Hello. I am administering a large plan, and it's my only large plan. Do I understand the 5500 instructions correctly: if a plan (no matter of size) is "fully-insured" it does not need to have an independent audit?? If it is NOT fully-insured, a large plan MUST have an independent audit.

Am I correct? Any words of advice on this are GREATLY appreciated!

m.o.

Is it true that a new plan that grants past service and has more than 100 participants does not have a deficit reduction contribution in the first year of the plan because the plan did not have more than 100 participants in the prior plan year (the plan did not exist in the prior year)?

Company A wants to provide a 10% of pay unfunded defered comp plan to those who provide services to the employer even though they are employees of unaffiliated Company B. Is this acceptable? Would this be exempt from ERISA?

Hello:

I am stuck on what I initially perceived to be an easy question. Plan requires One Year of Service and Age 21 for eligibility.

Participant completes his One Year of Service by completing 1000 hours in the initial 12 months of employment. He never reaches Age 21, and terminates service.

He is rehired on a later date about 2 years after terminating, and upon his rehire is now Age 21.

Does he enter the Plan immediately? Or does he now have to complete the One Year of Service again, at which point he would enter the plan at the next entry date?

I find a Q&A on the same subject where the employee completed his Year of Service in 2002, but then had two subsequent years where he did not complete 1000 hours but remained employed, and then turned 21 in 2004. He is deemed to enter at the next entry date after turning 21. The termination of service in my example is hanging me up.

Any insight/feedback will be greatly appreciated.

Andmik

I just received a brochure for a SunGard Corbel "Nonqualified Deferred Compensation Plan Workshop". Given the recent changes in this area, including the new I.R.C. Sec. 409A, I'm very interested in the program.

Is anyone planning to attend this workshop?

Do you have any thoughts or suggestions?

If you and I both attend, will you have lunch with me?

If applying the prior year method for ADP/ACP testing, if a plan gives a match during 2002, skips the match for 2003, and recommences the match for 2004, does that imply that any match received by the HCEs is going to automatically fail the test if they receive an allocation?. Sounds unfair to me for the HCEs. I tested a plan and I shifted to pass, but was not sure if thats the only way without going current.

Plan is cross-tested.

401k eligibility is immediate entry

Profit Sharing has a 2 year wait and allocation are based on compensation from date of entry.

When running the average benefits testing with permissive disaggregation for statutory exclusions, shouldn't the ABT use eligible comp for 401k purposes, since this is the lowest age/service condition? For eligible participants who receive a profit sharing contribution, their AB% is being determined on their partial compensation (which was used to calculate EBARs).

Thoughts/suggestions?

Did you ever realize that the only time in our lives when we like to get old is when we're kids? If you're less than 10 years old, you're so excited about aging that you think in fractions. "How old are you?" "I'm four and a half, going on five.”

You get into your teens, now they can't hold you back. You jump to the next number ... or even a few ahead. "How old are you?" "I'm gonna be 16!" You could be 13, but hey, you're gonna be 16! And then the greatest day of your life … You BECOME 21. Even the words sound like a ceremony.

But then you TURN 30. (Makes you sound like bad milk.) You BECOME 21, you TURN 30, then you're PUSHING 40. Whoa! Put on the brakes ... it's all slipping away. Before you know it, you REACH 50 ... and your dreams are gone. But wait!!!

You MAKE IT to 60. You didn't think you would!

So you BECOME 21, TURN 30, PUSH 40, REACH 50 and MAKE IT to 60. You've built up so much speed that you HIT 70! After that it's a day-by-day thing; you HIT Wednesday! You get into your 80s and every day is a complete cycle; you HIT lunch; you MAKE IT to 4:30; you REACH bedtime.

And it doesn't end there. Into the 90s, you start going backwards ... "I Was JUST 92." Then a strange thing happens.

If you make it over 100, you become a little kid again. "I'm 100 and a half!" .

These simple suggestions will help us all be youthful for life.

1. Throw out nonessential numbers. This includes age, weight and height. Let the doctors worry about them. That is why you pay "them!"

2. Keep only cheerful friends. The grouches pull you down. 3. Keep learning. Learn more about the computer, crafts, gardening, whatever. Never let the brain idle.

4. Enjoy the simple things.

5. Laugh often ... long and loud. Laugh until you gasp for breath. .

6. The tears happen. Endure, grieve, and move on. The only person who is with us our entire life, is ourselves so Be ALIVE while you are alive.

7. Surround yourself with what you love whether it's ... family, pets, keepsakes, music, plants, hobbies, whatever. Your home is your sacred refuge.

8. Cherish your health. If it is good, preserve it. If it is unstable, improve it. If it is beyond what you can improve, get help.

9. Don't take guilt trips. Take a trip to the mall… even to the next county ...to a foreign country, but NOT to where the guilt is.

10. Tell the people you love that you love them ...at every opportunity.

Client contributes the 3% throughout the year and of course always makes errors. The largest error for '04 entails an overfunding of about $1200 for the SH for owner. Does he forfeit this amount plus earnings, thereby reallocating as PS contribution? Thank you.

Prior recordkeeper incorrectly restated a 401(k) plan as a profit sharing only plan and did not provide for predecessor service. The effective date of the restatement is 1/1/04. The plan year is calendar year. Can we restate and fix retroactive to 1/1/04? Does this fall under the general remedial amendment period rules which allows us correct by tax return due date?

An employee is covered under the employer sponsored HSA but the HSA has no family coverage. Can the employee participate in the employer's FSA to cover expenses incurred by his/her dependents (that are not covered at all by the HSA)?

We have an employee who was in a class not eligible to participate in our 401(k) plan when she was hired. She worked under 500 hours and terminated August 2004. She will be rehired in August 2005 and will be in a class eligible to participate in the 401k plan. Eligibility for the match portion of the plan is 1 year of service. The plan has semi-annual entry dates and no break in service. Should her prior hours be counted towards eligibility for the match?

I just inherited a new client's plan. The definition of "Actuarial Equivalent" states that the plan uses the applicable mortality table "as defined in Code Section 417(e)." Does this suffice to mean the mortality table prescribed by Rev. Rul. 2001-62, or must the plan specifically reference the table in the Rev. Rul.?

If it must specifically reference the Rev. Rul., is this something that can be fixed under the VCP program since the deadline for amending to comply with Rev. Rul. 2001-62 has passed?

Have an employee who wants to roll SEP into 401k. 401k allows for this rollover.

Does the SEP rollover have to be separately tracked? Once rolled, is it eligible for participant loans, since plan allows for loans using rollover source?

If a participant exceeds the 402(g) limit, say by contributing $10,000 to each of two plans, who, if anyone, has reporting responsibility if the excess is not timely distributed?

I know, or think I know, that the consequence is double taxation. But what about the mechanics? I'm looking at something that seems to indicate a 1099-R is issued, but how does either plan know to do that, without the participant's instructions/decision as to which plan has the excess? Or is this something the participant handles on his personal tax return?

I took a $5,000 rollover from a traditional IRA to my Roth IRA. Prior to adding the $5,000 IRA distribution our MAGI was $99,000 and now it becomes $104,000. Since the $104,00 exceeds the $100,000 limitation do I now have to reconvert the $5,000 to my traditional IRA?

My question is in regards to whether or not distribution codes need to be updated when a participant reaches age 59 1/2? For example, a participant begins receiving a qualified monthly defined benefit payment at age 55. He is set up as a distribution code "2". When he reaches age 59 1/2, would his distribution code need to be updated to a "7"? Or does the participant's distribution code remain "2" if no changes are ever made to his monthly benefit. I looked through the 1099-R instructions and it indicates that "7" is used for a normal retirement. The instructions don't mention anything about updating the code unless the distribution type changes. Is it just assumed by the IRS that a plan administrator will update the codes?

Thank you

When a retirement plan (defers compensation; subject to a vesting schedule) changes its name, I.R.C. Sec. 6057 and its regulations provide some very clear rules about reporting the change. The plan administrator attaches an explanation to Form 5500 filed for the year of the change, and a failure to notify may result in a penalty.

What about a welfare benefit plan that's required to file Form 5500? I can't find any similar rule for reporting a welare benefit plan's name change.

Has anyone ever encountered this situation? I'm guessing that a welfare plan isn't required to report a name change, but that it's probably a really good idea to do so. Would you follow the same procedure as for a retirement plan? Example: the "Schlomo Brothers Health Plan" becomes the "Al & Greg Schlomo Health Plan"; would you attach a statement to Form 5500?

(NOTE. The plan sponsor's name hasn't changed, so Form 5500, Line 4 isn't used.)

A HCE is due to receive an ADP refund as the result of the 1/1/2004 to 12/31/2004 ADP test. The HCE would have turned 50 during the plan year (12/1/04), but died on 11/5/04.

Can the refund be re-classified as catch-up deferral money based on him turning 50 during 2004? Or will the refund will be issued based on being deceased at age 49?

Thanks for any help!

I have a client that wants to exclude a class of employees (about 4 non-HCE's out of a total of 60 non-HCE's) from receiving the safe harbor match. They want to allow them to make salary deferrals and receive profit sharing contributions, if any.

The document we use permits class exclusions in particular money sources, but I fear that by excluding these employees from receiving the match (and thus the safe harbor match), that the Plan would cease to be a true safe harbor plan.

Any thoughts would be appreciated.