does anyone have any sample language for an RIA service agreement for participant directed plans?

X sponsors a cafeteria plan for its employees. Employees who are regularly scheduled to work 1,000 hours or more are eligible to participate in most coverages as of the first day of the month after they complete 30 days of employment. Employees who almost never complete 1,000 hours, must first complete 1,000 hours to be eligible. A was a part time employee who first completed 1,000 hours in 2000. However, A was improperly not permitted to participate in the plan. A became a full-time employee in 2003. What can X do to correct this situation back to 2000? X's cafeteria plan has default coverages for new employees failing to enroll and a default for existing participants who fail to enroll for the following year. Although pre-tax premiums are not available, can X charge A for his/her share of the premium on an after-tax basis for 2000-2002? Your input on this would be most appreciated.

I have been reading quite a bit information on asset allocation, and all I have read so far talks about dividing among large cap, large cap value, small cap, small cap value, and foreign funds and so on. Does that mean one should skip mid cap funds? Reason I'm asking is that my 401K plan has mid cap fund in it.

should mid cap funds be avoided? Thanks.

403bwise has recently published an article I wrote concerning high cost 403b arrangements. You can view the article at: http://www.403bwise.com/features/nysut_jlf.html. Your reactions are welcome.

Peace,

Joel L. Frank

Administer a small cross-tested 401(k) plan that has depended on QNECs to pass ADP test in prior years. Next year they will not need QNECs to pass ADP test. However, the employees now count on getting a 3% of pay 100% vested contribution on top of the 5% Nonelective contribution subject to a vesting schedule.

Question: can they make a QNEC anyway even if they already pass the ADP test? Does the QNEC simply become an additional Nonelective contribution that just happens to be 100% vested? If so, I would think we could use the QNEC in the a4 test and not have to pass a4 without it.

We suggested the employer simplify matters and just make an 8% of pay Nonelective contribution but they just cant face the wrath of the employees who have gotten used to the 100% vested contributions.

Once a year we pay for our employees' annual physical. If an employee terminates, do we have to offer him COBRA for this? If so, can we charge as the premium 102% of the full cost of the physical or do we have to figure out how much it would cost in premiums to buy insurance for the physical and charge 102% of that amount?

I have drawn a blank: When did the law change, regarding Money Purchase Plans, that allowed you to reallocate forfeitures instead of using them to offset the employer contribution. I think it was effective in 1993, but can't find the technical side behind it.

Thanks for any replies.

I don't usually work with RMD's but my assistant is out ( I am starting to hate OPVs (Other people's Vacations). I had a question come up about a participant who retired at age 77 in April of 2003. I have not been keeping exactly current on the regs as they relate to RMD's but my understanding is that his RBD is April 1, 2004. What I am not clear on is if that distribution in 2004 is included in 2003 income? Am I totally off base here? Help! It is Friday and I can't think.

client discovered after the money had been deducted from paycheck and remitted to the plan. do you treat this like an excess deferral under 402(g) or is there some other way to return the money?

We're being asked some difficult "what if" questions about a probable distress termination situation. I've never personally been involved in one, yet. Looking for some general information.

Let's say a plan is 90% funded, enough to cover guaranteed benefits, but not all accrued benefits. For example, EGTRRA increases would not be guaranteed.

Would the PBGC pay benefits to the extent funded, or would people be cut back to guaranteed benefit levels?

Anybody know how the PBGC converts assets to benefits, i.e. determines what benefit levels would be paid (above guaranteed limits) based upon available funds? Do they, for example, use certain annuity rate tables?

The situation, which may not seem to make sense but does, is that there may be some additional funds available to make 90% funded 95%, but the parties want to know how the participants would be affected before agreeing to release the funds. (And I know that is not normally an option-this is a unique situation).

Can anybody shed light on this process?

Does anyone know where I can find a sample Sarbannes-Oxley blackout notice in Spanish?

Hi Everyone,

I have a participant in a Prevailing Wage account who passed away. He did not have a beneficiary, no children, no estate, who would be Next of Kin? Would the Plan Administrator be required to sign the Distribution Form as well?

Thank you

Dan

A client's payroll system failed to deduct loan repayments from a participant's paycheck and the loan is, technically, in default. The participant affected did not notify the company of the failure to deduct the repayments. The client also, in another situation, timely deducted the loan repayments from a participant's paycheck but failed to remit the repayment to the plan's trust.

In the second situation, the issue is clearly a prohibited transaction under 4979 and IRS Form 5330 should be prepared and the applicable excise tax paid. Since the loan repayments were timely withheld, there does not appear to be any issue under 72(p) with regard to a defaulted loan and/or deemed distributions. Correct?

In the first situation, however, the failure to make scheduled loan repayments that throw the loan into default was not the doing of the participant, per se. Shall I assume that this is, nevertheless, a deemed distribution situation? Are there any other corrections out there when the fault is more on the side of the employer?

If a person owns 50% of corporation A, 30% of corporation B, and their spouse owns 100% of corporation C - does this constitute a control group through attribution of ownership with corporation c & b?

The two spouses have nothing to do with the other's company - no management control, etc.

Thank you.

A participant in a cash balance plan continues to work past NRD. They continue to receive an allocation (theoretical) and earnings.

First, they must have their NRD benefit protected with actuarial increases, correct??

Now, the testing for nondiscrimination.

Is it proper to set the most valuable EBAR for this individual to the normal EBAR??

IF not, it would appear they would be subject to the same rules as everyone else - convert the increase in the accrued benefit (if using that particular method) from the normal form to a QJSA using actuarial equivalent and then convert back at testing assumptions. This would cause a different EBAR. Right??

Thanks for any and all help. The mind is a little frazzled and the regulations do not seem to reference what to do with people continuing to work after NRD.

Due to an ownership change in late 2002 a company is no longer a member of a controlled group. I believe that the rules are that this company can still be considered part of the controlled group for 2002 and 2003. If this is correct who actually gets to decide if they are included?

If I am incorrect is this plan considered a multiple employer plan?

I have a client that is a temporary staffing service and has a profit sharing plan with a decent amount of money. That plan covers all employees including the temps (if they meet the eligibility requirements).

Effective 1/1/04 they are adding a 401(k) Plan which will exclude all of the temps and any HCE’s.

They needed to do a separate plan because they didn’t want the temps to know about the 401(k) Plan. For a multitude of reasons (primarily communication) they really couldn’t roll it out for them.

All of the 401(k) money will be employer directed. They want to invest all of the money in the existing brokerage account (i.e. for the profit sharing plan) to obtain “economies of scale” on the investment side.

Page 36 of the Schedule H instructions reads as follows: “If the assets of two or more plans are maintained in a fund or account that is not a DFE, a registered investment company, or the general account of an insurance company under an unallocated contract, complete parts of I and II of Schedule H by entering the Plan’s allocable part of each line item.”

An ERISA attorney pointed that out to me, and said that doing what we want is okay.

My question is this: The profit sharing plan has an audit requirement while the 401(k) plan does not. The 401(k) Plan will be a very small portion of the assets. Are there any insurmountable complications with respect to the audit? My assumption is that limited procedures would need to be performed on the 401(k) Plan, since the commingling necessarily has implications for both plans. Anyone seen this before? Anyone have any thoughts?

The TPA will be tracking everything as if it was one plan anyway, so all of the information will be segregated at least in total, and then the investments and investment income can be allocated out pro-rata based on ending balances. All other amounts will obviously relate specifically to one of the Plans.

Any help on this would be greatly appreciated!

Here's the situation. We have a former participant of a DB plan that left in 1996 and was given a letter and the calculation details. At the time, he said nothing. He is coming to us now to say, I want to see the details. The problem is, his file has been lost. We know what his benefit amount is, but can't recreate it because it was based on a Career Average formula that used compensation from 1981 through 1996. He has the letter that we sent to him back in 1996 (but no calculation) and it agrees with our stored benefit. We only have comp going back to 1985 so we're missing 4 years. The benefit looks reasonable given assumed (discounted) comp based on 1985 backwards.

The question is, what obligation does the plan trustee have in providing him with the calculation of his benefit? We lost his file and we don't have the comp (even archived) from 1981 to 1984. Does the burden of providing comp for those years now fall on him? Not sure what the regs are on an issue like this.