Document provides for forfeitures to occur after 5 breaks in service and distributions to occur during the 6th break in service. If a participant is rehired, forfeitures are to be reinstated if participant pays back the distribution. Prebreak service was to be recognized as long as the participant did not have 5 breaks in service. A participant was rehired after 5 breaks in service but had not received a distribution of her vested interest but had forfeited the non-vested portion of her account in the previous plan year. The document isn't clear how to handle this situation but it would seem that the forfeitures would not be reinstated since she had more than 5 breaks in service and also we would not recognize her pre-break service. Is this correct?

Now that we have gotten thru another Administrative Assistant's Day, it is clear that Hallmark needs another ocassion for selling cards. The obvious candidate must be Actuary's Day. I propose October 16 (when most of our 5500 filings are done).

Any other suggestions?

P.S. Some in my office think everyday is Actuary's Day. I don't understand.

Any answer to this question, from an administrator at the Univ. Rochester MC:

I just found out through an employee (who's on bi-weekly pay) that the PTO dollars are taxed at a higher rate than normal weekday hours. He's decided that because of this, he's going to have his PTO deferred to his tax shelter at the end of the year. He had heard about this and I told him he should confirm this with HR, which he did. What do you think?

Are they taxed higher when they're paid out at the end of the year, or as the hours are used during the year?

I was asked about this, and would venture that when they're used during the regular year, they are used in place of normal hours pay, for time-frames when you go to the doctor, etc; thus, during the regular year, they are not taxed extra. However, if you don't use any PTO, and take it at the end of the year (unless you put it in the 403b), it would be extra hours, and probably taxed like a higher rate.

Is this correct? If anyone has the details on this (I did a Google search, but it was non-informative), please provide some refs.

A participant defers $12,000 during the 2003 plan year, 12/31/2003 year end. The participant is eligible for catch-up, also allowed in the plan doc. Now that the plan year has ended we are working on the profit sharing contribution. Can the participant be provided a $30,000 ps contribution and have $2,000 of deferrals recharectorized as catch-up? Assuming of course that all of this passes non-discrimination testing.

To add a twist, suppose the plan year ended on 2/29/2004. Assuming again that the partipant deferred $12,000 during the calendar year ending 12/31/2003. The 415 limit is now $41,000. Assume also that the participant defers the same amount each month so that the amount of deferrals for the 2/29/2004 plan year is also $12,000. If the answer above is "yes", that additional ps can be made with the deferrals being recharectorized, what is the amount of catch-up available now that we are in a new calendar year? $2,000, $3,000, $5,000?

Thanks!

The VEBA is administered by a teacher's association at a public school. It's a funding vehicle for paying participants' out-of-pocket medical expenses. I understand that they are required to file a Form 990, but is a 5500 also required?

Is year-to-year change in ben and comp limits other than from specific law change a plan amendment for funding purposes and be amortized over 30year?

Any comments would be appreciated. Partnership (12 partners) considering establishing cross tested 401(k) plan. Classes by ownership or age include more than one partner. I don't think this raises a deemed coda issue. However, a couple of partners would like even more flexibility in contributing. Naming them individually in a class I think rasies the deemed coda issue. Identifying them based on ownership and/or age where it is essentially identifying only one partner seems to raise the deemed coda issue as if the plan was specifically naming them. Agree? Disagree? Any suggestions regarding describing classes?

The bottom of the article reads:

"Other Automatic Enrollment Issues

The general information letter does not address the ERISA fiduciary issues raised by automatic enrollment arrangements. Nor does it address questions about whether such arrangements violate certain states' wage garnishment laws. Those issues are under the jurisdiction of the Department of Labor and the relevant states, respectively. "

Does anyone know where there is a list of which states require written consent (for 401(k) salary deferrals)?

Currently, e/er's plans provide for distribution to terminated participants on or after plan's anniversary date coinciding with or next following termination of employment. E/er would like to change this to as soon as administratively feasible after termination of employment due to recent employee layoff's. Terminated e/ee's want their money and E/er doesn't want to hold it any longer than it has to. Regarding an amendment to the plans is there any problem with having the amendment effective for all participants who terminated on or after the first day of the current plan year, ie, January 1, 2004? Thanks.

We are considering submitting an application on behalf of a client under the DOL Voluntary Fiduciary Correction Program for the purchase of an asset by a plan from a party in interest. As a result of this filing, we will be able to take advantage of PTE 2002-51 and avoid the payment of the excise tax under Code section 4975.

We have never taken advantage of VFCP before and are wondering about the experiences others have had with the program. If you have ever filed under VFCP and wouldn't mind sharing your experience (i.e., type of breach, correction, experience with DOL, etc.), please respond to this posting. Thank you!

Social Security Disability has been approved and the participant is getting benefits, plus is getting workman's comp. benefits. He took his money for his pension by installements each month on the status of Retired/Disabled. Recently he was just determined to committing insurance fraud and has had the workman's comp benefits and the SSI disability benefits revoked. Can the pension payment be stopped until he reached retirement age since he is not considered retired/disabled due to this issue.. because he needed to get a job? The DOL frowns upon taking a benefits away from participants, however under the circumstances... the employer feels that the participant took advantage of the system and wants this participant to wait until retirement age to collect the remaing pension balance.

What is the difference when a participant elects disability and get the SSI acceptance letter and then when the participant is up for review in 4-5 years, which is found that health has improved and the participant can go back to work... if this participant was taking installments and is not considered disabled.. can the pension payments cease since his status has changed. How do you go about doing this if it can be done and keep the Plan in compliance?

This is partly commentary and partly a question. A financial advisor brought us a brochure from a firm touting a type of traditional defined benefit plan that "almost" gets contributions similar to a 412i plans, but with a 50-50 mix of trust investments (stocks, bonds etc...) and life insurance. The contributions to the trust are typical maximum DB contributions, plus there is an exact matching level of deductible contributions to purchase life insurance (i.e., total contribution double the normal max DB contribution level when life insurance premiums are considered). As best I can tell from the brochure commentary, it appears this is a response to recent IRS promulgations on 412i plans and valuation of insurance in general. As you would expect with this arrangement, it appears to be a split-funded DB plan, but the life insurance premiums appear heavily front loaded (they are payable for 5-years) and more important the death benefit appears to be far, far, in excess of the incidental death benefits even using the 2/3rds method. They name an individual person as the beneficiaries (not the plan/trust) so It appears all death proceeds go directly to a named beneficiary without restriction. Given the insurance premium is an exact match of an un-rounded DB contribution figure, it seems too coincidental to be anything but an intentional matching figure. I think they may be taking the old revenue ruling on insurance limit that states that 50% of the contribution can be used to purchase whole life insurance, and trying to apply that directly to a DB plan without using normal 2/3rds derivative of this limit. My question is, is it clearly established that the insurance limit Revenue Ruling (50% method) only applies to DC plans and cannot be used directly (without 2/3rds derivative) to DB plans ? (I think so, but I don't want to kabosh someone else's design if I'm just missing something).

My question relates to annuities inside a Non-governmental 457(f) plan. I am trying to understand the mechanics of having a client annuitize their current 457(f) annuity. Should the tax statements and payment be sent to the client or the Plan on behalf of the client?

My understanding is that the annuity is taken out of the plan ownerhip and put into the client's ownerhip when the account is annuitized. The payment and applicable tax statement would be sent to the client (annuitant), not the plan.

Taking over a SH 401.... Just told by the financial advisor go-between that the client had an EE that was eligible to enter and defer on 1/1 but was not enrolled. The EE as a result ended up missing out on the ability to defer during the period from 1/1 to now.... and also missed out on the SH match.

Is EE entitled to make up the missed deferrals and receive the missed SH match? (I would think so)

Are there any other issues that I should be concerned with?

I appreciate the help!

I know that the maximum Safe Harbor match is 6% (enhanced match). And I know the plan can have an additional, discretionary, match as well. Is the maximum on that 4% before the ACP test has to be performed?

Two more questions:

Is it at 4% or more than 4% when the test has to be applied?

If and when the ACP test is done, which match gets tested? (say for example a 5% discr. match) Is it all 11%, or just the add'l 5%

I ask this becasue a client of mine currently has a match of 10% but the participation is very poor, and the ADP/ACP fails each year. I was thinking of suggesting a SH match of 6% and a discretionary of 4% to ease the plan's testing woes.

Will we have to do the ACP test? Does anyone see a problem with that scenario?

Any thoughts, as always, are appreciated.

A doctor has her own practice and gets a $40,000 contribution to her Profit Sharing Plan. This doctor also is employed at the VA Hospital and participates in their Thrift plan.

For 2003, is she limited to a total contribution of $40,000 between the two plans.

In August 2003, a participant borrowed $1,300 from their employee deferral source. Upon receipt of a new loan application, we discovered no payments were made on the August loan. Obviously, she defaulted on the August loan. How do we treat this? And is she eligible for a loan currently assuming all other issues such as 50% of the vested account balance .... are OK?

I have been hearing about SEC rule 482 and the effect on investment companies presentation of performance results. I am an internal retirement plan administrator. Our internal employee newsletter includes a chart of returns for the 401(k) investments. Should or must that chart be accompanied by disclosures and if so, which disclosures are required?

I imported the full census download from the ING website, I have run all necessary reports for 5500 and valuation purposes and they tie nicely. But..... when I run the ADP/ACP nondiscrimination tests, only the ADP test is performed. It is not running the ACP portion and there was a flat $200 matching contribution made to everyone who deferred during the 2003 plan year. Is there a way to disable/enable a portion of the testing? I would like to demonstrate the ACP portion of the testing since it is required. The former plan analyst kept running the test without the ACP portion and stamped pass on it each year b/c they did not know how to enable the ACP portion for this particular plan. I want to get it right this year.

Please help !!!!!

Multiemployer DB Plan is considering merging with another multiemployer DB Plan. DB Plan #1 has language that the optional forms of benefit are "one or more of the following" - basically, lump sum, installments and single life annuity. DB Plan #2 does not contain such language.

Is a combination of optional forms of benefit in and of itself an optional form of benefit? If so, because there are several permutations, might this be eliminated under the proposed regs?