Target benefit plan is a prototype document. ONe portion of the adoption agreement entitled "Target Benefit Formula" states that " A participant's monthly retirement benefit shall be equal to 12% of such participant's average monthly compensation." E/er wants to terminate the plan as of 12/31. E/er will fund this year. My thinking is that in order to terminate the plan not only would the e/er need to do a consent of directors re termination, but that the adoption agreement regarding the e/er providing funding to give a participant 12%...needs to be amended such that it reads 0%... That way even if there is a problem with the termination, eg, assets not distributed in a timely fashion, etc...., then the e/er will still not be obligated to fund.....? Any suggestions? Thanks in advance.

ERISA Section 4045 authorizes the PBGC to recover the portion of lump sum amounts distributed in the 3 year period prior to distress termination that are greater than the life annuity that would have been paid if elected instead of the lump sum.

Does the PBGC frequently use this authorization?

The plan in question is a small plan (13 monthly retirees and 6 vested terms) that has offered lump sums for a long period of time.

The vested term wanting a lump sum is not a decision maker with the plan sponsor (not an hce, owner, key, etc.). The lump sum is not being asked for in anticipation of a distress termination which may or may not occur in the next year.

Any thoughts or experience would be appreciated.

The current thought is to pay the lump sum but caveat it with a cite of ERISA Section 4045 indicated the PBGC ability to recover certain amounts.

A broker I work with has a client that just terminated the company 401(k) plan and will start a SIMPLE 1/01/04. The client was told by its TPA that balances could not be rolled over from the terminated 401(k) plan into the SIMPLE. I disagree, but respect this particular TPA, so thought I would ask if I'm missing something. Thanks.

Under the modified regs that came are you still required to give 90 days notice when removing this benefit?

I am looking for a sample form for RMD that incorporates any spousal consent, options. etc.

Thanks, Sue

I am looking for a source (web site or other) that I can pull some 401(k) statistical data from. What I am looking for is avg. account balance, avg. deferral rate, avg. deferral contributions, and avg. participation. I am hoping to get this information broken out by HCE vs. NHCE and if we can get by age as well I would be grateful.

I have the PSCA 45th annual survey and the Deloitte & Touche 2002 annual but neither of these has this breakdown.

Any help would be appreciated.

A company, currently in Chapter 11 reorganization is in the process of being sold. The current collective bargaining agreement was extended until January prior to its expiration. The purchaser of this company is not assuming any contracts, including the CBA. The employer who signed the CBA is going to be starting up another company and will likely be hiring the employees from his former company. As he is the principal of the old company (that is being sold) as well as the principal for the new company, can this CBA be transferred to the new company or does a new CBA need to be drafted and signed?

Please let me know if my thought process is correct:

I was considerring writing in 5% as Group B's allocation in the plan document, with the understanding that it would probably fail 401a4 in future years. I believe that by writing the formula into the document I can avoid bumping up group B into a higher percent, and hand pick individuals to bump up to receive the higher allocation by making a corrective amendment after the plan year of allocation.

I have 2 companies in a plan. One individual owns 65% of X and 100% of Y. The plan has a new comp formula and I only want to give Y the minimum gateway allocation.

Can I exclude Y from 401a4 since it's not a CG?

Can I give Y just the top-heavy minimum 3% and no gateway if the common owner only gets a 9% ps allocaion, but the other HCE's received 25%?

What if Common Owner makes 200k in both company X & Y. We allocate 40k to his X comp, and want to allocate 0% to Y's eligible comp, could we allocate nothing to Y?

Do you consider the value of Group Term Life Insurance in excess of $50,000 to be a "fringe benefit [cash and non-cash]" or "welfare benefit" for purposes of compensation exclusions under 1.414(s)-1©(3)

I have a profit sharing plan with the following employees:

Employee 1 - 49% ownership

Employee 2 - (spouse of Employee 1) - 49% ownership

Employee 3 - (child of Employee 1 & Employee 2) - 2% ownership

Employee 4 - (spouse of Employee 3)

Is this considered a "one-participant" plan?

I have a single physician whose entire staff consists of "leased" employees from the hospital group. There is no ownership issue between the hospital and the physician. Most work for him 100% of the time, and I understand they would be covered by his plan, but there are several who work only 25% - 33% of their time for this physician.

As there is no controlled/affiliated service issue, could those few employees working on a less than "substantial full time" basis be excluded from the plan?

We have a potential new client that currently has 2 401(k) Profit Sharing Plans. One is for Associate Attorneys only and the other Plan is for the Partners and Staff. The Associates Plan only has Elective Deferrals and the Partner's Plan has Deferrals, Safe Harbor Non-Elective and Profit Sharing. The Partners Plan is top heavy but they have not aggregated the Plans for testing or the minimums. My question is: They want to add cross testing to the Partners Plan. How does that affect aggregation/401(a)(4) testing?

I have a participant recently returned from military leave (5 month leave). Is there any standard paperwork that the participant should supply to confirm this leave?

He was a "contributing" participant prior to his leave.

I know that he will be treated as if he never left, and could possibly make-up any missed deferrals (within 15 months), then matched accordingly.

Thanks in advance.

from a trustee perspective for what reason would i want to NOT make monthly payments to a participant and provide a lump sum? is there any incentive? a participant is retiring this calendar play year, her monthly benefit has been calculated at $642 or $7704 a year, what would be the benefit of leaving her funds in the plan as opposed to just paying her in lump sum. the plan doc allows for both formats. finally, if they did make a lump sum payment, would there be any adjustments necessary on next years contribution? meaning is it possible the contribution would need to larger/smaller due to the lump sum dist.? i don't believe that would have any bearing, but would like a second opinion.

the plan has 1.8 mil in assets and about 400,000 in cash.

Client has an ESOP. They made a 4.91% contribution to all the eligible participants. However, the owner had not sold any of his shares yet, therefore he should have also received a 4.91% ESOP contribution for their plan year that ended 1/31/03. The 5500 has been filed. Can I have the owner deposit his 4.91% contribuition he should have received and amend the 5500? What can I do here to fix this problem?

I've only been in the pension industry for 7 years and besides knowing that there is such a thing as a SARSEP, I have no knowledge of them. The question is whether or not a company is even able to adopt a DB plan with a SARSEP currently in place.

What is the deadline for a self employed individual ( or partner on partnership ) to deposit his "elective deferrals ". Is it Jan 31st or by the tax return deadline ( April 15 or Aug 15 with extension ) ? The fund companies have numerous answers to this question !!

Thank you !

I’m sure that many other actuaries are dealing with this problem and as a result, may not have the time to answer my questions, but here they are:

My client has 2 DB plans – one union and one non-union. Union minimum contribution is $750k, max is $3.3mil (UCL). Nonunion plan minimum is $0, max is $800k (UCL). Client also sponsors a 401(k) plan in which both union and nonunion participate and there are matching contributions. Total eligible payroll is about $5 million.

To shore up the FAS87 reporting and avoid additional liability, they need to contribute $3 mil to the union plan and $700k to the nonunion plan. They are ready to do this, but these amounts in total are more than 25% of payroll. If the DB plans were the only plans, I don’t think there would be any deduction problem.

Since the DB’s are not the only plans, I think I have a problem in that the 401(k) match would not be deductible though I am wondering if I still have some deductibility “room” since I did not fund up to my full deductible limit in the DB plans.

My questions are: Which 404 limit trumps the other? Is 404(a)(1)(D) an absolute override to determine the deductibility ceiling? Or does it not even apply (God forbid) in an overlapping plan situation? Theoretically, I could put up to $4.1 million in the DB plans, but only need to put in $3.7 million. Is it reasonable to assume that the remaining deductible amount could be used for the 401(k) match?

If we can deduct just the DB max’s (driven by the UCL amounts), my client can live with about $150,000 in nondeductible matching contributions if necessary. I am hoping that we at least retain the 401(a)(1)(D) higher deductible limit even where there is a 401(k) plan into which DB participants contribute.