Is there potential age discrimination in a DB plan that reduces the NRB for years of service less than X?

For example, suppose the benefit is 50% of FAC multiplied by years of service divided by 25 years. Clearly an employee who is hired at age 55 will have a smaller NRB than an employee hired at age 35 (assuming same salary history etc.). However, if the employer does not force retirement at a specific age, the 55 year old participant could (but not likely) work another 25 years and earn a full benefit. Also, the 55 year old would accrue benefits at a rate at least as great as the 35 year old.

Suppose a plan passes 401(a)(4) but provides 50% of FAC to Group A participants and 50% of FAC reduced for years of service less than 25 for all other participants. Could a non-group A participant claim age discrimination?

Thanks much.

One of my clients over age 50 made a 401k deferral of $16,000 for 2004 in his employer's plan ($13,000 plus $3,000 catchup).

The client also has a SEP plan from unrelated self-employment income. The client thinks he can receive another $3,000 catchup contribution from his SEP for 2004.

I say no, but his accountant says yes. Am I wrong? Thanks.

plan year end is 4/30/2005 and the plan has last day and 1000 hour rule. Can we change the groupings or is it too late?

Currently plan groupings are "HCE" and "Non-HCE". We want them to read "President", "Vice Presidents", "Key Employees", and "all others". The only individuals who would be moving groups are HCE's.

Does moving HCE's to a lower contribution class constitute a reduction in benefits and thus disallow us to make this change? Ideally we'd like the "Vice Prsidents" to receive the same percentage as the "all others" and the "Key Employees" to receive a zero benefit.

We are going to be setting up defined contribution plans for a number of governmental entities and am looking for a good source of documents. All we have are the normal qualified plan document sources.

Any suggestions?

Can anyone provide a good source (preferrably online) for Health Reimbursement Account administration forms?

I have a plan that where all of the sudden I see a SEP money in one of the participant's accounts. Now this participant wants to take a hardship distribution from his SEP rollover. Can a qualified 401(k) Plan accept SEP money? I know it can accept IRA money. Is this pretty much the same thing?

Can someone tell me how this money would be taxed? I believe it is still not considered an eligible rollover, so the participant would not have to have federal income tax withheld. Does the 10% penalty still apply because he is under 59 1/2?

Any guidance on this would be appreciated.

Thank you.

Suzanne

While perusing the newly released LRMs for CODAs, on page 3 I discovered a note to reviewer that says: "A plan can permit Ele tive Deferrals fo more than 75 percent of compensation, but in general a plan cannot limit Elective Deferrals to a percentage less than 75 percent of compensation." What gives? Where did this come from?

I have a client who is about $5000 and several months in arrears regarding our invoices for TPA services. We have a signed contract with them that states we will cease services if any invoice goes unpaid for 60 days. When we notified them that we would be ceasing services until we received pmt., they informed us there were on the verge of filing bankruptcy. Also, they had not remitted several months worth of deferrals.

Now, without our prior knowledge, the broker has requested a check from the plan to pay our past due fees. I explained to broker that 1) the plan had to be amended to do this and 2) the amendment could be not retroactive and past due fees could not be paid from the plan. Do you all agree that the past due fees cannot be paid from the plan?

Broker has accused us of holding the plan and participants "hostage." My understanding is that upon filing bankruptcy, bankruptcy trustee will appoint a TPA to terminate the plan and payout participants.

Regarding our past due fees, I realize that we are just in line with the other creditors. But I want to warn the broker and the trustee that in trying to remedy the problem, they are creating others. Agreed?

I'm a little post happy today I guess. I'm having a hard time determining how to decifer and handle the new (2004) k-1 format on line 14 (self-employment earnings) where it has a sub-category A (net earnings from self-employment) and also B (Gross Farming) and C (Gross non-farm income). It's mostly "C" I'm wondering about. If a client has both A and C sub-categories of self-employment income shown on line 14 are both used for the earned income calculation (I realize there's a section 179 expense adj. potential as well). I don't like the term "Gross" income either on the C category as it make me wonder if there are some expenses that need to be subtracted from this figure. Any thoughts/help out there ? thanks.

Has anyone been receiving rejection letters from the IRS on Form 5500 extensions for the 6/30/04 PYE that were timely filed ? We have received a few and would have thought it was just our own issue but now a local CPA who files their own extensions (and does adminstration work on plans) also had a timely 6/30/04 extension rejected. In all cases the rejection letter claims the extension was not timely filed. Just wondering if anyone else has had this happen. Thx.

Here's a situation. A COBRA qualified beneficiary

notifies their COBRA administrator in writing that

they are terminating their COBRA coverage because they

have other coverage. They then learn that they do not

really have other coverage - in this case, it was the

mistake of the administrator of the new plan that

misinformed the COBRA participant. Can the COBRA

participant reinstate their COBRA coverage if they pay

the current month's premium before its due date? Is

there a cite for whatever the answer is?

Thanks.

Tom

I have seen articles on automatic rollovers and articles on seminars where there were indications the IRS was working on a revised model 402(f) notice to reflect the automatic rollover rules. As far as I know, this has still not come out. Has anyone heard anything further on when the IRS might release the updated safe harbor 402(f) notice? Thanks.

Can someone please clarify for me the status of the IRS' new relative value disclosure regulations as they apply to money purchase pension plans (MPPP)?

Specifically, if a MPPP's lump sum is not less valuable than the annuities under the plan, are the regulations currently effective or delayed to 2/1/2006?

Thanks.

Company A and company B both maintain 401(k) plans. Company B wants to buy company A but will continue to keep company B in existance. The regs say that salary deferral assets can't be distributed from company A's plan if company A maintains a successor plan. In this case the successor plan is company B's plan. But the regs also say that the company B and company A are not part of the same controlled group for the purpose of determining if there is a successor plan if company A's plan is terminated prior to the date of the acqusition. Can company A's plan be terminated prior to the date of the acquisition and all assets be distributed, even though company A will be a participating employer in Company B's plan after the acqusition?

Mr. John has a single member LLC. That LLC is partner in Bay Partnership. Bay pays Mr. John LLC for services. Can Mr. John have a pension plan either in the name of the Mr. John LLC or in his own name?

If Mr. John LLc is also partner in other partnerships (always minority partner, if that matters) can the revenue that comes into Mr. John LLC be used in the calculation of a pension plan?

If an employee has medical coverage for himself and the premium is run through a Section 125 plan, can the employee in the middle of the plan year elect to drop his medical coverage without a qualifying event (and therefore stop the premium deductions under the Section 125 plan)?

Does anybody know of a list of which companies do in fact file as a DFE?

Company A has a approx. 150 EE's and sponsors a K plan with match. So far so good. Approx. 35% of the participants have just recently become part of a CBA. The negotiation was to keep them in the plan, keep the match the same, but add additional $ to these members. I beleive it would be in the form of a comp to comp non-elective contribution to these selected members. Non-CBA members would not get this.

Better to seperate into 2 plans or can we segregate under 1? I understand the testing part, but not sure about the extra benefit the CB group receives.

thanks.

I started to supervised my sister inherited IRA from her Husband. How would i know if she rolled it over to herself or she became the beneficiary? i'm a little worried because she is 47 and her husband would have been 71 this year. Does she have to withdraw the minimum RMDs? I'm looking to do the minimun stretch out.

thanks

Does anyone know of a model that will assist in determining how much a profit-sharing contribution should be optimize the tax benefit to the principals? The variables I can think of would be:

1) Marginal tax rate (i.e., how much do I save in taxes for each additional dollar contributed)

2) Valuing the impact of deferral of capital gains taxes, and the impact of taxing as ordinary income versus capital gains income. I guess you would need to know years to retirement as well?

3) Amounts allocated to employees.

So it seems to me that perhaps someone has put together a model that at least attempts to address some of these issues. Has anyone seen anything like it?