Let's see if anyone visits this part of the bulletin board.

I'm taking over (of course it's not my fault) finishing off the admin for the final year reporting for a terminated DB plan

The assets/benefits have all been distributed in Dec 2003--and all participant disclosures, documentation and benefit calculations look in order. 1099R's were filed.

However, the Plan apparently never notified the PBGC as the file contains no evidence of Form 500, or EA-S, or a 501.

There are/were only 3 participants in this plan and the annual PBGC premium was $57. Last filed in July 2003 with PBGC-1 form.

Any ideas on how to fix the lack of PBGC filing?

DB plan permits AP's interest to be paid to AP's beneficiaries, be forfeited to the Plan, or revert to Participant if AP dies prior to commencing benefits. Original QDRO provided that those benefits would be paid to AP's "designated beneficiary in accordance with the terms of the Plan." AP died without having completed a beneficiary designation form and Plan has determined that since AP failed to name a benficiary AP's benefit therefore reverts to the Plan.

Can an amended DRO be entered and served on the Plan to provide that if AP fails to designate a beneficiary (or none is alive at AP’s death), the benefit will revert to Participant? Does the Plan have to accept the DRO and determine whether it is a QDRO?

I am working on a plan that fails the 12/31/02 ADP test. Since we are now past 12/31/03, I had suggested either a QNEC or a contribution equal to the amount of the excess deferral distribution plus earnings would need to be made to the NHCE's in order to keep the plan in compliance. Following is the response I got from the administrator...

"In doing some research on how to handle this, our position is that we can use the sponsor's own remedy to correct the failure. The 2 suggested methods you mentioned are NOT required to be used if SCP is being used for correction of an operational failure. Therefore returning the excess amount and earnings to the participant/s and paying the excise tax would be the chosen remedy. Supporting this choice, is the fact that the % of assets is small" Also noted is the fact some of the HCE's have cashed out their accounts as taxable distributions.

Does this reasoning make any sense?

I would appreciate any input.

Ineligible expenses paid from Plan. Employer to make a restorative payment plus lost earnings. Lost earnings in this case must be calculated using the DOL 6621(a)(2) "underpayment rate" approach (i.e., applicable federal short term rate + 3%). That much has been determined - but I don't have a clue as to how to actually do the calculation.

Suppose, for purposes of this example, $10,000 was incorrectly paid from the Plan January 2, 2004 and repaid by the employer July 15, 2004. Do I calculate using each month's annual AFT (+3%)?

For example, January 2004's short-term annual AFR was 1.71% Is the calculation $10,000 x 4.71% / 12 = $39.25? Do this for each month and add up the pieces? Or what?!

Thanks for any and all responses.

(Read a quote last week that seems to apply- at least in my case: "There is often a wide chasm between reading the map and hiking the trail."!)

Help I started a Roth IRA about two years ago when filing my taxes and then forgot about it. Is it still out there? If so where can I find out info on it ?

A potential client has what sounds like a 412(i) plan. I'm told its a DB plan funded entirely with insurance. The new investment rep wants to keep it as a DB plan for the next 2 years before eliminating it and starting a 401(k). Between now and then however, he would like to relace the whole life policies with term policies, and use the cash value from the existing policies to invest in non-insurance related products (most likely mutual funds).

There's a lot going on here and I realize that BLink is not the place to sort all of this out, but if you have a good reference place to point me at regarding how to go about getting rid of insurance in a fully insured plan (eg, terminate the plan, amend it, do the participants get distribution options, etc) I would appreciate it. Maybe pointing out some obvious hurdles that have to be jumped would be helpful as well.

Thanks for your help.

A company has a 401(k) plan in place that covers all eligible employees (ie, no excluded classes of ee's). The owner participates in the plan. Owner is now interested in knowing whether a separate plan can be designed in which he is the only one who is eligble/ benefits from it.

Are there any obvious solutions to this situation? Would there have to be other HCEs in the 401(k) plan in order for this to have a chance at working/combine both plans for testing purposes? Finally, would 401(a)(26) problems prevent a DB plan from even being considered as a solution?

Thanks for any comments.

Help! I am working with an auditor for the first time on a mutual client's 5500 form (over 100 parts. - long form - audit required). He is telling me that the 2003 ADP refunds MUST be put on the liability line on the 5500 form. We have always reported the ADP refunds on a cash basis in the year they are distributed. He says that if they are distributed before March 15th, then they have to go on the 2003 5500 form as a liability. I do report the contributions for this plan on an accrual basis, but have never done that with the refunds. I reread the 5500 instructions and don't seem to find a concrete answer. My feeling is that it could be done either way...Any opinions appreciated!

I've read the DOL Advisory Opinion dated September 8, 2003 regarding the use of profile prospectuses to meet 404© requirements. I've also been to the SEC Web site to clarify the meaning of a profile prospectus. This may be a silly question, but must the profile prospectus be produced by the mutual fund company? Could a 401(k) administrator produce profiles for all of their publicly traded fund offerings as well as their proprietary funds? This has been proposed at my place of employment, and while nothing I find seems to preclude it, I am concerned that some of the references to the "most recent prospectus available" as either profile or 10(a) might indicate that the profile must come from the mutual fund company. After all, if the administrator can create a profile whenever he/she wants, wouldn't that always be the most recent version?

Any thoughts?

There is some great advice on this website. Thanks to all who contribute. I am a 33 year old married mother of 1. My husband and I are just getting into the investing game, a little late, but better than never. My husband has a ROTH IRA and some mutual funds with Primerica. Now, it is my turn.

I would like to open a ROTH IRA, but I am not sure with who... I've heard Fidelity and Vanguard. My husband is with Primerica, don't know anything about them except his financial lady is pushy... The confusing part is once I open an IRA I've read that I have to choose what to put in it and that is where it does not make sense to me. My husband has a ROTH AND mutual funds, so I don't get... How do I know what to choose?.... who charges the lowest fees?... do all companies charge a % rather than a flat fee?....I'm low risk because of my mother (nickle machines in vegas!), but have been reading that I should not be too conservative. I still have a good 20-30 years till retiring.

I also have a 401K plan at work that I have not started. My company does not match anything; they just offer it. Is it worth it?... I know you absolutely CANNOT touch it without penalties, right? The money does come straight out of my check and I wouldn't spend it because normally if I have money I'll spend it!

I'm 33 and married with 1 child and 1 step-child. We are going to purchase a home by the end of the year. We have a savings balance of about $10,000. I have about $500-700 a month to invest. I do know that I should put the full $3000 into the IRA which means I have already paid taxes on the money, right? Ugh... I am such a beginner. But I know it is so important just to get started!

My husband and I are opening a joint savings account should I open an ING Direct 2.1% account rather than just a savings?... I know your "portfolio" should be diverse, but I don't even know where to start. We have a Suze Orman book that I am trying to read, but I have a baby and work full-time oh... and have a husband to take care of so time I don't have. Recommend any quick read books or magazines... ANY help would be very appreciated. Thank you so much!!!!

I have checked the box to perform the ADP/ACP testing for statutory excludables separately. However, the program is not automatically placing my two excludable HCEs back in the nonexcludable ADP/ACP test.

Typically, when there is an HCE in the OTE group, they must be drawn back into the testing. Eligibility requirements fro the plan are age 20.5 and no service. The two HCEs were hired 1/1/03, so I tried giving them earlier fictitious dates of hire to fool the system into including the two HCEs in the nonexcludable ADP/ACP test.

Can anyone help, please ?????

Is there somewhere in the system that I need to tell it to draw OTEs that are HCEs back into the overall ADP/ACP test?

After completing the 5500 for a client and checking "yes" to the question on Sch I about deliquent EE contributions, I am in the process of trying to file for relief under the DOL's Voluntary Fiduciary Correction Program. (All the deliquent deposits have been made) The DOL website gives lots of good info about FAQ's and even a checklist. The checklist and other info references an application, I can't seem to find it anywhere. Does anyone know where I'm supposed to be looking for this? Also, if anyone has any experience with filing under the VFCP or DFVCP, I would like to know their thoughts.

I have doctor with a 401(K) plan and she employs other doctors and non doctors who earn W-2 income. She wants to reclassify the employees as contract employees non-W-2. Can the contract employees still be part of the plan or should she term the plan?

When is the last day that an existing plan can adopt a 3% safe harbor plan? for example, for plan year 2003 is the last day December 1, 2002?

How is the DB PVAB typically calculated when attempting to put a value on the DB benefit when the plan does not offer lump sums? The couple is just attempting to ascertain the value of their estate at this time.

sorry AP is referring to a 100% contigent Annuitant Option Plan

paritcipant became sick with cancer and requested pension. his intent was to select a 100% Annity option for his wife. While waiting for the materials he passed away. Subsequenty his widow was only granted the default 50%AP she now seeks equitable relief for the 100% AP.

Can a delay in delivery and proof of P's intent be used to show that survivor is entilited to the 100%AP?

If yes or no does anyone know any cases on point with similarties?

thanks in advanced

desperate summer associate

I am work for a non-profit organization which is starting to provide financial planning for it's clients. We need examples compliance manual and policy and procedure manuals in order to create our own. Can anyone help me with this?

I have a client who for the first time has over 100 participants (101 to be exact) in their Health FSA. Do I have to file a Form 5500?

The facts...

DB Plan. Unmarried active participant X, a resident of CA, dies with no beneficiary designation on file. Plan defaults payment to X's estate. X's representative claims the death benefit would be X's only asset in the estate. Std practice for estate pmts is to request letters testamentary/administration, death cert, and TIN of estate.

However, under CA Probate Code s 13100, gross estates < $100k can avoid probate. The decedent's successor(s) may collect the decedent's personal property via notarized affidavits sent to each holder. It's not necessary to obtain letters of administration either.

X's rep has submitted a duly executed affidavit and wants direct payment. It's not entirely clear from the CA code whether "collection" means direct payment to successor or simply a release of the property to the successor, such as a check payable to the estate. Furthermore, X's rep claims that no estate is going to be established, thus no TIN.

The "right" thing to do?...

ERISA pre-emption...pay the estate and report it to the IRS under the estate's TIN, which must be obtained. Payment is > $600, so X's rep would also have to file Form 1041 for 2004.

Another pitfall is that without letters of administration, the plan is not protected from a fraudulent successor. Sure there's some protection under the CA statute (fraudulent payee is personally liable 3x amount to true payee), but ERISA pre-emption can be a double-edged sword: hold the plan to its terms and demand payment as true representative of the estate. Again, it would seem to me that the right thing to do is require letters of administration too.

Right result? I'd be interested in hearing how others handle this situation, as this is becoming more and more common.

We just took over the admin of what appeared to be a nice, clean cross-test 401(k). However, we just discovered over $60,000 in unallocated forfeitures that apparently have been building over the years. Document says to reduce plan expenses, then contributions, then reallocate. According to prior administrator, these forfeitures were held in suspense "for future plan expenses". Although it appears they have been deducting quarterly fees as well!

Looking for opinions here....due to the multitude of plan years involved, it would cost a fortune to go back and reallocate, make distributions, etc. Not to mention time I don't have. Appears that the most practical solution is to use the forfeitures to fund the $50,000 contribution for 2003 that hasn't been funded yet and reallocate the rest. Of course, I would bring this to the attention of the client and let them know of the potential problem upon audit.

Refusing to take the case is not an option, so please don't offer that opinion! Thanks for any input.