 5% of Compensation. "Compensation" is defined under the Plan to include salary continuance amounts funded by an employer whose emplyees participate in the Plan.

The employer has elected to designate employee contributions as employer contributions under the pick-up provisions of Code Section 414(h)(2).

A Participant in the Plan is absent from work and receives salary continuance amounts from an employer-sponsored insured plan, the premiums of which are paid solely by the Employer. All salary continuance amounts, net of F.I.C.A. withholding, are sent directly from the insurance company to the Participant. Historically, the Participant has sent 5% of the gross salary continuance amounts to the Employer for the Employer's remittance to the Plan.

Questions:

1. Assuming that the Participant and insurance company are both willing to do so, may the contributions of 5% of the salary continuance amounts be withheld by the insurance company and remitted to the Employer? May they be withheld and remitted directly to the Plan or trustee of the Plan?

2. Is there any type of arrangement which may be set up so that the 5% contributions on salary continuance amounts may be designated as employer contributions under Section 414(h)(2) or must they be designated as participant after-tax contributions?

Thanks in advance for your input.

Has anyone ever had any luck with writing a report that would inception to date contributions, gains/losses, etc? Is it even possible to write such a report?

A participant in a salary deferral-only plan has inception-to-date deferrals of $25,000, an investment loss of $5,000, and therefore a balance of $20,000 at the time of a $10,000 loan (i.e., the loan was funded entirely from actual salary deferrals). All deferrals are post-1987. Six months later, the participant has repaid $300 in interest, $850 in principal, and the non-loan assets in the account have earned $1,000, so the participant’s balance (including the loan, now valued at $9,150) is $21,300. The participant has received no other loans or distributions. What is the current maximum hardship withdrawal available?

A) Lesser of i) $25,000 (inception-to date deferrals), or ii) $21,300 - $9,150, or $12,150 (i.e., current non-loan assets);

B) Lesser of i) $25,000, ii) $21,300 - $9,150, or iii) $10,000 + $850, or $10,850 (non-loaned deferrals plus repaid deferrals);

C) Other (explain).

I'm trying to make our DV notice more understandable to the "average" participant. Is there someplace I can find out what the actual requirements are, including an example?

Thanks in advance - I've spent hours so far looking on the web.

If you could help or let me know where to get the following information, I would be much obliged.

1. Our cafeteria plan has two checking accounts, one for the medical reimbursement and one for the health insurance. What happens to this money IF we terminate the plan? Does it become taxable?

2. Do we need to file a 5500? We have 85 participants. I think we do, in as much as it is a "funded" plan.

3. We have a "reserve account" on the company books, for deferrals not yet transmitted to the plan accounts. Is there a limit on what we can have in this account?

Thank you!

Plan uses 3% non elective to satisfy safe harbor adp test requirements. No matching contributions are made, but there are employee after-tax contribs. I looked through the final 401k regulations and did not see anything which superceded Notice 98-52. in that the employee contributions must be tested using the current year testing methodology. Does anyone agree/disagree with this conclusion?

Thanks

client has a new EIN, and needs an extension for the 5500. should we file the extension under the old number and note the change when the 5500 is filed, or should we file under the new number?

Must loan repayments be paid back monthly? Can the amoritization schedule require that they be paid back quarterly?