Is this plan top heavy by virtue of forming a multiple Employer Plan.

Company A is not TH. Joe from Company A goes to Company B. Company B adopts A's plan to form a multiple employer plan. They are not a CG.

Since Joe has 100% of B's plan assets on the first day of Co. b's plan year are they a Top Heavy Plan?

Do we include Joe's account balance from Co. A in Co. B's TH test?

Any thoughts on what is standard practice with individually designed SEPs on whether to apply for an IRS ruling or not?

I'm working with an individually designed SEP that has a non-standard definition of compensation, but I'm confident the definition satisfies Code § 414(s) & regulations. Of course, an IRS ruling on it (& the plan) would be the most conservative route. Before I discuss with the employer whether to spend the money on a ruling, though, I'd like to know what other individually designed plans are doing.

I've seen a few articles lately that reference the aggressive combo of automatic enrollments (or negative elections) and deferral step-ups. The first part (withholding deferrals from an participant's paycheck unless they say no) has been talked about at length for the past few years, but this is the first time I've heard of the step-up feature.

Somewhere (presumably the SPD, but maybe also the document), the participant's are notified that at the beginning of each plan year, their deferral percentage will automatically be raised (the articles I saw didn't make it clear if the participant could opt out of the increase, though I presume a participant could change their withholding percentage at the next appropriate time) by 1/2% or 1% or whatever.

There were very few details, so I was wondering if this is something that is just gaining momentum, or maybe I haven't found the articles against it yet. Has anybody heard about this, or actually implemented it? Obviously, this would be a great help to the non-safe harbor 401(k) plans, but I'm not wild about being the first on the block to recommend it! Thanks for your input.

A friend called me and asked about self-insuring his company’s (180 employees) workman’s comp program.

He wanted me to determine some sort of funding schedule.

Does anyone know much about this subject?

A simple perspective would be to get a pertinent body of data based on the claims, amount of claims, coverage, etc. do an analysis and arrive at a funding plan. And put in caveats explaining the breadth of the study and its limitations.

Curious to know thoughts.

Thanks.

Gary

For December 31 plan year ends, when is the "best" time to amend the plan? Just wait until later in the year?

Thank you,

Sherry

I'm pursuing the QKA designation, and am about ready to order course materials for its last two required courses, DC-1 and DC-2 (NOT C-3 and C-4, which are for the CPC designation). The deadline for taking spring exams is May 31. If I devoted a few hours each day to studying, is it reasonable to think I could be ready for the exams in two months and pass them by that date? I realize I could take one or both exams later in the year (next window is Nov-Dec), but I'm trying to finish and receive the designation ASAP. Need to decide now, as the deadline for registering for spring exams is March 31.

Any insights greatly appreciated!!

Employee was disabled for several months in 2004. Employer has a disability pay program where employer pays all premiums, ins company pays money to employer, and employer pays the disabled individual. This "compensation" is reported by the employer on a W-2.

Plan defines compensation as W-2. Question was, can this be used toward deferrals in a 401(k) plan, and toward the employer discretionary contribution?

Not sure on this. Rightly or wrongly, since the plan definition is W-2, then it seems it must be considered. But, it seems odd. Any opinions? Thanks.

Can I make more than one contribution to a roth IRA account up to the $3000 max before april 15 2005? For instance could I contribute $2000 on march 15 2005 and another $1000 on march 25?

Contributed $3000 to a Roth IRA in 2004. Through a automatic investment plan, also contributed $1000 to a traditional IRA. My TurboTax s/w is telling me I must adjust my Roth IRA by either withdrawing $1000 and any earnings attributed to it, or recharacterize $1000 of the Roth IRA as a tradional IRA. Can I recharacterize it? Is $3000 the total amount I can invest in either of these IRA's? If I recaharacterize, the total amount I've invested is still $4000. A bit confused by this.

TIA

Al

I have a client who has a new comparability profit sharing plan and files based on a calendar year. The filing for 2004 is on extension and the company wishes to change the allocation percentages for all participants (HCE and NHCE) for the 2004 plan year. The employer made quarterly PS contributions throughout the year and has yet to make the 4th quarter contribution. Can the employer change the allocation percentages and then reallocate contributions that were already deposited into participant accounts throughout the year to reflect this new allocation formula?

What Makes 100%? What does it mean to give MORE than 100%? Ever wonder about those people who say they are giving more than 100%? We have all been to those meetings where someone wants you to give over 100%. How about achieving 103%? What makes up 100% in life?

Here's a little mathematical formula that might help you answer these questions:

If:

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z is represented as:

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26.

Then:

H-A-R-D-W-O-R-K

8+1+18+4+23+15+18+11 = 98%

And

K-N-O-W-L-E-D-G-E

11+14+15+23+12+5+4+7+5 = 96%

But,

A-T-T-I-T-U-D-E

1+20+20+9+20+21+4+5 = 100%

And,

B-U-L-L-$-H-I-T

2+21+12+12+19+8! +9+20 = 103%

AND, look how far a** kissing will take you.

A-$-$-K-I-S-S-I-N-G

1+19+19+11+9+19+19+9+14+7 = 118%

So, one can conclude with mathematical certainty that while HARD WORK and KNOWLEDGE will get you close, and ATTITUDE will get you there, it's the B*S* and A** KISSING that will put you over the top.

I have recently had the misfortune of getting another Service Contract Act fringe benefit issue dumped in my lap, and I wondered if anyone has had any practical experience with this one. I suspect I know the answer to my own question, but I have a luke-warm opinion of counsel from another law firm and the likely absence of any black-letter rules to overcome.

Background: A federal contractor subject to the SCA sets up various benefit plans (401(k), health, LTD, etc.) for the employees working on the contract. The DOL issues a wage determination about the appropriate hourly rate for fringe benefits. Contractor incorporates a special provision in the K plan whereby any shortfalls in the fringe benefit contributions deriving from employee elections (i.e., if the employee doesn't elect enough fringe benefits to "use up" the full hourly fringe benefit contribution by the contractor) are trued-up on a quarterly basis via additional non-elective contributions.

The question: Although the non-elective contributions are fully vested at present, the contractor would like to subject them to a vesting schedule. Can these contributions--which are essentially part of the hourly fringe benefit allocation required by the wage determination--be subject to forfeiture?

Discussion: Contractor has an opinion of counsel from a decent law firm that indicates that because the non-elective contributions cannot revert per ERISA and the Code, the fact that they are forfeited doesn't offend the SCA and the wage determination. The argument goes that even though particular employees might forfeit money, the overall group of employees will receive the fringe benefit contributions required by the wage determination.

I know that under the Davis Bacon Act, there is an annualization requirement for non-vested K plan contributions that are not fully vested when made. There does not seem to be a similar rule for the SCA, however. I have heard (thanks to Mr. Maldonado) that the Wage & Hour folks at DOL have raised issues with the use-it-or-lose-it rule for 125 plans where employer contributions are not used up at the end of a year. The SCA rules seem to be concerned with ensuring that individual employees receive the minimum fringe benefit allocation based on their hours worked. If a contribution has significant strings attached or is subject to forfeiture, I am having a hard time believing that the DOL would count that towards the minimum fringe benefit contribution required by a wage order.

There is not, so far as I am aware, a formal rule one way or the other on this.

Any thoughts?

Does anyone know if there is a reg that states that participants who have retired, are disabled or deceased during the plan year are entitled to the profit sharing contribution for that plan year?

We have a client disputing this with us. There document states the usual 1,000 hours and active on last day of plan year but not the above exceptions. This is how we have always processed profit sharing plans.

Their attorney is away for a week so if anyone can help I'd appreciate it.

Thanks

Does a defined benefit plan become a multiple employer plan if it continues to allow service credit and age for employees after such employees leave the controlled group for as long as they are employed by the subsidiary that is sold? This situation involves the sale of a subsidiary where years of service and age will be credited (for early retirement purposes) for as long as the participant continues to be employed by the subsidiary. The subsidiary will not be a sponsor and will not be responsible for any of the benefit accruals. If this does constitute a multiple employer plan, what are the ramifications to the plan sponsor and the subsidiary? Thanks for any input.

Does 409A require participants to make a new deferral election for each year or can a plan provide that their deferral election will continue into the new year if they don’t change it within the election period?

Thanks.

I have a client who will be paying S corp earnings distributions and the ESOP will receive it's pro rata share of these. The client's tax year and plan year are both calendar year end. They want to know if they have to deposit by the 3/15 tax deadline in order for us to include these in the 12/31/04 plan year end allocations. I don't think so because they are not deductible to the S Corp like a contribution would be so I'm sure that they need to be there by that deadline. Any feedback would be appreciated!

Thanks

Cross-tested plan allows for immediate entry into the 401(k) portion and 1 year of service (1,000 hours) for the profit sharing. An employee has worked for the company for at least 5 years but has never satsified the hour requirement to become eligible for the employer contributions.

The plan is top heavy however the minimum gateway being allocated to the eligible participants is 4.50%

Should this participant receive a top heavy minimum of 3% or the higher gateway minimum?

Thank you

As we were doing the accounting we see a large payout. It was to payout the wifeas part of a disolution agreement. Husband and wife were owners of the business. Husband and Wife are both particpants in the defined benefit plan. Her benefit was 207,000. His 350,000. THey agreed that she is to get 545,000. This was in fact paid out. The QRDO (that they just gave us) says that the wife gets 50% of his benefit.

1. Their intent is for her to get 545,000.

2. Would the cleanest way to handle this be to say the 545,000 represents her 207,000 of benefits plus 338,000 of his benefit? If so the Qdro needs to be changed. Agree? Does there need to be a separate QDRO addressing her 207,000?

3. There was no other distribution paperwork signed regarding the distributions. They just transfered the money into an IRA under her name. So, if she took 207,000 prior to being legally divorced he needs to sign off as the spouse. Agree? It's not perfect but obtaining currently dated signatures on the paperwork doesn't hurt. Wife did terminate employment prior to rolling over the monies.

4. Of course no letters were sent by the plan to participant or alternate payee notifing them of the QRDO or its "approval". Husband is a trustee under the plan wife was not. Do we issue the letters currently and note they are "retro active"?

Is this serious enough for a voluntary compliance filing (if applicable)? Any thoughts and comments will be appreciated.

Here's a link to the Batman comic book that featured the Actuary as one of the main characters.

http://cgi.ebay.com/ws/eBayISAPI.dll?ViewI...item=6517873256

The Actuary counts cards in Vegas and also works with the Penguin to identify places to commit crimes that have a low probability of being foiled by Batman. This reminds me of some of my past exploits (except for the part about working with the Penguin to fight Batman). This also offers invaluable advice to actuaries about dating.

I have a 401(k) plan with 3 months service eligibility, no hours or age requirement. Entry dates are 1st of the month coinciding with or next following the date on which an employee meets the eligibility requirements.

Here is the situation: I have 6 participants who were hired on 02/02/2004. I always thought they would enter 06/01/2004, but relius is giving them an entry date of 05/01/2004.

I have heard arguments for both, but I wanted to hear some others thoughts. Is there any reg or IRS Q&A that might clear this up? I have looked in The ERISA outline book, but I can't find an example.

Any thoughts would be appreciated.

Thanks,

Carson Vaughan