My company has just notified the employees that they will be changing our 401(k) administrators in the next month. We currently have a completely self-directed plan that allows us to choose whatever investment we like, including stocks and bonds. The new plan will have a limited number of mutual funds to select from.

I know the current scenario poses a tremendous liability for the trustees and I completely understand the need to change. However, I am very concerned about the cost associated with this transaction.

They have instructed us to liquidate our current positions by a short deadline or they will be liquidated for us. !? Since we have been choosing our own investments until now, some of us are faced with realizing losses on long-term positions that happen to be currently underwater. Not to mention the $30 commission attached to each trade, which could amount to several hundreds of dollars for some of us.

What I'd like to know is:

Can they legally force us to sell our equities?

Can they require us to sell them at our own expense (fees)?

Does ERISA give us any power to resist the changes?

Do we have the right to retain our current investments via roll-over or "freezing?"

Unfortunately, our HR person is not here to answer these questions today and the trustee just left town for a business trip. Any insights would be appreciated.

Hi,

Does a non-ERISA 403(b) account that let's participants invest in custodial accounts need a plan document or does each employee just fill out a custodial agreement and that is it? Having a hard time finding the answer. Any help is greatly appreciated.

Thanks!

A financial institution is telling us that they do not need to register under California's vendor registration law since it is marketing non-proprietary 403(b) products. Anyone know if they would be considered a vendor or a broker that does not need to register or obtain a vendor number? Thanks.

March year end.... March quarter investment statement received and all activity accounted for. My question is .. do you take into consideration that an employee may have deferred during the last pay period in the year and the $$ has yet to hit the account? Or do you just go with what you see as of 3/31.

From Sal's ERISA Outline book, Chapter 14

PTE 80-26 permits interest free loans to the plan by a party in interest to be used for the payment of ordinary operating expenses, or for a purpose that is incidental to the operation of a plan. If it is for incidental expenses, it can not be for more than three business days. The DOL did cite an overdraft as being incidental.

QUESTIONS:

What happens if the trust is overdrafted for more than three days?

What about excess cash? Should it be treated the same way?

Is there any other cites/articles/anything that deals with this issue?

How does your company handle overdrafts?

I'm trying to determine who is Highly Compensated but I'm unclear what pay I'm supposed to use. It's a new plan that was effective in June of 2003. The company was sold in June and the new owners started this DB plan. The employees worked for the whole year in 2003 - but for part of the year they were working for the prior owners. Do I use their compensation for the whole year in determing if they are Highly Compensated for 2004? Or do I just use the pay they made under the new owners?

This is a cumulation of several discussions with some disagreement, so we're looking for a new view.

A participant contributes to plans for two unrelated employers during the year (2003). Assume that in the first plan, he reaches a plan limit at $8,000 and then has $2,000 in catch-up contributions.

He then changes employers. How much can the participant contribute to the plan of the new employer? Assume a second plan limit does not apply. Can we say the $2,000 catch-up has been used, and the participant can contribute another $4,000 to reach the 402(g) limit?

Is there any way that this participant might be limited to a total of $12,000 rather than $14,000? (We have one dissenting opinion for this.)

Further, the second plan does not match on catch-ups, but since the plan does not recognize a catch-up because no limits are met - and until notice that the participant actually did overcontribute in total, was unaware they would meet the 402(g) - this plan has matched on all contributions. Can the current plan recognize that catchup was made in the prior plan, and match all contributions to the new plan; or must the catch-up be recognized at the end of the year in the current plan (and we should then forfeit match on $2,000)?

Is there a limit as to how long a waiting period can be for a self-funded plan?

I have checked and can find nothing to prohibit a 6 month waiting period but thought I'd see if anyone can verify.

(We know it can't be counted as a break in coverage.)

What is everyone doing with tracking the value of an insurance policy on participant (or trust/plan) statements? Our company had always used the value of $1 and then we switched to using CSV but, now it looks like according to Rev Proc 2004-16 we should be using FMV. Of course FMV isn't provided by the insurance company so, now we have a dilemma on how to calculate. Just wondering how everyone else is handling.

We had a new employee that started employment here in January. Added husband and children to health insurance plan. Husband is not a U.S. citizen, employee thought all the paperwork was going to be approved and he would be in the states in approximately a month. Well, last month received new set of paperwork from the Italian consulate that they have to start the paperwork over. Employee does not expect her husband to arrive for at least another 3-4 months and wishes to drop him from her coverage. Premiums are tax-sheltered. I am not sure if there is a qualifying event that would let her drop him. Any guidance or help would be appreciated.

My city goverment employer offers a 457 plan through Aetna. I am 25 years old and would like to defer a large portion of my income for 2-3 years, quit my job with the city and use the defered income in order to recieve a small income while I work on my masters full-time.

1) I have been told distributions will be taxed as income, will it be taxed at the regular employee FICA rate or will it be taxed at the higher self employment rate (essentially paying both the employer and employee portions)?

2)Are there any hidden problems that may arise with my plan?

Any knowledge you can pass on will be genuinely appreciated. Thanks!

Accruals under a 412(i) plans were frozen and premiums to the insurance contract discontinued from 2003.

Since the conditions of IRC 412(i) A(2) and (4) are breached by the discontinuance of prems, the plan loses its 412(i) status and hence the minimum funding rules apply - correct?

If such is the case, for the first valuation (in this case for 2003), are there any restrictions on the usual actuarial parameters - valuation date, funding method and assumptions or does one treat this as a new plan (except for the accrued benefit service credits, accrued benefits and the available assets) for setting assumptions, method etc?

Hi,

I am trying to understand the Form 5500 filing requirements for medical and dependent care reimbursement plans. Is is correct that a Form 5500 would be required only if more than 100 participants actually participate in the medical or dependent care reimbursement program (i.e. have at leaast $1 withheld) for the plan year AND the plan is fully insured/general assets?

Also, if less than 100 participate, would the plan be required to file because assets are held in trust? It doesn't seem that flex plans would have trusts, but some TPAs say that sending them the pre-tax contributions is establishing a trust which is then subject to a Schedule I. I called the 125 TPA and they admitted they were unclear of the rules but couldn't offer much guidance. I'm concerned about missing a deadline.

Can anyone shed some light??

thanks

Is there a new rule (perhaps as of 2/04) that if the payment of a DB plan benefit is deferred or delayed for some reason that the plan must pay interest on such payments for the period of deferral or delay? I have heard rumblings about this but can't find the guidance. Thanks.

2002 Schedule H did not include auditor's report but all figures were correct.

Should we wait for IRS to ask for it?

File amended 5500 and Sch. H?

Send it with cover letter of explanation?

Nothing?

Thanks for your help.

im currently 26 years old and make 52k per year. i just spent the last year chipping away at all my debts. i am totally debt free(besides utilities, ins. and rent). unfortunately my family history does not include a long lifespan.

i want to setup a plan that would let me retire at 50-55 yrs of age(obviously i wont be wealthy, but im not interested in working my ENTIRE life). would there be any benefit to using an IRA? would the tax advantages outweigh the 10% penalty?

ive just started researching my future and i see there are many different strategys to retirement, unfortunately you have to live past 60 to reap any of these benefits.

am i forced to stick with money markets and mutual funds?

like i said i just started researching so i am open to any and all suggestions.

Does the plan document governing a health FSA (with more than 50 participants) have to be amended if all claims are sent to a third party administrator?

I realize that other HIPAA requirements would need to be met (entering into business associate agreements, adopting policies and procedures, etc.), but if the plan sponsor never receives (nor will it ever recieve) PHI, would a plan amendment be nessesary?

I have been asked to assist a client that participates in a GIA. Since the beginning of time, the client has been particpating in a GIA with a number of other unrelated employers. The GIA trusts established are for Group Health, Group Life, LTD and Dental. The participating employers remit premiums to the individual Trusts.

Until recently, the Form 5500 has been completed as a DFE and filed by the Trust. The client has just been told that the Trust will no longer file as a DFE and that each client must prepare their own 5500. Everything else will stay the same - participating employers will continue to remit premiums to the Trust.

A couple of questions...

1. Has anyone ever experienced a similar set of circumstances? If so, would you please direct me to some guidance?

2. If the employer is now required to file an individual 5500, do they file it as a multiple-employer plan?

3. Is the sponsor required to have an independent audit performed? Note: The participating employer that I am working with has greater than 250 participants in each Welfare plan.

I am sure that there is more information that is needed to make an accurate assessment - anything that anyone can offer in the way of direction would be appreciated.

Thanks.

I need to get up to speed on Safe Harbor plans as quickly as possible. What resources (prefer web based) would you recommend? Thanks!

Traditional IRA created with form 5305. Designated beneficiary is an irrevocable trust. IRA owner is still alive and competent. Can the beneficiary designation be changed?