The prior actuary used actual compensation for the year for a beginning of the year valuation (ex. 2003 comp for a 1/1/03 valuation). I don't chalk it up to the wrong category, but I also don't like that methodology. Do you think this is:

a) a component of the funding method

b) an assumption

If a), do you see a way to change this with automatic approval?

Query: if welfare plans are funded through a VEBA, how does one treat the VEBA for reporting purposes? Specifically, must the adminstrator provide a summary annual report to participants for the VEBA?

It looks like a VEBA arguably could qualify as a "master trust" under the DOL Regs (2520.103-1(e)), in which case the administrator would not be required to provide a summary annual report for the VEBA (although it would have to provide SAR's for the individual plans funded through the VEBA).

Anyone ever run accross this issue?

State government employer has a 401(a) plan (414(h) pickups, employer, and voluntary after-tax contributions) and a 457(b) plan (deferral only). An employee in both could have the following contributed on their behalf:

1. 401(a) plan - up to $40,000 or 100% of compensation AND

2. 457 plan - up to $13,000 or 100% of compensation.

This would be a full $53,000 because the 457 deferrals would not count against the $40,000 allowed under 415. The only thing "reduced" by the 457 deferrals is the amount of includible compensation under 457(b) and the amount of compensation under 415©(3).

Is this right?

Also, as a state government, no nondiscrimination or coverage rules apply (pre- or post-ERISA) so it would be possible to have different vesting schedules for different classes of employees in the 401(a) plan.

Is this right?

Having a hard time getting the Code sections, etc. to confirm.

Thanks! AEA

The plan uses prior year testing.

For the 2002 plan year, one low paid NHCE deferred a large dollar amount. The 2002 definition of comp for testing is less deferrals. For all other years the definition of compensation will not be reduced for deferrals.

My question is: For what year is compensation for HCEs likewise reduced by deferrals?

1. Reduce HCE 2003 comp for deferrals, since this is the HCE data that will be tested against the 2002 NHCE data?

2. Reduce 2002 HCE comp for deferrals, even though the 2002 HCE data is tested against 2001 NHCE data?

Thanks for your help.

Richard

Quick question - Our standardized document states that if a loan is taken it can be for hardship or financial necessity. Would an auditor find any fault with this if an individual does not adhere to these guidelines? (I also need more information on how broad "Financial necessity" is?)

A builder of residential homes Company A, creates a new LLC for each project under development. Each LLC will have a small number of employees, all of whom are hired, fired, and under the control of Company A. Some of the LLCs are owned 100% by Company A. Others are owned 50% by Company A and 50% with another developer. However, even in the 50% only LLCs, Company A has direct control over the employees. When one project is completed and another started a new LLC is created and the employees of the dissolved LLC will sign a new employment contract with the new LLC, as directed by Company A.

Clearly the 100% owned LLCs are a controlled group, however, Company A would like to cover all of the employees in all the LLCs regardless of the amount of ownership.

Is there a case that the employees in the 50% owned LLCs are common law employees of Company A and would be able to participate in Company A's plan.

Is there any special wording I would need in the plan document under eligible employees?

Thanks for any assistance!

What do people charge to terminate a plan (basic PS plan with 10 participants) ?

and, does anyone ever Not file form 5310... simply file a final 5500?

Client is balking at my fee... maybe he should drop the cost of a root canal from $750 to $200, talk about a racket!

The distribution of a nontransferable annuity contract from a qualified plan is not taxable to the plan participant. Instead, the participant is taxed only as and when s/he receives payments under the annuity contract. For purposes of the qualified plan distributable events, such as those applying to 401(k) plans, is it permissible for a 401(k) plan to distribute an annuity contract to an active participant if the plan changes to a recordkeeper which does not want to deal with annuities?

Provided that the plan allows expenses to be paid from the plan itself, is it reasonable for a plan to pay expenses associated with using a commercial locator service to find missing participants in order to complete a plan termination? The plan in question is a 3-person DB plan where the owner will take the hit, so no participants' benefits are being reduced. We're looking for two people, so the fees won't be exorbitant by any means.

Does the participant have the right to obtain a copy of the audit that was completed by DOL?

Employer is a non-profit that employees blind indivudals. Employer wants to put in a medical expense reimbursement plan. Any way to do this given the disability issue? Plan document for medical expense reimbursement plan generally provides for ineligibility once participant becomes disabled. Also, disability seems to be a qualifying event under COBRA upon which the disabled individual is to pay 150% of the costs of the benefits under the plan. Any ways around those two issues. Bottom line is that employer wants to provide as much as it can to the employees without negatively affecting their SSI Disability, Medicare, Medicaid, etc... coverages......? Thanks for any help.

Participant is receiving lump sum distribution from DB plan and wants total rollover into IRA. Account includes after-tax employee contributions. Can contributory amount be included in rollover? Any constraints or cautions?

Our firm has primarily small DB plans (under 100 lives) but we're picking up more takeover plans which I defined as "mid-size" (100-500 participants) plans. We currently use Datair which we're generally happy with for small plans (except for the look of the reports), but it doesn't handle multi-decrements which some of our takeover plans have. I've searched prior threads and have gleaned some info, but does anyone have any recommendations on software that handles multi-decrements and does the 412(l) add'l funding calc for 100-500 lives sized plans without being too outrageously expensive ? thanks for any thoughts.

Have a potential PEO client that is under a multiple employer plan - each company has a seperate investement contract right now - one trust and owner of PEO is the trustee. Client wants to merge assets into one contract, wants to name an individual trustee for each company and wants to recieve comissions from the assets to offset adminstrative costs and reduce fee to companys. Comments????? Can there be one master plan with seperate trusts - how would hte 5500 be filed, with mulitple sch p? just like the ts? Is there any issues of the PEO receiving comissions - is that a prohibited transaction? Any ideas - any examples of what other peo's are doing?

Sponsor had a 401k plan that terminated. Final distribution was made in April 2003 (deferrals had ceased in 2002).

Now sponsor wants to start up another 401k plan. Although deferrals won't begin until July, I would still like to make the effective date of the plan 1/1/04. But I am worried that because the effective date of the new plan would be within 12 months of the final distribution date of the old plan, I will have a successor plan.

I can always go with a later effective date. However, I am not sure what policy objective or purpose this really serves.

I am wondering how to correctly handle employees who have exhausted their FMLA

leave and need to begin paying for their benefits. Currently, these employees are not receiving paid time so per our policy, they are required to begin paying for the full premiums for all of the benefits they were enrolled in prior to beginning their leave. Our company pays 100% of the premium for short-term disability, long-term disability and base life. Are we within guidlines to bill the employee for these benefits also, along with the full premium of the health and dental?

HELP! Does anyone know if there are any studies regarding productivity and how dress code may (or may not) affect work productivity?

I have a client who failed to file a Form 5500 for their health plan for 2001 and 2002 (calendar years). Because this was part of their Cafeteria plan, they misinterpreted Notice 2002-24 as meaning they did not have to file a 5500 at all for the plan (it has more than 100 employees).

What are the options? Are they best applying under the DFVC program and paying a $4,000 penalty? Any chance of getting this penalty reduced/abated either under this program or outside this program? I understand that the penalties outside of the DFVC program are potentially substantial, but $4,000 is still a decent hit that I would really like to try and avoid!

Thanks

A one participant plan uses the aggregate method in year one and switches to EAN in year two.

The dilemma is w/r/t the amort base.

Clearly if plan used EAN in year one then initial AL would have 29 yrs remaining in amort period.

By changing from aggregate to EAN in year 2, the UAL from the change in method is the only base and is amort over 10 yrs per rev proc 2000-40 for min funding and amort over 10 yrs for max tax. Thus no range.

A prior rev proc used 30 - x at time of change, thus in our case it would be 29 yrs, and allow for a meaningful disparity between min and max.

Therefore for eg. say participant entered plan at age 50 with NRA of 60. Under aggregate the PVFB is spread over 10 yrs and if plan used EAN the UAL spread over 30 for min and 10 for max.

So if Employer used aggregate in year 1 and wants to reduce costs in year two, it would seem reasonable to change to EAN and amort over 29 years, which would be the same path if used EAN in year 1 over 30 years.

See the dilemma?

Has anyone analyzed and resolved this situation?

Thank you.

Gary

I have a SEP-IRA. I own 100% of company 1 and 50% of company 2. No other shareholders are family. Is this a controlled group? Can I take a 25%/$35,000 contribution to my SEP from company 2 without having to make equal contributions to my employees in company 1?