I work for a Trust Company and we complete 5500's for clients that have Master Trusts. Thus, we must complete schedule D's.

The Schedule D that is filed with each plan must have Part I completed. My question is this:

Part 1 (a) is the name of MTIA (ie. client name Master Trust).

Part 1 (b) asks for the sponsor of entity listed in (a). We've been putting the trust company name in the past but have been told it's incorrect and we should use client name (employer sponsoring plan).

Which is correct? The instructions are not clear and I've found in the 1999 instructions you should use a financial institution, etc.

Please help and provide a source. Thanks!

I have a 401(k) Safe Harbor Plan, that is effective 4/1/02. If the plan document doesn't say to use plan year or participation wages, what do I have to use in this instance. Participants began deferring 4/1/02, do I use wages from 4/1/02 or from 1/1/02, its a calendar year plan?

Thanks.

I posted this on the cross-testing board but it applies to DB plans only. I would like to know if any one is using this in real life situations.

1.401(a)(4)-3©(3).

This is what it says.

(3) Certain violations disregarded. A plan is deemed to satisfy paragraph ©(1) of this section if the plan would satisfy that paragraph by treating as not benefiting no more than five percent of the HCEs in the plan, and the Commissioner determines that, on the basis of all of the relevant facts and circumstances, the plan does not discriminate with respect to the amount of employer-provided benefits. For this purpose, five percent of the number of HCEs may be determined by rounding to the nearest whole number (e.g., 1.4 rounds to 1 and 1.5 rounds to 2). Among the relevant factors that the Commissioner may consider in making this determination are--

(i) The extent to which the plan has failed the test in paragraph ©(1) of this section;

(ii) The extent to which the failure is for reasons other than the design of the plan;

(iii) Whether the HCEs causing the failure are five-percent owners or are among the highest paid nonexcludable employees;

(iv) Whether the failure is attributable to an event that is not expected to recur (e.g., a plant closing); and

(v) The extent to which the failure is attributable to benefits accrued under a prior benefit structure or to benefits accrued when a participant was not a HCE.

Anybody ever used this in testing?

Thanks

I was wondering if anybody is familiar with, or uses in real life 1.401(a)(4)-3©(3).

This is what it says.

(3) Certain violations disregarded. A plan is deemed to satisfy paragraph ©(1) of this section if the plan would satisfy that paragraph by treating as not benefiting no more than five percent of the HCEs in the plan, and the Commissioner determines that, on the basis of all of the relevant facts and circumstances, the plan does not discriminate with respect to the amount of employer-provided benefits. For this purpose, five percent of the number of HCEs may be determined by rounding to the nearest whole number (e.g., 1.4 rounds to 1 and 1.5 rounds to 2). Among the relevant factors that the Commissioner may consider in making this determination are--

(i) The extent to which the plan has failed the test in paragraph ©(1) of this section;

(ii) The extent to which the failure is for reasons other than the design of the plan;

(iii) Whether the HCEs causing the failure are five-percent owners or are among the highest paid nonexcludable employees;

(iv) Whether the failure is attributable to an event that is not expected to recur (e.g., a plant closing); and

(v) The extent to which the failure is attributable to benefits accrued under a prior benefit structure or to benefits accrued when a participant was not a HCE.

Anybody ever used this in testing?

Thanks

Suppose client had a plan terminated in the past with > $100,000 in assets. New plan is established and it has < $100,000 in assets. Plans did not ever exist at the same time. The Form 5500EZ instructions state the following condition for the $100,000 exemption:

You have two or more one-participant plans that together

had total plan assets of $100,000 or less at the end of every

plan year beginning on or after January 1, 1994.

Is a Form 5500EZ required for the new plan?

The "have" and "together" seem to indicate that you do not apply the test to plans that never coexisted, so the answer would be NO. Anyone disagree?

A health care provider provides health services to the public, and also provides health services to its own employees under a self-funded group health plan.

In such instances is it recommended to maintain one notice of Privacy Practices ("NOPP") for the hospital to provide to member of the public who become patients there, and a separate notice for employees of the self-funded group health plan who are treated at the hospital or one of its clinics?

I am thinking "yes" is the answer but am not sure of any regulatory support.

I have an account in which we managed a portion of the retirement plan assets for those participants which selected us. (Employer is trustee) The plan has terminated and distributions have been made according to the requests by the Employer. Earnings accumulated since the last evaluation period prior to distribution. Employer has requested these funds be sent to them. I have never had a reversion of earnings before to the Employer. (For me, it just does not pass the smell test) I am aware if this were a 415 violation, then this would be the proper course. Should these earnings follow the distributions or can they be paid to the Employer? Also the employer said their attorney told them to do this.

Hi,

We have a not for profit company that set up a 401(k) plan. Their administrator told them they are a non-ERISA plan and did not need to file Forms 5500.

I just assumed that if a not for profit set up a 401(k) plan in 2002, they were subject to all the same rules as a regular 401(k) plan including testing and reporting.

Does anyone have any insight?

Please advise.

Thanks

Lori

Have a plan that does not allow loans to participants - however, in 2002 the owner decided to take a loan for $50,000 - (less than 50% of his account balance). (He is making payments)

Does anyone know the correction procedure for this operational error (or is it a prohibited transactions)?

I can't find anything that is specific in EPCRS. Closest I found was in relation to Hardships - -

Thanks for your input and expertise!

I am interested in letting our employees use their earned vacation time to offset their contribution costs for health and dental incurance premiums next year.

Does anyone know of potential 'tax' or other problems I may face as vacation time is earned income and health insurance is pre-tax? This is a profit organization.

Help!

Thanks, KimT

Reg 1.401(a)(4)-9(b)(2)(v)(D)(2) provides that when testing an employer with both a defined benefit and defined contribution plan, the minimum aggregate allocation gateway is deemed satisfied if each NHCE in the DC plan receives a minimum allocation of 7.5%. Has anyone tested successfully where the minimum allocation was not used and what were the testing results? Any pitfalls to look out for?

Here is the definition of actuarial equivalence in a plan's document:

1983 Group Annuity Table with Projection H, with mortality rates based on calendar year of birth of 1930 and interest at the rate of 7% per annum

I thought I knew how to apply a projection scale to the underlying mortality rates, but this description confuses me. Is the reference to 1930 somehow limiting the ages of the rates to project -- and how is the number of years to use in the projection determined? An example would be great.

Thanks!

I have two 5300s pending with the IRS, and the IRS agent assigned to these files has, for the first time in my experience, requested that I remove the ADP and ACP language from the plan document because I have another provision that allows the employer to utilize the safe harbor methods of 401(k) and (m) to satisfy discrimination. I don't understand why the ADP and ACP language cannot co-exist in the document with the safe harbor language. The client may want to use safe harbor in year one, and rely on the general ADP/ACP test in later years.

Has anyone had this experience with the IRS?

An employer who sponsors a 401(k) Profit Sharing Plan failed its ADP test and distributed excess contributions and any income earned on the contributions to participants within 2 1/2 months after the end of the plan year. I'm not certain whether the employer is required to file Form 5330 in this setting. Although the instructions to Form 5330 are clear that there is no excise tax liability if the excess contributions are distributed within the requisite time period, the instructions are not entirely clear whether such employer must file. The "Who Must File" Section states that a Form 5330 must be filed by: "9. Any employer who is liable for the tax under section 4979 on excess contributions to plans with a cash or deferred arrangement." This leads me to believe that the answer is that there is probably not a filing requirement. Anyone have any experience with Form 5330?

Can anyone tell me how to terminate a 401(k) plan? The employer no longer wishes to provide the plan and hopes to close it and then replace it with a SIMPLE IRA next year.

Hello,

Our hospital is changing its hours of full time employees. Instead of being full time at 60 or 64 hours you now have to be 72 hours in a pay period. With the increase in hours there will be different levels of benefit eligibility. In our department there is not enough hours for everyone to increase to 72 hrs. Our boss has said he will decide who gets to increase their hours based on four different criteria. They include seniority, skill level, dependibility and attitude, and need for the increased benefits. I wondered if this is legal for him to decide based on need, such a subjective thing. Does anyone out there know the legalities involved in this. The age group in the dept. varies from 32 to 52, some are the insurance carriers for the family, and some want to be "full time" to get the fmla.

Thanks,

Melissa

I am a CPA and have a number of Plans which have improperly excluded certain portions of compensation for deferral and matching purposes (e.g. manual checks, bonuses, etc.). In the past, the general rule I've recommended Plan Sponsors to follow (after discussing with their ERISA counsel) is to make a corrective contribution for the deferral (at the ADP%), the lost match (at the ACP%) and lost earnings.

In reading APPENDIX B of Rev Proc 2003-44 (Section 2.02 (1)(a)(ii)(E)), there is discussion of the Special Rule for Brief Exclusion from Elective Deferrals. The example is specifically geared towards realizing an eligible participant was not given the opportunity to defer, but still allowing that participant 9 months to make contributions in the Plan Year.

If a Plan Sponsor does not withhold deferrals on a one-time bonus payment, could the principle of this section be applied? While this would affect a wider population than the example contemplates, the participants still would have the rest of the entire year to defer (> the 9 months in the Rule). The Plan Sponsor would still be liable for the lost matching contributions, but making up the deferrals is the portion most Plan Sponsors find difficult to swallow (especially since most employees probably prefer keeping their entire bonus).

Has anyone considered applying the principle of the "Brief Exclusion" rule to other common errors like these?

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I'm an attorney. My friend/client will turn 65 on November 22nd. All of his money ($500,000) is in TIAA-CREF. He was about to sign up for a ten year annuity from TIAA-CREF when I asked, "how do you know that's the best deal for you?"

I volunteered to help.

Now I need YOUR help. What's the best way to shop for an annuity for him? He wants a guaranteed income of about $4000/month for ten years. His money is currently distributed among three mutual funds in TIAA-CREF. He'll be surprised if he lives more than ten years.

Thanks. If you'd like, write to me directly at mkogut7007@juno.com

I have a situation where for minimum funding purposes the unfunded accrued liability is not negative. HOWEVER, the unfunded accrued liability is negative for 404 purposes. The reason is a large credit balance.

Is this a legal?? There is an actuary explaining that the prohibition on a negative unfunded accrued liability is for 412 ONLY. I looked at Revenue Ruling 81-213 (the one IRS always seems to reference in answer to this question) and it primarily addresses 412.

Can the unfunded accrued liability be negative for 404 purposes??

Here are some numbers:

Accrued liability 4,000,000

Assets 4,200,000

Credit Balance 500,000

What bases (if any) should be established for the current valuation??

The RR appears to establish a base for 412 equal to 300,000 (Section 7 of the RR).

Now, for 404 is the base a negative 200,000 (maintaining the equation of balance) or zero (this is just one of those situations where the equation does not work).

Thanks for any comments