My employer promised to reimburse me for portion of health insurance premiums I pay to a private insurer, agreed before employment as an agreed benefit. After meeting the 90 day requirement, I approached my employer about starting the $130 per month reimbursement. He said he needed to talk to the accountant and we'd start the next pay period. At the next pay period he said the same thing, hadn't had a chance to talk to the accountant. When asked again, he said the accountant was on vacation for two weeks and we'd look into it when he got back. It is now approxiamately 9 months since being eligible and no reimbursement has been made. Other employees are getting their health premiums paid on private insurance. I recently photocopied the checks that have cleared my bank account which were paid to the insurance provider along with a claim for the unpaid, agreed upon reimbursement. I work for a small employer who has less than 15 employees, actually there are about 9 employees.

My question is: does the employer have a legal obligation to pay these unpaid monthly amounts or am I just out of luck? I'd like to present him with laws or statutes that say he does have to pay, but I have not been able to find any laws or rulings regarding this other than a vague claim that employers do have to pay the benefits they promise to pay.

Also, if anyone in Phoenix, AZ, needs a detail oriented administrative assistant, please let me know...

Thanks for any help,

-Rick

A 401(k)/new comp PS has 1 YOS requirement for the K, 2 YOS for the PS, semi-annual entry dates. Plan defines compensation as date of entry compensation in each portion of the plan. Plan is top heavy. Favored group gets PS contribution >20%.

A new participant (A) enters the PS plan on 7/1/03, gets a 6% contribution based on comp from 7/1-12/31/03. Contribution is just over 3% of 415 comp.

Particpant B is in the 401(k), but not eligible for the PS, gets a top heavy minimum contribution boosted by gateway to 5% of 415 comp.

Do you agree that I don't have to boost A's contribution to meet Gateway because it is over 5% of his DOE Comp, but I do have to boost B's because his comp for the PS is $0?

I have come across a company that is launching an ETF 403(b)7 and I am not sure if this can be done - can it? ETF's technically are not stocks, they are mutual funds with daily liquidity and are registered with the SEC - I would love to hear if any of you know if they can be included in a 403(b)7 product and how I would go about identifying proof that they can be included.

ScottyD

Plan states that forfeitures will be used to 1. reduce plan expenses; 2. restire benefits; 3. reduce matching contributions; and 4. reduce profit sharing contributions. The plan does not state when it has to use the forfeitures for these purposes.

Question #1: Without any specific language in the plan, can the plan sponsor hold on to forfeitures by paying plan expenses from the company and making full matching and profit sharing contributions in plan years that it has the cash, or does the plan sponsor have to use the money in the forfeiture account first?

Question #2: If the answer to question #1 is that the forfeiture has to be used first, then can the plan be amended to allow forfeitures to be used at a date in the future that the plan sponsor decides?

Thanks.

Note: This is a profit sharing plan

Generally, an employer may not exercise discretion over the timing or form of a distribution. However, Treas. Reg. section 1.411(d)-4 Q&A 2(d)(1)(i) permits an employer to retain discretion to eliminate lump sum or installment payment options for benefits that are subject to the put option requirement of Code section 409(h)(1)(B). Does this mean that an employer simply has the right to amend an ESOP to eliminate these forms of distribution, or does this mean that the employer can exercise discretion regarding whether a specific participant can receive a lump sum or installments?

Stated differently, can the plan provide for lump sum distribuitons, but then reserve to the employer the right to make distribution via installments?

HCE received a refund due to a failed ADP test. The refund was made prior to the 2 and a half month period so it's taxed in 2003.

The problem is that the HCE already filed their 2003 taxes and they don't want to amend them. They've already cashed the refund check.

Anyone know if there are any other options to have this taxed in 2004 for this HCE? Can they return the money to the recordkeeper and have them reprocess it using a date after the 2 and a half month period?

Schedule B, line 2c, requires an entry of the percentage if market value assets divided by RPA current liability is less than 70%. What's the implication of this, ie, what is it used for? Is it applicable to multiemployer plans?

thx

I have a highly compensated participant who wants to terminate employment. From what I can gather from the 401(a)(4) test that was provided to us by the prior administrator, the accrued benefit used in the general test is the "formula" accrued benefit.

The cash surrender value of the annuity policy for this individual is significantly greater than the present value of the formula accrued benefit. Is there any way the policy can be distributed without a discrimination issue? Does the "increase" between the benefit used for testing last year, and the amount actually distributed this year, have to be recognized in the current year's testing?

For purposes of illustrating the components of the Net Periodic Benefit Cost for the Interim Financial Reports (9 and 10) of the Revised SFAS 132, is it normal practice to revise the calculation using updated asset and census data as well as changes in market rates or should we merely pro-rate projected values? We have projected the Net Periodic Benefit Cost through 12/31/2004 and intend to merely pro-rate our calculations as of 3/31/2004. However, I would like to get a 2nd (or 3rd) opinion. Thank you very much!

Is there someone I could find in plain language what retirement plans are subject to QJSA rules?

I don't handle many 457 plans, so any advice will be appreciated. I'm working with a client on coding their payroll system for employee deferrals for the 457 plan - are the 457 deferrals treated as pre-tax deferrals for payroll (similar to the 401k deferrals)?

thanks!

I have read in a couple of places that the financed securities exception of 409(o)(1)(A), which permits ESOPs to delay distribution where the exempt loan is not yet repaid, does not apply to S Corporations. Is this accurate?

FDIC is auditing a Trust Dept. Has anyone been through this? I'm trying to determine what they may be looking for. I don't want to instruct my client to overkill them with information - but at the same time, I don't want their rating with the FDIC to be impacted by not supplying enough.

In preparing our 2003 federal taxes our adjusted gross income is significantly lower than our itemized deductions/exemptions. We are both over 59 1/2 years old but not yet 70 1/2. Can we withdraw funds from our Traditional IRA or 401K before filing our 2003 federal taxes, that will increase our income to an amount equal to our deductions/exemptions and avoid paying any taxes on this withdrawal?

Thanks in advance for your response!

I was reading some of the other messages about a cross tested plan with a group for terminated participants and have a question. What if you have a profit sharing plan with no allocation or eligibility requirements. The plan has allocation groups with a group for terminated participants. The terminated participants get zero.

Does the plan need to make a gateway contribution on behalf of the terminees anyway since they are "benefitting" because of the plan not having an accrual requirement?

I was also reading where the plan could not use the average benefits test for cross testing in an instance such as this. However, if the plan was passing each rate group with 70% or more, then the plan would not need the average benefit test, right?

Thanks.

My firm is exclusively a fee for service consultant and a Registered Investment Advisor. We advise plan fiduciaries on investments they select as choices for participants within their organizations 401(k)/403(b) plans.

As a general rule, we have advised plan sponsors to provide education and communication in support of participant choicemaking. We do not encourage plan sponsors to get involved in providing or facilitating investment advisory services for participants. We just think there is too much risk in that and that participants can obtain investment advice on their own.

Despite this, almost all financial services firms (mutual funds, brokerages, banks & others) want to provide participant advice services and are calling on employers to get in the door. Typically these offerings are for on-line services and the advisor firm wants to take .25% to .75% for advisory services.

I am interested in hearing from anyone on the following:

1. What is a competitive fee for participant advice?

2. Is there a standard service contract?

3. Are sponsors hiring the advice firm or is it a particiant decision?

4. Do standards exist for monitoring an advisors service?

5. What does advice (for a plan part) consist of other than how much to save & asset allocation?

6. Is there any value to this service?

Thanks,

DC

Hi,

Can two members of a controlled group have two 401(k) plans, one safe harbor and the other not?

There is only one HCE (the 100% owner) and he will not participate in the non-safe harbor plan, so logic would say that his deferrals under the safe harbor plan would need to be aggregated/included in the ADP test for the non-safe harbor plan and top heavy aggregation would not apply. The safe harbor plan would satisfy coverage including the other group (it is much smaller). The non-safe harbor plan would have an exception to coverage since no HCE would benefit under the plan.

Am I missing a critical issue here? It seems too good to be true.

Thanks for the help!

I have an employee who is dead set that he does not want to take part in our cafeteria plan to have his health benefits pre-tax because he feels it is affecting the gross wages reported for his social security benefits.

How do I find out if one out of 100 employees can decide not to take his benefits pre-tax?

In the 2004 Grey book at the enrolled actuaries meeting, the IRS reps state that a frozen DB plan must in their informal opinion switch to Unit Credit funding method. No rationale is given.

At the podium, IRS reps clarified in particular that Individual Aggregate would not continue to be a reasonable funding method for a frozen plan - though they clarified that by a frozen plan they meant one where by the terms of the plan it was not possible for any additional benefits to accrue - and not for example a plan where only service accruals were frozen but salary increases could still result in benefit increases.

I would like to know whether any one understands the rationale that might be behind this opinion and also what response practioners plan to take in light of this informal opinion.

If not, where is the definition of "corporations" that applies for purposes of Section 1563?