I am researching a financial advice service offered through Principal Financial. My question relates to who can be billed for this service generically.

I was under the impression that- The fee can be passed on to the participant if it is for advice relating to the plan, but when they offer full range advice regarding all of the ee's financials (i.e. estate planning other retirement vehicles) - the fee has to be paid by the employer.

Has anyone else come across this? Is this an accurate statement?

Help if you can.

Thanks

I have a client who wants to terminate their existing SARSEP plan, replacing it with a 401(k) plan. I have not had alot of experience w/ SARSEP's, so please provide any input on the required procedures relative to termination. Thanks.

When freezing a cash balance plan, can the interest credit be frozen as well?

Given that the IRS' position is that the future interest is part of each year's benefit accrual, can that future interest be eliminated in a plan freeze or must the plan be terminated to cut off the interest credits.

Hi,

I've spent time on several occasions reading and researching and still don't quite understand the plan document requirements for SIMPLE IRAs. It looks like the plan may use an IRS model form, a prototype, or a custom plan. I then read that each participant may establish a SIMPLE IRA account by using the 5305-S.

What exactly does this mean. Does the plan need to have a document for the plan as a whole and then each participant uses the 5305-S as a type of account application? I know that a lot of the SIMPLE provisions cannot be altererd (distribution, vesting, etc) but it would seem that a document would need to exist to select things that can be elected by the employer such as who is eligible (i.e. not non-resident, union) and things like when deferral elections can be changed, etc. It anyone can shed some light on how these things interact in the real world, I would greatly appreciate it.

Many thanks

Lori!

Governmental entity offers a 457 plan through an insurance company which invests the contributions. There is no plan document or trust and the insurance company doesn't offer one. Any suggestions for locating a plan document and trust that could be used in this situation.

Governmental entity makes contributions to a 403(b) tax sheltered annuity on behalf of employees who opt out of health insurance. Are the contributions subject to income and FICA taxes?

Our firm is looking to purchase survey data. As with any purchase in a small company you want to get the biggest bang for your buck.

The data we use most is for PS and 401(k) plans with a little DB data as well.

Have any of you had either good or bad experiences obtaining this type of statistical data?

Do any of you have any recommendations?

In recent years we have used PSCA and Deloitte & Touche.

Thanks in advance for your help.

I know normally in PSP or in a DB plan where the participant is past retirement age, it is not a problem if the participant takes more than the minimum required. However, is it a problem in a case where the participant (more than 5% owner) is not yet at Normal Retirement Age? If so, what are consequences?

Employee became a "statutory" employee during the third quarter of 2003. It is our understanding that a "statutory" employee is somewhere between a 1099 and W2 employee. If the plan document excludes "statutory" employees, can this person be excluded from the plan for allocation purposes for the 2003 plan year? The plan has a last day and 1000 hour requirement to receive a contribution.

ok, only tested this one on one plan.

this is a census verification -

includes entry date and amount of deferral.

will (hopefully) produce warning message if ee has comp but termed in prior year

will (hopefully) produce warning message if ee has no comp but is listed as active.

there are a number of counters at the end of the report -

new employees-active, new employees (terminated), number of ees deferring

number of ees who termed prior year, number of terms current year. number of ees paid out current year

as usual, never know if I have captured all the conditions, but what the heck, maybe you want a report like this.

by the way, when working with a report under Custom you have the ability to print by category. you can even put one of Relius' reports there and have that as an 'added' feature - in case you didn't know.

Participant took a hardship withdrawal in 2002. Employer did not stop his deferrals for the six month "waiting period". Deferrals that should not have been taken out of participants paycheck were refunded to participant in 2003. Is this considered an excess contribution for which code 8?

I have a client who wishes to purchase the real estate out of his retirement plan. Is there a prohibited transaction exemption for this?

While I am clear that a participant cannot access Safe Harbor money in a Hardship situation, can they access that money for a plan loan?

I have a client who just purchased fidelity bond insurance through CNA/Western. All of my other clients have fidelity bonds which are 3 year bonds for 10% of the plan assets. The premium is around $150-200 for the 3 years.

The clients insurance company was told by CNA/Western that they only sell one year bonds, and that they set it up so that the coverage of the bond is 10% of plan assets, but that they split the coverage among however many trustees there are. I never heard this before?? The premium is $500 PER YEAR! I thought at first that it was fiduciary liability insurance they were selling, but it is not...it is a fidelity bond. The plan is the named insured.

The agent told me that CNA/Western is the leading seller of ERISA bonds and that they know what they are doing. I felt kind of dumb and am wondering...is this normal? The agent called back CNA and told them what I said, that my clients have 3 year bonds on the PLAN, and that the coverage is not split amongst the fiduciaries. They told him "there was a right and wrong way to do things".

How are your clients plans bonded? Does $500 a year seem outrageous? This is a tiny little company so that is a LOT. I could get them a bond for $200 for 3 years, he is selling them a bond that will cost $1500 for 3 years.

Can any of you share your procedures pertaining to beneficiaries? I realize it should all be covered in the plan document, but I am wondering what the majority of plans allow.

Do you leave the funds under the participant's SS# or do you move the funds to a new account under the beneficiary's SS#?

Do you allow beneficiaries to direct investments? If so, do you require direction from the plan sponsor to allow this?

Any thoughts are appreciated.

Our financial advisor wants us to terminate our profit sharing plan (it's two years old) and put a simple plan in place. I thought there were some issues centering on "permanency" when you terminate a plan (e.g., you are supposed to establish a plan for it to continue and if you terminate a plan and then establish another plan without some time in-between, the second plan is deemed to be a continuation of the first plan, etc.). Does this apply in a situation where you are going from a profit sharing plan to a simple plan? Is there a specific way you are supposed to handle this? I found guidance on going from a money purchase plan to a profit sharing plan - but nothing involving simple plans.

I just discovered that I contributed $5000 to a Vanguard Roth IRA for the year 2002. The IRA was in two different accounts (Index 500 - July, 2002 and money market - March, 2003). I do not know where to begin to straighten this out.

My daughter is 13.5 y.o, and during financial year 2003 made ~ 500.00 baby-sitting.

I figured that starting to contibute to a ROTH, whilst she is paying virtually no tax, would be a great way to start.

Is she allowed to open a ROTH?

Thanks

Deryk

Please help us resolve a little discussion in our office. Here's the situation:

New Plan that used to have a simple plan. Effective date of the plan is 1/01/04. The first payroll (paydate) for 2004 plan year is 1/04/04 (for payroll end 12/31/03). Some enrollment forms completed and dated as early as 11/19/03, while most completed and dated 1/08/04.

While checking the enrollment forms against the payroll information, I found that pretty much everyone's deferral amounts were different than what they specified on their enrollment forms. There were only three that were actually equal to what the enrollment form speciefied.

I found out that the payroll service had not gotten any of the enrollment form information for the 401(k) plan by the time the 1/04/04 payroll was to be paid. They were still using the old simple plan's elections. The service is reporting the correct type of plan under the deferrals (401k), just the amount did not match what the enrollment forms specified.

What about the dates on the enrollment forms? Should the individuals, who do not have a timely enrollment form on file, be able to defer for paydate 1/04/04?

Is this a "big deal". Some people here think it is while others think it is not.

Any thoughts on this?

I am reviewing a proposed contract with a claims fiduciary for a self-insured health plan. The contract limits the number of claims that can be audited, requires a random sample of claims for an audit, and prohibits the calculation of overpayments based upon an extrapolation from the audit sample. The proposed contract also is very restrictive in terms of remedies against the claims fiduciary. My questions are:

1. Have any of you had success in negotiating revisions to similar contract terms?

2. Is an audit of 250 claims sufficient for a plan with over 4,000 covered employees?

3. Is this similar to your experience?

While I have my own notions about these questions, I am interested in hearing from those of you who have dealt with this issue.