I have a client that is a C-Corp and the only 2 employees are a father and son. The father is 100% owner. Can they file an EZ do to the attribution rules?

Our administrator is advising that we do not have to do audited financials for our DB plan because it had less than 100 active participants at the beginning of the plan year. However, we would have more than 100 people if we counted the retiree medical folks (under 401(h) account)--should they count? Thanks.

We have a potential client that has historically filed one 5500 for their health,dental, life and disability. Do they need to file seperate forms for each of these comeponents?

We need to update our ERISA Outline Book. Does anybody know when the 2005 version is set to come out? They still have the 2004 version on the ASPPA website.

Thanks

Suppose you have a small consulting firm in the following position:

-- Virtually all of the business is generated by person A (i.e., person A has the client contacts that lead to projects and the rest of the staff executes the work as directed by person A). As such, without person A, the firm could not exist in its present form.

-- Person A is 60 years old. The rest of the staff ranges in age from 25 to 60.

-- The firm has a DB plan with a normal retirement age of 65.

-- The DB plan is funded using the individual aggregate approach.

In this circumstance, is it reasonable to fund the plan based on the normal cost (level contributions) assuming that the plan will continue indefinitely, given that it is expected that the firm will be disbanded and the plan terminated in the relatively near future (5 years assuming that person A actually retires at the normal retirement age)?

For example, suppose person B is 35 years old. At person B's normal retirement age, person A would be 90 years old. Thus, the company would surely have been disbanded and the plan terminated long before person B reached the retirement age. In that case, would it be appropriate to calculate the funding for person B as the normal cost (level contribution) over 30 years?

If not, what should be done in this circumstance?

Thanks.

My client has a 401(k) plan that provides for matching contributions with a 20% per year of service vesting. Let's assume that effective 1/1/05, the plan sponsor is going to change the plan to a safe harbor plan by making the mandatory matching contributions beginning in 2005 with 100% vesting. Question? What about matching contributions that were made prior to 2005? Must they fully vest when the plan become a safe harbor plan, or can they continue to vest based on the graded schedule?

A client has distributed the safe harbor notice stating they will contribute the 3% SHNEC for the 2005 plan year. Is it possible to rescind this notice before the start of the plan year?

We have a number of highly compensated employees that reach the $205,000 compensation limit fairly early in the year. These employees are encouraged to keep their contribution percentages fairly low so that they can receive the maximum benefit of the employer match (we use the safe harbor matching - 100% of the first 3% and 50% of the next 2%). The problem is that these employees will probably never get to the $14,000 annual contribution limit doing this. Our benefits director is asking whether or not this is just the way it is or if there is something that can be done to allow these employees to still contribut the maximum contribution amount but still take advantage of the employer match. Should we offer after tax contributions once the compensation limit is reached? Any other suggestions?

Also, excuse my ignorance, but the 3 limits (401(a)/annual compensation, 402(g)/maximum contribution and 415©/annual defined contribution limit) apply to all and every 401(k) plan and participant regardless of how the plan is designed, correct? Safe Harbor plans are not exempt? Thank you.

My firm is considering openings up the administration side of the business to include the administration of HRA Plans (deductible only). Can anyone give one place to figure out what the admin requirements are other than software?

If I have a cash-balance plan primarily designed to max benefits for owners at their 415 limits, although there will eventually be a couple of staff employees, what should the individual benefit statements reflect for contribution credits to owners where the contribution credits result in a benefit accrual for the year that is restricted by IRC 415 ? Since I cannot fund for more than the 415 limit, or distribute more, would the benefit statement reflect the full contribution credit per the plan document or a lesser amount equal to the contribution credit that is equivalent to the 415 accrual for the year ? Not sure if this is a technical issue or more a communication issue. I hate to show a higher theoretical higher account balance than can be immediately distributed, but maybe that's what I have to do with some appropriate caveat at the bottom of the statement. Any thoughts/opinions/preferences ?

If a participant initially takes their distribution in installment payments over their life expectancy and a couple of years down the road decides to cease all distributions (assuming the plan doc allows for this), are there any tax consequences for this decision?

Has anyone seen guidance on whether an employer can base contributions on grant money? Client has some researchers who are totally paid by grant, while others receive part stipend from institution and part grant. Are there problems with treating the grant money as if it comes from the institution, for either contributions or nondiscrimination purposes?

Thanks

I discovered this forum from a posting on ValueForum.com and wanted to ask an investment question. If I were to purchase shares of a publicly listed master limited partnership in either my IRA or SEP-IRA, I know that any UBTI over $1000 will become taxable. Does this same rule apply to foreign owned trusts such as the Canadian Royalty Trusts?

Thanks

James Jarrett

Here's a different question/angle on the new regs:

Why did the IRS specificially say that a "plan" could use language that called for deferral contributions to be deposited no later than 15 business days after the end of the month? They cited that as an example of acceptable language, at least that's how I read it.

I understand that ERISA plans are still subject to the DOL as soon as practicable standard. And I understand that there's a world of difference between ERISA and non-ERISA plans from an employer's or fiduciary's standpoint. But from an employee's standpoint, I doubt that a nurse who worked for a separate department in a hospital, which had a 401(k) plan, and then goes to work for the hospital itself and is offered a 403(b) plan, sees much difference.

I don't do much with 403(b)s so maybe that's "just the way it is." But I found it curious.

Does 401(a)(31)(B) apply to government plans? The focus of that provision seems to be on the $5,000 cash outs permitted by 411(a)(11) and the provision incorporates the actuarial factors of that provision (and 417) to determine the $1,000 and $5,000 present value levels. Government and some church plans are exempt from 411. Does that mean that those plans don't have to provide automatic rollovers?

Employer has two matching "levels". One group of employees receives no match while the remaining employees receive match of 100% of deferrals up to 4% of comp. My first thought was to test this for coverage using the theory that these are separate "tiers" of matching and would need b/r/f testing. In this case, 17 of 19 HCEs are in the group that receive no match. I easily pass 70% for the zero match and the 100% match. The more I think about this however, I'm not sure this is correct. If the other two HCEs were in this group such that no HCEs benefited from a match and fewer of the NHCEs were in this "no match" group (moved to the receive a match group), they would fail ratio percentage test. If they go on and pass nondiscriminatory classification test, I should be ok, right?

If for some reason, they fail this test, would I have a situation where the Plan design is not qualified? Doesn't seem right since the situation is one in which all the HCEs are receiving the zero match. There are other NHCEs also, however, who don't receive a match.

Maybe I'm overthinking this and getting myself confused.

Every month for the past two years, I contributed to my 401k. This past month, I finally got a 401k statement from my employer and discovered she did not deposit any of the money taken out of my paycheck. After I brought it to her attention, she deposited the funds. The disagreement comes about because she insists on correcting the interest lost by utilizing the IRC 6621 method and providing only 1% interest per year. Is this right? PLEASE HELP!!

As a TPA, we're not really all that familiar with the investment companies available in the marketplace. Has anyone heard of a reputable vendor or vendors who will be handling these accounts - for ongoing plans and terminating DC plans? I just sent to PenChecks for some information - anybody know of others? And will they accept accounts of <1,000? We're just looking for the names of a couple of vendors so that our clients will at least have a starting place. Thanks.

Default of a 22k loan. Participant qualifies for an inservice distribution. Can we treat the 22k default as an inservice distribution. We are past the cure period.

I've been reading about the suit surrounding Bank of America's pension plan, and I wonder why it took so long.

This reminded me of something else suspicious Bank of America did during that same period of time (around 2001). BofA announced that they were having financial problems on the deposit side of the bank, so they were taking away benefits. One of the benefits they took away was subsidies for education. A couple months later, BofA announced that they were rolling out a new subsidy for education: not as good as the one before, but still it was something that the Bank was "giving" it's employees.

The short time frame between the take-away and the "gift" makes me very, very suspicious. I think this was outright psychological manipulation. The idea is to make employees feel good about getting a new benefit (or getting back something they almost lost) when what actually happened was a cut in the old benefit. If BofA had just announced a cut, people would have been depressed. Instead what they did is create a sense of fear of take-aways, and then management road in with some unexpected largess, pumping up everyone's gratitude and energy.

Does this sound like something that benefits managers do intentionally? Do they sit in meetings and discuss how to manipulate the perceptions of the employees through the timing of benefits changes? Furthermore, if this was a deliberate attempt at manipulating mass psychology, was it legal?

Ps. When I worked at BofA, people (including myself!) raised the question of ERISA violations during meetings to acquaint us with the changes, and the managers charged with delivering the news took the position that the people who questioned the changes were just stupid. I really wish I were there now to be in on that lawsuit!