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?

I haven't been paying too much attention to this issue. Has the Service indicated yet when they will start accepting prototype and V/S submissions for opinion and advisory letters, updated for EGTRRA? Seems like 12-31-05 isn't all that far away any more...

Does anyone know where the rules for suspension of accural requirements to pass 410(b) testing are in the regs? I have seen them in pre-approved plans, but don't know the authority for them.

One of my clients added a 401(h) retiree medical feature to their DB plan two years ago. A separate account established for 401(h) benefits now holds about $120,000, and only one retiree is currently entitled to distributions (monthly payments of about $250 have not yet commenced).

The sponsor has now reconsidered, and would like to increase the DB formula in lieu of the 401(h) feature. The question is what can be done with the 401(h) account.

The Code and regs (1.401-14) provide that the 401(h) account can revert to the employer "upon satisfaction of all liabilities arising out of the medical benefits portion of the plan." The plan can be amended so that future retirees are not entitled to medical benefits, but what about the one current retiree? Can the plan be amended to terminate her medical benefits, which would allow an immediate reversion? The sponsor intends to continue paying her medical benefit from a corporate account.

Guidance on 401(h) is slim, but my guess is that her 401(h) benefit can be terminated by amendment, as the 401(h) feature is not a vested benefit.

Any thoughts on this one? I'll appreciate any & all input.

- Steve

Outside of plan language prohibiting other employers from adopting the plan sponsor's plan, is there anything else that you can think of that could prohibit an employer unrelated to the plan sponsor from adopting its plan? Obviously, the companies would be in agreement that this could happen.

Can anyone give me guidance on whether a OTC dairy relief product would qualify for reimbursement without a Dr's note? The employee sent a note stating her son is lactose intolerant and needs this product when he consumes dairy. Thanks for your help.

I have a client with a defined benefit plan and a SEP. Due to the limitations of 404(a)(7) the SEP contribution they made last year is not deductible. While I understand that the deduction can be carried forward, in reality we expect the defined benefit plan to continue and thus we may never get to a point where the SEP contribution can be deducted.

Is there any way that anyone can think of to get that SEP contribution back to the employer, since it will never be deductible?