I am looking for insight on the interaction of installment payments and funding waivers. Assume an employer is required to make quarterly installment payments but misses a payment during the year. A lien in favor of the plan arises as soon as the installment payment is missed. If the employer eventually receives a funding waiver for the year, presumably the waiver will retroactively cure any installment payments that were missed during the year. However, the employer may already have suffered adverse consequences resulting from the lien (e.g., violation of a financial covenant). Is there any way to prevent the lien in this situation (other than payment of the quarterly installment)?

Its always (to me) been an open question whether high-three-year-comp was "as an employee" vs "as a participant". The Code and Regs are at logger-heads. Now, the proposed new regs make it clear that its comp while a participant.

I've got a plan where benefits are based on high 3 year employee comp vs participant comp (pre-effective date). Think there'll be a grandfather?

An employee who terminated in Jan 2004 was paid out in 2004 and 20% tax was withheld. Since the Plan is Safe Harbor, he received a $47 contribution which was deposited to his account in March 2005. Is 20% withholding required on his second distribution since it's less than $200?

Spousal beneficiaries are allowed to rollover funds received from a deceased spouse. If money is kept in the orginial plan the spousal beneficiary must start a distribution by the time the participant would have turned 70 1/2. If the money is rolled out is this no longer true? Or is it no longer true in either case now that rollovers are permited?

We have just aquired a large block of PCRA plans through a takover. However, since we are a balance forward shop, this is very new to use. I think our biggest question is how to use the trading functions (Through the trans module). Does anyone out there process PCRA plans using the Schwab link in Relius? Your guidence, input would be great!

Quick question: Are CDSC charges entered as an expense item on Schedule H?

CAP

We have an attorney who is self employeed, files a schedule C and maximizes his contribution. There are no ohter employees on his schedule C. In December of 2003 he purchased a 100% interest of a settlement corporation (C corp) that sponsors a 401k plan in which he deferred 7% in 2004.

Questions:

1. Is he required to make the same contribution to the 401k plan that he made for his schedule C plan?

2. Is a self employeed individual allowed to participate in a SEP and a separate plan?

3. Are there any other issued I need to be aware?

If it's not too difficult please provide references for me to provide my client.

Is the plan audit part of the Form 5500 that must be given to a participant upon request? I'm thinking yes - since it is an attachment to the filing - but haven't been able to confirm.

Also, since Schedule E and SSA are not part of the public record I'm assuming they are not available to participants upon request.

Thanks much.

Michele

A business associate wants to have one BA agreement with its clients. Is it possible for the client (employer) as plan sponsor to execute one BA agreement with the BA that will cover all activities between BA and the various plans of the client?

I am finding difficulty finding anything that says I cannot do this.

thanks for any thoughts.

It is my understanding that the term cost of the death benefit can only be part of the funding, if the plan is at least partially funded by life insurance. However I am taking over a plan that had no life insurance, but added to the normal cost the term cost of the death benefit. The death benefit in the plan is the present value of the accrued benefit. There was no pre-retirement mortality factor in the assumptions. The sole participant is 100% vested. Do you agree that the prior year valuation was incorrect?

Do you report aggregate groups of employees, rather than individual employees by name, on Schedule C?

One of my clients has a legal opinion recommending this approach. The opinion is based on information provided by two DOL employees who spoke at a pension/benefits conference. Both of the DOL employees said that Schedule C's purpose is to report significant payments to service providers, not to list such very personal information on a publicly-disclosed document. Conference attendees were instructed to take employees with reportable compensation, lump them together in broad categories such as "administrative" or "executive", and report the aggregate amounts on Schedule C.

The Schedule C instructions certainly don't suggest this approach. In fact, the instructions say to use the employer's EIN (rather than individual social security numbers) when reporting employee compensation; this instruction suggests that each employee gets reported separately. And, since when is DOL so concerned about confidentiality? Form LM-2, another publicly-disclosed DOL form, reports some very explicity information about employee compensation.

On the other hand, the IRS prepares the Schedule C instructions, and the DOL could have a very different postion.

Has anyone else encountered this issue?

An employee moving to England wants to roll over to account there. Is their a way to do this?

I have a safe harbor plan that provides for the basic safe harbor match. There is immediate eligibility in order to defer into the plan, but there is a 1 YOS eligibility requirement for the match. Accordingly, the plan needs to satisfy ADP testing for the group of employees that did not complete 1 YOS.

The match is made on a payroll basis and is not trued up at the end of the year. Employees begin to receive the SH match on the payroll period following completion of the 1 YOS.

My question revolves around how you complete the testing for the otherwise excludable group. In a non safe harbor plan, I would make the determination of the two groups of employees and once that was done, I would test all contributions and compensation of each of those employees only in the group they were determined to be a part of. Would this same approach be the way you test in a safe harbor plan?

For example: A calendar year 2004 test is being performed. There are some employees hired early in 2003, one of which is an HCE for 2004. Based on the statutory requirements, all of these employees would be considered statutory employees for 2004 testing. However, they would not have begun to receive the SH match until part way through 2004. Therefore, do their contributions made during the first portion of the year need to be tested with the otherwise excludable population? If not, does that jeopardize the SH status of the statutory portion of the plan because some HCEs may end up with a higher rate of match as compared to NHCEs that may have only started receiving the match mid year?

Anybody have any guidance?

If a small plan invests in a hedge fund, would it be considered to be a qualifying plan asset for purposes of the small plan audit exemption? For example, I have a client who has invested in the Gabelli Associates Fund II LP.

Does the answer depend on what type of entity holds the hedge fund? For example, if it is held by a broker-dealer, would that make a difference?

Based on what I have seen so far, it looks like we may be stuck with treating it as non-qualifying but I was wondering if anyone else has had any experience with this issue.

Thanks!

Participant terminates in 2002 and is rehired in 2004. Participant has been reported as a B (simply to revise the balance information) for the last couple of years.

In 2004 would you report her as D? Or simply leave her off the SSA? Or something else altogether?

If a company adopts a 401k safe harbor with no elibility requirements to make 401k contributions, can they still put a 1 YOS requirement on the ability to receive the safe harbor contribution? Will that jeopardize the automatic passage of the ADP test?

Thanks

An employer has 2 401k plans covering 2 different groups of employees. They are considering eliminating one of the plans and have everyone covered in 1 plan. Would a plan merger make more sense than a plan termination? Are there any obvious pros/cons to doing a merger vs a termination, or vice-versa? Am I correct in that in a merger, there is no option for a participant to receive a distribution whereas with a plan termination the participants could take distribution? Finally, in a merger, accounts do not automatically fully vest, correct? Thanks for any insight!

My wife has a small 401(K) from a previous employer than she has recently been told she must either cash in (with applicable witholding) or roll into another IRA. If she elects to roll it into her Roth IRA, does the amount she rolls count toward the maximum total she may deposit in Calendar Year 2005 (including catch-up limits), which for her is $4500? Or, since the amount is being rolled from another retirement plan, does the rolled amount not count toward the annual contribution limit?

Can someone clarify for me if Rollover Money which is reported on Schedule I Line 2a(3) is supposed to show up as income on SAR. Govt. Forms is not including it so that when the numbers are added on the SAR they are incorrect.

We've been asked to consult regarding the frozen mppp of a deceased doctor. The plan assets are approximately $1,200,000. The doctor administered it himself, and for the past 10 years at least was the sole participant. The attorney for the estate can only locate the 1993 and 2000 Forms 5500. He has been unable to find any plan documents, so we cannot ascertain whether or not they are up to date. Obviously, the attorney would like to terminate the plan and distribute the assets to the beneficiaries.

1) Is there a way to determine whether or not a 5500 was filed for other plan years? If they were not, it will probably be next to impossible locate the financials to complete them under DFVC. What then?

2) What if the document cannot be found? It probably was not updated since the brokerage firm did not send a GUST package since the account was coded as personal. (They volunteered this information.)

The attorney and the inheriting children want to do the legal and right thing, but are at a loss regarding what to do. Has anyone been in a similar situation?

Thanks.