Client has a PS plan... he is only participant. Has invested in limited partnerships, to the tune of $1mil plus. My question is how to value these investments... From the K-1? Based on cost? Obviously based on cost would be the easiest... but if valued at cost, would that be accurate enough in the event of an audit?

Our plan covers many entities which have various benefit formulas. The plan provides that the benefit formula at the entity where the employee is last employed is the formula used to determine the employee's benefit under the plan. This to me, creates a windfall for an employee who has worked at a lower formula entity for the majority of his career, then transfers to an entity with a much more generous formula. Is there any reason why we would do this? It seems to me that an employee earns a benefit in accordance with the formula at the entity he is employed with and if he works at 2 or 10 different entities, his benefit is determined based on the aggregated benefit from the 2 or 10 different entities. Is there something that I am missing? Any guidance is greatly appreciated!

Self-funded Plan established 11/1/02, plan year 11/1/02 through 10/31/03, to pay dental benefits for employees. Funds are kept in a separate bank account under employers name, but with "Dental" specified on the second line. Can that be seen as still being paid from employers assets, or would that be seen as a funded plan requiring an audit?

Thanks!

This is a takeover plan, with an after-tax source, as well as a related rollover source (old DB $).

at the previous provider, the assets were rolled into a new investment product without preserving the separate sources - now, instead of deferral, profit sharing, rollover and after tax, there are two sources - employee and employer. In order to properly account for the assets, the sources should be split out, but the rollover to the new investment product happened about 2, maybe three years ago and when the assets were converted to the new provider, a participant (also the CEO) noticed that something was wrong with his account.

Any suggestions?

If I amending Schedule I for a prior year that required an audit, does the audit report also have to be amended? My first reaction is yes.........but it could add more expense to the client. Thanks.

What distribution methods are available for distributing an annual SAR? Is posting it to the lunchroom bulletin board enough?

Can anyone tell me where I can find some rulings/more information on the newly passes IRS Automatic Enrollments, they are calling it a "general information letter" but I cant find anything regarding the rules/guidelines, etc.?

Thanks for the help!

Calendar year DB plan uses highest consecutive 48-month average. Pay history is:

May 2000-April 2001: $18,000 per month, plus bonus of $40k in 4/2001

May 2001-April 2002: $21,000 per month, plus bonus of $55k in 4/2002

May 2002-April 2003: $22,000 per month, plus bonus of $61k in 4/2003

May 2003-April 2004: $23,500 per month, plus bonus of $70k in 4/2004

EGTRRA amendment applied $200,000 limit to all prior years.

Another practioner has informed me that in rolling monthly averages such as this plan uses, you limit the pay to the annual limit in effect for the Plan year in which the 12-month period begins. Therefore, the limited FAE = $200k for each year, since all 12-month periods begin in 2003 or earlier.

Or, can final 4 months of pay average be capped at $17,083.33 ($205,000/12), meaning that final year in 48-month average is $201,667?

I'm looking for feedback concerning a plan that specifies a unit credit benefit formula and accrues benefits under the fractional method of 411(b)(1)©. I'm looking for some thoughts about how to handle a potential violation of the minimum accruals required under Reg 1.401(a)(4)-3(b)(4)(i)©(1).

One Plan doc I've read specifies (summarized) that the plan will not violate this regulation. However, there is no fail-safe provision in the document.

Is it possible to draft a doc that specifies correction in the event a participant's accrual rate is too high, or too low? Could you either increase the low accrual rate or bring down the high accrual rate? Is there a difference using permitted disparity? Or is the Plan just not in compliance and subject to DQ?

Any thought? Thanks in advance.

The EGTRRA change to Section 403(b)(3) to permit employer contributions for up to 5 years after retirement is not limited to school districts, is it?

I know that the provision was designed with K-12 teachers in mind, but it is equally available to employees of private charitable orgs., is it not?

We have a QDRO that includes as part of the Alternate Payee's benefit, all future benefits accrued after the date of the order until the date the participant terminates employment. I have always thought that based on the language in the statute that a QDRO cannot provide increased benefits, that this is impermissible, however, I am now questing this thought. Does anybody have any insight into this? Are there any cases or rulings or guidance that specially states one way or another whether a QDRO can include future accruals from a db plan?

Thanks,

Do the QJSA rules and spousal consent requirement apply to 457 deferred compensation plans? Can a participant name anyone as his or her beneficiary? Thanks.

Say a participant reaches age 70 1/2 in 2003, thus RBD 4/1/2004.

He has accd ben at 12/31/2003 of 10,000 per year.

The participant will receive his annuity in annual payments.

For purposes of this discussion we will assume the employee does not accrue additional benefits and that his spouse is less than 10 years younger. And the employee must begin on 4/1 following 70 1/2, because he is a 5% owner and still an active employee.

My understanding of the RMD requirements are as follows.

1. He can receive a payment of 10,000 by 4/1/2004 for the 2003 year and a payment of 10,000 by 12/31/2004 for the 2004 year.

2. The regs say the participant can recieve an annuity over the life of or life expectancy of the participant.

Does this mean that instead of 1. above, the particpant can receive 10,000 per year over the life expectancy in one of the tables? So if the table has 27 years, the annuity of 10,000 would be distributed over exactly 27 years (r3egardless of when and if death occurs during that period)? And is it based on the uniform life table or the single life expectancy table?

3. ANd then I believe the regs allow for the accd ben to be converted to a present value, where such value is spread over the remaining life on the uniform life table, and the present value is recalculated each year.

So if PVAB were 200,000 at 12/31/03 and the life expectancy were 20, the payment by 4/1/04 (for 2003) would be 10,000 and then another payment of 10,000 would be made by 12/31/2004 for 2004.

And then the PVAB at 12/31/2004 would be redetermined and the RMD for 2005 would be based on the PVAB and life expectancy using the uniform life table as of 12/31/2004.

And is the PVAB based on the lump sum assumptions under the Plan?

Any views on the above interpretations and what others are available.

Thank you.

Can a 401(k) plan satisfy the requirements, as it relates to leased employees, of a safe harbor money purchase plan?

For example, if the (k) provides for immediate participation, the contribution is at least 10% of pay, no allocation conditions imposed on the contribution and it was 100% vested - would a safe harbor MPP actually have to be adopted? The only thing missing in the (k) plan would be J&S.

Employer A maintains a (k) plan and leases employees to Employer B. Employer B maintains a SEP and does not want to establish one for the leased employees. Employer A and Employer B are a brother/sister controlled group.

Thoughts/comments are appreciated. Thanks!

This is a plan using the safe harbor matching contribution and the employer is terminating the plan, or thought the plan was being terminated. The employer is being acquired in June. The safe harbor notice to participants for 2004 was not a "wait and see" notice.

Since the regs are proposed regs, the opinion is a plan termination prior to the end of the year is too aggressive and the termination date should be 12/31/2004. Has anyone successfully terminated a safe harbor plan midyear?

How do the new interest rates impact the calculation of the 415 limits???

Do we have separate computations for lump sums and forms of annuity??

Assume a participant is at the maximum benefit at age 62. The reduction to a monthly benefit payable at 55 is performed using (ignoring actuarial equivalent issues) 5% and GAR???

The lump sum value of this benefit is then computed using the 'new' 5.5% interest rate??

I thought the participant was entitled to the greater of the lump sum using actuarial equivalent or GAR94 and the 30 year Treasury rate. This lump sum was limited by the new lump sum limit using 5.5% for everything.

I thought this was pretty clear until we had a little discussion and in rereading the regulation it is not at all clear that the 5.5% is applied for the determination of the maximum benefit BUT just for the lump sum.

Any responses are appreciated.

For purposes of ACP testing.. how is the match portion of a catch up contribution supposed to be treated?

What if an employee exceeds the plan match limit b.c of a match on the Catch Up?

A portion of the plan assets are held in a REIT. Do I need to answer "yes" to question 3c on the Schedule I? Or is this only for real estate that the plan has control over?

Thanks!

409(e)(3) requires the pass through of voting rights with regard to certain transactions. If you have three shareholders, and one is an ESOP, and there is an agreement to purchase all shares by a buyer, this doesn't appear to be a "merger, consolidation, ..." and require pass through voting , or does it?

a safe harbor match satisfy top-heavy requirements alone? or is an additional contribution required?