I have been in the business a short time so forgive me.

While reviewing a plan document, I noticed the plan is non-trusteed. What determines whether a plan can operate as non-trusteed vs. needing a trustee?

This particular plan is a profit sharing plan with only post-tax employee contributions.

Thanks

I'm always curious to see other actuarys' CL assumptions. Most of my plans have stayed at the max end of the range for both RPA and OBRA. I recently came across the following two year set of assumptions which made me wonder whether I am missing some rule about CL rate selection. Calendar year plan:

2001 RPA=6.21, OBRA=6.21

2002 RPA=6.85, OBRA=6.00

My question is why the OBRA rate would not go to the upper range 6.28. 6.00 happens to be 105% of the 4-year ave. on 1/1/02, which was the old RPA upper range max before the JCWAA change. Is there some rule that says the OBRA rate needs to be the same % of the 4-year ave. from year to year? I thought we had complete latitude within the range from one year to the next.

Prehaps OBRA FFL was not a factor for this plan and the actuary felt it was easier to justify staying at 105% if he/she was ever asked about it.

I have seen other changes over two years which have also made me wonder. All of which led me to this post. Thanks.

A participant who satisfys diversification criteria in an ESOP wants to know if they can transfer funds into the PS plan for diversification purposes.

I am not at all familiar with ESOPs so I ask for your point of view.

Thanks in advance for your thoughts.

I am preparing an allocation for an age-weighted profit sharing plan. The plan has two participants that terminated in the plan year who earned 1000+ hours. In an age-weighted plan, should these terminated participants who are not excludible under 401(a)(4) receive an allocation? The plan document requires employment on the last day of the plan year, however, in order for all the participants the have the same EBAR, should these two receive an allocation?

I have a plan that requires spousal consent for distributions. Is it required for MRD's though?

If so, can someone give me a cogent reason why? I understand why it is needed for regular distributions (eg: termination, in-service), but not for MRD's. To me, it is akin to an excess--not eligible for rollover--and not subject to S.C.

And on another topic: MRD's and hangers on

What recourse does a Plan Administrator have if a participant is not taking his/her MRD? Is there a force-out rule similar to the $5000 rule? And what if the MRD is over $5000? I hate to think that a participant's (or spouse's) recalcitrance or reluctance could jeopardize a plan's qualification.

Any thoughts would be appreciated.

Please forgive the cross-posting from the small plans message board. Any recommendations on which is the best plan in the following circumstance? Would prefer a plan that permits the largest contribution.

Small law firm has 2 partners, both highly compensated employees (X and Y), 1 attorney (Z), and 4 staff people. X and Y contribute to a SEP plan. X and Y pay Z and salary and issue a W2. X and Y pay Z a 50% commission on any business Z brings in and issue Z a 1099 for that commmission.

I understand there are issues with X and Y issuing both a W2 and 1099, but if Z pays both the er and ee portions of FICA, still a problem?

Also, Z had originally intended on making a contribution to a SEP plan. However, instead can Z can set up a profit sharing plan for Z only in 2003? Z's salary plus commission is currently less than $80K, but expected to grow. No staff ees nor X or Y are interested in participating in the profit sharing plan.

What issues with

-starting profit sharing plan at end of year?

-discrimination testing?

-contribution limits?

If our employee has an open enrollment date now for coverage to begin January 1 and his wife has an open enrollment period in April - and his wife waives coverage are we obligated to offer her COBRA to span the months between January and April.

He is telling me that his wife's HR person said we were obligated to do this - however I have never heard of this - because no qualifying event has occurred - she is waiving our coverage.

Kind of need a response pretty quick. Thanks

Is it too late for an employer to set up a regular 401(k) for 2003 (calendar year)?

We have a client that runs a motel down the shore, and only operates 10 out of the 12 months of the year. The motel is closed for the other 2 months.

Does a year of service for eligibility, accrual or vesting have to be prorated?

I know it is possible to recognize service with a predecessor employer, but, I'm curious if it is alright to recognize compensation with that preecessor employer? Can a high three year average for a DB plan use compensation over all years of service, including those with the predecessor employer? What happens with ex-employees of the predecessor employees if service with the predecessor employer is recognized?

I was having a discussion with a prospect that has a qualified 401(k) plan as well as an ESOP. While speaking with this gentleman, he disclosed that the ESOP holds mostly cash; he has not been utilizing the cash to obtain employer securities.

I am not very familiar with ESOPs but this seemed to be out of line with how an ESOP is to function. I thought the sponsor was under timing restraints to invest the cash contributions in ER securities? Am I missing the boat on this?

Can anyone tell me if this is a problem? Is more data needed to evaluate?

Thanks in advance for your help.

Plan participant is highly compensated by attribution - his daughter owns 100% of the corporation. Participant will be 70 1/2 current year.

Is there a RMD based on the 5% owner rule, or is that only for discrimination testing?

Bill

Forgive an elementary question from someone who rarely gets involved with 403 plans. If a 403b plan that allows investments in custodial accounts under b(7) terminates, can investment in the mutual funds continue after temination, or must annnuities be purchased? Someone has suggested that the latter is the case. I understand that plan termination is not a distribution event for 403b plans. Thanks.

As I close a six month contract having provided services (considered by the employers as more than satisfactory) under the title of Development Director, for a struggling non-profit, I confront the following dilemma as I leave:

Should I sue this starving non-profit for not providing the healthcare benefits they agreed to provide in lieu of 25% of my compensation?

A brief explanation: At the time of accepting this part-time position, I inquired about the benefits advertised in the job announcement. The hiring committee offered me the job nearly immediately, however they said they would investigate and endeavor to provide healthcare benefits as well. When the ED called to initiate my actual hire, I was offered healthcare benefits and a salary reduced by 25% from the initial offer. (A recent graduate with little contract negotiation experience, I saw no real problem with this since it was assumed by all parties that this salary would be increased relatively soon based on an evaluation of my performance and the succes of the revenue-generating development activities that I would initiate.)

After more than a month of working extra hours and patiently but consistently inquiring about the healthcare benefits, I found that the organization had decided that I should register for an individual plan, which they would pay for. I called, received, filled out and filed the paperwork, which took approximately another month. The original application lapsed before I was able to secure the organization's payment plan (due to vacations of all financial personell). When I discussed the amount of time lapsed and absence of appropriate persons with the ED and CEO, they attempted to hold me responsible for not applying for insurance immediately.

Needless to say, four months into the contract, I realized that another month would go by before I became insured, so I suggested that we revert to the original compensation offer. A meeting to discuss the board's decision regarding this matter was scheduled for two weeks later, after which I was informed that they were of the opinion that they owed me nothing. Again, in the interest of reasonable negotiation, I suggested that they pay not the original amount of compensation, but merely the amount they would have paid for the benefits. Note that I also have assumed additional overhead costs for this organization, a generosity of which I gently reminded them when I asserted that they should merely pay me the amount of the healthcare benefits.

Thus, my dilemma: Do they owe me compensation for which I should sue? Or am I perhaps a fool (near bankruptcy) with no leverage and no rights?

Advance thanks for your studied opinion. Sincerely, ALA

Could someone please provide information on acceptable methods of recouping overpayments made to a participant after his death. Basicially, my company has paid many monthly retirement benefits before we receive notification of the participant's death. This has occurred both by check and also by electronic fund transfer. In many instances, the personal representative of the estate, or a family member with access to the decedent's account, will take the money, spend it, and not respond to any type of letter requesting repayment. Is this type of matter governed by state law? Who would prosecute these cases? Or, are the only available remedies civil in nature? Thanks for any information you can provide.

The ESOP provides only for an annual valuation but cash dividends on the employer stock are paid during the year. Must those cash dividends be allocated when paid to the Trust (and thereby creating more frequent valuations than provided by the document)?

I mean no offense to anyone nor am I disparaging anyone, but I am really at a loss for a better explanation for that which I am seeking.

In the world of Pension Plans there is Sal Tripodi who is regarded as an expert especially in the area of ERISA.

I am trying to find the equivalent person or persons in the area of the taxation of employee accident and health benefits. Can anyone make any suggestions?

Plan being cross tested plan has allocations that are based on age but do not meet either the 1/3 or 5% gateway. Assume it does not meet the smoothly increasing at regular interval standard. I'm trying to look at the broadly available rule.

The only criteria for an allocation is age.

What standard is necessary for each rate group to pass the 410(b) criteria in order to satisfy the broadly available criteria? Does each allocation rate containing an HCE need to have a ratio percentage equal to the safe harbor percentage or does it need to be at least 70%. If I understand the rules, this depends upon whether having the groups defined by age would be a valid objective business criteria.

Comments? This is the first time I've tried to apply this exception to the gateway rules

At death, estate is IRA beneficiary, so distribution period is 5 years (pre-RBD) or decedent's remaining life expectancy (post-RBD). Is there any problem if estate retitles IRA in the name of its beneficiary/ies--IRA of decedent, fbo beneficiary 1, etc.--so estate may be closed? Distribution period, of course, remains unchanged.

A not-for profit client has a flexible benefits plan where the employer contributes a flat dollar amount to each eligible employee per month. The employee can use the money toward their premium, in the spending account or take it as cash. If an employee exercises his/her cash option, the money then becomes taxable compensation. Can the employee then turn around and put that money into a TSA pre-tax? I know that a TSA/403b cannot be part of a flex plan, but if the money is taken as cash, I would think that this would be an available option.