Say we have a 5% owner receiving a RMD after age 70 1/2 as an annuity.

If he actually retires at age 80 would he then be legally allowed to take a lump sum of his accrued benefit?

401(a)(9) gives me the impression that the RMD annuity cannot be increased for such a reason.

Any thoughts?

I've always understood that noncontributory health plans require that 100% of employees participate in the plan, even if they have other coverage. My client is arguing with me, and wants a cite to confirm my position. The group application (which they signed) does say this. What they are trying to do is pay 100% of premium for those who want (need) the health insurance and compensate the other employees in the form of wages. We've suggested the 125 plan approach, but they have objections to that as well.

Is this a law, an underwriting practice, an insurance company rule, not a rule at all, or a figment of my imagination?

I'll try to make this as brief as possible. We have a client who had an annuity for her 403(b) salary deferrals through her school. In February 2001, her investment advisor rolled that annuity contract into a traditional IRA and everyone apparently signed off on it: the securities firm and the plan administrator. The problem is, she did not have a triggering event to make the rollover eligible. We have finally figured this all out and we have established her a new 403b. In the meantime, her IRA has been receiving her pre-tax salary deferred contributions as IRA contributions. We want to do a rollover reversal, but I need to know for my client what kind of penalties we may be looking at. Our boker/dealer has been suggesting a letter of instruction signed by the client and the employer-but their main focus in the language is that they are not held responsible for any potential penalties (but no one can tell me what those penalties may be!). Also, this client will be retiring in July, so I don't even know if it is worth it. Maybe we just leave it alone and hope no one notices? This seems to be a very unusual situation, so any advice would be helpful, Thanks!

Ouch..... Auditor discovered that when Plan was restated for GUST, the restatement inadvertently did not include the original 2 Yrs service eligibility requirement. Administration of plan and SPD continued as though 2 yr eligibility was in place. Problem can be solved by either

(a) make-up contributions for those who actually were not intended to be covered and did not think they were...

(b) going through VCP and hoping for forgiveness

Is there another simpler, cheaper, faster, safe solution?? THANKS

Are there any liability issues with the following scenario?

Carrier receives rollover distribution paperwork without their required letter of acceptant.

The letter of acceptance is from the new carrier which aknowledges the participant, what type of account the money will be rolled into, and aknowledges the eventual rollover.

Former Carrier does not notify participant of incomplete paperwork for over 3 months.

The participant is upset that the distribution took so long.

Plan Sponsor wants to know if he bears any fiduciary liability because of the delay. What can I tell him, or what codes can I show him?

I have a money purchase plan that adds forfeitures to the employer contribution. They have about $9K in forfs to add to their contribution this year. Their contribution is 25%. Is there a problem adding the forfs on top of the 25%? Two participants get $40K instead of 25% because of their comp. Is this contribution still ok? Thanks for any help you guys can give me!

I have a cross tested partnership 3% safe harbor 401k plan. There are separate rate groups for each physician PC. The PC's are partners in the partnership.

For 2003 2 of the physicians terminated employment with the group. The TPA is saying that they still must make the safe harbor contribution for themselves just like any other employee. These 2 physicians do not want to make any contributions to the plan including this 3% safe harbor. What can we do ?

Assume a 401(k) plan has a five year cliff vesting schedule for employer contributions and credits vesting service on the elapsed time method. Employee A is hired on January 1, 2002, and leaves the Company on February 28, 2003 with 14 months of service.

If this employee is rehired on March 1, 2004, can the Plan provide that she has 1 year of service (so that she will complete her second year of vesting service on February 28, 2005), or must the Plan credit her with 14 months of service upon her rehire (so that she will complete a second year of service in December, 2004)?

In other words, under the elapsed time method, do you round down an employee's two periods of service before combining them?

Any cites would be helpful. Thanks.

For the 12/31/02 ADP/ACP test, we did not disaggregate the employee's who did not meet the statutory age/service requirements. The test was done using the total group.

For the 12/31/03 ADP/ACP test, we'd like to disaggregate. However we use the prior year testing method. What percents do I use for my prior year test percentage?

I don't think I have ever seen someone get sent to jail for embezzeling pension assets.

The Department of Labor announced that the former owner of a Mississippi home health care agency has been sentenced after pleading guilty to embezzlement of 401(k) plan assets.

Restitution and Prison Sentence Ordered After Owner’s Failure to Remit Contributions to 401(K) Plan, DOL/EBSA News Release No. 04-111-CHI, February 10, 2004.

News Release

U.S. Department of Labor

Office of Public Affairs

Atlanta, Ga

Release Number 04-111-ATL

For Immediate Release

Date: Feb. 10, 2004

Contact: Gloria Della

Phone: (202) 693-8664

Former Owner of Mississippi Home Health Care Agency Sentenced for Embezzling Pension Assets

ATLANTA-The former owner of Complete Health System, Inc. of Vicksburg, Miss., (formerly Haworth Home Health Agency, Inc.) was sentenced on Jan. 23, 2004 to four months in prison, four months of home confinement, probation and restitution to the company’s 401(k) plan.

Ida J. Haworth was sentenced in federal district court in Jackson, Miss. after pleading guilty to one count of embezzling assets belonging to the Haworth Home Health Agency 401(k) Plan.

“Theft of employee benefit assets jeopardizes the benefits of workers,” said Howard Marsh, regional director of the Employee Benefits Security Administration (EBSA) in Atlanta. “This case reaffirms our commitment to protect the benefit promises made to workers.”

Haworth was indicted on Aug. 20, 2003 for failing to remit approximately $53,000 in employee contributions to the 401(k) plan’s investment manager. She operated several home health care agencies in Louisiana and Mississippi for several years.

The Atlanta regional office of the U.S. Department of Labor’s Employee Benefits Security Administration investigated the case. The U.S. Attorney’s Office for the Southern District of Mississippi prosecuted the case.

(U.S. v. Haworth)

Criminal No. 3:03-CR-128B

DOLNews FiduciaryNews PlanAdminNews 401kNews PenaltiesNews

just received from TAG notice that IRS has issued the regs. Let the sweating begin...

Suppose an insurance agent establishes a SIMPLE IRA for his agency and enrolls himself & his employees. The agent elects to fund the IRA w/annuities from an insurance company he sells for. Some of the ees decide that they would like to estab a SIMPLE IRA annuity w/this same company as well.

If the plan is not a DFI plan, and the employees are aware they can go anywhere to establish SIMPLE IRA.

Suppose insurance company pays commission on these annuities. Has a prohibited transaction taken place?

2nd question: suppose agent sells a SIMPLE IRA plan (not a DFI) at his brother's unrelated business. Brother & employees of that business establish annuities w/agent. Upon payment of commission, has a prohibited transaction taken place?

MEWA sponsoring organization has insured health care benefit covering its own employees and those of many other employers but only receives and processes information regarding eligibility, what would be its HIPAA obligations?

Employer contracts with a payroll provider during 2003 to utilize their PEO 401(k) plan. He goes along with the employees and essentially everyone in the company becomes a leased employee.

A question arose that asks what would happen if the employer went back to work for the company and left his employees with the PEO. Could he have his own retirement program with the company (e.g a SEP or a Uni-K) that just covered him? I would be interested in opinions.

Thanks much.

So let's say I'm determining my HCE employees. I use the alternative definition of HCE, so the employee must:

-be a greater than 5% owner in the current plan year or preceeding 12-month period, or

-have earned more than the HCE dollar limit and have been paid in the top paid 20% of all employees in the preceeding 12 month period.

I'm doing my 12/31/03 plan year testing. So I need to look at the 2002 plan year. Let's say I have 100 employees.

Q1: Do I need to subtract the employees who are not eligible?

Q2: Let's say I determine I have 14 employee's who should be HCE. So I take sort my list of employee's by compensation - highest to lowest. 2 of those members termed in November of 2002, so they won't be included in the 2003 test.

Do I substitute the next two employee's who qualify to be HCE to replace the two who won't be on the test?

School District X sponsors a 403(b) to which salary reduction and employer contributions are made. Because school districts and 501©(3)s are not subject to income taxes (and therefore the tax deduction rules of Code Section 404(a) do not apply), what is the due date for remitting employer contributions for the plan year?

How do you correct a situation when the contributions W/H for one of the FSA accounts exceed the Annual Election Amount and W-2 have already been issued?

Before I go on a wild goose chase, does anyone

know if there is a plan that could accomplish

the following:

1. Create individual accounts using pretax

dollars;

2. Allow these dollars to be used to make

self payments to an industry health fund;

3. Allow the dollars to remain in the account

after retirement and be used to pay the

retiree's share of his health premium;

4. Allow a high ceiling on the maximum amount

permitted to accumulate in the plan.

Thanks.

What new requirement for content have been added to SPD's for health care plans since the final regs effective 1/1/2000?

Company B maintains a qualified 401(k) plan. Company A acquires Company B with the intention of continuing Company B's plan. Please confirm, citing any references, that the participants under the plan would not become fully vested as a result of the transaction.

I'm fairly certain that this is an event that would not accelerate vesting, but I would like a reference to see it in print.

Thanks.