Is it proper for an investment adviser to a multiemployer pension fund to collect an annual fee from the fund while receiving commissions on sales to the fund? The investment adviser, in this situation, has a broker dealer license with the company that is paying the adviser commissions for sales. I know that the SEC allows for the receipt of both an annual fee and commissions in the event the adviser has a broker dealer license, but does this situation violate ERISA in any way?

Thank you in advance for your help and guidance.

We ran into a 403(b) plan that only allows employees to participate if they defer a minimum of 4%. This seems discriminatory to me and i've never heard of such a thing.

I realize you can have negative elections, but in the case above if someone is negatively elected to 4% and then wants to reduce to 3%, the plan would not allow this.

Any comments?? (should i run from this one and fast??!!)

Thanks

Running into a brain cramp here and want to make sure I'm passing on the right information.

A lawyer asked my opinion on a proposed design for his law firm on a new cash balance plan. They plan on using very conservative interest crediting assumptions coupled with conservative investments to avoid any underfunding exposure (and also sidestepping any "whipsaw" issues). One comment by the consulting actuary who had proposed the plan is the top 25 restrictions under IRC 1.401(a)(4)-5.

In this situation we can assume that cash balances roughly equal assets by design. My thought would be that you convert the cash balance to a SLA benefit, then value using 83 GAM and F and the RPA '94 CL interest rate (90-120%). The conversion to SLA would be done using the plan assumptions, then valued using CL assumptions on the resulting SLA accrued benefit. Presumably (unless we have an inverted yield curve), the spread between the plan interest rate and 120% of the weighted rate would put us comfortably over the 110% threshold that would trigger the top 25 restrictions.

Am I reading this right or do you take the cash balance and convert using CL assumptions to SLA and then revalue using CL assumptions to end up back where you started (in which case you would be nailed given the client's proposed investment strategy)?

Hi,

I have a rather unusual problem I was hoping to get some thoughts on. I recently requested and received a loan check from the plan of employer that I had left several years before. The reason this was possible is because the former employer had never changed my status with Fidelity to indicate that I was no longer an active employee. Therefore, I was able to take a loan but have no way to pay it back. In addition, the vesting had been continuing so they ended up removing 50% of the company match from my account when I called to inform them of my predicament. I asked Fidelity if I could just return the check and they said no and that I would have to take it up the issue with my former employer.

At this point am I correct in my assumption that I will just have to take this as an early distribution and pay the penalties? My ultimate preference would be to get the money back in my account somehow.

Thank you.

Can the underlying benefits in a cafeteria plan have different eligibility rules than the cafeteria plan itself? For example, if an employer wants only full-time employees to be eligible for major medical, but wants part-timers to have access to other benefits, like dental or other voluntary, can all of the benefits be set up under the cafeteria plan? The cafeteria plan eligibility would be "all employees", but only the major medical would say "full-time employees".

If this is permissible, is there a reg or TAM you can direct me to??

I've determined that combat zone pay is exempt, even if it was contributed to the TSP and is distributed. At distribution, it will be segregated from normal before-tax contributions (though its earnings won't). What I need opinion on is whether the contributions to the TSP this year (that came from combat pay) will count towards the $12,000 limit? It seems from the TSP website that since the combat pay was exempt from income and is not reported, then the portion of it that was contributed to the TSP doesn't count.

Any actual experience with this out there?

Has the IRS established a GUST/EGTRRA remedial amendment period ("RAP") for non-electing church plans. I know the TRA'86 RAP for non-electing church plans had been generally extended to February 28, 2002. But is there a deadline for the GUST/EGTRRA changes (to the extent applicable to a non-electing church plan)? Thanks in advance for any help.

Looking for some confirmation here.

A company with a self-insured plan wants to amend the plan to expand the definition of "dependent" but only with respect to certain executives (most, if not all, of which are highly compensated). The expanded definition would still be within the definition of dependent under Code Section 152. For example, the plan would allow an executive to cover his mother-in-law who qualifies as a dependent under Section 152. The company currently pays a portion of the premiums for dependent coverage.

Am I correct that no portion of the company-paid premiums would be taxable, but that anything reimbursed with respect to a highly compensated individual's mother-in-law would be taxable? Any other thoughts or concerns?

I have a general question. I have an employee that is wanting to be reimbursed under the medical fsa for premiums paid to a third party company that is not offered through the employer. Is this an allowable expense?

A situation has resulted where the an alternate payee was in the process of correcting a previously-submitted DRO, but died during the process--prior to submitting a DRO that was qualified as a QDRO. The prior DRO allowed for payments to go to the beneficiaries of the alternate payee in the event of alternate payee's death. Could any subsequent DROs be considered as possibly constituting a QDRO? Does any DRO have to reference the fact that the alternate payee died? Also, the plan does not reference whether an alternate payee could designate a beneficiary. Any thoughts would be appreciated.

EA2 question for y'all:

Plan Year is Calendar Year (assume same fiscal year for this question)

Company makes contribution for 2002 play year on 9/15/2003

Contribution exceeds deductible limit for 2002 (even if based on UCL at lowest interest rate)

Company deducts up to limit for 2002, and the rest in 2003 (less than 2003 max)

Question 1: is there any excise tax due?

Question 2: are 404 assets adjusted by this "carry forward" for 1/1/03 val

Thanks in advance!

Employer currently contributes a certain amount per employee into the cafeteria plan. They have now changed their mind mid-year and want to retract this contribution (from now forward- not going back). Is this allowed?

It seems to me- no- because it would be changing the annual election for all ee's but I can't seem to find anything to back me up. Any sources would be greatly appreciated as well!!

Thanks,

Rachel

DOES ANYBODY HANDLE ANY LOSAPS IN TEXAS? THE STATE PLAN IS A DB

THE vfd THAT I MANAGE IS LIKE A DC PLAN. HARD TIME GETTING TAX LAW FOR TEXAS AND MAXIMUMS.

WOULD LOVE FEEDBACK!!

THANKS

LERAE

I had an interesting question from a client:

Is there any rule prohibitting a loan to a participant who is 63 (only 2 years from Normal Retirement), that will not be repaid in a time frame that can reasonably be expected to be repaid. (for example, over a period of 20 years, long after the employee will retire).

One of my clients has a 412(i) plan that he wants to convert to a traditional split-funded defined benefit plan. I had pictured amending the Plan "without wear away" and applying the fractional rule to future accruals.

Datair's footnotes to their volume submitter document says that it is not possible use without wear away with the future fractional rule under any circumstance, not just under the 412(i).

Why? This approach makes all the sense in the world to me. Is it just Datair's documents or has the IRS said something on the matter? Also, what sort of post-amendment accrual would one use, given that the client does not want to front-load his accrual formula?

Any help would be appreciated. I am anxious about this one. Thanks!

Employer has an individually designed MP plan and a regional prototype PS plan. To merge the MP into the PS doesn't the PS have to be amended to preserve optional forms available under the MP, to require separate accounting of the MP assets etc? If so, can the employer adopt an amendment to the regional prototype plan or does the organization that offers the plan have to do so? Should the employer apply for a new determination letter for the amended plan?

A terminated participant in a 401(k) has a total account balance of $5,649.03. Of that, $2,600.00 is an outstanding loan. If the loan is deemed distributed today, what is the account balance for purposes of considering the $5k threshhold? $3,049.03? Or, is the loan still considered an asset?

I am trying to determine if a terminated employee can be forced out of the plan after his loan is deemed distributed and the remaining assets in the account are valued at less than $5,000.

I have a profit sharing plan that is adding a 401(k) feature effective 10/1. It is my understanding that this can be based on the full plan year's compensation. The attorney is disagreeing with me. Can someone provide me with a cite or tell me I am wrong?

Is a Trustee required on a 403(b) Plan?

Scenario: An employee is enrolled in a GTLI Plan which covers the employee only. Usually the amount of excess coverage over $50,000 gives rise to imputed income which needs to be added to taxable income. I have read, but been unable to verify, that when the employee is disabled, the amount of coverage that goes toward the calculation of imputed income is zero for the period of disability.

I have also read that the value of the excess over $50,000 of GTLI coverage is not taxable to a retired or terminated employee. The reference led to another section of the reg. specifically 1.79(b)(2), which discusses the exception to the rule of inclusion. Unfortunately, this discussion does not pertain to the reporting of GTLI by the employer, but rather the requirements an EMPLOYEE must undertake to delete the added income when filing his personal income tax return.

My question is whether disability is an exception to the application of imputed income and whether there is a qualification on the disability, such as it must be total disability. Any reference source would be appreciated. Thanks.