One that I liked was the comment predicting the end of tandem/pour-back arrangements between 401(k) and NQDC plans. "They're close to being dead if not dead", was one comment I think. (The scenario discussed was a NQDC that pours deferrals into a 401(k) after year-end to max. allowable limits, then a similar dovetail comment was made about arrangements that work in reverse - k to the max, then to NQ.) "Employers are likely to de-couple these arrangement in the future to comply with 409A" was another afterthought.

Seems to me if this is simply a matter of the timing rule, there are other fixes. I guess we'll see if this position is re-thought as guidance matures in '05.

Would anyone be willing to provide a sample notice for a 401(k) safe harbor? I'm talking about the participant notice that gets distributed at least 30 days (but no more than 90 days) before the beginning of a plan year.

The plan satisfies the provisions of I.R.C. Sec. 416(g)(4)(H) and, therefore, isn't subject to top-heavy testing. Each year, the plan makes a 3% QNEC contribution for every NHCE.

I'm trying to same time and avoid "reinventing the wheel" by having to draft the language myself. Any help will be much appreciated.

I made a Simple Roth IRA on the last day in 2003. I transfer money into the roth from a simple IRA to make my Roth IRA. Then on 1/27 of 2004 I recharactize some of that amount back to my traditional IRA. I reported both conversions and the recharactization on my 2003 taxes. This year was a bad income year for me so can I transfer some of the money back to the Roth to increase my 2004

income. If so, do I have to do that before the end of 2004 or can I wait

until before the 2004 tax filing date of April 15th of 2OO5.

Thank you,

Since I am beginning my first such valuations I would like to verify a couple of points.

1. OBRA '87 FFL no longer exists.

2. RPA '94 FFL 412 now uses a rate tied to corporate bond rates per PFEA. For eg. for PYB 1/1/2004 the rate used can be from 90 to 100% of 6.55%

3. RPA '94 Unfunded CL 404 - you can use either the rate in 2. above or the old rate based on the 30-year treasury which is from 90 to 105% of 5.25%.

Am I correct?

Thanks.

Also, if the funding rate is in the prescribed range, must that be the rate used for RPA '94 CL or can you just use any rate in that range? And if the rate is just above the range must you use the highest rate in the range or any rate in the range?

Thanks much.

If an employee submits a claim to the HRA in 2004 that exceeds his HRA balance, can the HRA pay the balance and pay the remainder of the claim in 2005 when additional benefits accrue?

Say a cash balance plan does not meet the safe harbor standards that entitles the plan to pay the lump sum as the account balance, thus the lump sum must be at least as great as the present value of the accrued benefit.

SO for eg. the situation results in a whipsaw based on projecting the account at 7.5% and a 417(e) rate of 5.5%.

The plan provides payment of the account balance upon pre-ret death to the beneficiary.

Does the present value of the accrued benefit have to take into account pre-retirement mortality when discounting the NRA lump sum to current age or should it just be discounted using interest only? We'll assume that the plan is silent on this present value calculation matter.

Thanks and look forward to various other views and interpretations.

A client has asked me to take a look at it. It's pretty complicated so I was wondering if anyone here has heard of it.

My understanding is that 411 allows NRA to be 65 & 5 at the latest. And that that date applies to 100% vesting.

So for eg. a plan can choose a NRA at say 69 & 5, but would require 100% vesting at 65 & 5.

Say the NRB is 100% of compensation, subject to 415 and non discrimination in favor of HCE's

And say the accrued benefit is pro-rated on plan participation and say a person participates at age 54, and receives compensation of $75,000 every year in the plan. Then after one year according to the plan his accrued benefit would be 1/15 of $75,000 or $5,000 per year.

It would thus follow that at age 65 this person's accrued benefit would be 11/15 of $75,000 or $55,000. If this amount is 100% vested, its it an acceptable accrued benefit? i.e. is it also necessary that the full 100% of pay or $75,000 be accrued at 65?

Thanks.

Loans cannot be repaid in a balloon repayment insteady of being amortized and not less than quarterly- true.

But what about the following scenario.

Participant borrowed $10,000.

Wants to repay loan in one lump-sum payment at the first quarter ( within 90-days) according to amortization schedule.

Is there anything that says a loan cannot be less than for a certain period?

I could not find anything in the code that would suggest that this is wrong.

Any help is greatly appreciated.

Thanks

Jane

I know that one of my TPA clients has a land investment in his DB plan (a restaurant franchise, actually), but one of my full service clients asked if he was allowed to put land in his DB. I told him that I thought he could, but there were some special rules on the valuation, bond coverage, etc. When I went to look that up in the ERISA Outline Book, it appears that land is not allowed in a Pension Plan. Am I understanding correctly?

Any help is appreciated! Thanks!

Cleint wants to invest plan $$ in undeveloped land. Property can be purchase outright ($30K parcels, no mortgage). KICKER... he is the agent and will receive a commision... I am sure this is a PT... I typically advise clients to not invest in Real Estate... this one is adamant.

Questions.... Transaction goes throught the usual RE course... Plan would purchase land, client himself would be agent for sale and receive a commision... PT right?

If there is a way how would it work?

OK - my search feature doesn't seem to be working... I have a client with a calendar year 401(k) Plan. They want to amend the plan to safe harbor to avoid the ADP testing. I know it can't be effective 01/01/05 because they passed the 12/01 deadline for notice. Is it true that they must now wait until 01/01/06 or can the plan be amended now and make the safe harbor effective 03/01/2005 as an example? Thanks in advance.

Can an employer fund his entire HRA commitment in one year and deduct it? Or must he only deduct when the expenses are incurred?

My understanding is that a rate of 5.07% was used for determining lump sum distributions in 2004 (e.g., employee terminates and accrued benefits are converted to equivalent present value).

My questions are:

How is this rate determined?

Do we know what the rate will be for 2005?

Thanks.

a client of mine made a contribution well in excess of the allowable contribution for the current plan year. it looks to me that in order to use mistake of fact the contribution can not be in excess of 25,000. here the contribution was greater. as we are still in the same plan year it looks to me like you can return the money to the employer but only after obtaining a nondeductibility ruling. is this correct?

Our money purchase plan will be reducing the cash out limit from $5000 to $1000 to comply with the upcoming regulations. We do not want to go the route of automatic rollover IRAs. Since the standard from of payment is a J&S annuity, all vested balances above $5,000 are offered an annuity and all vested balances below receive lump sum cash out. For an annuity, we remove the balance from the plan and purchase an annuity from an insurance carrier who then makes payments to the participant. If we reduce the cash out threshold to $1000, that means all vested balances above $1000 must be offered annuities. Yet no insurance carrier wants to deal with amounts below $5000. What are other plan sponsors doing in this area to deal with the automatic rollover rules?

If a 412i plan defines the accrued benefit as the CSV of the contracts, and the CSV = 0 at the end of the plan's 1st year, does that mean that the plan automatically passes 410b because no HCE benefits? The answer would seem to be "yes" but it doesn't pass the smell test.

Whatever the answer, the same reasoning would apply to the a4 test if the plan is not a safe harbor (which it won't be if it's funded with insurance and annuities, at least according to Jim Holland), right?

Hello,

Let me first briefly introduce myself; I am a student at the International Rotterdam Business School and currently writing my thesis (graduation at last!). I am researching the possibilities for a HR web-portal through which several employee benefits services will be offered.

I am looking for persons who have experience with these kind of applications, either from the employee's side or the employers' point of view.

I do realize that I am asking you for a favor, but I'd extremely appreciate it if you could share your opinion or experiences, or give me any hints to look for these.

Thanks in advance.

Kind regards,

Bob

I am attempting to start a solo K plan using a third party prototype plan with effective date 1/1/2004. We are in the last throes of making changes to the adoption agreement and then I will create a custodial account at a brokerage house. The sponsor, and my ERISA lawyer tell me that the plan is in effect as soon as the Adoption agreement is signed on or before 12/31/04. However, given the late date I am concerned about the consequences if the actual account at the broker is not established and funded by 12/31/04. The brokerage house has to review my plan before accepting it so I am not sure it will be in place by year-end. I want to be able to make contributions for 2004. I've been advised that the contributions do not have to be made till tax filing date with extensions, and I need not be concerned. But does the custodial account itself have to be opened in 2004, or is the signed adoption plan enough.

If not, should I quickly open a standard solo k program with one of the online-vendors, partially fund that before 12/31, and then subsequently transfer the assets to my original custodian with my original plan in 2005? Or can I keep two plans if I stay within the maximum combined limits?

Thank you for any advice regarding these questions. Obviously, I am not a professional in this field.

I would like to hear feedback regarding the prospects of an employer increasing an employee's pay comensurate to the cost of a voluntary premium (i.e., voluntary life insurance) so that employee can afford voluntary premium. What if any considerations are suggested before recommending that an employer do this?