Our company is having a plan change where spouses are no longer eligible to be

covered under our health plan.

This change will happen at our next open enrollment period.

Do we have to offer the spouse COBRA? I don't think so because it's not a qualifying event.

Any opinions?

If a 457 agreement is in place for a terminated employee, does that agreement have to be amended to reflect recent changes in the law?

What do I do if an employer mailed their 5500 before the employer profit sharing contribution was sent in to the plan?

I was told by their accountant that they wanted to do their deposit ASAP. So, we sent over their contribution amount to be sent in, waited a few weeks and then sent over the 5500. My intention was to wait to receive a confirmation of the deposit but figured if there were any changes in plans, they would have notified us.

If he did send it (he has to check with his assistant), does he have to make the contribution immediately? Or is there some way to put him on extension and/or do an amended return later (pretend the first didn't exist?). Just looking for what our options are....

Thanks,

Rachel

Considering purchasing the Datair DC System to do a small number of small straightforward PS/K plans?

I would appreciate any input regarding thumbs up or thumbs down and a brief explanation.

Haven't looked in a while, but is there a correction progarm for a situation where the employer haphazardly forgot to sign the adoption agreement? All trustees signed it, but officer of employer for whatever reason didn't get his/her signature in the blank.

I recently received a statement from the auditor indicating that all of a plan's assets should be marked as "party-in-interest" because they are held with an insurance company. The plan assets are held with ING. Some of the assets are in proprietary funds and we have always marked those as "party-in-interest". Some of the funds do not appear to be ING-managed (ING does not appear in the fund name as it does on the others), so we have never marked them as "party-in-interest". I pointed this out to the auditor, along with the observation that they have apparently followed the same thinking in their prior audit reports. His response was that the schedules in the prior year audit reports were not correct and reiterated his assertion that all assets held at an insurance company were "party-in-interest". Any thoughts?

This seems to be an aggressive plan design but appears to be doable unless I am missing something. Please, let me know if I am missing something.

It is a 403(b) plan with an employer contribution (non-matching). The employer contribution only goes to certain HC employees. In order to pass coverage they are going to combine the the 403(b) employer contribution with a DB plan (that covers everyone) for the ratio percentage test and do a general test.

Site 1.410(b)-7(f).

Thanks

The CFO of our company was not determined to be a key employee at the end of 2003 and therefore he did not trigger the 3% requirement for 2004. The question is for 2004 he will be a key employee and that will effect 2005.Therefore the 3% will be a factor. Short of stopping the contributions of the top heavy employees how can we as a company make this equitable for them?

Online Version of Inte-Greater Software Becomes Available

I am happy to announce the availability of the online version of The Inte-Greater, a program that David Baker wrote for the DOS operating system about 13 years ago. It finds the integration level for a corporate-sponsored profit-sharing plan that results in the greatest share of the employer's contribution for one or more 'favored' employees (e.g., the physician who owns his or her professional corporation that also employs several staffers). Give it a whirl!

https://benefitslink.com/cgi-bin/inte-greater/

I have a client who wants to increase participation in the company 401(k) plan by offering incentives such as gift certificates, bonuses, etc. I have suggested making the match more attractive, but she feels that will not work. She'd like to do something "outside the plan."

I don't think this is a good idea, but am having trouble dissuading her. She also wants to take a tax deduction for the incentives. I have told her these would not be deductible as a plan expense, but she may deduct as a business expense.

Has anyone encountered this? Any suggestions?

Can someone verify the appropraite correction method for employers who fail to increase a participant's deferral percentage upon his/her written request?

Please provide references, if possible.

I realize there may not be too much guidance on this one, but thought I would get some thoughts.

Small company has leveraged ESOP and all employees are terminated upon sale of the company.

Plan has last day of year rule in order to share in contribution. All employees terminated, therefore no eligible participants as of year end.

It seems that the ESOP would have to default on the note payment since the company can't make a contribution that can't be allocated nor deducted.

In that case the stock would revert back to the original sellers (the owners), participants would be cashed out, and the plan would be terminated.

I assume we will need a stock valuation. Am I missing anything besides the fact that they should obtain legal counsel and preferrably file for a determination letter. Is my thinking in line?

We have a situation where an employer/sponsor of a 403(b) is switching vendors. Assume that the money at the prior vendor had been contributed pursuant to an individual annuity contract arrangement, the new arrangement is a group annuity arrangement. Is there a problem with transferring funds from an individual annuity contract to a group annuity contract? The funds will still be subject to the 403(b) rules, such funds will just be part of a group contract instead of an individual contract. Concerns? Thoughts? Any secondary materials on this?

Thanks

A potential client (sole prop) is interested in setting up a DB plan. He has no employees. He receives his earned income from various partnerships that being partnerships have other partners. Would these other partners need to be considered to determine if there is a controlled group before setting up a plan?? Thanks.

OK. It has been a long day and just returned from vacation.

A valuation is performed 1/1/2004 and generates a maximum deduction of 100,000. The plan is now amended to cease accruals and terminate as of 8/31/2004 (assume that all appropriate deadlines are complied with).

Can the client take the full deduction because the plan year is still 12 months??

Thanks for helping a tired actuary!!

During a year in which my wife makes no income, can I as the spouse earning income still contribute to her Roth IRA? Or does she have to earn income in order for a contribution to be made?

Thanks

I do not deal with cafeteria plans very often and need some clarification. An employer has a cafeteria plan that they make contributions to. Some of the employees put a portion of these contributions into the profit sharing / 401(k) plan. What is the correct money type for these contributions and how do the tax implications come into play?

For example, some employees elect to put the cafeteria plan contribution into the plan and also have a separate 401(k) election. Would the cafeteria contributions also be considered employee deferrals? If so, are the two contributions taxed differently with regard to FICA and FUTA? I don't think they would be considered nonelective ER contributions.

Situation: SARSEP plan year runs 8/1 to 7/31. Employer wants to make SARSEP contribs 8/1/04 to 12/31/04, then start a SIMPLE 401k 1/1/05. I checked the SEP/SARSEP/SIMPLE forum back to "the beginning" and did not see a relevant post. Sal's 2004 ERISA Outline (chap 12, section V, pg 12.33, sub-par 1d) discusses the exclusive plan rule for non-calendar plans, and gives an example of a fiscal year SARSEP maintained for a portion of the calendar year. I am lead to believe that if SARSEP contributions stop 12/31/04, it would be okay to establish a SIMPLE 1/1/05. But on the previous page (sub-par 1c) it says "If the qualified plan is not maintained on a calendar year basis, the employer must make sure no benefits accrue under the plan for any plan year that begins or ENDS (emphasis added) within any calendar year in which the SIMPLE plan will be in effect. My idea would be to "terminate" the SARSEP 12/31/04, then there wouldn't be a plan year ending in 2005, the first year of the SIMPLE. Thoughts?

p.s. Sorry for the long post, I wanted to lay out the entire scenario.

Does anyone have an opinion on whether the concepts expressed in Rev. Rul> 2004-57 do or should apply to 403(b) plans?

I am aware of the requirement that employee 401(k) contributions be segregated from the employer's assets ASAP. Has anyone heard of a timeing requirement for the deposit by the trust into the participants' investment elections?

We typically have an employer that has weekly payrolls, deposit the contributions into a trust-owned account weekly. The employer provides us with a cumulative contribution report once or twice a month which we use to determine investment splits. Actual investment buys are made only once or twice a month.