While nothing is final, my understanding would be:

1. The NQDC investement offering would be based upon the short list of funds the participant has direction.

2. Unless you have some special hooks in your plan, the company's fiscal year is immaterial. The participant is making a deferral election prior to 12/1 for monies to be paid to them between 1/1 and 12/31 of the following year.

3. Good question. While the regs say any participant changes can't take effect for five years, my understanding from others is the intent was to delay acceleration of benefits - converting a 10-year installment to a lump-sum. So I would doubt your request from 10-year to lump-sum, but possibly 10-year to 20-year. The next question should be who would really want to extend their unsecured creditor standing during retirement from 10 to 20 years? Having been a NQDC TPA for over 15 years I never had a single case of someone electing to extend their payout. Most elected lump-sum and most plans called for lump-sum as the default election. Most companies don't want to hassle with paying out NQ benefits on an extended basis.

4. Yes - As long as this is a plan level provision, not a participant election.

5. Yes - New participants can still come in anytime and commence deferrals 30 days later.

The next question is why would a HCE want to continue to participate in an unsecured NQDC when the new era of selective benefits are personally owned company sponsored benefits that provide greater value and none of these hassles. As well as none of the hassles or expenses for the company.

A QDRO awarded half of participant's entire investment to his former wife. Now she receives an annual investment statement from the plan each year. That's right, the statement is in her name only.

Does this mean that she is a participant entitled to a SPD? Can she request a copy of the plan document (just like any real bonafide participant can)?

She presently has no idea if the plan is an ERISA 404© plan. Is the plan required to give her something in writing which explains if the plan is 404© plan?

She called the plan's 1-800 phone number and was told that she has no control over how the plan invests her account funds. The person she spoke to said he wasn't familiar with the word "ERISA". So obviously, she didn't speak to anyone of authority or knowledge.

Here's my questions:

1) I realize that if a plan is an ERISA 404©, then such must be stated in the plan document .... but it's not required to be in the SPD (according to the DOL's list of things that are required to be in the SPD). So how does she find out if the plan is a 404© plan, other than calling the plan and speaking to a receptionist?

2) If it is a 404© plan, then must she too be afforded the priviledge of selecting how she wants her account invested .... or does she not have that right because of the way in which she acquired the account (via a QDRO).

Note: Her ex-husband is still employed by the plan's sponsor.

Anyone have an excel formula I can use to allocate the basic Safe Harbor Match contribution?

Can i sell a fund that is currently in my Roth IRA to use the money to purchase a different fund in that same Roth IRA without having to pay any taxes or penalties?

I believe the old rules required an employer contribution into a 403b to be 100% vested.

Have the rules changed? Can we have a vesting schedule in a 403(b) now? Is there an IRS pub or Rev Ruling that specifically covers that?

I am trying to locate a person willing to be the administrator for a one-person FSA for a retired clergy person who has no employees. His accountant was willing to provide this service in the past but no longer is maintaining the administrative software license after 2004. Thus, the clergy person needs to find another independent person to provide this minimal service.

Where do I look? Do I look to other accountants, a TPA (which is unlikely to want to deal with a one-person situation in a cost effective manner), a financial planner, an insurance broker, an enrolled agent, or what?

The clergy person is exceptionally thrifty so any charges will need to be minimal (as an example, he always does take out food and orders only one meal to share when traveling with his spouse, and it is never at supper time).

Thank you for any suggestions.

Theresa Lynn

Several participants have plan loans that the plan provides should automatically be made by payroll deduction. For a number of administrative reasons, the employer and the TPA either never started repayments by payroll deduction or deductions did not equal the required installment amounts. The failure has just been discovered so participants have not yet been notified. Many participants have payments that were due in the first quarter of this year or sooner but have not yet been made. (The plan does not have loan procedures so we are choosing the latest date possible for the grace period.)

At least some of these loans must be defaulted in order to comply with Section 72 but we are hesitant to do that because this is arguably the employer's fault. Instead, we propose to allow participants to refinance the old loans with a new loan (assuming they have enough in their accounts to do so and the refinancing otherwise complies with Section 72). Because we are not declaring default for the prior loans but are required to under Section 72, we would file Form 5330 and pay the associated excise tax.

Does anyone see any problems to this approach or a simpler solution? Thanks in advance for your help.

All of the private letter rulings that I have seen that address paired 401(k) and nonqualified plans state that the elected amount is contributed to the nonqualified plan, then, soon after the end of the year after testing is done, the amount that will "fit" into the qualified plan is "poured into" the qualified plan from the nonqualified plan. The IRS has sanctioned this approach. (PLR's 200116046, 200012083, 9924067, 9807027)

Would the reverse approach work? An employee who is eligible for the nonqualified plan would make separate 401(k) and nonqualified plan elections. He could also make an election to defer into the nonqualified plan any amount that is required to be returned to him from the 401(k) plan due to a discrimination testing failure. The election would be made in the year prior to the year that the funds would otherwise be returned.

It seems that the amounts returned due to the testing failure could have been contributed to the nonqualified plan if the 401(k) plan did not exist, and therefore the participant should not be precluded from contributing the amounts to the nonqulified plan simply because nondiscrimination rules prevent the 401(k) plan from accepting the contributions (assuming a timely election). Has anyone seen a ruling based on this approach?

If this is allowed, I imagine that complying with reporting requirements could be interesting, since the 401(k) is distributing amounts but they are not received by the participant.

Thanks in advance for any thoughts on these issues.

I'm assuming most folks here are using Windows XP. Service Pack 2 will start rolling on to your computers in the next couple of weeks, and I thought it might be a good idea to keep track of any issues popping up with pension software so we don't feel like lone voices in the wilderness (trust me, there will be problems).

I downloaded the complete patch and put it on our server (so we won't have 15 computers downloading the complete patch over and over again) and installed it over the weekend (on my own guinea pig computer - not on all boxes before testing!).

Observations to date:

Pension Software running

ASC Win/Val w/ Pervasive 2001

Relius 2004 Government Forms

Relius SAR

Relius Government Forms 5300

Only problem noted is with Relius Government Forms 5300. You will NOT be able to print as it gives you an error message that "Your Printer Drivers are Outdated". Tried it on a non SP2 computer and no problem (both to network printers).

Contacted Relius this morning; still waiting to hear of a fix.

A deceased participant named his spouse as the primary beneficiary and his son as the contingent beneficiary. Spouse does want the distribution and wishes to defer the distribution to their son. I assume that she can do this, correct? What form will she need to complete in order to do this?

It has been determined through an attorney we have an affiliated service group consisting of 2 clients. The one client has a 401(k) Leveraged ESOP plan and the other a 401(k) Profit Sharing Plan. The 401(k) Profit Sharing plan excludes HCEs. Our understanding is the Profit Sharing Plan will provide a PS contribution "comparable" (we assume in dollar amounts) to the Leveraged ESOP. I understand we have to aggregate the plans for testing purposes, but is there a Benefits, Rights, and Feature problem with this plan design?

We have a client that has an initial short plan year of 5/1 to 12/31. Plan document says for entry date "semiannual - first entry date: 1/1 or the date 6 months thereafter, coincident with or next following satisfaction of the eligibility requirements".

Question: What are the entry dates for the initial short plan year?

Has anyone used, or is anyone planning to use, the PBGC's new "MyPAA" online filing system? I have a client that wants to try, but I'm hesitant to be the guinea pig.

We have just been informed that a participant who reched early retirement under one of our plans and requested a distribution will be returning to work with the plan sponsor on a part time basis.

Our initial investigation leads us to believe there is a problem here since NRD has not yet been attained.

In light of current projections that part time work will be a part of retirement for many, has anyone had experience with the current Govv't thinking on this type of arrangement? What sort of problems may the client encounter if this goes through?

Both of you have helped me in the past!

I'm having a hard time today...

Question relates to Flexible Spending Accounts and employee terminations.

Employee terminated May 1st.

They had contributed $400 of their election of $1200 but had only submitted

claims for $200 prior to termination. The plan document allows for a 90 day period to submit claims after the date of termination.

Isn't this employee allowed to submit claims up to the elected amount as long as they were incurred prior to the date of termination?

I think they are entitled to the entire election amount as long as the charges were incurred prior to the termination date, and as long as they were submitted within the claim filing deadline.

Thanks for your help.

Facts: A labor union provides a vacation plan for its members. Pursuant to collective bargaining agreements, contracting employers contribute:

(1) annual vacation pay, and

(2) the employer's share of FICA

to the plan. Union members receive their vacation pay net of FICA tax withholding. At year-end, the union reports each member's vacation benefit on Form W-2.

I believe that this arrangment is an ERISA welfare benefit plan, as defined in 29 USC 1002(1)(A). The plan provides a benefit described in LMRA Sec. 302(a). I also believe that the plan is required to file an annual Form 5500. There's no trust, which should be irrelevant; an ERISA welfare benefit can include any plan, fund, program, or other arrangement.

Any thoughts about this matter? Thank you.

Participant is 60 and wants a participant loan for a primary residence to amortize over 30 years.

I believe denying the loan on the basis that it will never be paid back is age discrimination, however, I cannot find anything in writing.

Are there any limits regarding the latest maturity date allowable that are based on age?

Can anyone point to something official looking?

Thanks,

If you are charging annual maintenance fees on SEPs, SARSEPs and/or SIMPLE IRAs, who is being charged: the participant's account? the participant? the employer? any combination of the above?

And, what fee is being charged?

Does anyone charge annual fees for non-ERISA 403(b) plans? If so, who is charged: the employee's account? the employee directly? the employer? any combination?

Tom P. or anyone using Relius...when imputing disparity for non-discrimination testing in a Safe Harbor 401(k) Profit Sharing Plan which utilizes the 3% SHNEC, does the Relius software "know" to only impute on the PS when I check that box or should I be testing "by hand"?