I'm trying to get a CPA firm to change it's PVAB reconciliation from 1/1/2002 to 1/1/2003 to 1/1/2001 to 1/1/2002 for a report accompanying a 2002 Form 5500.

My experience is that years ago all CPAs reported a reconciliation to the valuation date ocurring 1 day after the audit year, but that over the years most changed to a reconciliation to the valuation date falling within the audit year.

I have an auditor balking at such change, asking for a legal or regulatory cite or justification for such a change. Does anybody know these rules or how they are found?

Has anyone encountered a model document for Health Reimbursement Arrangements?

I'm confused... I've been reading all about the 410(b) minimum coverage, 401(a)(26) Minimum Participation and nondiscrimination testing under 401(a) (4).

Is it true that if your plan is not a defined benefit plan, you do not run the 401(a)(26) minimum participation test (unless before 1996)? Am I understanding this right?

Who can you exclude for coverage testing? I read that you can exlude anyone who did not meet the age and service of the plan. If a plan has immediate eligibility for 401(k) portion, you can use one year of service (otherwise exludible employees). Can you also exclude terminated participants that did not work more that 501 hours? I'm confused because Relius is putting the terms with less than 501 hrs in the exludable group. I didn't read anywhere where these ees can be exluded.

Is it true that basically 410(B) deals with minimum coverge while 401(a)(4) deals with nondiscrimination in terms of benefits? At least that's what I think I'm reading...my brain is mush...

We have a plan that only has 401(k) deferral money in it. the document allows for match and profit sharing, but there never has (or probably never will) been any employer match of profit sharing contributions.

The document is a standardized protoype, so all NHCE benefit under the plan. I've always filed the Schedule T reporting that all NHCE benefit.

Now, the sponsor wants to try to separate one of the "divisions" into it's own plan. The attorney is asking for Total EEs, Total HCE, Total exludable NHCE, Total excludable HCE. This seems like data for coverage testing. Is there some other test he will be running to see if we can have a separate plan? His request asked us to exclude ees that have not met the age and year of service requirement. Don't we need to also exlude those who have terminated with less that 501 hours?

Any guidance on this matter would be appreciated.

thank you

A participant in a Money Purchase Pension Plan has been on disability for almost 1 year. He was officially terminated 6 months after he went out on disability. He has made a request for a lump sum payout.

According to the collective bargaining agreement covering this participant, he is entitled to receive 1 year of health and prescription benefits while on disability. The 1st 6 months of contributions are made by the employer and the remaing 6 months of contributions are made by the union.

Should the date the waiting period begins be the date he was officially terminated or should it be the date the employer stops making contributions or the date the union stops making contributions? Or some other date.

If anyone has any answers, please reply ASAP as I am under a strict deadline here.

For Top Heavy Calculation for 11/30/2002, should the $30,000 receivable contribution for 11/30/2001, which was deposited on 4/16/2003, be included?

The contribution was included in the 11/30/2001 valuation and 2001 Form 5500. There was no contribution for PYE 11/30/2002.

I was wondering if anyone would have an opinion on the following....If a plan sponsor has both a DB plan and a comparability plan and the DB plan is intergrated with social security, should I not use imputed disparity results in the general test for the comparability plan?

And, would the same apply for an average benefits test? For example, let's say the employer has a DC profit sharing plan with an integrated formula but they are not covering enough people to pass the ratio percentage test. When the ABT is completed, should I not use imputed disparity?

Thanks!

I seem to have read somewhere that if a 501c3 organization has a 401k plan with a ADP problem for the HCEs, the company can sponsor a 403(b) plan just for the HCEs and doesn't have coverage or ADP problems. Thoughts?

404(a)(7)©(i) mentions that 404(a)(7) does not apply "if no employee is a beneficiary under more than 1 trust or under a trust and an annuity plan." 404(a)(7)©(ii) contains the exemption for 402(g) deferrals.

PLR 8743096 toward the end says: "..section 404(a)(7) would apply even though no contributions are currently being credited to the employee's profit-sharing account. An employee does not cease to be a beneficiary under the profit-sharing plan because contributions are not currently credited to his/her account."

Here is the situation, Plan A is a defined benefit plan, Plan B is a profit sharing plan. A participant of Plan B who has an account balance ceases participation (i.e. no more contributions) and moves to Plan A (both plan documents allow this).

I think that 404(a)(7) will apply and now limit the deductioin to both Plans A and B.

However, I have been told my an attorney that he heard Jim Holland say at a 1997 ASPA convention (and this may be pure unsubstantiated gossip) that 404(a)(7) only applies if the common participant(s) in question are currently benefiting, i.e., receiving an allocation and/or an increase in accruals.

Can anyone shed some informed light on this?

I have a client that wants to discontinue allowing their employees to contribute to the plan. I've never had this situation before. Would it be ok to just amend the plan to change the max deferral % to 0% or should all reference to 401(k) in the plan be removed? In the future, they may want to allow the employees to contribute again.

A quick look at the Conference brochure tells me that Board regulars Tom Poje, Mike Preston, and MGB are all doing sessions this October. Any other regulars, perhaps disguised, also doing a session?

I'm working with a client that wants to implement a 401k for a management company and its associated partners. The management company sits on top of 4 separate operating entities which will not participate int he 401k. The partners in the management company own varying interests in the operating entities. An actuary/TPA has reviewed and indicated that their is not a control group issue provided that the % ownership structure doesn't change.

What are the ramifications, if the % ownership were to change at some point in the future? Does anyone have an article or refernce material that I can use to explain this to the client in very basic terms?

In the ASPA QKA study material, several times it mentions the 415 limit for 2003 is $41,000.

I was surprised to read this. Is the limit not $40,000 for 2003?

I posted this question under the Church Plan heading, but I thought I should try here as well.

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 (or was there) a deadline for the GUST/EGTRRA changes (to the extent applicable to a non-electing church plan)? Thanks in advance for any help.

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.

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?