I'm working on trying to get our plan doc in order and I'm getting some confusing information. Our fiscal year is July to June our doc says plan year ends June, but we have a calendar year deductible. It is not stated anywhere in the doc Jan to Dec. Our Sect 125 doc is Jan to Dec.

Our TPA says that by having a "calendar year" deductible that means our plan year is Jan to Dec, the reason June is listed is because that is our reinsurance renewal. I'm so confused. I thought a plan doc was supposed to spell out all of the details and not leave anything open to interpretation.

How do I fix this??????

My insurance company issues annuities for 403(b) plans.

In the event an employer elevates the plan to Title 1 of ERISA and creates a plan document, what happens if the employer's plan document contains provisions that the insurance contracts already issued under the plan do not allow?

Specifically, would it be okay for the insurance company to inform participant that funds in annuity policy cannot be made available for loan? and then inform the participant that they may elect to move/transfer plan assets to another insurance company (perhaps one selected by the employer) in order to take a loan?

If the employer has the right & obligation to establish a written plan document, is an existing annuity contract required to include loan provisions (as well as any other provisions which are not already written into the underlying annuity contract) in the annuity contract itself?

I tried to research for information on the impact on existing annuity contracts when an employer upgrades a TSA into an ERISA Title 1 plan. What is an insurance company who has already issued a contract required to do?

Is it possible for TPAs to accept credit cards for COBRA premium payments? I can't find anything that states that payments must be made by check, money order, etc. Is there a law that states credit cards can't be used? If it IS possible, are we able to pass the fees that we're charged to run the cards on to the participants? If so, how?

Municipal Police employees in New Jersey are allowed to

accumulate sick and vacation days that are payable at the time they retire (included in various collective bargaining agreements).

For example, a police officer with 25 years service has 250

days for a payout of either $50,000, $75,000 or $100,000.

The employer has no written plan other than paying this

officer his accumulated days at retirement.

Any ideas, as to how these police officers can avoid receiving the cash and paying substantial income taxes upon receipt at retirement.

Can any plans be suggested to the employer and employee

on this type of situation.

An input or direction is appreciated -- I have a client that sponsors a profit sharing/401(k) plan. A plan participant named his wife as his beneficiary. He subsequently divorced and changed his marital status to single and his primary benficiaries to his two children.

He then remarried but never notified the plan sponsor. He subsequently died and the sponsor paid the death benefit to his two children, the beneficiaries on record. Now the new wife is asking where her benefit is.

I am inclined to direct the sponsor to their attorney, but I wanted to at least give them some idea of what they need to do. Does anyone have any idea how this issue is treated? Any starting point would be helpful.

Equity partner in LLC takes max loan in 6/02 of $30,000 on Account balance of $60,000. The account balance of $60,000 included $12,000 of deferrals and $12,000 of matching for 2002.

LLC loses money for 2002 creating $0 compensation for LLC ptnrs. Reversals of contributions and matching are processed leaving an account balance of $36,000. The loan now exceeds the 50% rule by $12,000. Are we out of compliance ? I can't remember where, but I recall reading that as long as the participants account balance allowed for the original loan at the time of inception (did not exceed the 50% rule) then a reduced account balance in the future would not put the loan out of compliance. I believe that this rule was established to compensate for the large earnings losses in 401K's but did not specify that it was limited to investment loss situations.

Can an employer require an employee to continue health benefits when on leave under FMLA?

A governmental plan is a combination DB/DC. The investment accounts that fund the DC lifetime annuity are controlled by the retiree. There are only 2 investment options: A fixed or variable annutiy. Investment election changes may only be made in the month of April and are not subject to change until the following April. One may not move between the two options in a lump-sum. The fastest one may move between the two is at a rate of 1/12 of the account balance over a 12 month period. Does this rule violate section 404©?

I have modified one of the "old" FDP reports on Relius to sort the Account Activity pages by division and print the division number & name at the beginning of each division group. I was also able to have the report sub-total by division. I have a small plan with only 4 divisions and the report worked great. Now - along comes a takeover plan with approx 78 divisions. For the most part, my report prints fine, however I have a few employers with only one previously terminated employee who received distribution during the valuation period I am processing (01/01/2003 - 03/31/2003). The employee prints out after a prior division sub-total, but does not start a new page with the division name and number at the top. Is this a sorting issue or do I have some grouping coded incorrectly? About 5 Divisions out of the 78 are not printing division # & name. I have tried various things, the "keep group together" codes, double checking the divisions/division codes, etc. to no avail...Any input is appreciated & thanks in advance. Patti

Does anyone know if the LSA and RSA accounts were cut from the new tax plan? Are there any changes to the Roth IRA?

Based on my reading of PLR 200317041 (Separate share treatment denied for IRA payable to trust), it looks like the IRS changed its position on separate share treatment when an IRA is payable to a trust.

It seems this ruling prevents us from identifying subtrusts for children that are described in the parents' revocable trust agreement as the beneficiaries, and having each child be able to use his or her own life expectancy under the separate share rule.

I presume that now the IRA participant either must accept using the eldest child's life expectancy or create trusts during the participant's lifetime and name them in the beneficiary designation.

Comments?

What type of insurance or bond can a TPA firm obtain to cover dishonest acts by its employees with respect to the assets of individual plans the firm administers?

We perform daily recordkeeping and place buy and sell orders through a custodian/trading platform. We don't generally handle funds going into a plan because deposits are made directly with a bank custodian. We instruct the custodian to liquidate funds when a distribution is required, based on signed authorization of the Plan Administrator. We then instruct the custodian to issue a distribution check. It is possible for misappropriation of funds at this stage. How can the plan's we service be insured against such a loss?

Should our firm be listed as a covered person on the each plan's ERISA fidelity bond?

An employee dishonesty bond will indemnify our firm from loss but I don't think the assets of a plan we service would be covered.

How have other addressed this?

What is your take on the Plan Administrator being able to sign a contract that will ultimately bind the plan? For instance, if there is one plan with cafeteria and ERISA features that uses a TPA to adminster the health FSA and open enrollment for the health insurance features. However, in the TPA contract, the TPA wants (1) the employer/plan sponsor to sign the contract to be responsible to pay the fees for services, and (2) wants the plan adminstrator to also sign regarding turning over information necessary for the TPA to perform its functions. Any issues or concerns?

Plan is not funded and has health FSA and insurance benefits.

I'm just wondering what others think about this.

In order to comply with ERISA 404©, employers who offer employer securities as an investment in their plan must pass through voting rights and establish procedures to ensure the confidentiality of votes, etc. Does anyone have a sample of such procedures they would be willing to share?

I have a MP plan that has merged with the PS plan. I am now doing the final 2002 5500 for the MP plan. Question 5a on sch i asks "Has a resolution to terminate the plan been adopted during the plan year or any prior year? If yes, enter the amount of any plan assets that reverted to the employer....."

If you mark NO, because the plan has not terminated--just merged with transfer of assets, Relius Gov't forms gives you an error saying that box 5a should be marked YES if it the final return/report filed......

What are some thoughts on this one.

thanks,

Carson

Where can I find info regarding the one time irrevocable election not to participate? We have a takeover plan which originally was profit sharing only. Dr Y participated. Dr X made irrecovable election not to participate. Amended to add 401(k) in 2000. Drs X and Y say they made an irrevocable election "not to participate" at that time. Prior TPA did not include X or Y on ADP test nor did they (when other owners did) receive the 3% Top heavy minimum. They can't do that -- can they? Once some time period has elapse, I thought Dr Y could not make such an election. Also, seems like there was some issue about owners not being able to use this election for 401(k) plans --

Plan Doc says -- participant may "waive Participation in the Plan for any Plan Year. A waiver will be permitted only if it does not adversely affect the Plan's tax qualified status."

Could Dr Y have made an irrevocable election years after the original PSP effective date? Are X and Y included in the ADP test?

One of my clients would like to "pre-fund" employer contributions to a cross-tested plan. The plan provides that the discretionary contribution is "an amount as specified annually by the Employer" and will be allocated "to each eligible Participant within a classification group". Does the fact that the total amount of the contribution has not yet been determined preclude funding some portion of the contribution? Further complicating matters is the presence of 1000 hours/last day requirements.

The plan contains a 3% safe harbor non-elective formula, so I am pretty sure that the client could fund that portion throughout the year. Since we know that the gateway provisions will then apply to all eligible employees, is the client safe in funding an additional 2% throughout the year?

I have a client that has a defined benefit plan with a September 30 plan year end. The client's fiscal year also ends September 30. The plan was terminated on Febuary 25, 2002 and the benefits were paid out in April 2003. The owner had to forego his entire benefit and had to contribute an additional $70,000 to fully fund the non-owner benefits in April 2003. The plan was covered by the PBGC. There were no unfunded guaranteed benefits (IRC 404(g)). For the October 1, 2002 actuarial valuation, we prorated the charges to the funding standard account as required by Rev. Proc. 79-237. The maximum tax-deductible contribution was $45,000, which was contributed in April 2003. When and how can the remaining $25,000 be deducted.

Can the owner deduct the $25,000 for the fiscal year ending September 30, 2003 under IRC 404(a)(1)(D), unfunded current liability?

I'll post this here, although the question does not involve a multi--it involves a collectively bargained single-employer plan. This group's wisdom seems most applicable.

We have a situation in which the actual plan document has not been amended to reflect changes to the benefit amounts and other terms that have been agreed to in collective bargaining agreements.

The employer is now bankrupt and member of the controlled group is assuming sponsorship of the plan to avoid very expensive termination liability. The controlled group member will now operate the plan.

I assume the new sponsor has to give effect to the terms agreed to in the cba. Nothing else would seem fair. Are there any concerns about doing so when the plan document does not provide for these terms?

In some instances the provision in the plan document is more participant favorably and in other cases the cba's are more participant favorable, in case that makes a difference.

Any thoughts or suggestions would be very helpful.

Julie

I am working with a client that adopted a 401(k) plan as of 12/1/02. The client decided to adopt the plan based on a cross-tested allocation that was performed prior to adopting the plan. The provider did not realize the client wanted to adopt a cross-tested plan and provided them with a prototype document, which the client signed off on. The client is now ready to make their 2002 contribution and was told by the provider they will be unable to do a cross-tested allocation for 2002 and that they will need to restate their current document to a volume submitter if they want a cross-tested allocation for 2003. Is there any way that this client could make a cross-tested allocation for 2002?