Under the Individual Level Premium funding method, in calculating the temporary annuity factor (PVFS / current salary) in order to calculate the normal cost, can the following projected salaries be used:

2004 $500,000

2005 500,000

2006 500,000

2007 100,000

2008 100,000

2009 100,000

at 6%, this would produce a factor of 3.309186. Is this allowed?

Thanks in advance.

A participant wants to know the regulation that determines the definition of account balance for use in determining the account balance available for a loan. Participnat has $26,000 in money market investments and $13,000 in an outstanding loan. Participant believes that the account balance available for determiing a new loan is $39,000. Any comments?

I have been approached by a person who is employed by a local Orange County, CA, city. She needs, and is willling to pay for, advice about how to handle her retirement plans.

The city has offered to move her deferred comp assets into the city retirement plan.

I pled complete ignorance about public employee retitrement plans and told her I would try to find someone who could worek with her.

Please emal me if you have any ideas.

clinthopson@hopsonpension.com

How did we all miss this one? Dom et al must have been right!

[Link removed-too late for the fun.]

maybe I should have put this under humor? This definitely rates a WOW.

I have a client who was eligible to establish a SARSEP in 1995. The client exceeded 25 employees in 1998 and continued to accept salary deferrals into the plan from 1999 through 2003. I cannot find any guidance on how to correct this error. How do we properly correct this SARSEP? Do we need to use VCP? What do we do with the ineligible deferrals? Any thoughts would be appreciated. Thank you.

Has anyone researched the proper treatment of distributions that are less than the charge imposed on the account balance (i.e., not paid by the employer or by the plan generally) by the recordkeeper or custodian to cut the distribution check? For example, a participant has a $12.00 vested account balance (resulting from a small forfeiture reallocation) and the recordkeeper/custodian charges the individual account $15.00 to cut the check. Do you have the recordkeeper keep the $12.00 and issue a $0.00 check, or do you forfeit what actually is non-forfeitable money? Do you issue a 1099R for $12.00, or is the taxable amount net of the processing fee? I've seen "some" of this type of discussion below, but I can't find any IRS or DOL guidance. The employer does not want to pay the fee for small accounts just to make the problem go away.

My guess is that since the amount is vested, there is no basis to reallocate that money to other participants, so the plan expense avenue would be the best grounded approach. Also, my guess is that the plan expenses come off the top before the distribution, and the taxable distribution in my example would be zero.

I am a little confused about what information from the K-1 we use to begin our circular contribution calculation.

One person in our office says take line 1 from the K-1, add line 5, and add line 9, and that's your starting point. The other person says no, add line 5 to line 1, and subtract 9.

What lines from the K-1 are other practitioners using as the starting off point for compensation? I can't seem to find any guidance anywhere online for this.

Thanks.

I have a self-funded self-administered health FSA. All claims are done in paper and sent to one person in the company to pay claims. Participants send claims information to the FSA administrator via interoffice mail or through the administrator's fax machine. No one other than the administrator has access to the information. Only the FSA administrator pays claims and discusses claims only with participants.

Does HIPPA Privacy apply?

Thanks.

Hi,

If a plan passes coverage on the ratio percentage test, can it exclude people by name? I am thinking the answer is yes since the reasonable classification test that requires the classification of employees covered be based on objective business criteria is not a requirement for the plans that can pass on the ratio percentage test.

As a second question. Could a plan exlude a class of employees that contains two of the oldest workers in the company, pass on the ratio test, and still be considered nondiscriminatory? I can't find anything that says a plan can't do this unless somehow age discrimination comes into play and preempts the coverage rules.

Can anyone offer any insight or experience in this regards?

Many thanks

I am having an argument with some coworkers, maybe I can find someone to settle this for me...

A is a 1% owner with comp in excess of 150k. A is a key employee.

A's wife, works for the company as well and earns 30K. She is a 1% owner by attribution, now, because her comp is under 150k, I do not consider her a key employee.

Am I missing something here?

Employer has DB plan that doesn't cover all the employees. It is Top Heavy.

One of the excluded employees participates in a second Safe Harbor 401(k) Plan.

Is the Top Heavy minimum for this employee bumped up from the 3%? (to 4% minimum?)

Thank you

A M&P plan has allowed participation by a foreign embassy. It turns out that many of the participants do not collect income taxable by the US. Is it permissible for the embassy to sponsor a 401(k) and, if so, is there any reason why those who do not collect taxable income cannot participate? The embassy is treating the plan like a savings plan for employees (there are no salary deferrals).

We have a large employer group that has union and non-union employees. If an employee switches jobs within this employer group that causes him to lose coverage under the non-union plan and he is not eligible to enroll in the union plan until he completes the waiting period, is his loss of coverage under the non-union plan a qualifying event? He is not terminating employment, nor is there a reduction in his work hours. There is no sale involved either. He just chose to move to a job that is under the union.

Thanks for your help!

Is it permissible to reimburse participants of forfeited $ on a per capita basis; e.g., if one participant has $1,000 of unreimbursed withholding and there are 10 participants, you can give them each $100.

Can the spouse of a more than 2% owner of an s-corp participate in a cafeteria plan? the spouse is an employee of the corp.

Plan Sponsors are required to provide notice to participants within 60 days of a missed quarterly contribution.

Is there any exemption from this notice for small plans (other than one life plans)?

If not, what is the feeling as to how well this requirement is being satisfied?

My wife has a Roth IRA. She donated into it while working for a previous employer a few years ago. In it she has less than $1000 dollars and is no longer contributing to it. She is charged a $35 annual maintenance fee. What is her best option? Should we keep it as is or should we roll it into something different and how do we go about doing this? She does not need this for retirement. She is 29 years old and is just looking to consolidate this or get out.

Thank you

Age weighted safe harbor plan, with 3% safe harbor contribution. 2 HCEs;

5 NHCEs, two of whom have terminated (one with <500 hrs). All seven participants get the 3% safe harbor, of course. Plan has 1000 hr and last day requirement. To pass P/S coverage, at least 4 of the NHCEs must be benefitting. Do I need to give one of the terminees P/S contribution beyond the 3% safe harbor, in order to pass coverage?

A plan effective 1987 with 100% of avg comp benefit formula (no reduction for service) and fractional accrued based on participation was frozen effective 12/31/1994. Owner employee’s data @ 12/31/1994 was:

YsOP = 8; Avg Comp well over 300k; Attained Age =NRA=65; Accrued Benefit = 7,920 (limited by 1994 $Max of 8/10*118,800/12).

In appears, his accrued benefit has been increased with the passing years to the $Max limit for the year. The accrued benefit in the 2002 valuation was $13,333!!

Q1 - Is this permissible now – with or without a plan provision to that effect?

(incidentally, in 2002, the owner was 73 and his S415 $Max would have been about $25k – so I don’t know why his benefit was restricted to $13,333).

There are NHCEs in the plan, some with pre 1995 entry date. The accrued benefits of the NHCEs who have pre 1995 participation, are adjusted for change in their avg comp after 1994. Even with this adjustment, the current accrued benefits of most of the NHCEs’ are Top Heavy minimum.

Q2 - If the answer to Q1 is Yes, is there not a 401(a)(4) issue here?