I have a contact that has a client that would like to maintain their DB Plan, but have Shareholders waive benefits to reduce current & future costs of the Plan.

1. Can this be done without terminating the Plan? My understanding is benefits are only waived upon terminating the Plan.

2. If it IS possible to waive benefits and continue the Plan, can you take into account the current waiver of benefits (6/6/2005) on the 12/31/2004 contribution calculation? The argument being that unlike amendments of future benefits, the benefits are actually being removed and don't actually exist for 12/31/2004.

It seems a tremendous stretch, but I promised I'd ask around.

Has anyone seen a version of the Special Tax Notice (402(f) Notice) that has been revised for the automatic rollover rules. I just checked the IRS website and couldn't find one there.

Are plans established by charitable aid societies considered church plans?

In Kentucky Association of Health Plans v. Miller, it states:

ERISA's savings clause does not require that a state law regulate "insurance companies" or even the "business of insurance" to be saved from preemption; it need only be a law which regulates "insurance", and self insured plans engage in the same sort of risk pooling arrangements as separate entities that provide insurance to an employee benefit plan.

Both of Kentucky's AWP laws apply to all HMOs, including HMOs that do not act as insurers but instead provide only administrative services to self insured plans. Petitioners maintain that the application to noninsuring HMOs forfeits the laws' status as laws which regulate insurance. We disagree. These noninsuring HMOs would be administering self insured plans, which we think suffices to bring them within the activity of insurance for purposes of Sec. 1144(b)(2)(A).

Rolling Vesting - At least one well-known benefit professional has written that rolling vesting will still be allowed for 457(f) arrangements because the "substantial risk of forfeiture" standard under 457 (b) will be different from the standard under ss 83(b) and 409A. [There is not an explanation of why it should be different.]

But then I saw an article from a national benefits consulting firm that seemed to say that not only will rolling vesting not be allowed for 457(b) arrangements under the new rules, but that the IRS was actively auditing old 457(f) arrangements and finding the rolling vesting to be per se bogus.

Anybody heard of IRS audits of this issue?

Any update from the IRS?

One of the arrangements I'm working on now has rolling vesting. I'm thinking of leaving it in there for now. It seems to me that there are so many rolling vesting provisions out there that the IRS will be forced to provide some transtional relief, even if it disapproves of the concept.

Three years ago, the employer made a discretionary PSP contribution for an employee who had never satisfied the eligibility requirement.

The requirement is one-year service & 1000 hours.

The employee worked only 8 months and then quit. However, the employer made a 15% contribution for the employee ($ 16,000 x 15% = $2,400).

Like I said, that was three years ago. The balance in this erroneous participant's investment account is now $ 3,200. He has moved out of state and the employer has no address for him.

The employer wants to terminate the plan, but has no idea what to do with the $3200. Is the former employee entitled to the $ 3,200 ? Since he was never a participant in the first place.... can the $3200 be refunded to the employer?

Was the $2400 erroneous contribution a "mistake of fact contribution (excess contribution" or some other type of operational failure ?

How can it be corrected now ?

I always thought it was a joke that someone would want to direct an investment into a tax exempt bond in an IRA. Now I have a customer who tells me their tax advisor says that this will make a distribution from a traditional IRA tax exempt. The contributions are pre, not after, tax. I thought all distributions from a traditional IRA made with pre-tax moneys were taxable as ordinary income. The customer's tax advisor is saying no that like a trust the character of the income is determined by the assets. Any thoughts?

An employer wants to amend their current graded vesting schedule and make all employer contributions full and immediately vested. The employer wants this change to apply to participants who have already terminated (generally I would see this as opposite of what employers would want to do).

My question is can they do this?

In the ERISA OUtline book it references a "One hour of service rule" to determine whether amended vesting schedule applies to a participant. I would think only current participants will get this benefit of full vesting, and the plan will have to distribute and forfeit terminated participants under the old vesting schedule, but as stated above, the employer wants to fullv vest everyone, including terminated participants (and already communicated this to the terminees).

I am trying to determine the benefit of having a TPA (separate from the insurance company) adminster the HRA. It seems that with most of the carriers offering an HRA + HDHP option as a package, it wouldn't be necessary to have a separate TPA administer the plan (for fully insured HDHPs).

Does anyone have any feedback on this? Thanks!

In my 24 years in this industry, I have never had this question arise. We have a money purchase pension plan and one of the participants is Muslim. She indicates that the company can make the pension contribution for her, but she will not accept the earnings as it's "against her religion"! Has anyone encountered this scenario? Wouldn't it be a breach of our fiduciary responsibility as Trustee to NOT give her earnings? HELP!

Is is possible for a 501©3 organization to have both a 457(b) and a 457(f), with the later limited exclusively to the CEO - so that the CEO could benefit from both plans simultaneously and the senior execs would benefit only from the 457(b)? We also currently have a Defined Contribution plan and supplemental 403b plan for all employees.

I read today that Roth 401(k) contributions are similar in concept to Roth IRA contributions, but they are not subject to the Roth IRA income-eligibility cap. Does this mean that there are no "discrimination" issues regarding the percentage of salary each participant contributes? I read through the IRS proposed regulations, and did not get any confirmation of this particular issue.

Don Levit

We have a former employee with a 401(k) balance. Unfortunately, he has terminal cancer. His beneficiary disgnation currently leaves 25% to each of three children and to his wife. His Wife has Alzheimer's disease and one of the children has a Power of Attorney over the mother. Can the power of attorney enable the child to change the beneficiary designations to 33% to each of the children? The mother currently doesn't always remember everyone in the family. If anyone has any thoughts, it would be very appreciated. Thanks.

Where can I find authority to support the proposition that a spinoff company is responsible for parent company's plan qualification violations?

A participant has gotten behind on loan payments and will go in default on 6-30. The participant cannot come up with all of the loan payments right now to keep the loan from going into default.

Is it okay to refinance the loan with the missed payments and the "ghost"

interest as long as the amortization period remains the same?

is the 1099 issued to the foundation with the tax ID in the payee #?

or is it just issued to the dead person and the final tax return gets a deduction (presumably)?

thanks

I have a situation which I hope everyone can help me with. Client starts a 401(k) in 2003. Contributes 12,000 to mutual fund A. Client not happy with broker, switches to a new broker. New Broker transfer the 12,000 into an existsing IRA. In 2004 client contributes 13,000. Broker moves employee deferral to the exsisting IRA, claiming the law allows for in service distributions. The Employee in question is the owner of the company and had no idea the new broker had done this. The plan does not allow for in-service distrbutions. Client is approx early 50's. The accounts of all the other employees in the 401(K) seem to be fine.

Can you move the money back to the 401(k), claiming it was a mistake??

Any thoughts on what to do???

I have a plan document covering Davis-Bacon participants from Montana. The document provides that if a covered employee is terminated with under 500 hours, the D-B contributions are forfeited, 500 or more 100% vested.

I was under the impression that due to their nature, D-B contributions had to be 100% vested at all times.

Searches in RIA did not help.

Is anyone else aware of the provision, and if so can you direct me to the source?

Thank you.

We are making distributions and now have reason to believe some of the recipients are deceased. We don't want to hire an outside firm to audit our records. What information is out there on auditing our own records?

Employer has 5/31 FYE. We just discovered that an employee deferred 13,000 to 401k in December and then 14,000 in January. Then he got regular 25,000 PS contribution.

1. As long as 402(g) limit is not exceeded for calendar year, I assume it is ok to make two contributions in one fiscal year?

2. Does employer have a problem since the employee deferred 27,000 and got 25,000 regular PS contribution, exceeding 41,000? If so, what can they do at this point if all funds already deposited?

Help! Thanks!