Am having difficulty understand the issue. How do you know if early retirement benefit and lump sum are "subsidized" or not? Have been asked many questions regarding this and honestly don't understand it myself.

Can someone give me an explanation and example?

A DB plan defines average compensation as the high 5 consecutive years. If in one of those years a participant did not work 1,000 and receives no credit for service can you still use the compensation in the average? It seems that the rule regarding double proration deals with plans that require more than 1,000 hours for benefit credit and give credit for a partial year. I know many documents allow you to exclude from compensation any year that you do not receive credit or have a break in service. This document does not address this.

I am having a harder than expected time trying to figure out how a safe harbor plan with additional nonelective contributions completes the Schedule T. If the 3% safe harbor is treated like any other nonelective contribution how would you test if 1) all employees are eligible for the safe harbor but 2) only employees with 2 YOS, 1000 hours and employed on last day of year are eligible for the additional nonelective. The coverage percentages is quite different under 2) than 1)

Please help.

Thanks

When the company deposited their required Top Heavy contribution- the investment company labelled it as a QNEC? Should it be done this way? Or is it ok to leave it this way?

I'm wondering if I should move the money from the QNEC account into the discretionary account. From my experience, only ADP/ACP corrections were called QNEC's.

Any insight for me?

Thanks,

Rachel

A company owns five different firms throughout the US. All are independently run, have different names, etc. The CFO of one of the firms wants to offer a 401(k) plan to his employees. Would it be required that the other 4 firms also offer a 401(k)? Is the answer different if the CFO of each of the five firms owns 25% of their respective company? Thanks in advance for any insight....

There really isnt a proper topic on the boards for this, but I was wondering if anyone had suggestions for where I could check out TPA companies (for competence/repuatation). I am going to start looking in North Carolina for a new position. Because I am out of state its tough to "know" the firms like I know the TPA firms around here. Right now I am working at a great small TPA that really knows its stuff! I am not sure how to know a quality TPA from a bad one in another state. (and i know there are lots of bad ones out there!)

I know in Plan Sponsor magazine one group in Charlotte was rated #1 this year, so I am going to check them out...but I really like working for small firms. Its a little harder to check out smaller firms and how they run things.

If anyone has any suggestions, I would appreciate it! (aside from the BBB, that is obvious but not that reliable).

Thanks!

Client (owner) wants to segregate his account in DB plan and he is beyond NRA and plan allows for post-NRA distributions. He does not want to terminate plan due to various illiquid investments in plan that an IRA would not easily hold. Is there any legitimate argument that I can apply 415 limit check only at time of segregation vs. at future distribution date (from segregated account), or must I apply the 415 limit check even on the segregated account when it eventually is paid. I have some concerns that the trust investments might grow enough to exceed his 415 limit sometime down the road.

I have a governmental target plan that is decreasing the interest rate from 5.5% to 5%. I am taking the PV based on 5% pre & Post retirement and subtracting the Theoretical Reserve which was based up to this point on 5.5%. This is producing a higher normal cost than the client was prepared for. Am I missing something?

Contigent Beneficiaries are his children. If Participant died first, benefit goes to his kids. If not, it would go to her estate. Both parties agree that time of death was at the same time and are willing to split benefit. Benefit in excess of $1 mil. They want to keep tax deferred status. Any opinion or cites on legality of this and tax options they may have??

Client failed the ADP test. There is only one HCE (owner) who took a hardship distribution in 2003 for all that he could. After the year end testing was completed it was determined the HCE does not have enough money in the plan to cover the ADP correction.

What are our options here? It seems pointless to contact the HCE to have him "give back the money" - when he was in a hardship situation to begin with, just so we can turn around and complete the correction the right way?

I would rather correct the 1099. However, I read that when it is not a full distribution from the plan (in the case of a terminated HCE) then it is not that clear.

Any advice would greatly appreciated.

Client has a PS plan... he is only participant. Has invested in limited partnerships, to the tune of $1mil plus. My question is how to value these investments... From the K-1? Based on cost? Obviously based on cost would be the easiest... but if valued at cost, would that be accurate enough in the event of an audit?

Our plan covers many entities which have various benefit formulas. The plan provides that the benefit formula at the entity where the employee is last employed is the formula used to determine the employee's benefit under the plan. This to me, creates a windfall for an employee who has worked at a lower formula entity for the majority of his career, then transfers to an entity with a much more generous formula. Is there any reason why we would do this? It seems to me that an employee earns a benefit in accordance with the formula at the entity he is employed with and if he works at 2 or 10 different entities, his benefit is determined based on the aggregated benefit from the 2 or 10 different entities. Is there something that I am missing? Any guidance is greatly appreciated!

Self-funded Plan established 11/1/02, plan year 11/1/02 through 10/31/03, to pay dental benefits for employees. Funds are kept in a separate bank account under employers name, but with "Dental" specified on the second line. Can that be seen as still being paid from employers assets, or would that be seen as a funded plan requiring an audit?

Thanks!

This is a takeover plan, with an after-tax source, as well as a related rollover source (old DB $).

at the previous provider, the assets were rolled into a new investment product without preserving the separate sources - now, instead of deferral, profit sharing, rollover and after tax, there are two sources - employee and employer. In order to properly account for the assets, the sources should be split out, but the rollover to the new investment product happened about 2, maybe three years ago and when the assets were converted to the new provider, a participant (also the CEO) noticed that something was wrong with his account.

Any suggestions?

If I amending Schedule I for a prior year that required an audit, does the audit report also have to be amended? My first reaction is yes.........but it could add more expense to the client. Thanks.

What distribution methods are available for distributing an annual SAR? Is posting it to the lunchroom bulletin board enough?

Can anyone tell me where I can find some rulings/more information on the newly passes IRS Automatic Enrollments, they are calling it a "general information letter" but I cant find anything regarding the rules/guidelines, etc.?

Thanks for the help!

Calendar year DB plan uses highest consecutive 48-month average. Pay history is:

May 2000-April 2001: $18,000 per month, plus bonus of $40k in 4/2001

May 2001-April 2002: $21,000 per month, plus bonus of $55k in 4/2002

May 2002-April 2003: $22,000 per month, plus bonus of $61k in 4/2003

May 2003-April 2004: $23,500 per month, plus bonus of $70k in 4/2004

EGTRRA amendment applied $200,000 limit to all prior years.

Another practioner has informed me that in rolling monthly averages such as this plan uses, you limit the pay to the annual limit in effect for the Plan year in which the 12-month period begins. Therefore, the limited FAE = $200k for each year, since all 12-month periods begin in 2003 or earlier.

Or, can final 4 months of pay average be capped at $17,083.33 ($205,000/12), meaning that final year in 48-month average is $201,667?

I'm looking for feedback concerning a plan that specifies a unit credit benefit formula and accrues benefits under the fractional method of 411(b)(1)©. I'm looking for some thoughts about how to handle a potential violation of the minimum accruals required under Reg 1.401(a)(4)-3(b)(4)(i)©(1).

One Plan doc I've read specifies (summarized) that the plan will not violate this regulation. However, there is no fail-safe provision in the document.

Is it possible to draft a doc that specifies correction in the event a participant's accrual rate is too high, or too low? Could you either increase the low accrual rate or bring down the high accrual rate? Is there a difference using permitted disparity? Or is the Plan just not in compliance and subject to DQ?

Any thought? Thanks in advance.

The EGTRRA change to Section 403(b)(3) to permit employer contributions for up to 5 years after retirement is not limited to school districts, is it?

I know that the provision was designed with K-12 teachers in mind, but it is equally available to employees of private charitable orgs., is it not?