New IRS regulations re calculation of earnings on excess IRA contributions make reference to IRAs that are "normally valued on a daily basis." Assuming that there is nothing in the IRA's governing document that addresses the timing of valuations. how is it determined whether or not an IRA is "normally valued on a daily basis"? Does the IRA custodian's ability to determine today's valuation today make an IRA "normally valued on a daily basis" even if the custodian does not actually capture valuation information for the IRA between the dates of statements or actual transactions?

Is there a reference point for defining the term "daily valuation" in the IRA context? Does the term really mean anything?

Our office is in the process of creating a 412(i) procedural list for implementing 412(i) plans. We are seeking any suggestions, specifically concerning the following:

1. The advantages / disadvantages of establishing the plan on a beginning or end of year valuation date?

2. Can the plan be established in mid-year, and if so, can compensation be used for the entire plan year?

3. Can the annuity and/or insurance premiums be paid quarterly or must they be annual?

I appreciate your input!

Richard

Are 457 plans required to issue a summary plan description to its participants ?

I would think not, because a 457 is not an ERISA plan.

However, how is the plan supposed to educate a participant as to what a 457 is, how a 457 works, and the participant's rights in a 457 ?

I have a leveraged ESOP client with a matching contribution feature. I'm hoping that someone can consider my thinking about the scenario below and tell me if I'm going about this in an appropriate manner. The facts are as follows:

The matching contribution (50% of salary deferrals) for the year is $50,000.

During the plan year, cash contributions of $50,000 were made to the plan.

Of the $50,000 contributed, $40,000 was used to make the payment on the ESOP loan.

There were 1,000 shares released from suspense by the loan payment.

The share price at the end of the year was determined to be $35/sh.

The end of year allocation will be $10,000 in cash and the 1,000 shares.

Because the FMV of the allocation at the end of the year is only $45,000, has the employer satisfied it's matching formula? I know that as far as their deduction goes, they've contributed $50,000, but how do I reconcille the fact that the FMV of what was allocated is $5,000 less than this?

Thanks for any input.

A plan failed to get a required audit performed for the 2000 and 2001 plan years. Due to sales of certain divisions of the company, adequate records do not exist to audit the financial statements for the related periods. What are their options, if any?

There is no doubt that 457(b) governmental plans come with a fiduciary responsibility. My question is where an employer should look to find a framework for this responsibility - should they look to ERISA? If so are they bound by that, meaning could they be sued for breach of fidcuciary responsibility under ERISA type topics even though they aren't technically covered by ERISA? How does an employer specifically define the Fidcuciary responsibilities it has and how do they document that they followed specific procedures related to that responsibility?

Next, suppose a district offered a 457(b) with 4 options, 2 options paid an upfront commission, 1 paid an ongoing fee to an advisor via AUM, another didn't compensate an agent at all. The districts contracts exclusively with agents to educate participants on their investment choices and it is highly unlikely the agents will disclose or sell the "no-load" option. My question is won't the agent, who under ERISA would be a fiduciary, breach his/her fiduciary duty everytime he recommends a commission/fee option over the no-load option because of "Prohibited Transaction Rules?" The agent benefits by recommending one option over the other which clearly creates a conflict, it seems to me that this is a breach, if it isn't why not and isn't it a breach under ERISA? Wouldn't this create a strong case for an employer to use a single vendor or only vendors who have the exact same compensation structure?

Thanks for the help - I see this as a situation that will be coming up a lot in the future.

ScottyD

I can't seem to get to the SOA site that has the month end Moody's Aa interest rates. Is there another site I can go to, or can anyone help me find out the rate for May?

Not a QDRO, but seemed like the right message board.

We have an employer that received a QMCSO, but the named participant is the spouse of an employee. Looking at ERISA Section 609(a) and the regs, it does not appear that a QMCSO must specifically name an employee (vs. a non-employee participant) to be valid. However, the National Medical Support Notice provided in the regs appears to contemplate that QMCSO's apply when an employee is named in the order, and that naming the spouse of an employee would not obligate the plan to comply with the order.

Has anyone run across this type of situation? Any citiation to authority on this?

A plan document is (mistakenly) amended to exclude union employees from participating in the plan. Only one union employee was participating at the time of the amendment and his status was not changed to "ineligible." Therefore he kept participating.

Under Rev. Proc. 2001-17, when an ineligible employee (due to minimum age and service requirements) participates, the plan can be retroactively amended to change the age and service requirements so that the employee (and all like situated employees) can participate.

Can the plan also be amended when the employee who participated is a member of an excluded class (i.e., retroactively amend the plan to allow union employees to participate)?

A plan document is (mistakenly) amended to exclude union employees from participating in the plan. Only one union employee was participating at the time of the amendment and his status was not changed to "ineligible." Therefore he kept participating.

Under Rev. Proc. 2001-17, when an ineligible employee (due to minimum age and service requirements) participates, the plan can be retroactively amended to change the age and service requirements so that the employee (and all like situated employees) can participate.

Can the plan also be amended when the employee who participated is a member of an excluded class (i.e., retroactively amend the plan to allow union employees to participate)?

Excuse me if this has been asked before -

A safe harbor plan will be deemed to satisfy top heavy if the only employer contributions made are those needed to satisfy the S-H requirement (and no reallocated forfeitures).

What if the additional contribution is the top heavy minimum? Assume the plan is top heavy for the 2003 plan year. The top heavy minimum is made in 2004. The employer wants to go S-H for the 2004 plan year. Will the top heavy minimum contribution made in 2004 prevent the plan from being deemed to satisfy top heavy in 2004? And so on ...

can a person roll his Roth IRA into a qualified plan if the plan permits?

Our firm recently received BISYS' Type II SAS 70 Report for the year ended December 31, 2002, which we were hoping to rely on to reduce participant testwork. Although the opinion was "clean", the report of independent accountants also stated that: "BISYS Retirement Services, L.P. was in the process of converting all recordkeeping to the WySTAR application and retiring the CASCADE System. Our examination did not extend to controls and related control objectives that were specific to the CASCADE recordkeeping application."

Because the CASCADE system was used for most of 2002, our firm believes that the SAS 70 report serves only to document controls at BISYS and cannot be used to reduce participant testwork. This would include testing the investment elections (which can be changed via the telephone and internet) and the allocation of investment gains/losses to participants.

Has anyone else received this report from BISYS and how did you deal with it??

A company where the bylaws restrict ownership of company stock to company employees and the ESOP, states in its benefit election forms that the ESOP will distribute the participant's interest entirely in the form of company stock, and that the participant will be required to sell to the company the shares that will be distributed to him, under the fair valuation formula for the year as determined by the ESOP's independent appraiser. (The form also contains a portion in which the participant can elect to make a "direct rollover" and contains spaces for the participant to set forth the name of the qualified plan or IRA trustee to receive such a "direct rollover.") Can a participant who receives a distribution per this form, in fact ever make a "direct rollover" under 401(a)(31) of the cash that he receives on this "automatic" sale? (If so, what is the authority for that position? Cites?) If not, can he rollover the proceeds from the sale of the stock to an IRA or another qualified plan that accepts rollovers, per 402©(6)? (It does not sound from the wording on the form, that the ESOP is going to actually be distributing any shares of stock. If it did, then maybe the participant could have his IRA trustee acquire the stock in a "direct rollover," thus avoiding any withholding, with the IRA trustee then simultaneously selling back the stock to the company.) I guess I'm a bit confused as to whether a "direct rollover" under 401(a)(31) is an option at all here, since it sounds like the employee is forced to "receive" the stock in a distribution taxable under 401 and 72, and then simultaneously "sell" the stock to the company.) Thanks for any help!

A cash balance has a higher interest credit for active employees than for former employees. In other words, it is partially backloaded. (The Contribution Credits are a percent of salary).

Both for purposes of measuring the ABO under FASB #87, and the current liability for ERISA purposes, in my opinion, it is appropriate to roll forward the balance at the lower rate (i.e the rate for inactives). Basically my reasoning is that the additional Interest Credit, like future Contribution Credits, has not yet been earned by the employee, who must perform future service for the employer before he is entitled to the additional Interest Credit. Therefore the additional Interest Credit should not be included in valuing the accrued benefit.

I have heard other actuaries express opinion on both sides of this question. I am curious about what interpretations other people are using, and whether the FASB or IRS has commented on the question.

I am the privacy officer for an employer that sponsors' a self-insured health plan. The current practice for budgeting for H&W is to provide estimated individual employee cost to the budgeting mangers to calculate their budgets for the coming year. My interpretion of HIPAA privacy rules (minimum necessary) has me questioning my company's current practice. However, I am getting a major push back from our accounting dept. and managers to "show me" where in HIPAA does it state we can not provide employee coverage levels (single, couple, family) cost to managers to perform their budgeting duties. Can you offer any guidance on this issue?

Note: The coverage level information comes from an ORACLE software based system that we use for benefits enrollment and payroll. The coming year cost are calculated by TPA vendor underwriters for the health plans.

I have a question regarding rights for a death caused by a negligent staff.

My sister-in-laws's father died recently. The staff did not respond when he was having a problem. He asphyxiated, had a stroke and died shortly thereafter. (Sorry so vague - I don't have all of the details.) Her mother is receiving hospital bills and the family doesn't believe she should have to pay - at least for the time he was in intensive care. They are in touch with an attorney and currently he is advising them not to pay.

My advice was to talk to the insurance company and have them investigate the surroundings of his death. Would this be correct?

Also, the mother really isn't interested in sueing & making money off of this. She just wants the hospital to have stricter guidelines/disciplines so that this doesn't happen to someone else. It seems to me money talks and that may be the only way to get them to take better care of their patients. Are there other ways to go about this?

Any other words of wisdom for these situations would be appreciated.

I posted this topic in the general retirement plans area and have received no replies. Thought I might get more readers here. . .

We have a client with a DB plan that will be frozen and a 401(k) plan with deferrals only-no match, no profit sharing. The plans cover the same employees, including 2 key employees. The 2 key employees are also the only 2 HCEs.

One of the key employees is receiving a life only annuity benefit from the DB plan, but continues to be employed. He has elected not to defer in the 401(k) plan, and, in fact, has no 401(k) plan balance. The other key employee is younger and is currently defering in the 401(k).

The plans are aggregated for top heavy determination and are top heavy. Since EGTRRA, we no longer have to count service while the DB plan is frozen for top heavy purposes. If the plans are written to provide the top heavy minimum in the 401(k), at the required lesser of 5% or the highest contribution rate for any key employee, and both key employees have elected to defer 0%, are we then required to provide a top heavy minimum in the DB, even though it is frozen, and would we then have to count years when the DB plan is frozen since otherwise, none of the nonkey would accrue additional benefits?

If so, since the goal is to avoid providing the top heavy minimum, can we amend the 401(k) plan to make key employees ineligible, thus avoiding having to combine the plans for testing, and then provide the top heavy minimum, if necessary, in both plans? There would be no minimum in the 401(k), and none in the DB since non-key employees have already accrued the required top heavy minimum.

Any comments would be appreciated.

I am looking for decisions (after 1995) awarding $100 or $110/day penalty for failure to provide records to a plan particpant in circumstances of concealment and gross breach of fiduciary duty by plan administrator.

Less than 3 years service, 20% vested. Accrued balance did not become nonforfeitable when plan terminated early. Why did ERISA Sec. 411 not apply? What would have happened to the 80% balance not paid out?