If a 401(k) plan is established via a collective bargaining agreement, is it necessary to do ADP/ACP testing?

If necessary to do the testing, what do you do if it fails? If the plan were a DB or DC plan you have the 415 limits, but you do not test discrimination under 401(a)(4) because the benefits are negotiated.

Are there any cites pro or con?

Not surprisingly, I am confused by the final regs and the exception for the 12-month rule for safe harbor plans in the year a plan terminates.

The plan makes the 3% not the match.

The regs say the plan will not fail to satisfy the requirements for safe harbor if it satisfies the requirements through the date of termination and EITHER 1) treats any suspension of safe harbor matching as a reduction or cessation subject to a 30 day notice requirement or 2) the termination is because of business hardship or transation described in 410(b)(6)©- probably a merger or acquisition.

Can anyone determine what this means for plans that make the 3%. Neither of these would apply if there is no match made. So, either it means 3% plans automatically satisfy 1 or satisfy neither and therefore must provide the 3% for the entire year or lose safe harbor status if it termintes mid-year.

Help!

Thanks

Stupid question. I have a 401(k) that covers union and non-union. Only one union group covered. Eligibility is 6 mo for deferrals and match. Do I have to test separately, union and non-union. Or can I test the whole thing as a single plan? I seem to remember something in an old pension answer book, that says a company may but is not required to treat the plan as separate plan. Does that only apply to minimum participation?

Thanks in advance.

Our office has been getting copies of letters sent to our clients from NYS Dept of Tax and Finance looking for a form NYS-45-ATT-MN. The form does not seem to apply and it does not make sense. We never got these forms in the past. There were no taxes withheld for NYS purposes. What is required to send to NYS as a transmittal form along with copies of the 1099R's?

There used to be a 401(k) forms and worksheet book, but Aspen Publishers no longer publishes it. Is anyone aware of something similar, preferrably on CD?

Can you provide that a deemed distriubtion to a zero percent vested participant will occur when employer sources are 0% vested? I.e., allow a forfeiture even if there is a 401(k) balance allocated to the participant.

Could anyone provide a 'dummies' version definition of a 401(k) catch up provision?

Also, what are the contribution limits nowadays?

Thank you!

Assume Ray is a participant in a nonqualified deferred comp plan. The plan provides a defined benefit type benefit payable only when Ray's employment is terminated.

Ray's employment will terminate on June 30, 2005. From January 1, 2005 through June 30, 2005, Ray's wages are $300,000. On his termination date, he is entitled to the nonqualified plan benefit which is, in its normal form of payment, equal to a monthly payment of $10,000 for life. The Plan also permits Ray to elect a lump sum payment which, using the plan's actuarial equivalence factors is equal to $1,200,000.00.

For FICA purposes, none of Ray's nonqual benefit should be subject to the OASDI tax (since he has already earned more than $90,000). However, is Ray's HI tax equal to 1.45% of the $1,200,000 (the present value of the benefit) or is it 1.45% of each $10,000 payment (when the payment is made--assume Ray does not elect the lump sum)?

As I read the FICA rules, the present value of Ray's benefit is includable in wages for FICA purposes (in this case that would be $1,200,000) on his termination date (which is the date on which the benefit is no longer subject to a substantial risk of forfeiture). However, the client's employee benefits consulting firm has told the client that the form of payment dictates the FICA treatment so that if Ray elects the lump sum, then the $1,200,000 is treated as a wage on his termination date, but if Ray elects monthly annuity payments, then when each payment is made it is subject to FICA then. Please help!!!

I realize this is a very broad topic, but is there anyone out there would could help me define what needs to take place during a transitional period due to acquisition of a retirement plan?

I am familiar with the management of H&W plans during a transition to an outsourced vendor but am not familiar with the management of pension plans taken over by an organization due to an acquisition.

Any and all information would be appreciated.

I know an inherited IRA for a non-spouse beneficiary must be maintained in the deceased's name. Does this rule apply for inherited 401(k) and qualified plan assets?

Thanks

Can't we pretty much allocate a QNEC to whoever we want to to pass ADP testing, and just make a corrective amendment?

Can someone also confirm my understanding of the effective date of the bottums up QNEC allocation rules. I believe they are effective for plan years beginning in 2006, is that correct?

Hello everyone. I am 24 years old and just recently started my first job. I am looking into investing into a Roth IRA. All the articles I've read and people I've talked to encourage a Roth, but no one every really mentions any downsides.

So my question is, ARE there any negatives to a Roth IRA over another type of retirement investment. Has anyone had any bad experiences I should look out for?

Thanks!

I have searched prior threads about accepting rollovers for terminated employees. In most cases, they are not accepted by the current plan because the person rolling the money over is no longer an employee. Most plans limit rollovers into the plan to "employees".

What do you do when the employee request the rollover from his prior employers plan and then terminates from his current employment while the money is in transit? Does the fact that the rollover was initiated while he was still an employee have any bearing on the issue? To accept or not accept, that is the question?

When you are developing your own benefits administration forms for participant communications and elections as well as other reporting and disclosure requirements, what sources do you use for getting sample/model forms to develop? Any recommendations?

An IRA account holder died in February '05. The deceased person's spouse would like to make a 2004 contribution into the existing IRA on his behalf since he was alive for all of 2004. I've been under the impression that a contribution cannot be made after the account holder dies, even if he was alive for the entire tax year. Can anyone tell me if I can find that in writing somewhere, or if she can make the contribution after all?

recently acquired client (takeover plan) that has "old" match forfeitures. according to plan document, match forfeitures are used to reduce the matching contribution, but client has been a safe harbor plan (basic match formula) for several years, and continues to do so. can client use these match forfeitures to reduce the safe harbor match contributions?

Client has startup plan effective 5/1. First plan year will be short year 5/1 -12/31. Thereafter it is a calendar year plan. Entry dates are plan year quarter. The plan year is defined as the 12 month period commencing on January 1 and ending on December 31. Eligibility reqt's are 3 month period of service and age 21. Question is, someone is hired in July and therefore would complete the 3 month period in October. When does this person enter? What are the entry dates for the first short year if they are quarterly? Are they 5/1, 8/1, and 11/1? Or are they 5/1, 7/1, and 10/1? If it is the latter then this person wouldn't enter until 1/1/05 and would not have to receive an allocation of the contribution for the first year, otherwise they would enter 11/1 and would have to benefit. Since the entry date is plan year quarter and the plan year is a calendar year except for the first year, shouldnt' the entry dates correspond also to the calendar year quarters?

Can I use Revenue Ruling 74-307 (the 1/2 of the ILP premium rule) in a traditional DB plan, i.e., a non-412(i) plan and still meet the incidentally rule?

If the answer is yes and the participant dies prior to retirement, can the death benefit be equal to the face amount of the policy PLUS the PVAB, (assuming of course that the plan document so states) without regard to the maximum 415 lump sum?

I think Mike Preston has already answered this question before but I want to be sure. Thanks.

We have a client that did not elect to adopt the EGTRRA increase in compensation limit to the $200,000 effective in 2002. Their document indicates that the compensaiton limit after 2001 would be continued in the same manner as pre-2002 (preEGTRRA).

Does anyone have a spreadsheet, or access to the appropriate COLA's to determine what the comp limits would have been for 2002, 2003, 2004 etc assuming the arbitrary jump to 200,000 in 2002 did not occur?

For a DB plan which allows a non spouse designated beneficiary, the beneficiary is age 26, the retiree 55. Applying the standard factor for 50% J&S benefit form, the benefit does not seem to get as small as was thought. Is there some kind of adjustment which would need to be made?