For purposes of determining when a cause of action accrues under ERISA 502(a)(1)(B), the participant must have made a formal claim for benefits. However, my understanding is that under the discovery rule if the plan has made a clear repudiation of the benefits claimed such that the participant should have known of the denial, then a "formal" claim is not necessary. We are certain that we definitively told the participant's attorney that the person is not entitled to benefits. Can the attorney's knowledge be imputed to the participant such that the SOL begins? Any help/guidance/cites will be greatly appreciated

I am running the general test for a short plan year 7/1 -12/31. Under 410(b)-5(d)(3)(ii) it states: An employee’s employee benefit percentage is determined on the basis of plan years ending with or within the same calendar year. These plan years are referred to in this section as the relevant plan years or, in the aggregate, as the testing period.

Now in 401(a)(4)-1©(3) it states: The requirements of paragraph (b) of this section are generally applied on the basis of the plan year and on the basis of the terms of the plan in effect during the plan year. Thus, unless otherwise provided, the compensation, contributions, benefit accruals, and other items used to apply these requirements must be determined with respect to the plan year being tested.

I am a bit confused as to how to run the AB%T. Do I include both plan years that end in 2004 or not?

Does an insurance policy inside a Welfare Benefit Trust have spousal consent requirements like a qualified plan where in order to name a beneficiary other than a spouse it requires spousal consent ? (I don't think this would apply but just want to make sure). Thx.

409(p) requres the present value of synthetic equity be determined, but gives no hints regarding the discount rate. We are a TPA firm rying to perform the test properly. I have received no responses to my message board post on 11/17 regarding this issue, so I thought I'd try this.

In a cross tested top heavy profit sharing plan with no 401(k) feature, does there need to be a 3% minimum contribution to NHCEs? The ER has contributed $0 for 2004 and does not want to contribute anything. Thanx.

Funny, lots of views, nobody responding.

I represent a recordkeeping firm, that is preparing to market a solution for the industry. I am doing some polling to determine interest in such an offering.

I'm not a DB person, so pardon my terminology if it isn't quite accurate.

With the EGTRRA change, you no longer count service after 2001 for additional TH accruals if the plan is frozen. However, it seems to me that there's no mention of freezing the benefit - if your average comp goes up, then you have the same TH percentage, but of a higher salary.

For example - prior to a plan freeze effective 1-1-2002, participant has accrued a TH benefit of 6% of a high-5 average salary of 20,000, or 1,200. Three years later, with the high-5 average being 30,000, is his TH benefit:

A. still 1,200, or

B. 1,800?

I'd vote for B, as I see nothing in the statute or regs which indicates otherwise.

Additional twist - suppose as of 1-1-02 the client adopted a PS plan that specified that the PS plan would provide TH benefits of 5% if required, but for 2004 there is no contribution to the PS plan. If the answer to the DB question is (B), then does this reqire a contribution to the PS plan? I guess that depends on whether the increase to 1,800 is considered "accruing" an additional TH benefit? Anybody wrestled with this question yet? My inclination is no contribution to the PS plan, as no HC is accruing a benefit in the DB plan.

A client excludes non-resident aliens from their retirement plan. There is a "substantial presence test" which states that if an individual is present in the United States for at least 183 days over the current and preceding 2 years that that individual would be redefined as a resident alien. If that is true, that individual would need no longer excludible from the plan.

Is that a correct analysis? Any comments?

We have a non-qualified Employee Share Purchase Plan that offers a 15% discount. We are currently taxing employees on the discounted amount for Federal, State, FICA and Medicare.

Are we taxing employees correctly on the discount?

CEO of a company had part of a loan defaulted (don't ask me why they didn't default the whole thing...) while the plan was at a prior recordkeeper. He has since taken another loan but the administrator did not take into account the defaulted amount in the calculation of the maximum allowable amount. This resulted in a loan being issued for about $10,000 more than it should have been. This also violated the plan loan provisions which no not permit loans to be issued to participants who have defaulted on loans.

The plan does not allow in service withdrawals for participants under age 59.5 unless a hardship so I can't go back and treat the excess as a legit distribution and issue a 1099.

Any suggestions on how this should be corrected?

Thanks!

Good Morning All!

If a client has a Cash Balance Plan and a Profit Sharing Plan where the Cash balance provides 2% for almost everyone except for a couple older participants, is it possible to kick up their allocations in the Profit Sharing Plan and thus satisfy top heavy for everyone? Possibly turn the Profit Sharing into a Class Plan?

Any help would be most appreciated! Thanks!

A three physician doctor's group has it's own current retirement plan (safe harbor 401k and profit sharing). They save the maximum $42k from this plan.

They, and 11 other doctors, are opening a surgery center with each doctor as a 7% owner. We are going to establish a retirement plan for the employees of this new surgery center.

If the doctors figure out how to turn their passive income from the center into active, can they use this as a 2nd source of profit sharing that will let them save up to $84k (for both plans?). Does a 7% (per individual, not by practices) ownership and use of the facility constitute "affiliation" and deny them participation in this plan? Is there a workaround that they can consider to be a part of this 2nd plan?

I'd like to get some opinions on the pros and cons of reducing the involuntary cash out to $1,000. I've pulled the analysis that was posted by mintz.com and am anxious to get some other opinions. I have several clients that would like me to provide a listing of pros and cons.

Thanks!

We cover retirees under plan A, which is the same for active employees, until age 65. At age 65 retirees receive a fixed amount towards coverage in Plan B. Under the deferred event rule, we know that COBRA will apply to Plan A when the employee loses coverage but only for the time remaining in the 18-month COBRA coverage period (i.e., the COBRA period is measured at the original event, termination).

My question is does COBRA apply to plan B? I assume not since the qualified beneficiares could have elected COBRA under plan A and still have gotten the subsidy under plan B.

Thanks!

Does anyone know of any group that is starting or considering a public awareness or employer awareness campaign (or any other sort of campaign) to ensure that this proposal to eliminate the FICA excludibility of cafeteria plan salary reductions does not become law.

It would spell the death of cafeteria plans and have a major impact on employer provided health coverage. It would also have a major impact on the business of TPAs,

Here is the Proposal See page 71:

http://www.house.gov/jct/s-2-05.pdf

Situation:

Husband retired and rolled his 401K to an IRA. The IRA contains around $450K. Now husband is getting divorced and is transferring half of money to wife as part of settlement. Wife needs to know what portion of the transferred IRA is taxable since the original 401K had a non-taxable and taxable portion. Husband is 68 and wife is 63. Husband says he does not have records of the 401K distribution/rollover.

Question:

How does one determine the taxable portion of a 401K rolled over to an IRA?

We have a plan that had the wrong definition of compensation written in the GUST restatement. The prior document excluded bonuses and the employer did not intend to change. The plan was amended in 2004 when the error was discovered. I know the IRS does not recognize scrivener's errors. However, if we go back and correct the allocations for the years in question it will result in a reduction of benefits for the NHCEs. Has anyone had any experience with this and the IRS?

The spouse of a 100% owner of a corp works for the corp and was taking a substantial salary for few years and has established the desirable Hi 3 average for maximum projected benefits.

If the spouse stops taking a salary (while still working), can service credits be given to the spouse for plan benefit purposes?

Quick question regarding key employees. I ran across somewhere stating that there is no longer a look back on Key employees on the Top Heavy Test. Is this correct?

Example - Key employee in 2003 (Highly Paid Officer), was terminated in June of 2004. Never made the $130,000 required under the Highly Paid Office category. Is he still concidered a Key employee for the 2004 plan year end?

Thanks,

SHAF

In a 401k plan what is the timing of elective deferals for the partners?