Has anyone considered this:

If an employee purchases service credit in a d/b plan with a rollover from an eligible retirement plan can 25% of the employee contribution be used to fund a 401(h) account?

A plan is terminated and gone through the PBGC 60 day wait period. Now the 180 days to pay period starts. The plan however has a final contribution which the owner cannot make now. Also, he could make up the asset shortfall if he could take until next June to fund and pay his benefit.

I know I can get an extension on the 180 days to pay, but how long an extension could I get? He would need about 5 or 6 months. (June/July 05).

The minimum funding deadline will not be until 10/15/05. Jan YE.

Any thoughts?

Thanks.

I have a small X-tested PS plan. Two HCEs, 11 NHCEs. The Ebars for the two HCEs are approximately 8.0 and 5.0. Ebars for the NHCEs range from approximately 11.8 down to 2.4. The plan fails the F & C test for the highest HCE. If I use rate banding without specifying the bands, the plan passes. Basically, Relius reduces both HCEs' Ebars to the low rate of each band, but I'm having trouble figuring out how Relius determines the bands. I would appreciate any help/advice in determining bands and figuring out Relius.

I've also seen some of the prior messages regarding rate banding in small plans and was wondering if feelings are still mostly against it in small plans.

Thanks.

Its been awhile, we don't have a great deal of plans failing ADP since the advent of safe harbor, so when refunds are actually made, is the excise tax imposed on just excess contributions or excess contributions + interest????

Thanks!

What does a plan sponsor due in this situation?

A few years back, salary deferrals for one pay period were not deposited timely to the 401(k) trust. Upon discovery the sponsor made the contribution to the trust, and filed form 5330 to pay the excise tax on the "amount involved" (the assumed interest on the assumed loan). BUT, the sponsor forgot to deposit the related lost earnings to the plan associated with the late deposit.

It seems clear under DFVC principles, that the lost earnings, plus earnings on the lost earnings are still due to the plan. But, is there a new or recurring prohibited transaction excise tax because the original error has not been fully corrected?

I have a client that terminated a pension plan in 1988. IRS and PBGC both approved of the termination. Annuities were bought for actives, term vesteds and retirees. Some actives were able to "grow into" early retirement subsidies if they continued to work for the employer and later satisfied the age and service conditions.

One participant who was terminated vested (had 14 years of service) at the time of the Plan termination was rehired several years later. He worked a few more years and if the Plan had continued, he would have qualified for early retirement benefits by virtue of leaving his second tour of employment after age 55 with 15 years of service.

He is claiming that his second round of employment should count toward early retirement eligiblity and that his pension benefit (now the obligation of the insurance company) should include an early retirement subsidy.

This does not seem correct to me, but I am unable to get a grip on any certain that could be used to deny the improved benefit. The fact that the Plan terminated does not completely eliminate the impact of any contingent events or future service since in the case of active employees, they must be able to get an early retirement pension from the insurance company if they meet the qualifications. What about terminated participants? Can their service after rehire impact their benefits from a terminated plan?

It is my understanding that under the Pension Funding Equity Act of 2004 that for plan years beginning after 12/31/03, for purposes of determining the plan's funded current liability percentage, you can recalculate the 2001, 2002 and 2003 funded current liability precentages using the new corporate weighted average interest rate permissible range.

My question is, can you also use that new interest rate range for purposes of calculating the 2003 Additional Funding Charge? My assumption would be no.

I recently received DRO that dictates the Alternate Payee is entitled to 50% of the participant's accumulated account balance in a money purchase plan as of 6/30/98. The plan is on a calendar year basis. Would the Alternate Payee be entitled to 50% of the participant's 1998 contribution if the plan does not require either a 1000 hr or last day provision? Has the participant accrued his 1998 contribution as of 6/30/98 subject to the DRO?

Not for profit has an ERISA 403(b) plan and they want to terminate and start a 401(k) in order to have more alternatives regarding investment types (i.e. stocks, bonds, etc.)

I know that there is an issue regarding whether an employer can really terminate a 403(b) plan or if it has to continue forever until the last participant terminates or the ER goes under.

I am reading the 403(b) prototype, and it expressively gives the ER the right to terminate the plan, however, Morgan Stanley is saying no.

Has anyone ever terminated an ERISA 403(b) Plan? Is this possible. The client has been asked to get legal opinion (and we will suggest this) but I just wanted to get some thoughts so I wouldn't be sending them on a wild goose chase.

Any help is greatly appreciated!!!

Hi, everyone,

We are having a debate here at one of the United Nations organizations regarding the eligibility of American employees to contribute to Roth IRAs. We know that in general foreign income earned under the limit is not considered compensation and so can't figure into the potential for contribution.

What we don't know is whether this applies to us as we work for an international organization, not a company nor a governmental body. Under treaty with both the US and Swiss governments, we are not subject to country tax in either country and we do not have to report tax in Switzerland (although we, of course, do in the US). We are filing (in general) forms US-1040 and 2555, reporting the income, but then not having to pay tax on it. In addition, we do contribute to the pension fund here, but for myself at least, I'm pretty sure I'll return to the US before being vested in the pension and will have to take out what I put in without any significant gain.

So my questions:

1. Can we contribute to Roth IRAs?

2. If not, what CAN we contribute to? (Many of us are in our mid-30s without retirement plans worth anything. I want to have something to live on when I'm 75!!)

Many thanks for your help!

Cheers,

Confused in Switzerland

Can you transfer a (deductible) traditional IRA to a 401k plan?

This year's add'l minimum liability is less than last year's, resulting in a negative charge to equity. Is this now reported as a credit or a zero?

Hi I recently received a $100,000 life insurance payment when my dad died. We used about 10,000 to pay off some bills. We would like to save some for emergency money and I would like to invest some.

I am 35 and my husband is 40. We have two kkids 12 & 6. I figure I will have collage costs in 6 & 12 years to worry about. We would like some of this money to be able to be used for collage, but we are also looking at retiring between 55-60. My husband has a 401k with 46,000 and mine is 3000 since I only started saving in mine recently (I realize this was a big mistake to wait now). Our house will be paid off in 13 1/2 years. We really want to start thinking and moving toward being able to retire. There is also the possiblity that I may get some money from the sale of my dad's property, but since I am not the executor of his estate (his two brothers are) and I have no idea what the will said I don't know if there will be anything left after paying his debts or if I would even get it. I am his only child. I make $46.000 a year and he makes about $52,000 a year plus between $5000-10,000 a year from his Air National Guard job (sometimes a lot of this is non-taxable when he goes on hazardous duty trips). He will have a retirement from the military & his government job. I will have a retirment from my company as long as there are no layoffs within the next 17 years. My husband currently has 10% of his income put in his 401, and I have 7%.

I really want to start investing this life insurance before it somehow gets spent over the next few years a little at a time. It seems to be too easy to get caught up in the "we have lots of extra money" spending. I want to pull a halt and get our savings in order before too much gets wasted.

Is an Roth IRA a good place to start? Since this money is tax free to us (since it is life insurance), it seems this is a good place to put this money so that we will not have to pay taxes on the interest in the future. It also seems like a good idea because we could take the contributions (not the earnings) out at any time if there is an emergency need for it.

Also where do I start. I looked at my personal bank (where the money is in a moneymarket) and at Fidelity (where my 401K is at). Where are the least expensive places to start a Roth IRA? How do I know I am chosing no-load mutal fund. Is it best to split my investments equally between a large cap, small cap and an international fund? I think I read about this strategy on the armchair millionare site.

Thanks in advance. I feel so lost as to what to do with this money.

An employee was hired 4/8/2002 and was laid of 12/3/2002 having worked more than 1000 hours. The service req is one yr of service with qtrly entry dates. While the employee was laid off his unit was activated and he was sent to Iraq. The employee returned to work on 5/14/2004 when he came back from military duty.

I think his date of plan entry is 7/1/2003 and should receive a ps contribution for 2003 based on his theoretical wages for 7/1/2003 to 12/31/2003.

Any thoughts?

We have a large client with several thousand employees that has discovered

401(k) contributions have not been deducted from overtime for several years. Potentially 1000's of affected ees over a multi-year period. The document clearly states that overtime is included in the compensation defintion for deferrals. Any ideas?

Thanks

What do you do when loan repayments are withheld and submitted to the trust for a participant loan that has been previously satisfied ?

We have a situation in which the Trustee/recordkeeper is cutting a check (possibly several checks) directly from the Trust to the participant for the amount of the loan overpayment. No reporting is done on this distribution from the Trust. The client would prefer to continue this practice.

I am concerned that once the $ is in the trust it is considered plan assets and can not be distributed for any reason, other than the standard 401(k) reasons (termination, 59.5,etc.) The issue could be corrected in payroll before $ is sent to the Trust but that means more payroll manipulation and possibly more errors.

How do your cleints correct this problem ? I have seen the overpayments applied to the account as "loan interest" but I think this is also an issue because the participant pays more interest than was disclosed in the truth in lending disclosure.

Can this $ be distributed from the trust ?

Participant has approx. 4 MIL in PSP. Particpant also owns real estate (low basis) worth approx. 4 MIL. Participant plans to take a distribution of entire 4 MIL in same year that participant plans to donate the 4 MIL of real estate to charity. Participant believes it will be a wash; however, I think the charitable deduction rules may allow for up to 50% of AGI deduction (will need to verify). Anybody see any issues with this? Alternative Minimum Tax issues? Assuming the distribution is per a distributable event under the plan document I don't think the PSP is impacted at all.

We have a participant that was in the FSA. She terminated her employment but still has money available in her FSA. If she elects the FSA under COBRA, are those funds available to her? Also does she still have to make a contribution to her FSA under COBRA? Or can she just spend down the funds? Any advice would be great!! Thanks

Employer has an arrangement whereby it reimburses employees for a portion of their group health plan insurance deductible ($400 of $500 for individual and $800 of $1000 for family) once its met. This arrangement is not treated as an ERISA plan, its paid from general assets, there is no plan doc, no filing, it is separate from any other plan, it is not taxed as income, it's "just a leettle something they do for their employees..." Is this a health reimbursement plan? I think its an ERISA arrangement but what type? There is no account--the funds are just paid from gen assets if the employee meets the deductible and submits proof to the company.

ANY thoughts appreciated.

When new employees start on the job (a factory), the employer obtains a medical history from the employee, including questions such as present medicines being taken by the employee, recent surgeries, allergies, etc. The employer also maintains a group health plan.

The information is kept in a sealed envelope in the employee's personnel file, to be used only if needed in an emergency (e.g. the employee is unconscious on the factory floor and the first responders need to know about medical conditions or if he's allergic to anything).

Two questions -- First, would the medical history information fit under the PHI employment records exception?

Second, if the medical history would not meet the exception and must be protected as PHI, am I correct that disclosure to first responders or other medical providers would fit under the treatment exception to nondisclosure of PHI?

The employer could of course stop collecting the medical histories and require that information be obtained from providers or the health plan, but having the information on site could be important in a life-threatening situation.

Thanks in advance for any thoughts.