I am somewhat confused as to the calculation of the maximum allowable lump sum under IRC 415 for NRAs prior to age 62. Assuming that the plan's actuarial equivalence post-NRA is 5%, 94 GAR. Is 1 or 2 below the correct method?

1. Convert age 62 415 maximum dollar limit ($165,000) to a lump sum using 5.5% apr, discount back to NRA using 5.5%.

2. Convert age 62 IRC 415 maximum dollar limit to a lump sum using 5.5% apr, discount back to NRA using 5%.

When a db plan freezes accruals there is obviously a curtailment under FAS 88. My question is how to handle the unrecognized transistion asset and the unrecognized gain/loss. Are they both set to zero since there is no expected future service? Also is the Prepaid Pension Cost set to zero?

We are taking over a 401(K) plan that has appx 500 lower paid participants. There are no highlys or keys participating in the plan. Presently, the doc has a discretionary match. The employer contributes contributes 8% of pay per pay period as a match if the participant defers the minimum. (The minimum is $5.) Needless to say, a lot of participants are deferring $5 per pay.

The employer would now like to change the match formula and contribute by groupings.

Question #1

In general, assuming you can pass coverage and acp/adp testing etc., can a match be allocated by group similar to a new comp ps plan?

Question #2

This employer would like to give group A - 12% of comp and group - B 6% of comp. The only deciding factor on which group you are in is whether or not the employer pays for your spouse's health insurance. If you have single premium ins. you would get 12% if you have spousal coverage you would get 6% (we're not up to addressing children yet).

Question #3

If it can't fly as a match, how about as a new comp contribution? It would pass the gateway and other tests.

Appreciate any help here.

Are there any schedules required to be file for a 403(b) match plan? Someone in our organization made the argument that we should file Sched. P for statute of limitations purposes, but this does not appear to be required per the instructions.

1)a bank employee who will soon turn 65 is considering substantial equal payments into an ira(6 payments). is that allowed?

2)what if she retires and the following day takes a distribution of the stock in her account, would she only be taxed on the basis that the plan paid for the stock and not the unrealized gain/loss until she sells it?

i believe its yes to number one and she would be taxed on all capital gains on number 2 even post distribution?

a client has called me asking if they can contribute employee bonuses that they are going to be giving 100% to the plan. I was thinking that this is not allowed. Am I correct?

The adoption agreement has a question that says : May partiicpants make a special salary deferral election with respect to bonuses? No.

The plan only allows for deferrals up to 25%, so if this employer wants put the bonuses in the plan, he can only do so according to the percentage that the employee has elected. If participant/employee A has elected to defer 10%, than only 10% of his bonus should go in there. The plan has match, so i assume that the bonus should be matched as well (up to the limit).

Am I on the right track with this line of thinking? Thanks fo ryour help!

Where can I locate information on the implications of failure to deposit a profit sharing contribution? I have tried every search keyword possible!

Not 401(k) contributions (of which there is plenty, easy to access information . . .).

The employer failed to make a final deposit of the profit sharing contribution for the plan year ending February 28, 2003. The deposit should have gone in no later than May 15, 2003 (no extension). We are just now discovering that the deposit was not made.

Clearly the money must go to the plan, the employer included it with their tax deduction for 2002, but should there also be a penalty and a filing of some sort with the IRS?

Can someone point me in the right direction?

Thanks.

I found historical monthly average rates for Moody's AAA and Baa bonds here:

http://www.federalreserve.gov/releases/h15/data.htm (near the end of the table)

I found historical rates for the last business day of the month for Moody’s AA bonds here:

http://www.soa.org/ccm/cms-service/stream/...&g11n.enc=UTF-8

(click on “moody_agreement.html”)

Anyone have a link to AA monthly averages?

I'm fairly new to the whole conversion process - fairly new to the pension industry in general. I work for a small TPA in the midwest, and I was wondering what other TPAs do as far as "conversion work" is it normal for the TPA to be involved in the transfer of assets? By that I mean is it normal for the TPA to tell the new service provider how to break out the assets to be allocated to participants' accounts? Does that have any bearing on fiduciary issues?

I've seen a couple conversions where the asset providers do all the work, including breaking out the assets to be allocated to participants' accounts, and then I've been involved in a conversion where I've had to break out the assets and show the new asset provider how to allocate the funds. Is there a standard way to do a conversion properly?

Is feature 3H used for individually designed plans? thanks...

A client with a Safe Harbor 401(k) is going out of business. They use the basic match ($4$ up to 3% and 50% on the next 2% of comp). No other contributions have been made to the plan other than the match.

If the company provides everyone with a notice that the plan is terminating, I think the company has to do the ADP/ACP test. Since they have gotten a free ride on the top heavy issue, do they now have to make a 3% top heavy contribution?

I have an unusual situation, and I just want to make sure we don't run into some kind of nondiscrimination issue:

This is a three participant plan. Two of the participants are 50/50 owners of the corp., and the third participant is an ordinary NHCE.

The NHCE signed an election not to participate in the plan dated May 2003.

At the time he signed the election, he still had a contribution receivable applicable to the 2002 plan year.

That deposit was never made on his behalf, so issue number 1 . . . certainly you cannot retroactively opt out of a plan after you've already met the contribution requirements and a receivable has been posted (and possibly deducted from the tax return)?

Number 2, even though he has opted out of the plan, is he still counted for 410(b), as in: included as eligible, but not benefiting? . . . as in, FLUNK? Or is he now a quasi-statutory exclusion?

Thanks!

We have come across a bad situation with an HRA plan, and I would like to see if any of you have any insight on how to handle this problem.

A CPA came to us to have us set up an HRA plan. We drafted plan documents per his request for a group of doctors, giving coverage of $10,000 per year for each employee. The plan document was adopted and SPD's were distributed to each of the doctors. The problem is that the employer actually intended that the level of coverage be $4,000 per employee per year, and the CPA gave us bad information. Now they have an employee who has submitted claims for $10,000 and wants to be reimbursed, and the employer only wants to give him $4,000. The existing plan document does provide for $10,000 of coverage. (Of course, nobody actually bothered to look over or read the document prior to signing.)

Do any of you have any prior experience with a similar situation or ideas on what can be done? Can an amendment be drafted? Are they stuck reimbursing this guy for the full $10,000? I would really appreciate any advice. I guess there is going to be a big meeting with attorneys later today.

Plan defined compensation to include bonuses. For their 2003 calendar year/plan year, the employer did not withhold deferrals on the bonus and their Match did not take bonuses into consideration. They failed ADP/ACP for 2003.

The employer will be making a QNEC to correct the shortage of deferrals and an additional employer contribution to correct the Match. Prior year testing if that matters.

Must the 2003 ADP/ACP tests be re-run to reflect the corrective amounts? What about any excesses that have already been distributed due to the failed 2003 tests?

one of the funds in a plan is closing to new investors. they will remain open to participants in the plan that are currently invested in that fund. this differs from the normal scenerio in that when a fund closes, it typically remains open to all participants in the plan even if one participant is not invested in the fund. do you think that the fact that some participants will have access to a certain fund while others will not presents a discrimination problem?

We have a situation where an employee's child has had a baby and wants to add the grandchild to her health insurance stating that she has limited custody of the baby. Has anybody dealt with this before?

There are several types of employees that do not have to be considered in the Reg 410(b) coverage testing. One of those types is "EMPLOYEES of an employer which is part of the controlled group but which is considered a separate line of business".

What does "separate line of business mean" ?

I find it hard to believe that if a car dealership and a private hospital are members of a controlled group ....then the employees of the hospital are excluded from the coverage testing when the car dealership's defined contribution plan is being tested, soley because the two employers are not in the same line of businness.

Company A currently has their plan at an insurance company.

One particular HCE (who is not a principal) would like to move his assets out of the insurance contract to another location.

Four options have been discussed 1 - Taking an in-service withdrawal; 2 - Using the SDBA feature; 3 - Unbundling the plan at the insurance company to allow for a 2nd custodial account; and 4 - Creating a second plan with a separate investment option (at a mutual fund compnay) where the HCE would be the only participant.

Concerning the 4th option - if the HCE were the only participant in the second plan, either b/c of eligibility or lack of interest by NHCE's, would this have an impact (if at all) current and effective availability discrimination issues?

Assume an S Corp has an ESOP that owns 60% of the stock of the company. The remainder is owned by individuals. No stock will be allocated to a "disqualified person" because those people are excluded from participating in the Plan. The individual owners are receiving payments of nonqualified deferred compensation (although they will never receive ESOP allocations). I think it is clear that the Plan will not violate 409(p); however, it seems that there is a problem with 4979A(a)(4). Because these individuals have nonqualified deferred comp interests (synthetic equity) and there would be a nonallocation year (although no stock is allocated to the individuals), does that mean that they now are liable for a 50% excise tax? (I know they can distribute the nonq deferred comp by 7/21 and avoid the problem, but this still doesn't seem right).

Thanks.

I would appreciate the expertise of other members of this forum.

The plan year for a safe harbor 401(k) must be twelve months long, unless it is a newly established plan (excluding successor plans) or, under the proposed regulations, a terminating plan.

A current 401(k) plan (not safe harbor) is on a calendar year. If the current plan elects a short plan year, say ending June 30th, can the plan adopt the safe harbor provisions effective July 1st? (This assumes proper notice is given and the safe harbor plan year ends June 30th.)

This scenario seems to meet the requirements of Notice 98-52, but something about it is nagging at me. Thanks for the help.