Is there a legal way to have a participant's life insurance policy reimburse the DB trust in the case of an over payment of a deceased pension participant? Both are provided by the company (two different funding sources).

Plan written with three classes. Owner, former owner, all others. Former owner is gone. Owner's adult children now working for him. Cross Tested allocation not working with the adult children included. I would love to exclude them but since they were not around when the document was written they do not have their own class or were not written out of the allocation.

We are amending and putting them in their own class ongoing but this is an issue for the 2004 allocation.

Any other way to exclude certain HCEs (they are HCE only by attribution)? Only three HCEs in plan dad and 2 kids.

I have a client who maintains a SEP Plan. They use to be invested at Smith Barney and therefore adopted their SEP Adoption Agreement. However, in the past year they moved to Merrill Lynch and ML does not maintain a SEP Document. Isn't it most likely true that the Smith Barney document probably doesn't satisfy the ML investing? I spoke with both SM and ML and they cannot give me any answers.

Do you think I should adopt the IRS Form 5305-SEP Document to be safe?

Any suggestions?

I have a quick question on amending a “wrap-around” plan document. I work for a TPA in Iowa, and we recently went from a full plan document that includes all plan provisions to a “wrap-around” plan document that only contains the necessary ERISA information, and refers to the SPD for all benefit, eligibility, HIPAA, COBRA, etc.

When I amend a “wrap-around” plan document, am I amending the original plan document and the SPD issued at that time, or am I amending the current SPD? I’m a little confused!

Any help will be appreciated!

Thanks!

A participant (age X) is currently receiving a monthyly benefit payable as a joint & 2/3 Survivor benefit with the cavaet that if he outlives his spouse (age X-1) he receives a $100 increase in the benefit. Per divorce settlement, each party is to receive half of value as of specific date. I know i haven't provided many specifics, but does it sound reasonable that after the settlement the participant would receive a monthly benefit that is less than half of the original amount?? I can provide more info outside the board. Thanks.

I took ove a defined benefit plan that has been using Unit Credit funding method, can I change to Individual Aggregate without filing for approval of the change? Thanks.

Just a question on how others are handling this plan provision. We have amended a majority of our plans to force payouts under $ 1,000. We have done this to avoid setting up the IRA for the $1,000 to $5,000 balances.

In practice, are administrators giving the participant notice (30 days for example) at the time of termination to make a decision on what to do with their funds, or are they just paying them out the full balance and putting the rollover onus on the participant?

Just wondering.

Takeover plan, 6 participants, Individual aggregate cost method. Benefits are projected with a 4-1/2% salary scale, but funded based on a level dollar amount rather than a level percentage of pay. I've never seen his technique before. Is it a problem?

I did some searching and have some confusion. I really have two questions.

I have a participant that has just attained the NRA. He is also the owner of a business and that sponsors a PS/401k Plan. The owner/participant wants to rollover a very large amount from a 403b plan and use this money to pay premiums in a life policy. The Owner/Participant no longer works for the Univesity and can take distribution of the 403b account. I am the TPA and not the broker.

Can the participant have a policy and pay premiums from the plan after attaining NRA? Does this rule exist for DC Plans?

If the participant can have the policy, can the premiums be paid from the rollover account? I know there is a rule about using the two year old money, but I did not see anything about using rollover accounts.

I would appreciate any help here.

Thanks

A 401(k) plan participant committed suicide. There was not a valid beneficiary designation completed. Husband filed a timely disclaimer. Under terms of plan, amounts pass to (1) spouse (N/A), (2) children (none) and (3) parents (yes). Are parents designated beneficiaries under 1.401(a)(9)-4, Q&A-1? Initiially, I thought the answer was no, but under the regs. I think they would be. Thanks. Ed

I have a profit sharing plan that has 410 problems (numerous years). If we do a VCP amendment to add participants, make the contriubtion, and the lost earnings, can the employer deduct the contribution and the earnings? I believe the proper correction method is in 1.401(a)(4)-11(g). 11(g)(5) states that the amendment adding participants is not given effect for purposes of section 404. I am not sure what that means. Also, Rev Proc 2003-44 6.02(4)(b) says that the corrective allocation is not an annual addition but that the "normal rules of section 404, regarding deductions, apply." Not sure what that means either. Does it mean that the employer can deduct as long as it is under 25%? If so, is that 25% of comp in the year of the contribution or the correction year? If they have to go over the 404 limits, will the excise tax apply? Sorry for the numerous questions but I have looked and cannot find an answer to this anywhere. I have seen the question posted several times but no responses. Any help would be appreciated.

I have a 401(k) client who is winding down their business due to law changes within their industry and one of the two partners is dying from brain cancer. They have a 4k plan which is funded to the maximum and still have 400k+ in their corporate account. All of the employees are gone except for the two partners and one nonrelated employee. Could they keep the corporation open, establish a DB plan and fund the plan in an effort to get some of the money out of their corporate account and then, if, down the road, they have no alternative but to file bankruptcy (due to non-negotiation with their landlords), would the DB and 4k assets be protected from bankruptcy court? Thank you. Donna Neuhauser Pensions Ltd (San Diego County, California)

An employee's monthly severance compensation is based, in part, on collections (attributable to the employee's services) that the employer receives after the employee terminates employment. It has been suggested to me that this "severance" is not deferred compensation for 409A purposes since there is no legally binding right to the collections and thus no legally binding right to the severance.

For example, assume Employee A works for Consulting Firm. Employee A provides consulting services for a client of Consulting Firm and the client is charged a fee in January 2005. Employee then terminates employment the next month. Client decides NOT to pay the fee and Employee A receives no severance as a result (no collections after termination=no severance pay). The bottom line is that the severance was "unilaterally reduced or eliminated by....[an]other person after the services creating the right to the compensation have been performed." Q&A 4 of Notice 2005-1. Therefore, there is no legally binding right and no deferred compensation.

Any comments? Bad analysis?

Hi, I have a multiple employer plan with 7 contributing employers in 3 controlled groups. (Group 1 with Companies A, B, and C, Group 2 with Companies D, and E, and Group 3 with Companies F, and G.)

I am reasonably sure that three Schedule Ts are needed, but I am not sure how to deal with Lines 1a and 1b (Name of Participating Employer and EIN). If I have more than one participating company in the controlled group, how do I report that? There is only room for one participating employer and EIN on that line.

Thanks for the help.

New Client with the first year a short plan year for '04, Nov - 12/31. In all the confusion of getting everyone enrolled, etc, three people deferred about $1000 each for '04 when they did not have W-2 earnings for 04 (but will for '05) - they had 1099 income. Just received year-end census data and realized their error. What distribution code should be used for the 1099-R? Thanks.

In connection with litigation over two ERISA plans, we are looking for a firm or an individual to provide expert testimony on (1) the prudence of certain investment decisions and (2) the calculation of damages to the plans. Does anyone have a recommendation?

Thanks.

Is someone aloowed to contribute to a Roth Ira when receiving a pension? His wife works and makes enough wages to be able to contribute for the both of them. The amount between the wages earned and the pension does not exceed the maximum amount of wages allowed. Thank you.

the employer is using insurance. the plan is basically an unfunded SERP, there is no rabbi trust (or any trust for that matter), and the accounts are not vested until 10 years. the employer is using life insurance and the investment returns have been less than the account balances should be. is it possible to amend the plan in order to change the benefit due each participant? the plan seems to allow for this. i was thinking however there might be some contractual obligation and that the employee would have to agree to a lesser benefit. any thoughts?

I heard recently that the IRS had "stated" that a matching contribution for a 403(b) deferral could not be made to a 401(a) plan. Of course, now that I need to look at the "statement", I can not find anything. Does anyone know where or when the IRS said this and how to find this?

Thanks!

Plan alloes a loan term for 5+ years for purchase of a principal residence. Anyone ever heard of or used a 30 year term and does that qualify as "reasonable"? The examples I have found use 15 years.

Thanks.