Are there any conferences or seminars out there that deal primarily with NQ plans? TIA

Have a client considering the addition of 401(k) safe harbor language to his existing top heavy PSP. He is concerned about the financial commitment in lean years. Question: If we design the plan and the notice to commit the Safe Harbor contribution to only NHCE's, can we amend that provision during and/or after the plan year to include the HCE's?

As a solely safe harbor plan, appears that we don't have an issue with the HCE non-key employees not receiving a top heavy contribution in a plan year in which the HCE's are excluded from the safe harbor contribution.

We have a bunch of operating units participating in a 401(k) plan and a DB plan. To date, nearly all those units have been 100% owned by us with a few stragglers that are in the 90% range. But in any case, all well over 80% and therefore part of our controlled group.

We are on the verge of an acquisition which would result in an operating unit that we own 75% of. Our preference would be to treat these people like everybody else, and put them in both existing plans. The Plans as they stand have well in excess of 120 participants. The new location would have (say) 50.

So based on my research from searching threads here, calling my auditor, and reading code would give me the following implications:

• We now have multiple employer plans.
  
• We need to amend each plan to include the new location, and make the plan a multiple employer plan.
  
• We should get a new IRS determination letter.
  
• We would file a single 5500 for each plan.
  
• We would include in each filing two Schedule T's--one for the controlled group, and one for the new location.
  
• We would not need a new audit, and there would be no impact on the plan's financials.
  

Questions that I have not figured out yet, and could use some guidance on:

• Do we have to perform separate ADP/ACP tests?
  
• What about 415 and 402(g) limits if someone transfers in or out of this location?
  
• What else am I missing?
  

RCK

I am probably going to have about 100 questions on this topic, but I will start with the following:

Is the Fiduciary responsible for seeking recovery for all overpayments from the plan, no matter how they occurred? I have read through many posts on this topic and found a great deal of information. I read that for overpayments under $100, the fiduciary must notify the party of the overpayment, but is not required to see recovery.

So, does this apply to situations where a dividend was double posted, a price was incorrect at the time of payment, etc. It seems to me that you must attempt recovery and let the participant know that those funds are not eligible for rollover. You must then correct the 1099-R correct?

Does anyone have any comments or insight they would like to share?

I've a client who sponsors a Health FSA plan that is funded via pre-tax ee deductions and employer contributions. This client wants to pull back all funds that it contributed if the employee terminates and elects to continue Health FSA coverage under COBRA.

First, is the employer permitted to revoke its unused funds upon an employee's termination? Secondly, is an employer required to continue making contributions to a COBRA participant's HFSA?

Hello. I've been reading the posts here for awhile but haven't seen

this addressed.

We have a self funded plan that is subject to ERISA. Our plan document allows the plan administrator to amend the plan from time to time as necessary.

1. Can these changes only be made at renewal?

2. What prohibits a plan from making a plan change that would target a specific employee? For example an employee needs a type of organ transplant and the plan administrator amends the plan to not cover this type transplant. All I can find is that the employees must be notified within 60 days of such a change. Is there a law that prohibits an employer (plan administrator) from doing this?

Thank you.

Is it still the case that a payment at termination for unused vacation (accrued from prior years) is not includible compensation and therefore not eligible to have deferrals taken from it?

As many of you know, the Treasury Department has extended until the end of 2005, for states to enact legislation providing for HSAs. While states do have authority for state tax policy, and they do have authority to regulate licensed insurers - states have no authority to regulate the structure of ERISA plans. For example, if a plan sponsor wished to offer an HSA along with the qualifying HDHP, he can do so.

The only benefits that are mandated for ERISA plans are the four benefits mandated by the federal government. Aside from these requirements, any state mandated benefits are completely preempted by ERISA.

Because of this complete preemption, licensed insurers need not be concerned about legal ramifications for providing only those benefits asked for by the plan sponsors.

While required to offer all state mandated benefits, the plan sponsor can pick and choose which to accept, if any, and be charged only for those benefits he contracts for.

Any thoughts?

Don Levit

1099R instructions don't seem to allow for using 2 as the distribution code for a QDRO. Alternate payee was under 59 1/2. Do we use 1? or 7?

Newbie here. I've decided to open up a Vangaurd Roth IRA who charge an annual $10 fee on account balances under 10K.

If I do my 2004 contribution now, my 2005 contribution after April, and my 2006 early next year, will I only be charged the $10 fee once? (at the end of 2005).

Also, if I have 3 funds with 5K each, they won't charge me $10 for each fund, right? The way I read it was that they charge you if the total of all your funds is under 10K.

We have a client who terminated from his former plan and would like to withdraw his 401(k) funds. The plan document says that termination distributions will be processed two years after the last valuation date.

Several sources have said this can't be right post EGTTRA & GUST, but no one has been able to find anything saying otherwise. So far I have located the following DOL guideline:

------

ERISA provides specific rules governing when you may or must begin receiving your pension benefits. First, ERISA sets the latest date by which the plan must permit you to begin receiving your benefit. Under this rule, payment must begin by the 60th day after the end of the plan year in which the latest of the following events occur:

(1) you reach age 65 or, if earlier, the normal retirement age specified by your plan;

(2) the end of the 10th year after you began participation in the plan ends; or

(3) you terminate your service with the employer.

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Advice?

Thanks!

FalynnDFW

A client has 21 non-excludable employees. Obviously, 40% is 8.4.

Is there any rationale to enable 8 to be used (the regulation does not specify greater than, at least , etc.) when determining how many employees must be covered to pass 401(a)(26).

Personally, I feel most comfortable with 9.

Thanks for any and all responses.

Plan charges active ees for QPSA coverage

Ptp turns age 35 in 1988

Are you allowed to charge QPSA coverage before age 35

Election date is 9/1/187, date of marriage

I am assuming ptp was given proper ntoice, etc... priro to age 35

thanks

Hi,

ER ceases all contributions to SIMPLE plan as of end of 2004 and put a 401(k) in place 1/1/05. Does the SIMPLE need to be officially terminated prior to 2005 in order to avoid the exclusive plan rule or does the fact that no EE accrues a contribution under the SIMPLE make it okay? I seem to recall this is the case.

Additionally, I presume that if EEs have participated in the SIMPLE for 2 years, they can roll their money into the 401(k) regardless of whether they or the plan have terminated since there is no restriction on SIMPLE distributions. Is this a correct understanding? My SIMPLE knowledge is a bit lacking.

thanks much!!

A Sole Proprietor with employees and an existing PS plan (NOT 401(k)) wants to add a Safe-Habor K feature before October 2005. I believe that is permissable as long as there was not previously a K feature.

For the employees, the SH contribution must be based on pay from (at least) the effective date of the feature to the end of the year and their K contributions will necessarily be limited to 100% of pay after the feature is added.

But, what about the owner? Since his income isn't determined until year end, can he count the whole year's income? Does he need to pro-rate his income? Pro-rating would seem most equitable, but is it required? I assume that his draw doesn't figure into the calculation.

Calendar year 401(K) Plan has one employee who's payroll records show 995 hours for 2004. The employee called me up and told me that she actually worked 1004 hours in 2004 and wants to start defering. If you subtract the hours worked in 2003 and paid for in 2004 and add the hours worked in 2004 but paid in 2005, the total is 1004.

Is she eligible? yes, no, or it depends on the document. (I can't find anything in the document on this) I think she has to be in. ( For what that's worth)

I would like to hear from other administrators. How much work do you go through to figure this out exactly or do you just go by payroll records? I'm wondering if I should have on my checklist to take a close look at anyone between 980 and 1020 hours. As hard as it is to get census info from some clients this could be a big ...challenge.

I have a client, Company B, that is purchasing company A (assets). Company A maintains a 401(k) plan and Company B maintains a Simple IRA. For the 2005 plan year can this employer maintain both the 401(k) plan and the Simple IRA or do the newly acquired employees have to join the Simple IRA? Since Simple IRA's do not have all the testing requirements of a 401(k), if both plans are maintained, which testing should be done with both plans?

Assume a company contributes to HSAs established by employees (without relying on 125 rules to avoid the comperability rule).

Assume also that two employees are not, in fact, eligible for HSA contributions as follows:

Employee A - covered by spouses first dollar coverage and Medicare

Employee B - has a change in family status between open enrollment and January 1 and changes her election (but is not processed until after 1/1)

I know that Q&A 82 of Notice 2004-50 provides that an employer may not recoup "any part of the employer's contribution the the employee's HSA" (which I find pretty clear), but I have a client (and a provider) indicating that they think the employer can raid the HSA account and take back the employer contribution from these employees.

Does anyone see their argument or do you agree that the employee gets a windfall.

Thanks for your help!

Can anyone point to any surveys of retirement plans sponsored by private colleges and universities. Prevalance of DB plans. Contribution data for DC plans. Similar information.

Thanks for any suggestions.

DC Plan has J&S language and provides a few different forms of annuities as options. Right now we have to manually set up an excel template, unique for each client, to calculate the estimated annuity amounts for each option available. Obviously very time consuming. Is anyone aware of any software packages that will calculate this automatically (outside of Relius or some similar system)? What do other people do with this situation?