One paragraph of a QDRO for a DC plan states that the ex spouse is entitled to 50% of the Participant's benefit. The AP's benefit is 50% of the Participant's benefit which had accrued as of a certain date (which in this case is 2 weeks after contributions had stopped for this participant).

The next paragraph, however, states that if the participant elects to receive a return of his accumulated contributions and interest prior to his retirement or death, the AP's benefit shall equal 0% of the Participant's benefit which had accrued on the date mentioned in the prior paragraph.

The participant has now elected to receive a lump sum payment (which he is entitled to do as he has terminated employement with a contributing employer). Does this mean that the ex-spouse gets nothing?

If the Fund distributes 100% to the participant, it can be subject to future litigation.

If the Fund distributes 50% to both the participant and the AP, the fund can be subject to future litigation by the participant?

Both the participant and the AP are under the impression that they each are entitled to 50%.

Help

Does anyone have a recommendation for a translation company that can translate our communication/policy materials into Spanish? On the same note, does anyone have experience in this arena and care to offer advice for managing a translating process?

After calculating 50% of the value of a Joint & 2/3 Survivor benefit currently in pay status, there is a question as to how the value of the former spouse's benefit should be converted to an annuity (as a reduction to the participant's benefit), as a life annuity or a J & 2/3 S annuity. The argument has been made that since the survivor benefit was accounted for in the 50% calc that the conversion should be done using a life only factor. the argument also has been made that since the benefit is a J&S benefit, it should be converted using the J&S factor. Does anyone have a definitive answer?? Please let me know if more details are necessary. Thanks.

We have a client that is considering offering a defined contribution to employees who do not elect the medical insurance through the group. Has anyone ran across this in the past?

Could the company require proof of coverage?

How does this affect the group plan as far as adverse selection and what would be the ramifications if someone develops a condition and loses the individual coverage?

Any help is appreciated.

I'm preparing my top heavy determination for the 2005 plan year (calendar year plan) and I need to determine who the key employees are. Has the compensation amount in either of the following tests changed?

1) Officers of an employer who have annual compensation greater than $130,000

2) An owner of more than 1% of the employer with annual compensation of more than $150,000

What's the demand when participant gets a distribution that ignores the last valuation date and reflects a distribution that's reduced by interim fund and admin charges? I mean to ask, does the participant demand a full accounting by the plan adminstrator under ERISA 104(b)(4) and a review and explanation of the benefits determination? An answer is the plan document controls.., but what if the Plan is fairly silent on procedures for disputed calculations? Anyone done / seen this?

Can a 403(b) that is not subject to ERISA in operation - meaning it meets all of the requirements - limited employer involvment, no employer contributions, etc. but which has a document that subjects it to ERISA claim NOT to be an ERISA plan?

Several members of our firm recently attended a SunGard Corbel 5500 Workshop. We all have notes on one case study with regard to a 401(k) plan that provides ancillary life insurance. In this case, we were told to check Box 8b on the 5500 and put in code 4B.

Many of the plans we prepare 5500s for are invested in Group Annuity Contracts through a major insurance company. The plans do not allow for life insurance as an investment option. We have always included "Insurance" as a funding arrangement and have completed Schedule A. But, we have not checked Box 8b to call the plan a welfare benefit plan.

Our manager has now directed us to check Box 8b - indicating a welfare benefit plan and Code 4B for Life Insurance.

Is this correct?

Also, we cannot locate our email contact information for sending this question to Corbel. If anyone has that, we would sure appreciate having it.

Thanks.

I have a client who is setting up a SERP and wants to require the signature of both trustees in order to process a distribution. Schwab is saying they can not require both signatures. Any suggestions of a provider that would hold the assets and require dual signatures?

Thanks!

Does anyone have any wisdom to support a definition of post-secondary education that might include "schools" other than colleges or universities? I can't find any legislative history or the like and am faced with a request for a hardship withdrawal for the cost of a truck driving school. The program is called a "class" and participants are called "students". Any help will be most appreciated! Thanks.

The employer maintains a nonstandardized, prototype 401(k) plan. A separate entity but member of its controlled group began participating in this plan on behalf of its employees at the beginning of this year, but the related company didn't execute a co-sponsor adoption page as is required under the terms of the plan. Can we self-correct by executing the adoption page now with a retroactive date (taking the position that this is a plan amendment to correct the inclusion of ineligible employees) or is our only recourse submitting under VCP? I would appreciate any thoughts.

Company currently sponsors a SH K Plan. From the beginning they have used the 3% QNEC SH election. They would like to amend their plan to include X-testing language. Upon review of the document, they have a 3 yr. vesting schl. for the non elective PS allocation. They have never allocated PS contributions. If they amend the plan to now have a 6 yr. graded vesting schedule, do the current EE's remain under the old schedule or can they apply the new 6 yr. schedule?

Thanks.

My question is can an Employer deduct funds from there employees paychecks on a pretaxed basis to pay for Employee only funded Insurance Premiums.

How would you run this through a section 125 plan?

what is the best way to handle this?

A partnership with only highly compensated employees partners (and no employees) allowed the partners to set up their own SEPs and contribute whatever they wanted within IRS limits. Some made contributions, some didn't.

This violates the SEP rule that requires that all employees (includes partners for this purpose) of an employer (the partnership) must receive the same level of contributions (as a percentage of pay).

Question: The normal way to correct this would be for the parnership to contribute amounts (and make up earnings) for each partner so that all received the same contribution as a percentage of pay. But this bothers me because the partners are all highly compensated and self-employed - it doesn't make sense because the make up contributions will be made in a later year, reducing the partners' income in the later year, and the deduction will go to the partners who got the additional contribution. It seems useless to correct this way, not to mention the fact that it will make the partners who didn't have SEPs before unhappy.

Is there an argument that it would be ok not to do any sort of correction, other than to lay out procedures to ensure that it will never happen again?

Or, what about the partners who got contributions simply taking distributions? Is there an argument that this will correct so they don't have to change their tax returns? Could you argue that the distribution is not subject to the early withdrawal penalty or the penalty on excess contributions to an IRA because the distribution was a correction?

Any suggestions?

Company A was purchased by Parent Company XYZ on 8/30/04. Company A sponsored a 401(k) plan with a December 31 plan year end. Parent Company XYZ also owns Company B which sponsors a 401(k) plan also. For 2004 ADP testing purposes, can the ADP test include just company A employees?

Plan sponsor allocates a MP contribution to a participant who was not employed on the last day of Plan Year. 3 months later they find that the participant was actually termed and should not have recvd. the contribution.

How to correct?

Several businesses make up a controlled group. We will be dividing them into QSLOBs. Not all of the businesses have 50 employees, so we plan to combine the smaller businesses with one of the larger ones. When we're done, we expect to have 2 or maybe 3 QSLOBs.

I want to make sure that such a combination is permissible.

We also have a client with ownership in 3 non-related businesses, 2 of which are a controlled group. Since one of the 2 businesses consists of the client only (no employees), I don't see how we can use the QSLOB rules in this case. Am I correct?

An employer will be permitting participants to invest in non-marketable employer securities. He will have to get a bond equal to the value of the securities if that investment totals more than 5% of the plan assets.

How frequently must the securities be valued? If there are no transactions in employer securities for an entire year is a new valuation required? Can someone provide a code section?

I was just wondering if anyone had a good crystal report for a participant's statement. Relius has some good certificates with pie charts that are ok, but since I am not a Crystal Report guru, I don't know how to make changes.

If anyone has a certificate they would like to share I would appreciate it.

You can email me or reply here. Thanks for any help!!

Carson Vaughan

Carson@dailyval.com

My boss asked me to find the Internal Revenue Code section that deals with individual/solo 401(k) eligibility....I have spent 4 hours and I still cannot find it (i.e. owners and spouse are eligible or owners and family members, etc.).

I really have to give him a citation for the eligibility....if anyone can help out, i would truly appreciate it.

thanks