Under Reg 1.401(l)-3©(2) you have deemed uniformity with fractional accrual if you have disparity for 35 years and no more than the excess % applied to average comp for years after 35 ( 1.401(l)-3©(2)(ii)(B) ).

Question : If the plan's formula provides for the excess % for years after 35 but before 40 , is this still uniform ???

A participant directed 401(k) plan permits participants to invest in employer securities among other investment options.

At one point, following the Enron scandal, there was talk about passing regs that would limit the percentage of employer securities that a plan could hold, even if the employees made the election themselves.

I know that there is limited 404© protection if the plan follows certain criteria, but was a percentage limit ever passed?

Our software contains the following documentation for a certain Plan Level Variable.

IF THE ACCRUED LIABILITY FOR ACTIVE STATUS PARTICIPANTS IS TO BE DEFINED AS THE PRESENT VALUE OF THE BENEFITS ACCRUED UP TO AND INCLUDING THE CURRENT VALUATION DATE, ENTER PLAN-LEVEL VARIABLE #414 AS '0'. THE NORMAL COST WILL THEN BE THE PRESENT VALUE OF BENEFITS ACCRUING OVER THE ONE-YEAR PERIOD IMMEDIATELY AFTER THE CURRENT VALUATION DATE.

IF THE ACCRUED LIABILITY FOR ACTIVE STATUS PARTICIPANTS IS TO BE DEFINED AS THE PRESENT VALUE OF THE BENEFITS ACCRUED UP TO AND INCLUDING THE BEGINNING OF THE CURRENT PLAN YEAR, ENTER PLAN-LEVEL VARIABLE #414 AS '1'. THE NORMAL COST WILL THEN BE THE PRESENT VALUE OF BENEFITS ACCRUING OVER THE ONE YEAR PERIOD IMMEDIATELY AFTER THE PRIOR VALUATION DATE.

NO MATTER WHAT THE USER-ENTRY FOR PLAN-LEVEL VARIABLE #414, FOR NON-ACTIVE PLAN PARTICIPANTS THE ACCRUED LIABILITY IS DEFINED AS THE PRESENT VALUE OF THE BENEFITS ACCRUED UP TO AND INCLUDING THE CURRENT VALUATION DATE AND THE NORMAL COST WILL THEN BE ZERO.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

My questions:

Is it reasonable to have an end of year valuation normal cost with the accrued benefit funding method based upon the one-year period following the current valuation date? Shouldn’t it be based upon the one-year period that is the valuation year?

If the funding method is Unit Credit, it was my understanding that by definition the normal cost is the increase in the accrued benefit from the beginning of the Plan year to the end of the Plan year in the current valuation year. With the methodology that our software employs, we have the odd situation in some of our Plans where a participant hired during the Plan year (after the effective date), received their first allocation, terminated, and has no normal cost. If this is their first year in the Plan, how can they have no normal cost and only a past service liability?

The Working Families Tax Relief Act changed the definition of eligible dependent and added a residency and financial support test. I sure this question has been

addressed before, but con someone tell me how a health plan is to treat

a QMSCO when the child does not satisfy the WFTRA definition?

The plan in question was amended to include the updated definition of dependent. A family member of the child provided the plan with a QMSCO requiring it to extend coverage for the minor. The problem is that the child lives outside the home of the divorced parents and is wholly dependent upon a relative for support. Absent the QMSCO, this child would not be eligible for coverage under the plan.

Thanks.

Terminated participant is age 75 and has been taking RMDs for several years out of his plan account balance. He now wants to "consolidate" his monies and move his plan money into 1 big IRA with all of his other IRAs.

Question: If he currently has $60,000 in plan money, and lets say his RMD for 2005 for this balance is $3,000. Can he roll the entire $60,000 now (May, 2005) into this IRA, and take an RMD by 12/31/05 from this IRA, which will have to factor in all of the other IRA monies?

I hope I am wrong but I understand that Mark Beilke of Milliman recently passed away. I knew Mark through his work with employer trade groups. He was highly intelligent and very generous with his time. I believe he posted on these boards under the screen name "MGB". I always learned something everytime he posted. He will be missed by the pension community and by these message boards.

A one participant 5500EZ filing (non Title IV) plan was converted from a DB to a Profit sharing plan eff 1/1/05.

Title IV plans are considered terminated when a plan is converted from DB to profit sharing, as long as PBGC termination procedures are carried out.

How would one consider and administer the example above?

It seems the DB plan could be considered terminated at 12/31/2004 and the accrued benefits rolled into the PS plan. A problem would occur if assets exceeded 415 limits (or at least excess asset issues). And a final 5500EZ subsequently filed.

Any thoughts?

What happens if a fireman executed his catchup provisions before 2001 when all of the catchup numbers where much lower for 457 than they are today? Is there something that will allow him to make up that difference today since the catchup is much higher now? Can he dump sick pay into his 457 if so how much?

I have read over several insurance codes, and, as I recall, they all had similar provisions which allowed insurers to avoid some, or all, of the state mandated benefits.

The code provision for the Texas Department of Insurance, my home state, is In Title 28, Part 1, Chapter 3, Subchapter S, Rule 3.3081 entitled, Nonconventional Coverage.

It states, "The commissioner may authorize approval of a policy that does not correspond with one of the categories relating to Minimum Standards and Benefits for Accident and Health Insurance Polcies, if such policy is determined to be a type of coverage that is experimental, or will in the opinion of the commissioner fulfill a reasonable public need and is appropriately and prominently described in the outline of coverage."

Then, in Rule 3.3091, it states, "The outline of coverage for policies approved for Nonconventional Coverage shall prominently display, THE POLICY DESCRIBED DOES NOT MEET THE MINIMUM STANDARDS FOR BENEFITS ESTABLISHED FOR BASIC CATEGORIES OF COVERAGE REQUIRED BY THE INSURANCE REGULATORY AUTHORITY OF YOUR STATE."

So, when we discussed recently, and at great length, that insurers had to provide state mandated benefits, doesn't this type of provision allow some flexibility for insurers that wish to "experiment" a little?

Don Levit

A 7(5 NHCEs/2HCEs) participant 401(k) with no service requirement and age 21 eligibility, quarterly entry dates, failed adp miserably in 2004 HCE ADP 6.84% NHCE ADP 2.80%. however, 2 eligible participants did not meet the statutory minimum service elibility conditions under Section 410(a). excluding them from the test, the plan still fails, but rather than an NHCE ADP of 2.80%, it is now 4.67%, which would afford the HCE's to avoid a deferral/yield refund of appx. $6400 plus excise taxes and would pass the test with a QNEC of appx a few hundred dollars. Question is: would the QNEC go to all 5 NHCE's or just those 3 NHCEs who met the statutory conditions?

There is an issue as to whether or not the 2004 Form 5500 instructions changed the rules for completing the Schedule SSA. Apparantly in the past, it was not required to enter a vested termination with a D code (delte) after he was paid out. (It was probably very prudent to do so to avoid trying to prove to the participant he was paid out in the past after he has received his letter from the SSA.) Also, apparantly many plan sponsors did not bother to delete participants that were later paid out.

The wording in the instrutions has changed slightly. Do the instructions now require that if a participant previously reported on the Schedule SSA is subsequently paid out, the participant MUST be listed with a D code on the 2004 Schedule SSA? If so, does this apply retoractively, that is, for a plan sponsor who has never used the D code, must they add to the 2004 Schedule SSA with a D code all participants subsequently paid out since 1976? Is there any offcial or unofficial guidence from the DoL?

At this point, we all know that the IRS frowns upon deferrals made from post-termination payments (e.g., severance, bonuses, commissions) by departing employees. In some of the IRS's informal comments, I get the impression that we are talking about a bright line (i.e., if an amount is paid even one millisecond after an individual is "terminated" -- whenever that is -- no deferrals can be made from it, even if it was clearly earned prior to termination) and in some other comments, there seems to be a recognition that an amount earned prior to termination but paid within a short time thereafter might still be an acceptable source of deferrals.

What I am wondering is whether the following scenario would be within the realm of reasonableness:

Employee A terminates on April 10 and receives a check on April 15 as part of the normal payroll process; this check includes only regular wages. Employee A signs the standard release of claims on April 14 and therefore becomes entitled to receive a severance benefit; because of the timing, the severance benefit cannot be paid until the April 30 payroll. On April 20, the accounting department finishes up its review of Employee A's sales through April 10 and concludes that he has some commissions coming, also to be paid on the April 30 payroll. For what it's worth, Employee A's health insurance as an active employee runs through April 30.

I think that we are fairly safe in allowing deferrals from the April 15 check. What about from the April 30 check? If we were talking about a commission or bonus check paid in June, that would clearly be out of bounds, but what if the check is paid during the month of termination? What if the company regards Employee A as an active employee through the end of April (even though he doesn't come to work after April 10)?

Any thoughts?

Is it permissible to pay out the employee contribution portion of a pension benefit first?

We have a plan that brought several employers together. Two of the employers had plans where employees contributed after-tax. All of these different plans were "rolled-up" into the current plan. We have continued to account for all of the employee contributions but when an employee leaves we would like to pay that amount first if possible. We have situations where employees terminate and rehire all the time and the administration can get very cumbersome.

Any guidance on this issue would be greatly appreciated.

Thanks,

Fred

I am confused on 415 limit and catch-up contributions.

My 401(k) PS plan has a plan year 07-01-2004 to 06-30-2005. I have made the following 401(k) contributions:

01-01-04 to 06-30-04 $12,800

07-01-04 to 12-31-04 $3,200

01-01-05 to 06-30-05 $18,000

Total plan year 401(k) contribution = $21,200

Total 401(k) catch-up contribution applied to 2004 plan year ADP testing=

$3,000 from 2004 & $4,000 from 2005

My 2004 plan year 415 limit is $42,000 - what is the maximum profit sharing I can take for the 2004 plan year to get me to my 415 limit? Note - my comp. is well in excess of the 401(a)(17) limit in effect.

Is it $42,000 less $14,200 in deferrals or $27,800? or is it something less than this?

Any help is appreciated.

Is it a true statement that although an individually designed plan can go in for a dtermination letter now for EGTRRA, it would have to go in again under the six year schedule yet to be announced, so that any filing at this time would not eliminate another EGTTRA filing later????

My former employer, with whom I have health care coverage through, changed carriers mid-way through my COBRA. I was not notified of this change until 1 WEEK before the change over. I had already used 10 months of an 18 month COBRA policy, then it was changed. Would I be eligible for more than 8 months coverage under COBRA, since I didn't even get my Insurance card until 1 month after the new policy went into effect.?

I was declared disabled during the first month of going on COBRA. I was led to believe it was for 18 months only, for an individual person. I did not know that I could qualify for 29 months of coverage if being declared disabled. I am now at the 15th month of my 18 month COBRA coverage and just learned about it. Would it be too late to submit it to my plan administrator, even though the rule calls for it must be submitted within 60 days of determination AND before the end of the 18 month period. I really need the extra 11 months, as I don't qualify for Medicare until May of 2006. What should I do?

Scenario - Employer pays a small portion of health premiums for eligible dependents. Those same premiums can also be paid towards eligible domestic partners, but employer premium for domestic partners is directed back to the employee as imputed income.

Question - How is premium added to employee's gross wages? Is it just added to gross wages at the end of the year? 1099?

Does anyone have a link to a table of non-blended qxs (Male and Female). I develop my own APR tables, but the actuary is saying he needs sex-specific aprs for RPA. Boy, I love acronyms! The only table I could find was a 50/50 blend.

Individuals must have earned income and adjusted gross income less than $110,000 for single, $160,000 for married couple.

Let's say I open a RothIra now my income now 60K. What is in couple years my income will be more than 110K, then I am not eligible anymore for RothIRA and I should close it?

Or I can keep using it even if my income grew more than 110K limit?

Thank you