Is there anything improper about providing some employees with more information on their DB plan participant benefit statements than other employees? For example, the lump-sum present values? Client fears some ees will quit just to collect their DB benefit. For select employees, client wants to inform them of the value of their benefit and the annual increase, in more meaningful terms than the annuity amount payable at NRA. I was considering sending 2 sets of statements, and the client could then pick and choose. I'm going to recommend he consult with legal counsel, but was hoping to get opinions here.

I have a client that has a several single member LLC subs. The employees of the subs are covered under the parent's 401(k) plan. Do the LLCs have to adopt the parents plan or are they automatically covered? My thinking is that because the LLCs are disregarded entities and the employees are technically employees of the parent, no adoption or participation agreement is needed by the LLCs. Any thoughts on this?

Is there any new information on the model SAR with the info required to avoid the small plan audit requirement? Is there any delay on the requirement that this information be included in the SARs we are preparing now? Thanks for all input.

My Roth IRA is invested at the moment in a REIT. If I think some other investment would return better, is it merely a case of calling my broker? Are there any limits on what I want to invest in--say, commodities, or overseas markets? What if I wanted to put the Roth money into yuan, for a little currency trading? Could I do that?

May a plan be drafted providing a discretionary profit sharing contribution to all employees who (a) are employed on the last day of the prior plan year, (b) are credited with at least 1,000 hours in the prior plan year, and © are still employed on the "credit date" which would be approximately two months into the current plan year?

It is clear that a plan can require both a last day and 1,000 hours requirement (1.401(a)(4)-2(b)(4)(iii)). However, I cannot find any authority permitting or prohibiting the "still employed on a second date" requirement. I believe that this would not be permitted but I need some authority to back me up.

Any help out there?

We have an employee that was ordered reinstated and awarded back pay. He wants to put a portion of it in the 457(b) plan on the theory that had he not been improperly terminated he would have deferred that amount. He has already received the back pay award and is proposing to return part of it to be deposited in the plan.

My inclination is to say that if he could have done it at all, it is too late now that he has received the award and there was not agreement providing for the deferral in place. If there is a way he can do defer it under these circumstances, the question becomes the applicable deferral limit as the back pay was attributable to multiple years. Is there any authority or guidance on this situation?

A tax client (employer) of mine has two separate plans. One is a money purchase pension plan and the other a SEP-IRA.

I recently read that a employer cannot sponsor a SEP, Simple 401k, or a SIMPLE IRA at the same time that it sponsors any other type of qualified plan.

Can this be true ?

I knew that a Simple plan could not be sponsored if another qualified plan was also being sponsored ...but I never knew that a SEP-IRA could not be sponsored with another plan.

Is this a new rule? How long has this rule been around?

What expenses for Plan Administration can be levied / charged back to

the Plan Assets?

Anyone have any thoughts on this?

http://www.actuarialstandardsboard.org/pdf...and2_repeal.pdf

I can't seem to find the answer to this anywhere. Does anybody know if the death benefit for single participants be eliminated without violating the Code or ERISA in a cash balance plan? Is notice required? I know we can't eliminate optional forms of benefit but I'm not sure this is one. Of course, it will not be eliminated for married participants.

We have a client who amended from a standardized profit-sharing plan to a Safe Harbor 401(k) with a SHNEC contribution for 2003. Now, the client has changed her mind and wants to change to a Traditional 401(k) without any required SHNEC contribution for 2003. Is there any way that she can do this? If not, can she terminate the Safe Habor 401(k) with SHNEC mid-year? If she is permitted to terminate the plan mid-year, does she have to give any notice, does she have to satisfy ADP/ACP tests, does she have to fund the non-elective through any particular date, and where is the authority for terminating mid-year, since you are generally not permitted to have a short plan year Safe Harbor?

When do "deferrals" have to be deposited for a SIMPLE IRA for a self employed individual who has no "salary"?

Is it April 15 like 401K's or January 31.

The fund companies do not want to say much on this topic.

{{That is because there is no official guidance on the issue. See discussion below -- by gsl}}

Participants in a PSP vest under a 5-year cliff vesting schedule. The plan sends notice to participants that benefit accruals will cease on 01/01/04. The plan does not terminate, nor does it intend to terminate (in other words ...plan assets will not be distributed by 01/01/04). Benefit accruals are simply frozen. So, I guess you could say that there is a "partial termination".

The plan started 10 years ago.

My Question:

Do participants with less than 5-years of employment (less than 100% vested) as of 01/01/04 ..... continue to vest?

Plan participant retires from Company but does not take any distribution from his 401K plan. Participant named his two sons as beneficiary following a divorce in 2000 (with former wife as contingent beneficiary). Participant remarried July 2002, and separated 3 weeks after marriage, and spouse filed for divorce Jan. 2003. Participant commits suicide before divorce is final. Had no will. Just found out that ERISA automatically assumes spouse as beneficiary on his 401k plan. Probate Court appointed sons co-administrators of estate as spouse refused to pay any funeral or burial expenses. Entire burden of estate is place on the sons (ages 23 and 19).

How can this be challenged? Can this be considered as "abondment"?

Decedent was a Kentucky resident, spouse an Indiana Resident and lived in Kentucky less than 3 weeks. This was spouses sixth marriage.

Many Thanks.

We merged an employers MP with PS as of 12/31/2002. Employer has never filed 5500's for plans because they have never reached the combined limit of $100,000. Question - since these plans have been merged to we need to file a 5500 for the MP and if so when?

Thanks,

Ronnie

We are restating a 401k of an employer who also maintains a DB plan. We are using a Corbel Volume Submitter checklist to do so but have a question on one of the selections. Question #69 states the following:

"If DC & DB plans are maintained (whether or not terminated), which plan provides top heavy minimum benefit?

a. n/a

b. DC, with 5% minimum

c. DC, with 7 1/2% minimum

d. DB, with 2% minimum accrual

e. DC, with 3% minimum accrual

f. Provide full top heavy minimums to each plan

We've never amended a DC with a DB and don't deal with DB plans. There is a 1% chance that either plan will ever be top heavy and we just need some advice as to which selection from above we should go with.

Thanks,

Ronnie Wasel, CPA

Is it possible to name both a corporate trustee such as a bank and also an individual from the company in a qualified plan?

I just want to make sure that I under a participant's right to convert his policy. A participant may only convert a policy into an individual policy after he separates if the policy itself permits such a conversion? Therefore, an employer is not required to offer convertible insurance products...

I have found a lot of information on the need to impose a penalty on an inservice withdrawal from a nonqualified plan, but no discussions on what happens to the haircut amounts.

When a plan imposes a haircut on an inservice withdrawal, where does the amount taken as the penalty go? Is it a forfeiture? Does it make any difference if there are employee deferrals in the plan? If these are forfeitures, are they reallocated, or used by the employer in some fashion?

Thanks for any help you can provide.

Hoping someone can help!!

If a 401(k) plan is over 120 participants because of record keepers errors is there a mechanism to avoid filing as a large plan and thus avoiding the expense of having the plan audited???

Situation: I'm the employer who sponsors a 401(k) plan. The plan year is the calendar year. The plan record keeping was initially done by "A". "A" got out of the business and 'sold' their responsibilty to "B". "B" was then acquired by "C". We then moved the plan to record keeper "D". Without the following 'errors' the plan has never exceeded 120 participants and thus would still qualify as a small plan and not be required to have an audit of the plan performed.

Record keeper "A" missed distributing a piece of Forfeiture dollars (~$2,200) from 1999. (Forfeitures are allocated to all active participants employed as the last day of the year.) The error was corrected but not distributed until December 28th, 2000. Fifteen (15) individuals who had previously received full distributions from the plan (after termination of employment) ended up with minimal balances ($200 or less) and thus ended up being included in year end head count for 2000, pushing the participant count to 127. (Participant count would have been 112 without the late Forfeiture distribution.) There were no additional entrants on January 1st, 2001 thus 112/127 was the head count at the start of 2001. In 2001 "A" got out of the business and sold their record keeping responsibilities to "B". In 2001 "B" was aquired by "C". The problem was discussed with "C" and "C" adjusted the beginning head count for 2001 on the Form 5500 filing for 2001 and filed as a small plan. Now, at the end of 2001, "C" was instructed via letter and fax to force out 22 participants who had balances less than $5000. "C" forgot to do the force outs and finally processed them in January of 2002 but once again left a head count issue at the close of 2001 - 130 versus the 108 it should have been. There were no additional entrants on January 1st, 2002 thus 108/130 was the head count at the start of 2002. In 2002 we moved record keeping responsibilties to "D" (you're not asking why after all of this, are you?? lol) "D" is now requesting an audit be performed based on the 130 head count at the start of 2002. (Head count at the conclusion of 2002, start of 2003 is 106.) The problem has been discussed with "D" and "D" has agreed to file as a small plan for 2002 with a letter from me, the plan sponsor stating that we will hold them harmless.

I don't mind sending the letter but I sure would feel better if I knew I had a 'leg to stand on' in case of an ERISA audit. Anybody have any case law or something that would support my position of filing as a small plan and not having the plan audited? My actual preference would be to address directly and include a letter of explanation with the 2002 Form 5500 filing but I have been advised that that would surely solve nothing and basically 'force' an ERISA audit. Anybody have thoughts or ideas here????