Does anyone know what the implications are if a COBRA enrollment notice/form is sent to an individual who is not eligible for COBRA coverage? Is the company still responsible for providing coverage since they informed the individual they were eligible for coverage?

Do the proposed phased retirement program regulations under Notice 2002-43, that provide for prorata distributions at normal retirement from a defined benefit plan or money purchase plan, supercede the provisions of a Deferred Option Retirement Program (DROP) that provide the accrual of the of the monthly retiremnet benefit and usually paid out in a lump sum benefit after the end of the DROP period (usually 1-5 years)? In addition, the proposed regualtions provide for the employee to maintain a dual status (i.e., partially retired and partially in service). This appears to conflict with a DROP where employees are still actively performing full time service for the employer. Finally, would the benefits payable under the phased retirement program be considerd an eligible rollover distribution?

I have searched old posts for an answer, but have come up empty....

Under USERRA, compensation used to determine make-up benefits for the military service period is the amount the employee would have received during his/her absence under the rate of pay in effect at the time the period of military service began.

So someone that earns $50,000 in a given plan year, but who otherwise would have earned a total of $100,000 if not for six months of military service, receives a total allocation of employer contributions based on the $100,000.

My question is whether the determination of HCE status for the following plan year is based on the $50,000 actually earned or the $100,000 inferred? I'm inclined to think that it is based on the $50,000 actually earned, making the employee a NHCE for the next plan year, since I can find no documentation to the contrary. Can anyone confirm this as fact? Thanks.

We handle a safe harbor 401(K) with the non-elective contribution. The principals have not deferred any amounts and probably will not for 2004.

There are 4 other participants, all NHCEs but only one is deferring salary.

Client does not want to make any contribution if he does not have to.

Under what circumstances is the client NOT obligated to make a 3% contribution.

Thanks,

Steve

If two companies are part of a controlled group and both have separate 401(k) plans, in determining the coverage test for each, it may be beneficial to limit the number of HCEs to the top 20 percent. Does the plan have to have this limit for me to do so, or is coverage testing a separate issue, and the top 20 percent limit elected administratively for coverage purposes.

Would anything prohibit an employer with a self-insured health plan from having its employees answer a health questionnaire and charging a higher deductible to those who refuse?

For a nonqualified deferred compensation program, to what degree is spousal consent required prior to a distribution?

Hi folks, my problem is that my wife has a fair amount of company stock(~170k) in her profit sharing plan at work. The company is being bought out and it sounds like we need to liquidate the money. I assume we can move it over to an IRA without tax consequences? Please advise if this isn't enough information and I'll get additional details as needed. Appreciate your help.

Just an interesting note. According to the latest news I've heard, the average national savings rate is actually zero or negative (which means that people have an enormous amount of debt). This is really unbelievable. Don't people realize they're consuming their capital and that such can't continue forever?

Five participants in 401(k) plan, four are highly compensated and over 50. For the HCE for 2004, we have deferred 16,000 each and matched 4,320 ($108,000 x 4%). Question: Can we make deductible contributions to a DB plan and still deduct the ee and er contributions? What is the maximum DB contribution we can deduct? Thank you.

EGTRRA got got rid of the four year look back as to who is a key.

Do you know whether the IRS takes the position that this also eliminates the four year look back for aggregating any plan in which the "key employee participate in the plan year containing the determination date and any of the four preceding plan years?"

We have an employer with a Simple plan and just found out from their accountant that they contributed significantly more than the 3% match for 2003 and 2004. They have actually matched the exact dollar amount that each employee contributed, which is much higher than 3% of pay for most of them. How do they go about correcting this (especially for 2003 since it was not found until now) and what type of penalties might they incur? Also, what is the effect on this if an employee has quit and taken a full disbursement?

Thank you for any help....

A 401k plan is currently daily valued. The plan sponsor has decided to do a daily valaution search/comparison to see if their current recordkeeper is up to snuff. An independent third party is the gatekeeper for the search functions. Are the fees to the third party (unrelated FYI) payable from plan forfeitures or do they constitute settlor functions? I tend to think they are payable from the plan, but would like some input.

Also, I assume the decision to do the search , that is any fees related to the decision are not payable from the plan. Agree?

Thanks

Dee

As we get close to the end of the year, I have a couple of GUST prototype plans that adopted the 3% non-elective ADP safe-harbor contribution. This provision is coded into the adoption agreement. However, the clients, who are top-heavy, for 2005, are interested in changing to the matching (100% of the first 3% and then 50% of the next 2%, or possibly the enhanced 100% up to 4% formula) ADP safe-harbor in order to only award those employees who defer to the plan (they are aware that no other contributions, including forfeitures, can be allocated). What is the amendment procedure?

Thanks for any replies.

I have run into a few CFPs who pick my brain on behalf of a "potential" client only to find that all the free advice got me nothing. What do people do to prevent this scenario... how do others handle these situations? Or is it the cost of doing business?

New 415© dollar limit for 2005 is $42,000. Is this for limitation years beginning or ending in 2005? In other words, if I have a limitation year ending September 30, 2005, is the limit the new $42,000, or the 2004 limit of $41,000? Reg. 1.415-6(a)(2) seems to say it would be $42,000, but that is an old regulation issued before EGTRRA and I can't find anything definitive anywhere else. Thanks for assistance.

I have a one person 401-k. I wish to terminate this plan on 12/31/04 and start a SIMPLE with some employees as of 1/1/05.

What do I have to do to terminate the 401-k? Do I have to file that huge 5310? The custodian told me to file a 5500, but I have never had to file before (plan assets about $55,000).

And since this is a self-employed situation, can I contribute to the plan for 2004 up to the filing deadline in 2005 even if I have already termnated the plan?

Scenario:

Employee worked for 10 years at Company A and terminated in 1992. The employee was paid out his accrued benefit in 1999(lump sum). The employee then rehires in 2002 and works until 2004.

Under regulations, would the employee be entitled to vesting for his prior service(1992 and prior years)?

Would the employees break-in-service go back to his original termination date(1992) or would the employees pay-out date be the "adjusted" break-in-service start date which means the employee would not have a 5, 1-year breaks in service?

Any help provided would be much appreciated!!!!!

Thanks,

Fred

Scenario:

Employee worked for 10 years at Company A and terminated in 1992. The employee was paid out his accrued benefit in 1999(lump sum). The employee then rehires in 2002 and works until 2004.

Under regulations, would the employee be entitled to vesting for his prior service(1992 and prior years)?

Would the employees break-in-service go back to his original termination date(1992) or would the employees pay-out date be the "adjusted" break-in-service start date which means the employee would not have a 5, 1-year breaks in service?

Any help provided would be much appreciated!!!!!

Thanks,

Fred

Scenario:

Employee worked for 10 years at Company A and terminated in 1992. The employee was paid out his accrued benefit in 1999(lump sum). The employee then rehires in 2002 and works until 2004.

Under regulations, would the employee be entitled to vesting for his prior service(1992 and prior years)?

Would the employees break-in-service go back to his original termination date(1992) or would the employees pay-out date be the "adjusted" break-in-service start date which means the employee would not have a 5, 1-year breaks in service?

Any help provided would be much appreciated!!!!!

Thanks,

Fred