Reviewing a proposal on a 412(i) plan (not prepared by us) and it appears that the salary figures used in the proposal were based on compensation excluding bonuses rather than total compensation. Is it allowed in a 412(i) plan to use a non-safe harbor definition of compensation? Obviously this lowers costs for everyone but the owners (who are both well over 200k).

Reg. 1.401(a)(4)-5(a)(3) is the 5 year safe harbor for grants of benefits for past years of service.

If one were to establish a new DB plan and not use this safe harbor (i.e. count all years of service prior to establishing the plan) the determination as to whether or not this has the effect of discriminating significantly in favor of the the HCE's is a facts and circumstances test.

Does anyone out there have any examples of successful demonstrations that granting more than the 5 years allowed under the safe harbor was not discriminatory?

Member of controlled group discovers (in 2003) that it fails 410(b) for 2002. Controlled group has 4 other members with plans. Problem is that they have different plan year ends and therefore cannot be aggregated for 2002. Two have 12/31 year ends and 2 have 3/31 year ends (why??).

Aggregating the plans that do have the same year ends does not work. Aggregating a 12/31 year end with a 3/31 would work, however.

How to fix for 2002?

1.401(a)(4)-(11)(g) says correction can be done retroactively (by 10/15) by making QNECS to expanded group equal to average NHCE deferral (and same for ACP) but that would mean bringing in large number of employees of another company who already participate in a 401(k) plan. It would also mean substantial $$$.

Is there an alternative? Anybody found a different solution?

Can it be argued with merit that the QNEC can be offset by the employee's actual deferrals/match in their 401(k) plan?

Big problem with costly solution due only to plan year ends being different (and problem discovered late). Ideas?

(The free pass for coverage change is not available.)

This may seem like a stupid question, but here goes...

If you have a certification signed on February 25, 2002, and you are just now amending for GUST, do you still enter the first day of the plan year in 2002 as the effective date of the amendment, or do you now have to enter 2003 because the adoption agreement will be signed in 2003.

Thanks for any help.

I have a radiology practice with a Non-Standardized Profit Sharing Plan. Has a 5/31 plan year with a last day rule. One of the doctors left the practice on 7/27/03 for a fellowship and will be gone over a year.

Will she not receive a contribution for 5/31/04 since she will not be an employee on that date? Or are there special rules for fellowships? I've never seen this addressed before.

Once upon a time, on a small island, there lived many people. For days, the weather forecaster announced that a fierce storm was approaching that would hit the small island on October 15 at 12:00 noon. Early that morning, most of the inhabitants left the island, that is, all except for a small group of actuaries. You see, each of those actuaries had determined that it would take exactly 5 minutes to cross the bridge. At 11:55, however, there was a traffic jam at the small bridge. At 12:00, the fierce storm came and swallowed up the actuaries.

And then everybody lived happily ever after on time.

An employee requires a kidney transplant. She notifies her supervisor, who sends an email to others within the company, asking if anyone can provide any guidance on the best doctors/hospitals for the transplant.

The questions are not being asked in the context of the health plan, and no members of the benefits department are involved in the emails.

Is this in any way related to HIPAA, or not, because the questions and information being shared is not related to the health plan?

Hi,

It's been a long time since I've worked on a NON-participant directed plan so bear with me. This is regarding the Schedule I question that asks if the plan held more than 20% of its assets in a single security.

I couldn't find any guidance in the Form 5500 instructions.

Would a mutual fund be considered a single security? Also, do you look at the beginning of year total plan value to determine the 20% figure. My recollections says yes to both but I just wanted to confirm what others are doing.

Many thanks!

Can an employer withhold any portion of its employer contributions from a former employee who was terminated for stealing? The Plan has been terminated and the funds must be distributed.

Is there any way to attach any portion of the 401(k) proceeds if a civil judgment is entered against this former employee?

We are considering terminating all employees eligible for group health plan. If we terminate our self-insured plan (w/stop loss insurance of course) for all employees and retirees do we have to give COBRA notices even though COBRA will not be available? What can we say in the notice that will be of any help to anyone?

Approximately 5 years ago one of our DB plans created an

unreduced retirement benefit for those employees

with 30 years of service who were at least 57 years old.

Unfortunately, this was added to the definition of normal

retirement age in the plan document. In actuality, it is

an early, unreduced pension.

We would like to change the plan to correct this error. However,

there is some concern over the IRC and ERISA anti cutback

rules. If this change were made, the employees would

still have a right to the same form and amount of benefit,

it just would not be characterized as a normal retirment.

Thanks

I have a 401k plan where one of the hce's never deferred. Helped out the test each year. For some reason, now he doesn't get comp for tax purposes, but still works. Can I include him in the test?

I know that ERISA does not provide a statue of limitations for suing to recover delinquent employer contributions.

Does a state's contract SOL apply automatically?

Does a federal SOL govern?

How is the determination made?

If employees are given a choice at hire between different fully insured welfare benefit packages (benefits and less compensation OR no benefits and more compensation), is that a cafeteria plan? A formal cafeteria plan happens to be one of the benfits available to all employees, but new hires are allowed to choose between two employment categories, which directly affects whether they get high benefits/low cash or low benefits/high cash.

Is there any way to structure this to avoid technical questions about this being a 125 plan? Can we have employees execute a one-time irrevocable election to be one class over the other, or is there something that we are missing?

I know this is done a lot in the case of employees vs. independent contractor cases like Microsoft, but I have never heard about whether this creates an inadvertant 125 plan where the choice is between two classses of employees.

If I change funding method from Individual Aggregate to EANC, Rev Proc 2000-40 says the new unfunded is amortized over 10 years. This means that the minimum and the maximum are the same for the first year of change. Since gains/losses are amortized over 5 years (if I am not mistaken), for years that there are losses, the minimum is greater than the maximum, in which case the minimum applies. Is this correct or is there something wrong with my reasoning? If this is correct, is there a way to get a contribution range if you want to change from Individual Aggregate (at least in the first year)?

Stated simply, a Voluntary Salary Reduction Form was signed by error resulting in lower PERA benefits. The employer will not make the correction.

What are my options?

If employees are given a choice at hire between different fully insured welfare benefit packages (benefits and less compensation OR no benefits and more compensation), is that a CODA? If so, ADP testing obviously does not make sense, so what can we do. Is it an issue about the form or timing of the election or does something need to be done to change the proposed structure. I know this is done a lot in the case of employees vs. independent contractor cases like Microsoft, but I have never heard about whether this creates an inadvertant CODA.

A plan had more than 120 participants not too long ago. Due to economic conditions, the participant count is now 84. The client's CPA is stating that the plan can now file as a small plan, thereby avoiding the audit. Is this too good to be true? I thought that once a plan filed as a large plan, they had to continue to do so. I apologize for the simplicity of this question, but my supervisor wants a regulatory citation supporting the correct answer, and I cannot find one. Any assistance will be appreciated. Thank you.

If a plan sponsor should decide to amend the plan to allow a person into the plan that was erroneously included earlier than he should have (i.e. should have waited 6months but entered immediatelyin 2001), can the retroactive amendment be worded ---"immediate entry effective 1/1/2001, and 6 months wait effective 1/1/02", with an adoption date of 2003? In other words, retain the current eligibility requirements but adjust for only one year when the error occurred.

Thanks.

We've got a takeover plan never amended for GUST. No GUST certification letter & it does not appear that prior prototype provider submitted for GUST letter before 12/31/00. Plan will adopt our prototype. It seems to me that plan can correct under VCP. Using VCP the plan sponsor is required to submit for a determination letter.

Is my understanding correct?

Thanks in advance for any guidance.