We are contemplating adding a SERP for one of our outstanding sales people - does anyone know if we need him to sign the election by June 30, 2005 for this type of arrangement (not set up as a bonus arrangement)?

I have a situation whereas the participant elected to have his distribution made to his new ee's plan. However, he did not do his homework and his new ee does not accept rollovers. This transpired in Feb,05. He said he would set up an IRA. It is now June and my plan sponsor has not heard back from him regarding this IRA. She wants to re-deposit the distribution back with the plan's investment(he was not 100% vested, his account was not forfeited, therefore still has an account balance) and wait until he contact her again with distribution instructions. Any problem in doing this? The distribution amount is $445! Thanks.

Has anyone run accross anything (or have any thoughts) addressing whether a 409A Separation from Service will occur if one moves from being a common law employee to an independent contractor/consultant.

I'm involved in a situation where key employee of a publicly traded company is stepping down but will remain as a consultant. The key employee will no longer have his current title (i.e., the employer will hire a replacement). He will not have the same duties as before. Will this be considered a separation from service so as to permit the executive to start receiving, in 6 months, his benefits under the nonqualified plan.

I have a 401k plan at work and I wanted to get into mutual funds and have a roth IRA. I just recently purchased a mutual funds book so I can start learning. I wanted to have a Roth IRA account that I wouldn't have to worry that much about it and then other mutual funds that are outside of the Roth IRA.

I was thinking about at least starting out with this Vanguard Target Retirement 2035 Fund (VTTHX). Is this a good idea or am I better off pickig another mutual fund?

I was thinking about going with this one for my Roth and then having another mutual fund (wellington). Any suggestions?

An exisiting POP amends their document to allow employees to pay for individual health insurance policies on a pre-tax basis. Is an employee that has an individual health plan that he/she is currently paying with after-tax dollars permitted to elect pre-tax payment mid year (effective with the plan document change) or does the employee have to wait until the next plan year?

Looking at the 125 regs more closely, does anyone think that 1.125-4(f)(3)(iii) would apply? "If a plan adds a new benefit package option or other coverage option..., the cafeteria plan may permit eligible employees to revoke their election under the cafeteria plan and , in lieu thereof, to make an election on a prospective basis under the new or improved benefit package option."

Calendar year plan. On January 1 they began to use a 3 months of service requriement from 6 months. Due to a back log and late notice we are now getting the amendment out. Any issues?

Our document person feels the amendment can not be effective until 7/1. I think since it is increasing benefits you can make it effective 1/1.

I work for a non-profit company that currently has a 403(b) plan and wants to add an additional benefit for certain members of management. We have considered adding a 457(b) plan, but the $15,000 contribution limitation could be less than the amount that the company wants to contribute to the management staff. I have read the code on 457(f) plans and the 409(a) issues, as well as almost every post I could find on this site regarding 457 plans.

My questions are as follows: If you could develop your own plan, which direction would you head, what would you want written in the plan for Substantial risk of forfeiture and how would you want the distributions to be paid. I'm looking to develop the ideal plan and am looking for ideas. Basically...what's your dream plan?

Thanks in advance for your input.

Gretchen

An employer maintains a non-safe harbor DB & a safe harbor DC plan with no common participants. Both plans separately pass the 401(a)(26) and 410(b).

DB plan is a non-safe harbor plan and is to be tested for non-discrimination without aggregating with the DC plan.

In computing the rate groups's ratio percentages and the average benefit %, are the non-excludable employees who are not in the DB plan taken into account with zero accruals? S1.401(a)(4)(2)©(3)(i) says they must.

I am being told they don't need to because:

"Since the MPP is a safe-harbor plan (and passes testing) and the DBP passes non-discrimination testing, then the 2 plans are broadly available separate plans."

The DB passes the 401(a)(4) if only DB participants were taken into account.

A DB plan maintained by a nonprofit was converted to a cash balance plan in 1997, while its TRA-86 remedial amendment period was still open. A determination letter application was filed before the TRA-86 RAP closed, but the plan was one of the first referred to the National Office under the mandatory tech advice for cash balance conversions.

The TRA-86 determination letter application is still pending, so the TRA-86 remedial amendment period is still open under Treas. Reg. 1.401(b)-1.

Now the question: Is the plan's GUST remedial amendment period also still open? The extension in Treas. Reg. 1.401(b)-1(e)(3) is expressed in a general way, suggesting that it is.

Thoughts on this?

Employee enter the plan on Jan 1 and July on or after the eligiblity is met.

Some employees will enter on 07/01/05, which is a Friday and happens to coincide with the pay period ending 07/01/05. Paychecks will be cut on 06/30/05.

Are the new entrants eligible to make deferrals from the 07/01/05 paychecks?

The problem is that the plan provides a matching contribution and 3% safe harbor contribution.

I have 2 companies on with 401k plan on Relius (ver 8.0). companies are now merging.

Any ideas on how we can merge the data easily? One company has around 500 partic. and the other 70 or so.

Thanks

My employer is a non-governmental tax-exempt with a 457(b) Plan. The employer recently terminated their 457(b) Plan administration contract with Administrator A. They have engaged Administrator B to handle the 457(b) Plan. The employer moved all of the participant accounts and investments to B without consent of employees/participants. Was this permissible? What if I had wanted to keep my money with A? Can anyone direct me to the rules on this?

Thanks.

I'm hoping that someone more knowledgable about cafeteria plans than I (which means everyone else) is able to explain something to me.

Prop. Regs. 1.125-2(b)(4) is truly puzzling to me. I think the middle sentence means an FSA of an employer may only cover premiums for health plans offered by that employer, and not the employer of the employee's spouse or dependents. But what the heck does the last sentence ("This paragraph (b)(4) does not prevent premiums for current health plan coverage (including coverage under a health FSA) from being paid on a salary reduction basis throught the ordinary operation of the cafeteria plan.") mean?

One commentator (in a Tax Management portfolio) stated "However, this rule is not intended to prevent pre-tax payment under a cafeteria plan of premiums under a health plan of the same employer, where the premiums are paid directly by salary reduction instead of from a reimbursement account. While not entirely clear, this prohibition seems to apply to payment of premiums for other health coverage available through the employer maintaining the health FSA plan, as well as another employer of the participant or his spouse." This isn't very clear to me, either. Is he saying that premiums for voluntary dental insurance offered by the employer (the employer also offers medical insurance) may not be reimbursed from a FSA? If the medical insurance premiums are paid through a Premium Only Plan, may the voluntary dental premiums also be paid through the POP?

I hope my questions are clear, but if they aren't you know why!

Help! (from the regulatory language challenged)

Ken Davis

Univ. of South Alabama

A client of mine - US citizen now living in the US - has three UK pension plans. One is a "TeleWest Unfunded Unauthorized Retirement Benefit Fund" (SS AAR 005) which I believe is NOT elegible for transfer, and must be cashed in the UK.

The other two are called "Personal Pension Schemes" and I am told they may be transferred. A friend of this client purportedly did so in 1999 without consequences.

I called Standard Life in UK today and they informed me that it was their understanding that any such transfer is taxable as income in the US immediately, should it be transferred and they advised against this.

Nobody seems to know the correct answer to this. Help, please!

401(k) plan for a controlled group of several auto dealerships - EmployerA/Plan A. One of the auto dealerships was purchased by an individual (lock, stock and cars) from Employer A, creating Employer B.

After the purchase Employer B continued to take out deferrals from employees (previously participants in Plan A) for aprox. 1 month. Employer A/Plan A refused to take those deferrals and not willing to allow Employer B in their plan. Employer B has not yet established their own 401(k).

Shouldn't the deferrals (and earnings) taken from Employer B's employees be returned to them, since Employer B has no plan which even allows these employees to make deferrals? All of this has happended so far in 2005. Any alternatives?

I need some expert advice about retiree benefits being changed by a collective bargaining agreement after vesting has occurred, increasing the years of service required through a new contract after the individual has a deferred retirement date and seperated from a county government for approximately 17 years, just finding out the years of service have increased for health retiree benefits from 8 years (year of departure, Union contract gave health benifits), to 15 years which prevents qualification. Which collective bargaining contract is the correct contract for health benefits, the year the individual seperated or some new contract, denying the vesting committment of when seperated from service.

I know this topic has been discussed MANY times but here I go again...

I know the DOL says deposits have to be made as soon as the contributions can be segregated from the sponsors general assets. Under this guideline, I'm wondering if a two week time period is acceptable for a medium size (2000 employees) employer.

The company is on a bi-weekly payroll. Their stated goal is to remit deferrals and match prior to the following payroll. This seems to be a bit too long to me but I'm wondering what others think the DOL would say about this.

If you agree that this is too long, how should an employee approach the employer about speeding up the deposits?

Thanks for the input.

We have a client who is a bank who only does business in the state of Montana. Their holding company stock is not traded on the open market. The market values are determined by D.A. Davidson, a regional brokerage, based on the last sales price of the stock. They will be issuing a special stock offering and want to make it available as an investment election for participants in their 401(k) plan. In addition, other employers we work with would like to purchase the stock for their pooled account and individual directed plans. Some of these local employers (the owners) sit on the Board of Directors for the bank.

Our questions are:

1. Can the bank offer the stock as an investment selection for all money types in their plan, i.e. deferral, match, employer contribution? Are their any limits to the amount of stock the plan or any one individual can hold?

2. Are there any restrictions on the purchase of this stock by other plans, either pooled account or individually directed account plans. Is that affected by any other banking arrangements the employers sponsoring the plan might have with the bank. Or that the owner of the employer sits on the bank's board?

3. Would any of these answers change if the bank did business in more than one state?

An S Corp ESOP acquired non-voting shares in addition to the voting common stock in 2004. Would those shares be subject to the diversification requirements since they were acquired post-86, even though they are not "employer securities" under 409(l)? I did not find anything that would exempt them from diversification.

Employees are nurses that provide home health services. They don't track hours. Nurses are paid a set amount for each home health visit, regardless of the time necessary.

Some nurses will do several visits a day while some only do a few each week.

With the exception of elapsed time rules, any good ideas on how to measure or credit time for these employees?

Perhaps something like each visit = 3 hours, etc?