This is another end of the year valuation question.

Part of the quarterly penalty calculation involves determining the minimum funding requirement at the beginning of the year.

The actuary has decided to change interest rate from 5% to 7% at the 12/31/2003 valuation.

The credit balance is brought forward with 5% to 12/31/2003.

However, when the minimum funding requirement is determined (using the 7% interest rate) WHICH interest rate is used to bring it back to the beginning of the year??

A 5%

B 7%

The IRS appears to say that everything that happens prior to 12/31/2003 is at 5% and that the change does not occur until then.

Thanks to any responses in advance.

Our company is exploring a joint venture where we would have 50% ownership. Can the employees from this company be put on our benefit plans? What other considerations should I be thinking of?

I'm 31 years old and ready to invest in a roth ira. I plan on maxing it out every year until I retire at age 60-65. My question is since I will be putting in money every year for at least 30 years how can I choose now which roth ira will bring me the best investment. I don't want to get locked into a situation 10 years from now where I realize that I made a mistake in choosing the roth ira that didn't bring results.

Also, can I invest in a mutual fund and set it up so that every Jan 1st they deposit $3000 into the roth ira?

Any help would be appreciated.

Participant had vested balance > $5,000 at termination. At Age 70.5, minimum required distributions started. Balance at 12/31/03 was approximately $4,900 (after two years of MRDs). In case where balance at termination exceeded $5,000, plan document states that if the balance "subsequently falls below the cash-out amount for any reason prior to the commencement of installment or annuity payments", that amount may be paid in a single sum.

In this case, may the Plan Administrator pay out the $4,900 in early 2004 or is there a prohibition against this once the Age 70.5 distributions begin? Or is there a presumption that minimum required distributions will continue until they reach $5,000 and are then paid out?

On a separate question, is the exclusion of rollovers for determining the cash-out limit (per EGTRRA) an election or by default? If no election is made, is the Administrator required to include the rollovers?

My company is doing a joint venture with a small firm that has operations both in and out of the US. Question was posed to me as to whether or not the US employees can be offered our benefit plans. From my understanding, we will own the company 50/50 with another firm. Any thoughts?

I'll definitely check on this with our ERISA counsel but just wanted to get some preliminary thoughts from you all.

Thanks

I've gleaned what I can on restructuring under the (a)(4) regs, plus reviewed some good prior threads on this service (benefitslink). Does anyone know of any seminar articles or other sources that might also help illuminate the rules and scenarios where restructuring can be helpful ? Thx.

Stupid question:

Plan document says plan year end is February 28

This is a leap year so February has 29 days.

Does the 2003 form 5500 get filed for the plan year 03-01-2003 to 02-28-2004 or 03-01-2003 to 02-29-2004.?

Can anyone please tell me where to find these notices? Thanks for your help.

I have a determination letter request pending with the IRS on a DB plan. We are using a prototype document. The regular vesting schedule is 5 year cliff and the top heavy schedule is 2/20. The IRS is saying we must amend the top heavy schedule because it is not as favorable as the regular schedule in the 5th year. They are asking that we amend to 3 year cliff or change the 2/20 to 100% in the 5th year. I've never had this come up before. I understand there are protection issues when a vesting schedule changes but is this a valid request?

If benefits from an IRA are paid to a trust for the benefit of a child under a Will with distributions made at ages 25, 30 and 35, when calculating minimum distributions, is it based on the life expectancy of the child with accelerations at 25, 30 and 35 or do we presume that the person only has a 15 year life expectancy (presume dad dies and the child is 20 at the time death occurs)?

I also posted this in the Health Plan forum,,,,

We currently pay 100% of the insurance premiums for both individual and family coverage. We would like to decrease the number of individuals electing family coverage. There are a few ideas that have been thrown around:

1. Implement a full flex plan, provide employees with $X with which to purchase items they would like (health, dependent care, medical FSA). If they do not use all the money, they get the cash.

2. Simply paying employees to not select family coverage.

3. For those employees who are eligible for, but do not select family coverage, making an employer contribution into the 401(k) Plan (would this be subject to vesting?).

Any insight, issues, problems with any of the three above?

Thanks,,,

We currently pay 100% of the insurance premiums for both individual and family coverage. We would like to decrease the number of individuals electing family coverage. There are a few ideas that have been thrown around:

1. Implement a full flex plan, provide employees with $X with which to purchase items they would like (health, dependent care, medical FSA). If they do not use all the money, they get the cash.

2. Simply paying employees to not select family coverage.

3. For those employees who are eligible for, but do not select family coverage, making an employer contribution into the 401(k) Plan (would this be subject to vesting?).

Any insight, issues, problems with any of the three above?

Thanks,,,

We have a client that wants to set up a 1 person 401(k) Plan. It will start now and run on a short plan year. There will be a rollover from a previous plan. Is he required to make a contribution during the short plan year? If so, what is the minimum? Is there a minimum he must make next year during the regular plan year? If so, what is it?

Thank you for your insight on this topic!

I have a situation where an IRA owner is in payout status and dies. The account has 4 non-spouse Primary Beneficiaries. Two of the beneficiaries elect to take death distributions. The remaining two beneficiaries request that ONE Beneficiary IRA be open. (I do not know the reason why they and the advisor is insisting that One Beneficiary IRA be opened - They know that the RMD will be based on the Single Life Expectancy of the oldest beneficiary).

My question is:

1) Is this legal or does two separate Beneficiaries have to be opened?

2) Where in the Code and Regulations can I prove this?

Thank you in advance for your input.

Anthony Milano

An employee is married and elected single medical coverage. If the employee is transferred from one company of a controlled group to another company can the employee change his medical election from single to family coverage?

Thanks.

Is it permissable to amend a 12-31 401(k) plan to a plan year running from 01-01-2004 to 09-30-2004 and then terminate the plan and pay out all participants prior to 12-31-2004?

Does this create 2 two short plan years? Are you allowed to have consecutive short plan years? If the answer is no - could you process the distributions in early 2005?

Awhile back I posted a question regarding what "maintaining" a plan meant because a client of mine maintained a profit sharing plan (had not put contributions into the plan in a few years) but set up a SIMPLE IRA concurrently.

I got some feedback from this board, and wanted to come back to tell you what the IRS said.

They disqualified the SIMPLE IRA saying that "In order to establish a SIMPLE IRA, the employer cannot currently maintain another retirement plan". The fact that there has been no contributions to the plan does not mean, to this auditor at least, that the plan has not been "maintained". The IRS response letter suggests that if a deduction were to be taken for a contribution for a year, that it should have been put into the profit sharing plan if the profit sharing plan was still maintained, and if they wanted to open the SIMPLE they should have terminated the PSP first.

I thought you all might be interested in the response we got from the IRS.

My girlfriend is doing research on different IRA's and she was curious as to what are the qualifications to be eligible for a Roth

Income from certain fishing activities is not taxable to Native American tribal employees. How should this income be treated for purposes of the tribe's 401(k) profit sharing plan? My theory is that compensation for deferral and contribution purposes can be defined to include fishing income, but that for 415 purposes, only W-2 income (plus 401(k), cafeteria plan and transporatation plan deferrals) can be counted.

I haven't found any guidance on this, so my theory is based upon an analogy to the treatment of nontaxable parsonage income for clergy in qualified plans (as I understand it after a brief review).

Any thoughts?

DB plan receives a DRO in good order and the administrator determines it is qualified. The court orders the plan to distribute benefits to the alternate payee per the terms of the QDRO.

A mistake was made by the atty who drafted the DRO and the administrator did not catch the error.

Specifically, the order indicated that the alternate payee is awarded 50% of the participant's accrued benefit. It should have been 50% of the participant's accrued benefit earned from the time of marriage to the time of separation. The alternate payee was paid 50% of the participant's benefit through the date of separation and now wants more (i.e. 50% of the participant's benefit forever). Is there any such thing as an amended QDRO?

The participant and alternate payee have not finalized their divorce and have not fully divided joint assets yet. Perhaps I am wrong, but if joint assets are being split 50/50 couldnt the participant reduce other assets being given up by the same amount of excess plan benefits resulting from the mistaken language?

This occurred in California which is a community property state.

Thanks much for any responses.