We are having more and more participants who are going on military leave. I am aware of the requirements - no break in service, how to calculate make-up contr's, etc....

However, I am not sure how to handle these participants while they are away. Since they can not have a break in service, how are they to be reflected on the reports?... I'm thinking that in the year of deployment, they would be reflected as a terminee and included in any compliance tests applicable. For subsequent years, they would not be included in any compliance tests. Upon return, they would again be included in compliance tests (make-up contr's of course would be disregarded in 404, 402(g), catch-up, 415 for year actually made, but would be subject to years for which they are attributed.)

Your thoughts and procedures on this issue are greatly appreciated.

Thanks!

Is it permissable to forfeit rather than distribute very small account balances, (e.g. $15 or $20)?

In this situation, cost to employer of processing the check is $15, though this is not charged against the participant's account. So, the employer could be paying more to the TPA than the employee will receive.

I know that under the IRS correction programs, an employer need not make small corrections, but I am not aware of anything that allows the employer to forfeit very small accounts rather than distribute

Would your answer be different if the balance in the account, however tiny, represented 401(k) or other participant contributions?

Thanks!

A client maintains a 401(k) plan with some grandfathered participant accounts containing "esoteric" (but permissible) assets from way back when. Current recordkeeper and trustee don't much care for this stuff and would clearly like to see it all out of the plan ASAP.

The proposal is to amend the plan to permit these assets to be distributed in kind. The one twist is that the participants whose accounts hold these assets are uniformly highly-compensated, although there are a relatively small number of them at this point (maybe 1-2% of the participant population).

I suppose we need to check the numbers to ensure that we don't run into any 401(a)(4) issues here, but can anyone think of any other landmines in this situation?

Thanks!

I am currently enrolled in Mississippi's PERS (Public Employees Retirement System). I believe it is a 401a plan. Our city is attempting to privatize all public works operations, which would likely mean a 401k plan under a contractor. Our wonderful city manager is telling us that our benefits will be just as good. Can someone briefly describe the differences in a 401a vs 401k? Are 401a plans "safer" or guaranteed in some way? Which is better? Thanks in advance!!

We are a TPA firm with 15-20 employees and have been using ASC for a few years. We are considering other administration software and the front-runner is Relius. Ideally, I'd like to hear from someone who has switched from ASC to Relius. Any comments/suggestions you might have regarding the Relius program would be greatly appreciated.

I am trying to set up a DB/DC combo plan. There are two HCEs, one over 70 and one in early 30s. There are 8 NHCEs ages 23 - 67. One of the HCEs is 100% owner and he wants to participate in both plans. The DC plan is X-tested PS and the DB plan excludes the youngest empoyees and provides a 2% of comp benefit for the older employees while giving the owner as much as he can get considering the 404(a)(7) limit. The combined ebars pass the rate group test and avg. bfts test. Does the DB plan have to pass the rate group test and avg. bfts test on its own??? Thanks.

This is about an ESOP plan which had made contributions years ago, so it has a number of participants with more than 10 years of service. The ESOP first started to make contributions after 1987 in 1998. For a participant who meets the requirements of age and participation but has no eligible contributions to diversify, does their QEP actually start the year of their first new contributions? So would 1998 be Year 1? There is another participant who received his first post 1987 contributions in 2000 at age 60 with over 10 years participation. Would 2000 be the actual first year of his QEP?

Thank you

If you have a failed ADP test and the only correction available is to refund deferrals to the HCE's, do you have to rerun the ACP test once the corresponding match contributions have also been refunded/forfeited as the case may be?

I have a client who has not contributed the required top heavy contribution for 2001 or 2002. in addition the w-2 reports that the nhce contributed $4,081. However only $693 made it into the plan. the hce's w-2 shows a $6,327 contribution, however only $1,818 made it into the plan.

besides the qualification issue for failure to make the top heavy contribution, what other problems can we expect?

thanks

If in following the matching formula for a 401(K) plan, a NHCE receives excess match, does this excess get counted in the ADP/ACP?

Are visits and food you purchase at a weight clinic allowed for reimbursement through the cafeteria plan?

How does one calculate orphaned matching contributions (following return of ADP excess contributions) if the plan contributes matching contributions more frequently than annually and no true-up?

For example, calendar year plan, match contributed quarterly, match formula 25% up to 8% of pay. HCE contributes up to 402(g) limit in final quarter (say 24% of pay during quarter or $50k). For ADP testing, his ADP is 6%, but needs to be cut back to 5% ($2,000). If he instead contributed the 6% of pay throughout the year, the forfeited match is 25% of $2000. However, since the $2,000 was contributed in the final quarter, it was not matched since greater than 8% of pay.

It seems obvious in this example, he shouldn't be required to forfeit any match since the returned deferrals were not actually matched. But, this would require an accumulation of deferrals not matched during each allocation period (even if the allocation period is per payroll period) to determine if returned deferrals exceeded this accumulation. Is this correct?

Re information that MUST be provided to a participant if a Plan is intended to be a 404© Plan:

One requirement is that a copy of the most recent prospectus is provided either immediately before or after investment if the investment is subject to the Securities Act of 1933.

How are sponsors and advisors managing this requirement - handing a stack of fund prospecti to each participant or making them available and easily accessible during enrollment and other times?

Plan has a participant that gets annual MRD. Participant is still actively working with the employer.

MRD was calculated and transmitted to Employer to have withdrawn from investment accounts. Monies were distributed from the investment company on 12/31/2002, but participant did not receive the monies until 1/3/03.

Questions, does the participant get assessed the MRD penalties even though she still works and/or the monies were out of the plan by the end of the year?

Also, does she receive a 1099R for 2002, even though she did not receive the monies until 2003?

Thanks.

A new 401(k) has an Age 21/Year of Service eligibility that was waived for anyone who was employed on March 31 -- the effective date of the plan. The plan has failed its ADP testing (testing statutorily excluded employees separately).

If the Employer opts to correct w/QNEC, are only ee's w/year of svc & age 21 eligible? How about if Employer opts to only give QNEC to ee's who deferred (a document option)? The document does not address this issue. It only definitively excludes ee's not employed at the end of the plan year. (FYI - It is a Corbel Volume Submitter.) Having to include the excludable ee's will obviously drive up the total cost of the QNEC.

On a related note - what is the current word on a bottoms-up QNEC? Legal today?

What is a reasonable time for a company to update information with the insurance company? What if a company accepts 3 COBRA payments with a fourth on the way and then something happens and the individual learns they do not have coverage with the insurance company though they paid the premiums?

Also, who should the recieve the EOB's? The Ex (who is the insurance primary person) or the ex-spouse who now pays there entire premium on there own? I would think the EOB goes to the person paying and recieving treatment NOT the ex spouse who was the primary.

It seems to me that a majority of health plans will have an additional year (i.e., until April 14, 2004) to comply with the HIPAA Privacy Rule because they are fully insured and the premiums for the prior year did not exceed $5 million (it would be quite the large plan that pays more than $5 million in premiums). What does everyone else think?

Suppose an employer sponsors a fully insured medical plan and a fully insured dental plan. In determining whether the medical plan (which I believe is a separate covered entity from the dental plan - although they may be part of an organized health care arrangement) is a "small" plan, would you only consider premiums paid for the medical plan or would you also include the dental plan premiums?

To All,

I recently got layed off (before Christmas) by my former company after 15 years of service. I was given a severance of 15 weeks starting January 1, 2003. There is a good chance I may rehire (say, April 1, 2003) with the same company under a different position. They will bridge my benefits, allowing me to keep my 15 years seniority and benefits.

Is it customary for a company who rehires a former employee and bridges the benefits, to demand repayment of any "unused" severance? I would appreciate your thoughts on this matter. BTW, they made a lump sum payment of severance in January 2003.

Thank you,

DevoFan

Can a participant in a 401(k) plan direct the investment of employer contributions that are subject to a vesting schedule? My employer, the plan sponsor and trustee, says no, but I know people who can do this in their plans. Where does it say this is legal?

Looking for guidance on the calc. of compensation for a sole prop. to allocate a discret. cont in an age-wtd. PSP. I have used Ideal Sal. feature for non age-wtd. plan, but I/S doesn't work with age-wtd. I have the client's tax forms Sch C & SE (before contrib.).