I've searched the regs and old posts and haven't found an answer to this question:

Can a plan, relying on a payroll period safe harbor match of 100% of first 5% deferred, amend to increase the rate to 100% of first 6% deferred in the middle of a plan year?

The regs clearly state that you may reduce or suspend a safe harbor match during the year, if you provide notice, amend the plan, and run the ADP test using the current year method for the entire plan year. However, I can find nothing that addresses an increase in the safe harbor match rate during the year. Can you also provide notice and amend the plan? Are you then subject to ADP testing?

A calendar year DB plan’s death benefit is the greater of PVAB or the (insurance) Policy proceeds. The face amount of the insurance policy to fund the death benefit is 100 times the projected benefits.

For purchasing the insurance policies, the plan states:

“….. as soon as practicable following the Anniversary Date coincident with or following a Participant’s satisfaction of the eligibility requirements, the Administrator will direct that a life insurance contract be purchased with a face amount ……………..

The Anniversary Date is January 1.

A participant met the eligibility late 2002 and entered the plan on 1/1/2003. A life policy was purchased for him based on his projected benefit computed @ 1/1/2003 (BOY val date in case the actuarial val date is of any consequence).

As a result of increased projected average comps, projected benefits computed @ 1/1/2004 and 1/1/2005 increased and additional polices were required for 2004 and 2005 for all participants (for both years the required policy face amount was above the minimum threshold required for a policy to be purchased).

The participant died (suicide) during January 2005.

Except for the deceased participant (obviously too late to buy a policy), the required additional policies for 2004 were purchased in April 2005 (made effective in 2004) for all participants. The additional policies for 2005 have not been purchased yet.

Admittedly, there was not enough time to perform calculations for 2005 to determine the additional policies required let alone purchase them. But what about the required additional policy for 2004? Do the beneficiaries have a claim against the Plan/Plan Administrator?

Does the following affect the answer?

1/1/2004 computations were done mid 2004 and the sponsor had funded the required 2004 contributions, including the required premiums (split funding method) for the existing policies and for the additional required policies for 2004, by December 2004!

What type of retirement plans are available to associations?

I have money I would like to put into a Roth IRA, the problem is I may be to young and it needs to be under my name. So my question is at what age can one start a Roth IRA under one's own personal name?

New financial advisor wants to put a program in place for one employee (SD insurace) place while the employee stays w/ the company).

the company is supposed to lend money to the employee for the premim deposit where the employee is the owner of a split dollar (SD) insurance benefit.

If the employee dies, the employee names a beneficiary who gets a tax free death benefit and the company will get their deposits back.

He says the employee will get a tax free gain at separation from service (for full length of agreement).

But if the employee separates prior to the date (or poor performance) the company will take back its contributions.

The agreement is supposed to end at the rollout date.

The employee will pay tax on the below market interest rates on the loan.

He says the company will have a claim to all money set aside w/in the SD plan.

Then he says to do this we need to complete a new NQDC agreement promising the employee money in year 21 if he is still with the company at that time.

If employee quits after year 21 - he gets 400,000 (not directly tied to the SD amount).

Option to add: if the company wants to let the employee also defer additional money, he could get even more at year 21.

to me (with limited knowledge) it sounds like a loan regime split dollar is informally funding the NQDC plan. the first part is the SD program that will provide financial backing while the employee is actively employed by the employer with a golden handcuff - and the second part of it sounds like a serp agreement.

How would this be set up? SERP? NQDC Top Hat? Just a SD agreement and then a SERP down the road (or all of them now). Any 409A problems-I know there are issues with golden parachutes, but I'm not sure re golden handcuffs?

Just seems so different than anything I have encountered that my head is spinning a bit.

Will a domestic relations order issued in another country (i.e., Canada) be effective in the United States. Section 414(p) of the Internal Revenue Code requires that to qualify as a domestic relations order, the order must be issued pursuant to a State domestic relations law. Thanks!

If a participant takes a withdrawal from a mutual fund that charges a back-end- load, or CDSC charge from the participants account, in order for the fund co. to recoup its investment costs, would you recommend reporting this charge on Schedule C - Form 5500 under the Fund Co. EIN, or do you have any other suggestions on disclosure or if it is even reflected on the C at all? Also, how would you disclose on the Schedule H? As other fees, contract fees etc?

If a participant utilizes the services of an art therapist, who is not licensed in psychotherapy, but has art therapy credentials could the expenses incurred be reimbursed through a health FSA?

I came across a brochure from a provider that determines a loan differently from how I was taught. Here are the parameters:

Vested Balance: $60,000

Highest balance in the past 12 months: $6,000

Current Loan Balance: $5,000

I am assuming the vested balance is $55,000 in fund balances and a $5,000 loan balance.

Is the maximum loan amount available $19,000 or $25,000?

Has anyone prepared an RFP for a DB Trustee search and/or a search for a provider to outsource DB administration. Or, can you recommend any sources to obtain one. Thanks!

I searched the board and sort of found an answer to my question but it didn't totally clear things up for me.

Company A buys Company B in early 2005 and creates a parent/subsidiary controlled group. Both companies have 401k Plans. The plan is to merge Plan B into Plan A effective 1/1/06 and have Company B employees begin participating in Plan as of that date. This means that a final valuation and 5500 filing will have to be done as of 12/31/05 for Plan B. From what I read, if the legal date of the merger is written to be 12/31/05, then that is when the assets are considered to be transferred to Plan A, correct? It is most likely a physical impossibility to value the assets and cut a check or wire all in the same day on 12/31. So, the assets will not physically transer until sometime in Jan. 2006. Obviously a black out notice will be issued to the affected participants. Am I understanding correctly then that on the final 5500 for Plan B for 2005 plan year that we would show a transfer out to Plan A of the value of the plan assets on 12/31? Even though the assets in Plan B don't physically transfer until maybe the middle of Jan 2006 is there a 5500 filing requirement for the 2006 plan year for Plan B? And if the answer is no, in what reg or cite is that communicated? I'm also guessing that any investment gains/losses for Plan B's assets prior to transfer in 2006 are just lumped together with Plan A?

If the plan is cross tested and top heavy, do participants receiving the top heavy contribution need to receive the 5% gateway or can they be limited to the 3% top heavy minimum?

In my experience, and it is my understanding, that if an employee terminates their employment and have claimed more money from their flexible spending account than they have contributed then that is the end of it. By the same token, if an employee contributes money to their FSA all year long and has no claims while they are enrolled in the plan and then quits before year end then the money is left in the plan.

The company where I am now employed has a policy that an employee who terminates and has not contributed enough money to their flexible spending account to cover their claims must repay the money in their final paycheck. However, if vice versa is true and money is unclaimed in the account then the employee has to leave the money. This just seems wrong to me and I have argued using all of the documentation I can find - Q&As on the final IRS regs for cafeteria plans, commentaries, etc. but payroll argues that the company still has a risk because of the employee who will leave with big claims and money that can't be recovered in the last paycheck.

Now, I am hearing that large companies - for example, MCI - has the same policy. Does anyone have anything definitive on this issue other than just an opinion - that is, something that says, "an employer cannot require an employee to pay back monies they have claimed against their Flexible Spending Account if their contributions don't equal their claims."

Thanks in advance.

Does the IRS charge a fee to review an application submitted under Treas. Reg. 1.408-2 (i.e., an application to obtain designation as a non-bank trustee)?

Appendix B to Rev. Proc. 2003-44 provides two permissible methods for correcting the exclusion of eligible employees from a profit sharing plan: (1) the "Contribution Correction Method" and (2) the "Reallocation Correction Method".

Assume that a plan provides that profit sharing contributions are made pursuant to an integrated allocation formula that uses "allocation points" or another method, so that the integration rules are always met regardless of the amount of the plan contribution (i.e., the plan does not specify a certain percentage amount above and below the wage base). Also assume that the plan discovers that a prior year's allocations to certain participants were based on inaccurate compensation (not including some fringe benefit amounts that should have been included, and including other fringe benefit amounts that should have been excluded).

I interpret Appendix B to mean that the plan sponsor may correct the allocations that are based on inaccurate compensation by first determining what was the effective allocation formula for the other participants (whose compensation in the original allocations was correct) -- e.g., for participants whose compensation was correctly determined in the original allocation, this may have effectively resulted in an allocation of 8.334% of all compensation plus an additional 5.7% over the wage base. Then, the plan sponsor would make a corrective contribution, adjusted for earnings, to each affected employee who did not have sufficient compensation considered, and apply an appropriate forfeiture to employees who had too much compensation considered, based on this formula. No reduction or other adjustment would be made to the accounts of the employees whose allocations were based on accurate compensation.

However, the plan sponsor's recordkeeper believes that because the allocations were made pursuant to an integrated profit sharing formula, the mistaken allocations may only be corrected under the Reallocation Correction Method, requiring the plan sponsor to redo allocations for all plan participants (even those who were not affected by the error) and notify all participants of the change.

I have not been able to locate any information to support the recordkeeper's argument that this correction must be made using the Reallocation Correction Method. The fact that the allocation formula initially used was intended to maximize benefits to highly compensated employees doesn't seem to have any bearing on the proper correction method.

Does anyone have any thoughts on the proper correction method to be used in these circumstances?

A DB plan participant retired and elected a direct rollover of his accrued benefit. Two months later the plan realized that the lump sum paid was too small because it did not account for certain service. The plan is now ready to make a second payment to the participant. We want to rely upon the original distribution election for this second payment. Any reason not to do that? Should the participant be able to elect again?

If a company makes a $500 per year employer contribution into the FSA for their employees, can the employer contribution amount be pro rated for individuals that do not participate for the entire year (for example a new hire)?

Can a Roth IRA contribution be made this year using earned income from past years of employment if person is now retired and not employed?

We are acquiring another company (assets only, not assuming the plans). However, b/c there is a collective bargaining agreement - we have to mirror the plans they currently have place. One plan is a 401(k) and (m) plan. The main difference is that we (base company) provide a match of 2% up to 50% of comp and the new plan (new plan for purchased assets) provides a match of 2% up to the 100% of comp.

We crunched the ADP/ACP tests on a controlled group basis (based on info we rec'd in due diligence) from both plans' (testing it as the base company's controlled group AND then testing it as the new company's controlled group) - we passed the ratio percentage test both times.

Is there anything we are not thinking of (other than 401(a)(4) ND) and how would we report this on the Form 5500 (I'm thinking of Schedule T)?

I don't do much with SIMPLE plans and someone has asked if the SIMPLE can be aggregated with the person's personal IRA accounts for purposes of the 70 1/2 RMD calculation and distribution. It seemed logical to me that this would be ok, but I couldn't find an answer in print. They are aware that any Qualified Plan distributions must be taken from the plan as a stand alone. Any help is appreciated.