This is not my area of expertise, so sorry if this sounds like a stupid question. Can Mutual Funds be used as a funding vehicle for non-qualified deferred compensation plans where the employer loans money to the executive? I see where it can be done using a split-dollar life insurance policy. Thanks for any and all input.

9/1 plan year

Failing 9/1/02 to 8/31/03 ADP test

1 member getting refund and they're over 50

Refund is 3730.16

2000 tax year contribs equal 10,999.70

Catch up for 2002 would by 1000.00 and for 2003 would be 2000.00 for a total of 3000.00 that could be reclassified for the 2002 test year.

Does that sound right?

Client is a single member LLC, which has employees. Obviously the LLC can adopt a 401(k) plan, but my question is about the 100% owner. I believe that testing is done on his self-employment income, not on any salary that he may receive (supposedly he has received salary during 2003, which should be corrected). Is that correct? Thanks for any responses.

An employee left the company to serve in the Armed Forces in Iraq. The company policy is to continue to pay the employee at their regular rate while they are serving. The employee is eligible for the 401(k) and was contributing to the 401(k) before leaving for military service. Should I continue to withhold and contribute to the 401(k) plan while they are in the armed services since I am paying their salary anyway? They have not worked for the company at all in 2003, should their vesting increase for 2003 plan year becuase I am paying them?

Does anyone know of/have a good standardized transmittal letter to send to participants regarding correcting their failure?

Fiscal plan year ending 8/31/03, failed ADP test and has an HCE that must receive corrective distribution. This occurs before November 15th (3 1/2 months limit).

In what year would this distribution be taxable to participant?

Thanks.

Company A owns 100% of Company B and 63% of Company C. Company A and Company B each have their own cafeteria plan document and each file Form 5500.

For testing purposes, must the plans be combined or may they test separately.

The Nov 11 Business section of the NY times carried an article on how the accounting firm Grant Thornton set up a Roth IRA for a client to be used as a form of tax shelter through the purchase of a shell corporation holding appreciated assets. The article was not very specific on how the assets were transferred to the shell corporation. I am looking for citations to other articles on this technique or the lawsuit that has been filed against Grant Thornton.

I have a few technical questions about the 18-month disbursement restriction/segregation period that protects potential alternate payees and the plan administrator's fiduciary duty to protect potential alternate payees. The DOL discusses when the period begins in the online QDRO faq but doesn't seem to address the issues below.

Is the fiduciary duty only triggered by the submission of a bona fide DRO (executed and court entered)?

Many plans invite the submission of proposed QDROs that deviate from plan models and that are unexecuted and unentered (a draft order). Some published QDRO Procedures suggest that plans will voluntarily begin the 18-month period upon the submission of draft order. Is this legally required? If it is not legally required, do most plans invoke the protections voluntarily?

I understand that the protections are triggered by the submission of a judgment of dissolution/divorce (a bona fide DRO but probably not a QDRO). If the protections are not triggered by the submission of a draft order, would it be advisable for alternate payees/their counsel to submit a judgment of dissolution/divorce with the draft order to trigger protections? Should QDRO preparers be reluctant to provide judgments of dissolution/divorce to plan administrators/their QDRO reviewers? Would a plan administrator/its QDRO reviewer compare the judgment of dissolution/divorce with a proposed QDRO and reject/revise it if the two appear inconsistent despite the participant and alternate payee signing off on the proposed QDRO?

When representing an alternate payee in a case where distribution to the participant is imminent, will plans invoke protections based on a fax of a judgment of dissolution/divorce? A phone call (which is obviously problematic for the alternate payee and counsel because there's no proof)? Is mere notice of a proposed QDRO being prepared sufficient to trigger the plan administrator's fiduciary duty to restrict disbursements?

Thanks in advance.

--

EDIT: Found some answers on this web site in http://www.benefitslink.com/articles/qdro.txt

The plan's obligation to hold back and

separately account under the Code literally does

not begin until the plan receives an actual order

(as opposed to a proposed order or mere notice of

a pending divorce), so the plan administrator

might be in breach of its duties to the

participant if the participant is denied the right

to make an in-service distribution in the desired

amount or the participant is denied the right to

self-direct the participant's whole account

See Schoonmaker v. Employee Savings Plan of Amoco

Corp., 987 F.2d 410 (7th Cir. 1993) (participant

sued plan for failing to allow him to sell

employer stock in his account; plan placed a hold

on the account when it was informed of upcoming

order by attorney for participant's ex-spouse).

But the legislative history to TRA 1986 (which

made some changes to the 18-month procedures)

indicates a plan administrator "may delay payment

of benefits for a reasonable period of time if the

plan administrator receives notice that a domestic

relations order is being sought." Conf. Rept. at

II-858. The report goes on to illustrate a

profit-sharing plan that is exempt from the

spousal consent rules on lifetime distributions

and says the plan administrator "may delay payment

of benefits" in that case. This language did not

find its way into the statute, however.

And that legislative history states the plan is

justified in continuing to hold back benefits even

if the plan administrator determines the order is

defective, if "the plan administrator has notice

that the parties are attempting to rectify any

deficiencies in the order." See Blue Book on the

TRA 1984 technical corrections contained in TRA

1986 at 224.

I am working with an association of attorneys. The association has about 1500 members in 48 states. Currently each member is obtaining their own medical coverage. The association would like to offer a group medical plan to member attorneys. Does anyone have any suggestions on what insurance companies might consider such a group?

I have a plan where the participant has a NRD which is 2 months prior to his 62nd birthday (don't ask why the document is drafted like this but it is<GGG>).

Question:

Can an actuary perform a valuation and use age 62 (no reduction in the 415 limit) for funding purposes OR must the exact limit be used??

Obviously, the opposite problem could occur where the age 61 limit is being funded for BUT the participant is entitled to 61 5/12 (that is another issue)

IF the exact limit is to be used, administratively how are others determining this?

Calculate 61 and 62 limits and prorate between them

Adjust the factors to compute actuarial equivalent numbers at 61 8/12

Thanks for any and all input.

Can an MCAP plan reimburse for support hose that are required to be worn as a result of blood clots if a physician's letter accompanies the receipt? The plan defines Medical Expense as any expense for medical care within the meaning of medical care or medical expense as defined in IRC 213 and the rulings and Treasury regulations issued thereunder.

Need some help. I have run across a situation where a client has a long-term disability plan. I see two different documents, one covering officers and the other covering all other employees. This leads me to believe that these are two separate plans requiring separate 5500s. However the original drafter gave both plans the plan number 501. This makes me wonder if they are truly separate. Anyone have any comments or suggestions?

I recently spoke with a Plan Sponsor who was informally funding a NQDCP with COLI which is owned by the Plan Sponsor. Currently there is no trust. They are interested in putting in a Springing Rabbi Trust. I've never heard of an instance where a sponsor would informally fund an asset held by the company and then set up a Springing Rabbi Trust in which to move those assets upon CoC. My concern would be the lack of protection in the event of Change of Heart. Also, its my understanding that the allure of Springing Trusts lie primarily in the ability to not informally fund until a triggering event - so is there any benefit in setting one up if you have historically informally funded the plan?

Any thoughts on pros/cons of Rabbi Trusts vs. Springing Rabbi Trusts would be greatly appreciated!

I have been presented with a defined benefit proposal that groups participants based on job classification and then determines benefit levels based on the group's average age. (The purpose being to make the same contribution amount on behalf of each partner even though their ages differ.) This plan will also operate in conjunction with an existing 401(k) profit sharing plan.

I am not familiar with the concept of determing benefits based on a group's average age but would like to be able to respond to the proposal semi-intelligently (at least insofar as that doesn't exceed my actual capability).

1) Am I correct in assuming that such an arrangement must fall under the category of a cash balance plan?

2) My search for "average age" in the Code and Regs was fruitless. Where is this method addressed?

3) Are there some other reference materials to which someone could direct me?

4) Are there any strong opinions (negative or positive) about such a scenario?

5) Any caveats to worry about (besides normal testing or deduction issues)?

Any and all responses are greatly apprecieated.

Many medical surgicenters are established in such a way that they are partly owned by the physicians who treat patients at the surgicenter, often giving rise to affiliated service group arrangements, or ASGs. I have heard that there is a private letter ruling issued to a large law firm (Jones, Day?) in which the IRS takes a non-enforcement stance on such arrangements. Is anyone aware of such a PLR?

If a broker offers free benefit enrollment software for its clients (the software has nothing to do with plan assets - just allows the plan administrator to create and conduct open enrollment docs/process through the web) - is this a fiduciary violation and/or a prohibited transaction?

All benefits and plan options may be equally represented on the software (not just what the broker peddles, etc.).

Also - is the software company at issue if some of the plans are covered entities under HIPAA?

Employer A does not terminate employees' employment when they become disabled. As a result, disabled employees may continue their health benefits indefinitely by continuing to pay 100% of the "premium".

Beginning in 2004, the policy will be changed. The proposed change is to terminate employment for employees who are disabled for 12 months. At that point they would be eligible for COBRA for 18 or 29 months. Existing disabled employees would be notified in 12/2003 that their employment will be terminated as of 12/31/2004 and that they would be eligible for COBRA at that time (essentially a 12 month notice).

Do you know of any reason or see any issues with making this change?

An ESOP plan and PS plan are to be merged into one plan. The surviving plan will retain both ESOP and PS provisions. For purposes of coverage testing, the ESOP portion will be considered a separate plan from the PS plan, notwithstanding that the surviving plan will file a single 5500. For purposes of MRDs, will the plan be considered a single pension plan or will the ESOP and PS portions be considered separate plans that must meet the requirements of 401(a)(9) separately?