We are getting ready to upgrade to 7.2 and wanted to make sure there weren't any bugs or issues associated with this upgrade.

Thanks for your help.

Heather Aaron

The Emerging Issues Task Force of the FASB reached a conclusion at their meeting two weeks ago that the only proper attribution method for a cash balance plan is traditional unit credit.

Up until now, there has been a wide variance in approaches to applying SFAS 87 to a cash balance plan. The other very common method is to project out all salary and interest credits and then prorate on service. This is no longer allowed.

All measurements after today must use traditional unit credit. Any change in PBO due to methodology should go through the gain/loss (this was in the EITF minutes).

At the end of the EITF meeting, Jules Cassel made the following "observation" (if an observation is included in the EITF minutes, it carries the same weight as a published staff Q&A). For plans that use a market-based rate to credit the account balance, the discount rate must be that same rate. This was included in the EITF minutes.

EITF minutes must be ratified by the Board. At today's Board meeting, the observation about the discount rate was dropped from the minutes prior to ratification. The FASB staff was directed to write up a more comprehensive position paper on the specific circumstances that a discount rate other than corporate bonds would be used. This may end up as a staff position paper (similar to Q&As) or be sent through the EITF. In any event, this is expected to be completed fairly soon. By the end of this year, many cash balance plans may be required to use a different discount rate than they are currently using.

We are receiving a number of Medical FSA claims with prescription receipts that do not reference the drug prescribed. Some pharmacists are telling us that because of HIPAA, they are not allowed to print the name of the drug on the receipt. Instead, they can provide a phone number and a prescription number and it is up to us to call them for the name of the drug.

Are any of you getting this kind of feedback?

Thanks....Sheila

How is the annual accrual for a Cash Balance Plan General Test calculated after the first plan year if the interest crediting rate changes (annual change in 417(e) rate).

Assumptions:

Testing on the annual basis (not accrued to date).

Cash Balance Plan credits interest at 417(e) rate.

5% 417(e) for year 1 and 6% 417(e) for year 2.

$1,000 allocation each year.

Participant is age 40 for year 1 and 41 for year 2.

Retirement age is 65.

5% GAR 94 Age 65 APR Monthly = 141.5291

6% GAR 94 Age 65 APR Monthly = 130.3888

Year 1 Accrual:

1,000 * 1.05 ^ (65 – 40) / 141.5291 = 23.93

Year 2 Cash Balance Account Detail:

1,000 * 1.06 + 1,000 = 2,060

Is the Year 2 accrual for general testing (a) or (b) below:

(a)

2,060 * 1.06 ^ (65 - 41) / 130.3888 = 63.97

63.97 – 23.93 = 40.04 accrual for testing

or

(b)

2,060 * 1.06 ^ (65 - 41) / 130.3888 = 63.97

Then Recalculate Year 1 at new interest rate

1,000 * 1.06 ^ (65 – 40) / 130.3888 = 32.92

63.97 – 32.92 = 31.05 accrual for testing

We prepare a Schedule P for each trustee of the plan. I noticed that some TPA's complete only a single Schedule P with the 3 trustee names on the 1 line. Previous reviews of this process end in a split vote. My theory is why would the software allow multiple schedule P's then.

However, In regards to EFAST signatures, do I need to obtain 3 EFAST signature ID's? The reason I ask is in Relius Gov't Forms, when electronically filing, the software will only extract the names on the 5500 (plan administrator & Plan Sponsor/employer, if they are different) regardless of how many trustee's (Schedule P's).

Do I even need EFAST signatures for the Schedule P?

Participant's atty. has requested a form QDRO from the plan. The plan has no form QDRO available, however, was considering responding with a checklist of the technical requirements of a QDRO for the participant's atty. to consult when drafting the dro. Any problems with that approach?

I have a few questions: I'm wondering if there is a difference between Trad and Roth IRA's and how they are inherited.

Does 100% get distributed to the children?

What is a Stretch IRA and how does it work?

Is it different if you have a 401k?

Thanks it for now. Thanks for all the reply!

We are a S-Corporation. If the corp pays the health plan for the owners can they offer this coverage to their employees at their cost. In Other words, does the S-Corporation have to pay all or part of the empoyees premium?

We have a client with almost 5000 employees (including union, part-time, temporary, full-time, etc.). Of this number, around 1000 are actually full-time according to their definition. They currently only offer benefits to full-time employees.

They want to add a cafeteria plan with FSAs and only want full-time people to be eligible. However, for the other 4000 employees, they want to extend some voluntary benefits to them on an after-tax basis.

For non-discrimination testing purposes, would they need to include part-time and temporary employees in the testing pool? Also, would offering voluntary, after-tax benefits to the part-time and temporary pose any problems from a compliance standpoint? (The same voluntary benefits will also be offered to the full-time employees but on a pre-tax basis through the cafeteria plan.)

Thanks!

A plan sponsor discontinued making matching contributions a couple years ago. Can the match forfeitures now be used to reduce plan expenses? The plan document states that match forfeitures are used to reduce future matching contributions, but really doesn't address this issue.

For the past 5 years or so (since the plan has been in existence), one participant had a life insurance account set up that has a monthly deposit of his employee contributions. We were unaware of this separate account but had been reporting the correct contribution amounts (just showing it going into the other deferral account with the rest of the plan assets).

Do I go back and amend all those 5500's or how do I now start reporting this life insurance account? It has a balance of approx. $1800 so our past values of plan assets have been off. I'm just not sure how far to go back or where I should fix it.

Any advice you can provide is greatly appreciated!

Thanks,

Rachel

Large plan with REA (J&100%) death benefit for married participants but no death benefit for unmarrieds wants to address perceived inequity and is looking for suggestions. Plan is sponsored by a University. Plan has no lump sum provision (over $5,000) except that the REA death benefit is available as a lump sum if under $10,000.

Two options might be paying survivor portion of a 10 C&C and also paying 50% of the PVAB to a beneficiary.

Any other ideas? What might be typical of a large plan unmarried death benefit that wouldn't drive HR bonkers with paperwork? (Non-union)

Thanks for any suggestions.

I am trying to print out participant benefit statements from Relius Administration 8.2. I am working on a plan in which I have an Employer Safe Harbor Discretionary Contribution and a normal Employer discretionary contribution. Relius is not able to make out the vesting difference since they are both created under the employer source.

Has anybody gone through this? Has anybody created correct statements?

Any drawbacks to allowing participants to opt for in-kind distributions where the trustee oversees the investment of the general plan assets, i.e., no directed investment accounts? Employer is considering allowing for distributions to be in cash OR IN-KIND, instead of in cash only. The election is to be made by the participant. Any negatives to allowing for in-kind distributions in this situation?

A current 401(K) plan that I presently administer has new employee's who are coming from another 401(K) plan and want to roll over their money along with life insurance policy's that they had from the previous plan. The policy's have been paid in full.

Is it possible to do a trustee to trustee transfer of the life insurance policy's to the new employer's plan?

Two part question - 1) If two participants are actually paid out (checks made) on January 3 of 2003, does that require that a final 5500 be filed for 2003? and 2) The instructions talk about a final 5500 after all participants have been paid out but we have a case of funds being left over for the specific purpose of paying the trustee's fee. can the date the trustee fees are paid out be used as the date for the final 5500 or must you use the date the last participant is paid out?

What recourse does a former employee have to rectify the failure of a former employer to offer a 401k to the former employee despite availability to all other employees. Should the former employee pursue a claim through the DOL or IRS?

Our plan previously described eligible beneficiaries as a "legal spouse." We have formerly allowed employees to claim common law spouses as beneficiaries. We would like to change our plan to state that only legally married spouses can be beneficiaries under the plan. How do we do this? Does is matter what the state law is? The state where the plan is administered does not recognize common law, but we have employees in another state that does recognize common law. Any help would be appreciated. Thank you.

I have a Roth IRA (opened in 1998 - approx. $18,700.00). Taxes were paid over 4 year period. I put a Company 401 Distribution of approx. $2500.00 into a regular IRA in 2002. I am not happy with the investment company I am dealing with.

Can I cancel both IRA's with this company and put most of the Roth portion into I-Bonds, keeping the remainder free, then take the Traditional IRA and add some of the money left over from the roth to it and start another Roth?

Would there be any penalities or taxes due on any of this?

Thank you

JWright

Please, I need help getting started. My husband worked 20+ yrs for Orlando City Hall as an administrative assistant. We were married all that time, but divorced some years after he retired. He died a few years ago. City Hall said he opted to exclude me from the pension plan. I don't recall signing away my right to part of it. I'm 62 now and qualify as a low- income senior. Can yall please coach me on how to get started finding my legal rights there, if any? Thanks much.