We have a multiemployer plan that uses a large bank as its "directed trustee." The bank maintains custody of the assets and provides the daily valuation software. This is a participant directed DC plan (with a negotiated hourly contribution rate). Although participant directed, the plan is not 404© compliant, nor does the SPD claim compliance.

When this plan was established in the mid-1990's the trustees opted to include the bank's stock as one of the eight or nine investment alternatives. Due to the relatively stable performance of the stock over the last few years, approximately 50% of

all plan assets are in that single security.

My (conservative) view is that this creates a serious diversification problem. Moreover, as the plan is not 404© compliant it seems the trustees would be "on the hook" if this

stock were to pull an Enron, WorldCom, etc.

We met with one of the bank's ERISA attorneys to address this issue. He indicated that this would not be a diversification problem since the stock has a long history of stable performance versus the S&P 500. He also argued that by making the actual decision to allocate their assets the stock, the participants would have great difficulty in stating a claim against the fiduciaries.

While this explanation made the administrator feel better, I know that the bank is not fiduciarily responsible for investing the participant contributions. I am also concerned about the inherent conflict in relying on a bank's attorney to provide advice about his employer's stock. I would appreciate knowing where others stand on this situation.

As long as I've been involved with the insurance plans, our plan year has been 11/1 to 10/31. But our 5500 shows the plan year as 10/1 to 9/30, except some of the Sch A's show the right year. I was told that at some point in the past, the plan year actually was 10/1 to 9/30, but since it isn't anymore, is there anything we can do to fix this so it's all correct in the future?

I am thinking that if it had been done properly back when the plan actually changed then a short plan year 5500 could have been filed for the one month, and then changed to the correct plan year from then on. But how do we do that now, since the change happened so long ago?

At least two PLRs (9608042 and 9418034) allow a spouse who is the beneficiary of a qualified plan to transfer the benefits to a beneficiary IRA (rather than rolling the benefits over into his/her own IRA).

I cannot think of any logical reason that the result should depend upon whether the beneficiary is the spouse. However, I have not found any authority one way or the other. Does anyone know of any authority either way as to whether a non-spouse beneficiary can do this.

In PLR 200244023, the beneficiary of a terminating plan took the benefits in the form of an annuity. Perhaps if the beneficiary IRA were permissible, the beneficiary would have done that instead. But it's possible the beneficiary in that case did not consider that possibility.

Okay, let's say an terminated employee elects COBRA (medical and dental) for himself and his family. Then decides he only wants dental for his family, so he calls and verbally cancels the medical plan effective 3/1/03. He then decides mid month that he wants to keep the coverage, but only for his children. The employer has not paid their portion to the insurer and the employee's grace period for payment has not been met. Can the employer reinstate the coverage?

If an employer self-insures a medical plan (such as dental benefits) but charges the employees a cost, which is paid through salary reduction contributions through a cafeteria plan, are the employee contributions "plan assets" that must be held in trust, or are they exempt from the trust requirement under the DOL Technical Release?

The benefits to be provided are just like those under dental insurance - such as orthodonture, exams - and benefits are not limited to the amount of employee contributioins.

My client has a 12/31 year end, so does its 401K PSP. An extension for filing the tax return was not filed. Client sent a contribution to the Trustee, and it was received 3/14 (Friday). The check has not yet been deposited to the trust.

When is the contribution "made?" Is is made when the check is sent, when it is received by the Trustee, or when it is deposited into the trust?

Thanks!

Has anyone seen a report that could possibly list all plans and their total value as of a certain date? I've been bouncing this idea around in my head for a while, and I'm not sure that it is doable, at least reasonably. If you did it through Crystal, you could generate it in Crystal, but you would still have to have the data for all plans in the temporary tables and that wouldn't be practical when you are talking about alot of plans.

Anyone have any thoughts on this?

Tim

What are the options for a plan that is terminating, with life insurance policies that has CSV accumulated?

1)surrender CSV and take as cash? I thought I read somewhere surrendered CSV cannot be rolled over.

2) Assume the life insurance policy as an individual policy? What happens to the csv from the plan? How is it treated as a distribution? Lump sum?

Thanks.

These are pretty new to me so I had a couple of basic issues I am not clear on yet:

Does the employer have to allow a carry over year to year or can the employer apply a "use it or lose it" policy?

Can the employer set different amounts of reimbursement for singles vs. employees with dependents?

I have a client who is telling me that her doctor has recommended that she get liposuction done because she is out of proportion. She is very small up top and larger around her waist area. I have a feeling she can't get reimbursed even though she has a doctor's note and recommendation, but please let me know if I am correct.

A 401(k) plan allows both 401(k) and after-tax contributions and matches the first 3% of such contributions. If a participant's 401(k) contributions reach the 402(g) limit, then the participant is deemed to have elected to make after-tax contributions from that point until the 401(a)(17) compensation limit is reached. In 2002, the plan allowed for catch-up contributions. A review of some eligible participants' contributions shows that, for some of these participants, the attempted "catch-up" contribution was made on an after-tax basis. Although it is possible to recharacterize a 401(k) contribution into an after-tax contribution, the reverse is not necessarily true. Does anyone have any thoughts on how this can be corrected?

What was the pre-1997 statute of limitations for medicare reimbursement claims? For some reason I had it in my head that the statute of limitations mirrored the claims filing requirement under the plan. Is this correct? If so, where can I find the authority?

I've been searching thru the messages and it appears to me that Indian Tribes are considered "governmental" for ERISA purposes and therefore no 5500 needs to be done (message of 5/19/00). We have a 401(k) plan that we took over. They have an ERISA doc but the old TPA never filed a 5500 or did a val. They really only tracked the loans.

Is this reporting matter (5500) still a "grey" area or has anyone see anything recently that clarifies the reporting requirements?

Thanks for any input!

I have a Client who has a Money Purchase plan. They recently established a Simple plan (recommended by their CPA). I told them that they cannot establish a simple plan in conjunction with another qualified plan. The question now is what do they do? My thought is that they need to terminate the Simple plan and distribute the deferrals made to it and report it as taxable income. Is there anything else I am missing? Are there any other ramifications?

Thanks

As a TPA when a Change of Status is received from the client's HR Dept. for an employee making a change such as reducing their premium account and medical reimbursement account due to "Spouse's change in employment status"... do you require that HR person to provide proof or documentation of that change (in this case spouse's new employment) or do you make the assumption that because the HR person signs the COS also that they have the needed "proof" on file????? :confused:

An HCE received distribution due to ADP failure for year 2002. The distribution was paid before 3/15/03. She is doing her taxes for 2002 and wants to include the distribution. I've found in 1040 instructions that you include it on Line 7 but she won't have a 1099 (with code P) until January 2004. Is that a problem? Does she have to wait for the 1099 and then do amended 1040? Thanks in advance.

Have a PS plan, that excludes bonuses, commissions, and overtime. Three separate "check" boxes in the adoption agreement. They fail the testing this year by excluding bonuses, but would pass if you include bonuses. The plan is silent on the correction method if you fail.

Two schools of thought here. One is that you could do a retroactive amendment under 1.401(a)(4)-11(g) to include bonuses, you pass, end of problem.

Another is that absent specific plan language, you would automatically have to "revert" to total compensation. And that therefore any retroactive amendment that would limit compensation at all, as with first method(because overtime and commissions would still be excluded) is a cutback and you can't do it.

I'm leaning toward the first interpretation, which seems more reasonable, but I'd appreciate any thoughts on this. Thanks.!

so a guy wants a hardship withdrawal for purchase of his primary residence. the catch is that the residence will be shared with his sister and brother in law and it will be in their names, not his. does this qualify? its his primary residence, so i would think its ok.

Is it OK in a Profit Sharing Plan to set the Normal Retirement Age (NRA) at 40. The reason we would like to do this is to give the ability to all participants to take an in-service-distribution at NRA.

If it is not OK, then what is the earliest I can set NRA at?

Does any one know the definition of a financial institution as it would pertain to Rev Proc 2003-16? Wondering if the definition includes recordkeepers.