The Union that I belong to is thinking of joining a 403(b) pension plan.

If the body agrees to join everyone most participate. They will all pay the same %, or dollar amount per shift. Is there any way to opt out of this plan? I heard that there is a form to fill out. If so what is it called?

I have a Roth for myself and my wife, I contribute to a 401, and a company retirement account. plus I save on my own. Help I don't want this as I want to retire early. When I do they will only give me my money back, NO INTEREST.

My employer, during our Merger Agreement, eliminated the Lump Sum (LS) feature of our retirement plan for all employees being hired after January 1, 2001. All pre January 1,2001 members were "frozen" on December 31, 2000 in their ability to accrue additional annuity value which could be converted to a LS. To wit : all future benefits after 01/01/01 under the plan would only be paid in the form of a monthly Annuity check.

The question is thus: Can an employer once "locking in" and /or negotiating to allow, as in our case, employees to receive a portion of their benefit at Normal Retirement Commencement in the form of a Lump Sum (the annuity amount frozen thru 12/31/00) could they later, upon converting to a cash balance plan, take away the Lump Sum feature entirely?

This is a Utility Company and I am a Union Represented employee. Thx.

I understand that in order to aggregate two plans for top heavy testing, the plans need to be aggregated for 401(a)(4). Law firm has two plans, one for assocaties (no employer contribtions) and one for staff and partners (cross-tested). If the plans are aggregated for top heavy, the group as a whole is not top heavy.

I'm not sure what we need to do to aggregate these plans for 401(a)(4). The ADP passes on an aggregated basis. No problem. The cross-test is where I get confused. Due to the mechanics of the cross-test, basically, all nonexcludable employees of the employer are considered. In the NDCT, we include eligible associates who do not benefit. They are zeros in the test and are in the rate group denominators. As required, we aggregate the plans for the ABT and coverage. The cross-test passes.

Have we therefore aggregated the plans for 401(a)(4) and can thus aggregate for top heavy? Am I oversimplifying this? Do we have to provide the minimum allocaton gateway to the associates in the other plan in order to satisfy 401(a)(4)? Not sure. If anyone has thoughts, please let me know.

Many thanks!!

Lori

Could anyone out there who knows pic up on this question. Appreciated. If my Company converts to a Cash Balance or similar type of plan what happens to my current 34 years of Service. I am 51 years old and my concern is that the Company will freeze my current "Value" by NOT allowing my age to continue in my current plan till I can receive a full unreduced Annuity which would be available to me at 57. With current age reduction factors I'm only currently eligible for about 35 - 40 % of my annuity (or Lump Sum if I choose). My understanding is that at Retirement commencement, if converted to cash balance, I would "choose" either the 34 years earned under my current plan WITH THE AGE CARRYING ON or the Cash Balance value amount for all Years of Service whichever would be greater. This creates the effect of a wearing away of my current plan (a freeze) if the cash balance plan turns out a lower total value at retirement commencement. Am I correct? Or, would I be "frozen in time" in my current plan with the 35 -40 % value of which then surely the cash balance plan would surpass albeit coming in much lower in value than if allowed to CARRY ON MY AGE WITH MY 34 YEARS IN MY CURRENT PLAN. Thx. Charlie.

Sorry -- this is a cross post from a couple other message boards, but I wasn't sure which one was the right one on which to post it.

What is a "Qualified Sick Pay Plan" and why might a company need one in order to properly deduct disability benefits payable to an employee per his/her employment agreement (the payment comes directly from the employer, not from insurance)? Some websites indicate that a company must have a QSPP in order to deduct this type of disability pay.

Code s. 162 seems to permit the deduction of accident or sickness payments (i.e., disability pay) as a business expense as long as it's reasonable.

Am I missing something? Thanks for your thoughts.

Sorry -- this is a cross post from a couple other message boards, but I wasn't sure which one was the right one on which to post it.

What is a "Qualified Sick Pay Plan" and why might a company need one in order to properly deduct disability benefits payable to an employee per his/her employment agreement (the payment comes directly from the employer, not from insurance)? Some websites indicate that a company must have a QSPP in order to deduct this type of disability pay.

Code s. 162 seems to permit the deduction of accident or sickness payments (i.e., disability pay) as a business expense as long as it's reasonable.

Am I missing something? Thanks for your thoughts.

What is a "Qualified Sick Pay Plan" and why might a company need one in order to properly deduct disability benefits payable to an employee per his/her employment agreement (the payment comes directly from the employer, not from insurance)? Some websites indicate that a company must have a QSPP in order to deduct this type of disability pay.

Code s. 162 seems to permit the deduction of accident or sickness payments (i.e., disability pay) as a business expense as long as it's reasonable.

Am I missing something? Thanks for your thoughts.

I am filing Form 5500 for a single employer 401(k) plan with only 4 employees. The instructions state to file Schedule T if the plan "is intended to be qualified under Code section 401(a) or 403(a)".

Would a 401(k) plan automatically be qualifying under the above named sections? Or is it qualifying under section 401(k)?

I wasn't sure which Board to put this question on--so I'll try it here. It has to do with the controlled group regulations at 1.414©. There is a provision in those regulations that says that you excluded from the calculation stock owned by employees of the subsidiary if that stock is subject to a substantial restriction on disposition that runs in favor of the subsidiary or the partent. (1.414©-3(b)(5)).

Assume that Company A is in the controlled group of Company B because lots of stock is held by the employees of Company B and is subject to restrictions on disposition in Company B's favor. Without the exclusion for this type of stock, Company A would not be in the controlled group.

Company B files for bankruptcy. Certain employees of Company B who owned stock are terminated in connection with the bankruptcy but still own their stock.

Does that Company B stock become "un-excluded" and is now included in the controlled group calculation? If it is, Company A is no longer in the controlled group.

I could find no guidance or authority interpreting this provision and wondered if anyone had any thoughts. Some aspect of it just seems too tricky.

Any thoughts are greatly appreciated.

Can an employer require its employees to participate in a long-term disability plan if the employer pays the premiums, but then imputes the premium amount as income to employees on a taxable basis? In other words, the employees will have to pay income tax on the value of the premiums.

I have mostly small plans with one owner that we try to maximize, while minimizing the other participants. It's late in the day and I may be loopy, but I am wondering when a safe harbor flat benefit formula using fractional accrual can be worse for this type of client versus a unit accrual plan.

A benefit formula is designed to get the owner at a certain benefit level. Mathematically, each person who would have less than 25 YOP at NRD would have the same benefit under a flat benefit formula as if the plan were designed with a unit accrual formula. However, those with greater than 25 YOP at NRD would accrue LESS of a benefit under a flat benefit formula.

Simple math but this example might illustrate it better.

Flat benefit: 150% of FAP reduced for YOP at NRD < 25. Assume owner would have 15 YOP at NRD and comp is $100,000.

Proj Benefit = $100,000 * 150% * 15/25 = $90,000

AB 5 years into the plan = $90,000 * 5/15 = $30,000

Unit Accrual = 6% of compensation (designed to produce same benefit at retirement as above)

AB 5 years into the plan = $100,000 * 0.06 * 5 = $30,000

Say a person has 30 YOP at NRD:

Flat:

Proj Benefit = $100,000 * 150% * 25/25 = $150,000

AB 5 years into the plan = $150,000 * 5/30 = $25,000 (thus, less than the 30K produced by the unit accrual formula)

So, again, in a situation with a certain benefit being targeted to a person or persons who would have less than 25 YOP at NRD, it would seem a plan in which there are other employees with potential for YOP > 25 at NRD would be best designed with a fractional accrual formula such as above. Thoughts? Calling Mike Preston....

I notice that the IP address appears only on some forums. For instnace, it appears on IRAs, but not on SEPs and SIMPLEs.

How can I prevent my IP address from being shown on my posts?

If an entity if a covered entity under HIPAA and has an known operational error that results in violations of HIPAA so that criminal penalties are appropriate, who in the entity would be subject to serving prison time? For example, assume a health plan has an automated system that sends claims information to participants but this system is somehow flawed so that a number of claims are sent to the wrong address. The managment of the entity knows about this problem, but doesn't fit it because of a high cost. Who is going to be subject to the prison time if that penalty is applied?

Company A (daily plan) buys company B (periodic plan). The final valuation date for the Co. B periodic plan is 6/30/03. However, the final valuation won't be complete until some date in August probably.

1) Should the assets be transferred on 6/30 and held in a money market account until the valuation is done, and then transfer the assets into individual accounts?

2) Or is it better to keep the assets where they are until the valuation is done, and transfer the assets in the middle of the quarter?

It looks like there will be a black-out period for those assets in either case. Is there any way around that?

Fact set:

Plan Year July 1 - June 30.

Distribution to terminated EE occurs in August.

ER decides to terminate plan on February 28.

Forfeitures are added to ER contributions and allocated as of the next valuation date. Plan has annual valuations.

Does the EE become 100% vested because the plan termination is in the same Plan Year during which the participant received a distribution? Or, is the forfeiture reallocated to other participants because the EE received the vested portion of his/her plan balance before the decision to terminate the plan was made?

PEO sponsors individually designed single employer plan. PEO wishes to comply with Rev Proc 2002-21 and decides to convert to a multiple employer plan. PEO also wants to adopt prototype plan in place of individually designed plan.

PEO intends to amend current plan to convert it to multiple employer plan prior to May 2 deadline. If PEO adopts prototype multiple employer plan after May 2 and before the end of the year must it request a determination letter as required by Rev Proc 2002-21 with respect to the current plan or the prototype plan?

Can an employer who pays a matching contribution during 2003 deduct this contribution on their 2003 return if it pertains to the 2002 plan year?

The employer decided on making a 2002 matching contribution after they filed their 2002 return without extension.

I know employer contributions are deductible in the year paid, but would compensation earned and deferral contributions made have to pertain to the same tax year?

We have a client who will be applying to the IRS for a letter ruling relating to the exception to the 60 day rollover rule. We don't believe she qualifies under the automatic exception.

As of today, the assets are not in an IRA account. We are wondering if we should put the assets into the IRA now, or leave them where they are until we get an answer from the IRS.

An employee receives $300 per month as "Car Allowance" - can they make deferral contributions on this money that is included in their regular paycheck.

The plan document defines compensation as

"...shall mean wages within the meaning of Section 3401(a) and all other payments of compensation to an Employee by the Employer (in the course of the Employer's trade or business) for which the Employer is required to furnish the Employee a written statement under Sections 6041(d), 6051(a)(3) and 6052 of the Code (wages, tips and other compensation as reported on Form W-2).

Compensation must be determined without regard to any rules under Section 3401(a) of the Code that limit the remuneration included in wages based on the nature or location of the employment of the services performed.

Compensation shall also include elective contributions made on behalf of a Participant to this Plan or salary reduction contribution made pursuant to a plan described in Section 125 of the Code."

I'm not sure if this would fall under the "working condition benefit" mentioned in the ERISA Outline Book, which is non-taxable.

Thanks for any input!

Has anyone seen a good sample policy and procedure document (preferably free) that addresses internal compliance or a sample employee consent document for HIPPA? If so, can you provide the website?

Thanks.