A 401(k) plan requires participants to have a 1-year BIS before becoming eligible for a distribution. The plan has an early retirement provision of age 55/6 years of service with 6-year vesting. The plan is a Corbel prototype with this language:

"Distribution of the funds due to a Terminated Participant shall be made on the occurrence of an event which would result in the distribution had the Terminated Participant remained in the employ of the Employer (upon the Participant's death, Total and Permanent Disability, Early or Normal Retirement). However, at the election of the Participant, the Administrator shall direct that the entire Vested portion of the Terminated Participant's Combined Account be payable to such Terminated Participant provided the conditions, if any, set forth in the Adoption Agreement have been satisfied."

The condition in the Adoption Agreement is the 1-year BIS requirement.

Also, does this condition apply to a participant at NRD, age 65 in this plan? How about LRD? The requirement that a participant be paid no later than 60 days after the end of the plan year containing the latest of NRA, 10 years of participation, and termination of employment could delay payment to the 1-year BIS date for someone with short service at termination on/after NRD.

It seems that the first sentence in the above plan language may override the 1-year BIS provision for participants who die, are disabled or reach Early or Normal retirement, but I'm just not sure. Anyone?

I know that a DB and 401k plan can be implemented together without triggering 404a7 limits on deductibility. I cannot find a cite that permits matching contributions for a 401(k) plan implemented with a DB plan. I know that the Code does not permit matching contributions as an offset, even though they are Employer Contributions (treas reg 1.40(a)(4)-8(d)(1(vii)). Are matching contributions permitted with a DB/401(k) arrangement?

Does the testing methodology need to be stated within the plan document for plans which demonstrate compliance with IRC 401(a)(4) via "cross-testing"?

Thanks

May an FSA be offered outside a cafeteria plan? We have a salary-reduction FSA (at least, that's what we call it), and I've always heard it referred to as part of a cafeteria plan, but the question was raised when I read a sentence in the 1996 Tax Act Blue Book (where it is discussing the addition of section 106©) that said FSA may be offered outside a cafeteria plan (but did not elaborate on the point).

If the FSA is outside the cafeteria plan rules, what tax rules control the taxation of benefits to the employee?

Thanks,

Ken Davis

Univ. of South Alabama

My understanding is that if a plan uses the 30-year treasury for lump sums, then with no amendment to the plan it is possible that a participant can get a lump sum less than the 415 limit if the lump sum were based on a life annuity equal to the maximum life annuity for plan years beginning in 2004 or 2005. This would occur if the 30-year rate went above 5.5%.

My feeling, to avoid this potential scenario, amend the plan to base lump sums on the lesser of 5.5% or the 30-year rate for 2004 and 2005, then if the participant receives a lump sum based on the maximum life annuity under 415 he will receive the 415 lump sum limit.

Any observations?

Thanks.

Gary.

Group does "employment contracted" business and provides "staff employees" to work these contracts. Group doesn't currently offer coverage to domestic partners and has decided to wait until January 2006 to open plans up to dp's.

Group is bidding on a contract with a municipality that requires any businesses under contract to offer benefits to domestic partners.

What are your thoughts on this group only opening up domestic partner coverage to those staff employees working on this municipality contract. Group would not extend dp offering to all others until January 1, 2006 as originally planned.

Thoughts, feedback?

Any thoughts on whether state laws that prohibit an employer from putting an employee's social security number on a benefit card will be preempted by ERISA? We are self insured and recently discovered that a law prohibits putting an employee's social security number on any card required for the employee to obtain services. Any thoughts?

Thanks

A db plan allows for an unmarried participant to designate a beneficiary to receive a "return of contributions" death benefit in the event he passes away prior to retirement. Participant was inactive but vested and died in 1996. Per the terms of the plan, his son would have received the benefit. HOWEVER, the Plan did not learn of the death until last month...8 years after the fact.

The terms of the Plan cite the distribution requirements of 401(a)(9). Pursuant to this section of the Code, a death distribution to a non-spouse must begin no later than 1 year after the death.

What does this mean for the beneficiary? Does he forfeit the benefit? Is the Fund allowed to make the payment?

Your assistance is appreciated.

I'd like to hear your thoughts on restraining orders. Facts are as follows:

Plan is sent copies of restraining order restraining the Plan from paying the participant pension benefits and restraining the participant from "accessing" his pension benefits. No QDRO, and divorce decree states that participant gets pension benefits--nothing assigned to the ex-wife. Participant applies for benefits, and plan responds saying that there is a restraining order restraining the plan from paying benefits. Participant doesn't respond (perhaps because he reads his restraining order which states he can't "access" his benefits).

Do you think the participant could make a reasonable claim that ERISA preempts the state court restraining order (or the underlying law)?

Apparently the ex-wife may be attempting to secure a QDRO.

Under AJCA, distributions are permissible upon "death". Whose death is the statute referring to? Is it only the participant's death? If so, why? The statute refers to the "participant's disability" ((2)(A)(ii)), but simply uses the term "death" ((2)(A)(iii)). Presumably, it could be the death of someone else, but then would it be a specified event which is not allowed? In the case of an arrangement that covers employees, could it be the sole shareholder's death (the shareholder does not participate in the plan)? The committee reports appear to be silent on this (unless I missed the discussion).

Thanks in advance for your thoughts.

Where can I purchase a brochure with the 2005 maximum benefit and contribution limits?

An S-Corp ESOP is exchanging shares of different classes (all the features will be the same so it should be permissible)(A shares to B shares). The value of the B shares will be greater than that of the A shares. There will be a dividend paid and I wanted to know if the dividend associated with this transfer will be considered earnings. If so, I won't have any potential 415 problems. Any help would be appreciated.

Does a one person 401(k) Plan have to receive and submit a SPD?

Thanks!

the question posed by the sales guy: Can we terminate a 412i plan and rollover the distribution to a new DB plan? Yes. But what he really wants to do is change a 412i plan into a "regular" DB plan. My simplistic answer is that once the 412i DB is no longer funded with insurance it ceases to be a 412i and becomes "regular". The next question posed was - can we "restate" the 412i into a prototype document? What do you all think?

Another issue that seems to be rearing its head is how domestic relations orders will be treated under the AJCA. Because there are strict NQ distribution situations, with no guidance as of yet with regard to ordered distributions from an NQ plan, how do you think these will be handled? I've looked high and low for some information and have come up empty. Any ideas? Any direction? Thank you.

I just found this board and read as many correspondences as I could find on the subject of Roth IRAs.

John G had this to say in a reply to kathye's post: "assuming that you qualify for a Roth in both years".

1. What does it take to qualify for a Roth IRA?

I am 61 and divorced. I understand I can contribute $3500 per year as long as my earned income for the year is the same or more than the $3500.

I am currently on sabbatical from operating my piano studio (therefore, no earned income June-December 2004) in order to write a book but I had more than $3500 earned income this year Jan-June. (I am living on the monthly income from my ex-husband's pension plan.)

2. Is it possible to start contributions to a Roth IRA this month, December, or is there an earlier cut-off date requirement? (I read something about a mid-April date but wasn't clear on it's significance.)

3. In 2005, is it correct that I wouldn't be able to open or make a contribution to a Roth IRA until/unless I began working again?

A few months ago, before I found this board, I went to a community bank in the little town to which I relocated recently. I asked to speak to someone about Roth IRAs and a woman came out into the lobby to talk to me (quite different from the big city atmosphere I'm accustomed to where you're ushered into a private cubicle to have financial discussions--I had to chuckle inside).

The conversation was very brief because I wasn't sure I was being given accurate information. The woman told me I couldn't open an account because I was retired.

Confused me.

4. What constitutes "retirement"?

5. I am not currently collecting social security but if I were to do that when I turned 62, would that preclude me from opening/contributing further to a Roth IRA?

6. Basic question about the Roth IRA account. Each new year that you make a contribution, does it go into the SAME Roth IRA account or might individuals have many different Roth IRAs?

Thank you for reading and for any help in answering my questions.

Nancy

does the $205,000 compensation limit apply to employer contributions to a 403b plan? In other words, when the employee's annual compensation hits $205,000, does the employer have to stop contributing, even if the other limits on total contribution have not been met?

I would like to get an idea of how different people are interpreting "meaningful benefits" (I think that's the correct terminology) for the purposes of headcount in the 401(a)(26) test.

I know IRS hasn't said what meaningful benefits are. What are your feelings on this? Have you heard anything that IRS has said informally?

Thanks.

The following formula could be added to Part1pg (or a variety of certificates) to project out a cash at retirement.

This particular formula, since it uses '1' would be for projecting out the deferral account on that report.

It assumes the current year deferral will be constant for all future years.

This is written for 6%, easily modified for other interest rates.

You would have to add PLANEE table to make it work.

you could modify it to project out on other sources. e.g ContrForf2 would be match.

the first half of the formula uses the current year contribution. The second half is the ending balance in that source.

Round ((Sum ({@ContrForf1}, {RPTEE.SSNUM})*((1.06^{PLANEE.FUTRSVCYRS})-1)/.06

+Sum ({@EndBal1}, {RPTEE.SSNUM})*1.06^{PLANEE.FUTRSVCYRS}))