The CPA doing the small plan audits for us (for the 2002 year) is saying we need to prepare the H versus the I. We get errors preparing the H from the software package because there are less than 100 participants. (These are audits due to the % of nonqualified assets held.) Is the CPA correct?

a quarterly valued 401k/profit sharing plan allows for participant directed investments. a quarterly deposit made on behalf of one of the doctors was made to the money market fund in the last quarter of 2002 and was reported as paid to the money market fund for the 12/31/02 participant statement. Subsequent deposits were paid and shown on statements prepared 3/31/03 and 6/30/03 as being paid to the money market.

After 3 timely statements had been provided to the participant (and a good return on the equity fund account that was where the money was supposed to have been paid all along) the participant calls and says that his $ was being paid to the wrong account!! What is the plan's obligation to reimburse for gains to the account? I believe that the only adjustments due would be for the 1st quarter that deposits were shown as made incorrectly; the plan/trustee/(tpa) is under no obligation to correct to-date as statements have been provided. Any comments, cites? thanks

Are employers limited to the 10 approved medicare supplemental insurance policies if they want to a supplemental policy available to their employees?

Am I correct in assuming that if employees are excluded from participation by class, they get neither the top heavy minimum nor the gateway? Also, if there is no exclusion by class, it is OK to give non-key HCEs just the top heavy minimum, not the gateway? Thanks.

Has anyone implemented a wellness program due to the overwhelming increases in health plan costs? We have a self-funded plan and are looking for ways to control costs (as everyone is) and were wondering if wellness/disease management plans work. If you have implemented, how long have they been in place and have you seen significant savings?

A 401(k) Plan allows for hardship withdrawal due to

1. Medical expenses

2. Purchase of Principal Residence

3. Tuition

4. Costs Preventing Eviction or Foreclosure from a Primary

Residence.

5. Such other costs or expenses deemed to be immediate heavy financial needs in accordance with Treasury Regulation Section 1.401(k)-1(d)(2)(iii)(A) and (B)

A participant is out of work due to injury at work and is waiting for his court hearing for workmans comp. He has used all of his personal income outside of the plan to keep up on his bills. He has no other source of income at this time and will be past due on his mortgage, but he has not yet received any notice of eviction or foreclosure. He does have other bills he has due utilities and I'm sure credit card dept. He is not receiving any income from the company at this time. Would he qualify under Item 5 above in any way??????

Please let me know as soon as possible....

I have a plan where the husband and wife work at the same company. The husband passed away with a loan balance.

The wife wants to rollover the money into her account. She doesn't want to get a 1099r for the outstanding loan.

She has the money to payoff the loan. (The company is going to help her out) Pretty nice! Once the money gets into her account she will take a new loan to pay the company back.

Can the company and most importantly the 401(k) do this? Is there any rules or regulations about this? Let me know your thought. Thanks.

I'd really appreciate anyone's thoughts on the following scenario:

1. A subsidiary is being spun-off from the parent corporation. The parent sponsors a 401(k) plan that covers the sub's employees.

2. The 401(k) plan accounts of the current and former employees of the subsidiary are going to be transferred in a plan-to-plan transfer to a newly established 401(k) plan of the subsidiary upon the spin-off.

3. Certain current and former employees of the subsidiary were previously participants in plans that were merged into the parent plan and various different forms of benefits were grandfathered with respect to those employees.

4. The subidiary would like to offer only lump sum distributions under the new 401(k) plan if it's possible to eliminate the other forms of benefits.

I read 411(d)(6) and the regulations at 1.411(d)(4) to provide the following:

a. The grandfathered forms of benefit could not be eliminated in the course of the plan-to-plan transfer because the requirements of 411(d)(6)(D) are not met because the direct transfer is not being made pursuant to a voluntary election by the participant whose account is being transferred.

b. A defined contribution plan may eliminate all alternative forms of benefit except for a lump-sum on otherwise identical terms to the forms of benefit eliminated. 411(d)(6)(E) and 1.411-d(4), Q&A 2.

My question is this: Could the spun-off subsidiary transfer the accounts to the newly established 401(k) plan on Day 1 complete with all of the various grandfathered forms of benefit and then, on Day 2, amend the 401(k) Plan to eliminate all but the lump sum?

I've not found anything in the Code and regs that would preclude this course of events, but it seems like a real end-run around the rules about retaining forms of benefit in a spin-off.

All thoughts would be very much appreciated.

Julie

Does anyone have a sample force out package (or letter) available? I have a client who wants to clean up their plan (PSP) by eliminating all terminated participants. We all know we can't force out anyone with a $5K balance or higher (without rollover) but we have been asked to draft a letter to ALL terminated employees to try and encourage withdrawal. I am struggling with this and thought I would solicit input.

Any ideas?

Does anyone know if the ASPA QKA designation is considered a "lesser" designation than the QPA? I got the QKA instead of the QPA becasue I dont work with DB plans at all. However, coworkers consider it a lesser designation.

I thought they were the same, only focused in different directions....

One employer may merge into a larger one. The large company has a DB plan and a 401(k) with a 3% match. The smaller firm has a PS/DC plan with a 3.5% discretionary employer contribution (which has routinely been made) and a dollar for dollar match up to 6% of salary for participants.

Obviously, employees at the smaller company are loathe to lose their 401(k) with an effective 9.5% of salary contribution from the employer.

The formula for the new employer's DB plan has a rule of 80 for vesting (age plus years of service = 80) and an accrual rate of 1.65% x years of service x highest salary.

I am wondering if it is possible, outside of hiring a consultant or actuary, to value and compare the new DB plan with the existing smaller company's PS/401(k) plan.

Any thoughts would be greatly appreciated.

If participant qualifies under the plan to do an in-service distribution, can he request that it be done as a direct rollover to his IRA? This would avoid the 20% (plus state tax) withholding on the distribution since he wants to put the money into an IRA anyway. He is under age 70 1/2.

Thanks.

I have heard there is a possibilty that the IRS may extend the RAP one more time. anyone hear anything about this?

A 401k PS plan, which permits self-directed investments, purchased (40% interest) and co-owns commercial real property with the employer (the plan's trustee) (60% interest).

Is this transaction a Prohibited Act under ERISA §406 and §4975?

The language of ERISA §406 covers the Sale, exchange, or lease of any property between the plan and a party in interest...not the initial purchase.

I can see possible problems when minimum distributions are required.

This co-ownership seems to have the appearance of impropriety. Without the plan's 40% contribution of purchase price. the ER would not be enjoying the benefits the real estate investment.

Thanks for helping me out.

One employer may merge into a larger one. The large company has a DB plan and a 401(k) with a 3% match. The smaller firm has a PS/DC plan with a 3.5% discretionary employer contribution (which has routinely been made) and a dollar for dollar match up to 6% of salary for participants.

Obviously, employees at the smaller company are loathe to lose their 401(k) with an effective 9.5% of salary contribution from the employer.

The formula for the new employer's DB plan is not particularly generous. It has a rule of 80 for vesting and a 1.65% x years of service x highest salary.

Is it possible to maintain the smaller employer's 401(k) only for current participants? Could employees of the smaller firm participate in both DC plans?

I'd appreciate any thoughts on how this generous plan can be maintained.

Also, any thoughts on how to value and compare the new DB plan and the existing smaller company PS/401(k) plan.

Thank you very much.

If a non-profit entity sponsors a qualified plan, is deductibility of the contributions really an issue?

It would seem to me that if the entity does not pay any taxes that the whole issue of a tax deduction would be moot.

How do the provisions of IRC sections 404(a)(1)(A) and 404(A)(7) - limitation for DB and DC plan - apply to plans sponsored by a non-profit entity?

This $ is already in a rollover IRA, angry woman wants to pull $ out for non-first-time-R/E purchase or refinancing... and use it for 30 days and then put it back into the IRA. Can I please tell her she is making up rules, or is there something I don't know.

Thanks

Can anyone set forth a short, but descriptive, step-by-step methodology for determining the present value of a stream of future payments to a husband and a wife out of a SERP (continuing until the last of them dies)?

The husband (the employee) is 66 and his wife is 65. The husband is scheduled to begin receiving annual payments of $80,500 when he turns 70. The present-value discount rate that must be used is 5.17% (i.e., 120% of the long-term AFR (compounded semi-annually) for August 2003).

What are the steps to take to determine the present single-sum value of that stream of payments? Thanks.

If an er is a sole proprietor and the plan covers the sole proprietor or they & their spouse, the plan is not covered by Title I of ERISA nor the fiduciary rules under ERISA. Thus, 404© does not apply to these plans, correct? Should they leave this question blank on the Corbel version of prototype documents?

Is there any reason this response should change if the owner incorporates?

Does anyone offer Domestic Partner benefits? Do you strictly for your health plan or do you offer other benefits for domestic partners? How do you define "domestic partner"? Do you include both same-sex and opposite sex partners? How well has it been received by your employees? We are thinking of offering DP benefits and would like any feedback good or bad. Thanks.