Final 419 Regs

Actually, after reading through the examples, bye bye any death benefit 419 plan unless it is pure term only (with no level term period allowed and no bogus "special term" insurance to get around the rules).

Aftermessage:

BTW, Dave's edit only steered the URL link to a cleaner version of the regs (provided by the Congressional Register through Benefitslink) than the one I originally posted through Relius. No "big brother" action by our fearless leader for anyone wondering why there was a message for awhile that said "edited by Dave Baker"

This isn't going to make sense since I haven't been able to think too clearly about this all, but in reading through some of the stuff in my HIPAA implementation checklist, it just starts to boggle me about how the plan can't release info to the employer, but when you are one and the same person how do you differentiate between when you are working in one capacity and when you are in the other, and how are you supposed to keep yourself from knowing information that the employer isn't supposed to know without authorization, when you already know it, because you do the work for the plan?! I must be missing something...

I'm reviewing a (cafeteria) plan document (drafted by another organization) that specifically incorporates the Summary Plan Description into the plan. It goes so far to refer to the SPD for many of the definitions of plan terms.

(Examples: "Company": The organization named in the SPD as the "Employer"; Participant Termination: A Participant will cease to be a Participant as of the earlier of the dates set forth in the SPD.)

I think incorporating the SPD into the plan document is poor practice at best, but it's so pervasive in the document that I would have to recommend a nearly complete re-write of the plan document to correct it. Any comments as to how common this practice is? Should suggest a re-write, and if so, how strongly should I suggest it?

This is the first year that I've had to file a 5500 for a large plan (lucky me). I've helped with them in the past but never had to complete one on my own. I got through most of the financial info on the Schedule H but have now come to questions 4i and 4j (Part IV) and am not sure how to proceed.

What exactly does the DOL want for the "Schedule of Assets"? Is this something filed for every large plan? I have reviewed the instructions and they don't seem to make any sense to me. Do I just create a spreadsheet with a list of all their investments (w/info specified in instructions- i.e. Identity of Issue, Description of Investment, Cost & Current Value)? Or would the auditor take care of any of this? I can't seem to find a copy of a spreadsheet in past files and the person who used to do them is gone on not-so-great terms and probably wouldn't be much help.

Regarding the 5% of current value transactions... what is current value? Also, if the plan decided to move from one investment to another, that is still considered a "transaction"? It seems like a lot of extra work to me.

Thanks,

Rachel

I have a client who is questioning the years of service for employees on a plan with an effective date of Nov. 1, 1999. Standardized plan that credits service for all employment years.

Example: Full time employee hired in March 1998. My calculation is one year of service each for 1998, 1999, 2000, 2001 & 2002 (only looking at data through 12/31/02). 5 years. His calculation is one year of service each for 1998, 2000, 2001, 2002, and one year for 1/1/99 - 10/31/99, one year for 11/1/99-12/31/99. 6 years. His arguement is for the short plan year, only need 166 hours for a year of service. Somebody hired in October 1999 is credited with a year of service for 1999. He argues that if you credit somebody that wasn't there the full year a year of service just because they had full time hours for that plan year because it was a short plan year, then somebody that was there that same year, but the full year should get 2 years of service. Because if somebody was hired in October 1998, they would not get a year of service for 1998 because they didnt' work 1000 hours in 1998 and then they would only get one year for 1999.

I need help explaining this.

I'd appreciate any comments as to whether you think there are any issues with designing a DB plan to not offer lump sums, in order to reduce or eliminate impact on general testing a Most Valuable Accrual Rate (MVAR) due to 417(e)/act. equiv., AND then in the 11th hour before plan termination adding a lump option which is never considered in any testing.

My concern is it seems a little too good to be true; to be able to avoid having to test 417(e)/actuarial equiv. lump sums in the MVAR for the entire life of the plan, and then just add the lump sum option at the end with no ramifications or impact on prior years testing.

I like the results though, and want to use that option (periodically) if available, but would appreciate any comments pro or con on this approach.

With regard to a voluntary supplemental life plan available to employees, where employees pay for the total amount of the premiums, is any amount of the benefit considered imputed income?

The question arises because the employees, by virtue of their being a part of a employer sponsored plan, are receiving premium rates more favorable than the rates they would pay as individuals outside of an employer sponsored plan.

How would the answer change with after-tax or pre-tax dollars?

As you can probably guess.... I am completely bewildered by this journey into IRC Section 79 and any guidance would be appreciated.

Can anyone tell me where in the 5500 package is the question regarding operating under 404c compliance?

I know the question is there I just can't remember where.

Thanks, you folks that browse these boards are true assets to those of us that have questions...

Feeling really silly, however, I would rather verify my understanding than err.

401(k) Profit Sharing plan, no leased or self employeed individuals.

All non-excludable, non-HCEs are eligible to participate however some choose not to.

Does plan qualify for Exception D?

Can a participant that is 100% vested and receives a lump sum distribution of his entire benefit buy back into the plan when he is rehired to receive credit for prior service?

Specifically, I would like to know if a plan sponsor can refuse the buy back.

I apologize if this is a basic question but my field is DC and I get a little confused with the DB rules as I don't use them often.

Thanx!

I am looking for ocde and/or regs to justify the use of a cola on the maturity value when calculating the PV of the benefit. We are looking to fund the maximum contribution possible using the least amount of compensation.

Thanks, Sue

Plan has segregated accounts (FBO accounts for each ee).

Plan used to have 401k deferrals only so no tracking of g/l by money type was done or needed.

Now they've added match.

All is fully vested.

Hardship allowed from ltd 401k def only (plan effective 1995). We track ltd contribs.

Is there a reason we need to track g/l by deferrals and match? Is there anything in the regulations that requires this?

Thanks

Would like to know what happens when there is a failure to obtain spousal consent. Plan requires this. Thanks.

I am trying to find information on a defined benefits plan. I have a client who has been terminated from his position and he wants to rollover the proceeds of this retirment plan into an annuity and he has been told that he cannot touch the money that he has in the plan until he becomes retirement age.

We have written several letters trying to get a copy of the plan but to this date, they haven't given us the plan so that we can review it.

Our question is whether or not he can rollover his investment into another plan?

A prospective client receives director's fees from a company that he no longer works for. It is my understanding that he should be treated as a sole proprietor and not an employee of the company and his income be treated as Schedule C income subject to SETD, etc. Can someone confirm or advise on this matter??

Thanks.

What the limits for 2004....compensation, 401(k) and catch-up????

Anything else, please add.

I am searching for a variable annuity carriers that offer living benefit riders and accept 457 plans. Can anyone suggest any carriers?

Can a LLC have a Cafeteria Plan put in place? If so or if not, can someone explain the specifics to me as to who can or cannot participate. Thanks

I'm a bit new to the determination letter process and am wondering if anyone can provide me with some advice. All of the employers that we represent adopted Corbel's volume submitter plan in the mid-to-late 1990s, and we made modifications to the volume submitter language. These employers all submitted for determination letters on Form 5300 subsequent to the adoption of their plans. The 5300 was used because we wanted the IRS to make a determination as to affiliated service group status, as this is critical to the way the plans operate.

All of these plans were amended and restated for GUST and EGTRRA prior to February 28, 2002 but we haven't submitted for determination letters yet. Everything I've read and everyone I've spoken to is in agreement that we need to submit for a determination letter with respect to the amendment and restatement and cannot rely on the Corbel letter. But I am not certain as to whether we need to submit our request prior to the end of extended remedial amendment period, September 30, 2003. Anyone have any advice here? Also, do I need to use the Form 5300 again or can I use a Form 5307? I don't think the amendment and restatement affected the affiliated service group status at all. Plus, we still have the earlier determination letters indicating the employers are a member of an affiliated service group. What would any of you do here?

Can anyone site the IRS bulletin that addresses their position on plans that must now either remove the end of year requirement if the plan submits the match each month or revert to submitting the match annually? Thank you.

Linda