If an employer implements a voluntary early retirement policy for a specified period of time (8 years) with the intent to terminate the policy at that time (or anytime prior if it desires), is this policy/program subject to ERISA? Any cites/authorities would be greatly appreciated! Alternatively, is there a specific way such a policy can be drafted so that ERISA is not implicated?

Thank you

Are there updated plan documents available for non qualified deferred compensation plans?

Various research materials indicate that a Health FSA can be 100% employer funded. Can the Health FSA document define and limit the expenses to be reimbursed? For example, could the plan say that the first $1,000 of out of pocket expenses due to hospitalization are reimbursable by the plan? (All other medical expenses would not be reimbursable by the plan.) The employer does not want any carryover provisions (that an HRA plan could provide.)

The other option would be to use an HRA document and specify no carryovers. Client would prefer this to be part of the existing 125 arrangement and not a separate HRA.

Since beginning work at the university a group of faculty members also began work at a related 501©(3) organization, and received compensation from both employers. The "dual" employees will soon leave the 501©(3) and become 100% university employees. Their university compensation in the future will equal 100% of their present combined compensation from the university and the 501©(3).

The state teachers' retirement system has told us the faculty members will retain their creditable years of service for purposes of calculating retirement benefits. But, without the faculty members buying enhanced benefits, the compensation on which their retirement benefits will be calculated will be proportionately equal to the ratio of their university compensation to total combined compensation, calculated immediately before their move to the university.

I read PLR 200229051, which said that a voluntary purchase of enhanced benefits would not come under 415(n). The benefit would be equal to 2% for each year of service, up to 80% of compensation. As understand it, the reason given by the IRS was that the enhanced benefits related to years for which service credits were already been received, and this is not allowed under 415(n)(3)(A)(ii).

But the ruling doesn't say what the effect would be if a participant made a voluntary contribution to purchase enhanced benefits. Can someone help me out with the effect? Does it mean that the plan must meet 415©, and can't use 415(B) [as would normally be available when voluntary contributions are made to purchase permissive service credits]? Any other effect?

There are a couple of possible sources of funds for the purchase - aftertax cash and rollovers of qualifying distributions from existing 403(B) accounts (the 501©(3) doesn't sponsor either a 403(B) or a 457(B) plan). I assume trustee-to-trustee transfers from 403(B) and 457(B) accounts would not be available because the enhanced benefits do not meet the definition of permissive service credits. Correct?

Thanks,

Ken Davis

Univ. of South Alabama

A participant has 2 complete plan years of compensation. They earned $500 and $19500 respectively for compensation. The hours worked were 100 and 2080 (part time in the first year for the sake of argument).

The plan requires 1000 hours for a year of accrual. Therefore, the participant has only 1 year of accrual.

Can the plan 'legally' have the average compensation be equal to $10000 ($500 + $19500 / 2) for benefit purposes???

I can not find anything to prevent it but it just 'smells' funny. The average would be $10000 for 415 because it just looks at how many years exist and not hours.

I have pretty much convinced myself that it is permissible but I just don't like it (sorry for the personal opinion)

Thanks for any and all comments.

I am attempting to find out whether a plan covering employees in Ohio may use automatic enrollment. Given the DOL's continued silence on whether state wage and hour laws that impact deferrals through automatic enrollment are preempted, I am investigating what Ohio laws, if any, would prohibit automatic enrollment. Does anyone have any information on Ohio's stance as to whether automatic enrollment is permitted?

I posted a link to a discussion/analysis of 412(i) plans a few weeks ago. We are looking for more analysis. Can anybody point to any?

We're trying to find a way to see through the smoke and mirrors.

I have a client whose 1996 5500 filing showed plan number 003 (Money Purchase Plan). The plan was amended to an ESOP and the prior recordkeeper files the 1997 5500 as plan number 005. The 005 plan number has been used since 1997.

BOTH determination letters issued 6/23/1997 and 2/11/2000 reflect the 004 plan number.

The plan was audited by the IRS (they said nothing).

What should we do?

(Perhaps make the change on the 5500 question #4?)

I have read that if an employee separates from employment during the first two years of participation in an employer's Simple IRA plan, the IRA maintains its status as an IRA, and apparently no longer is a Simple IRA. This was found in a commentary related to Notice 98-4, Q&A I-3, related to the restrictions on distributions from a Simple IRA during the employee's first two years of participation in a Simple IRA. Can a former participant in a Simple IRA plan roll his IRA account into his new employer's 401k plan (assuming the 401k plan accepts these rollovers) even if it is within the two year period?

Employer allows HCE to defer from his year end bonus but does not allow staff employees to defer from their year end bonuses. Obviously, this is discriminatory but what corrections can be made, if any.

I have a client with a M/P plan and a 401(k) plan. Do I still need to combine the contributions to do the 415 testing?

I have a situation where an individual owns 100% of a restaurant, and 79% of a second restaurant. He sold the assets of the first restaurant, and retains ownership of the corporation. IMHO, this does not constitute a controlled group because it fails the 80% common ownership test, although the 50% identical ownership test is met.

However, one company pays fees to the other. (100% to 79%) - does this constitute an affiliated service group?

Hello,

My name is Steve Tippins, I am a professor at Roosevelt University in Chicago and I teach employee benefits. I have been approached by a dear friend who is COO of a company that would like to convert from a defined benefit plan to a cash balance plan. He has asked me to recommend someone as a consultant who has done this many times.

If you have any interest in consulting on aomething like this or know of someone who would please contact me.

Thank you,

Steve Tippins

Some of the classic artists have re-released their greatest hits with lyrics to accommodate their aging audience.

Some examples:

Herman's Hermits- "Mrs. Brown You've Got a Lovely Walker"

The Rolling Stones- "You Can't Always Pee When You Want"

Paul Simon- "Fifty Ways to Lose Your Liver"

Carly Simon- "You're So Varicose Vein"

The Bee Gees- "How Can You Mend a Broken Hip"

Roberta Flack- "The First Time Ever I Forgot Your Face"

Johnny Nash- "I Can't See Clearly Now"

The Temptations- "Papa's Got a Kidney Stone"

Nancy Sinatra- "These Boots Are Made for Bunions"

Abba- "Denture Queen"

Leo Sayer- "You Make Me Feel Like Napping"

Commodores- "Once, Twice, Three Trips to the Bathroom"

Procol Harem- "A Whiter Shade of Hair"

Steely Dan- "Rikki Don't Lose That Clapper"

Credence Clearwater Revival- "Bad Prune Rising"

Marvin Gaye- "I Heard It Through the Grape Nuts"

The Who- "Talkin 'Bout My Medication"

... and everybody's favorite,

The Beatles- "I Get By with a Little Help From Depends"

A fairly simple question, but I am getting conflicting answers. Can someone please verify and give me the correct answer.

The plan year I am testing is 10/1/01 - 9/30/02.....are catch-up's even allow for that time period. My opinion is that catch-ups were not even available when this plan year started, therefore they would not be allow until the 10/1/02 - 9/30/03 year.

Thanks.

I have a client who retired from a Fortune 500 company in the middle of the year. When the company calculated her pension benefit, they prorated the section 401(a)(17) compensation limit for her last year. Even though she made less than the $170,000 limit for 2001, because of the prorated limit based on her mid year termination date, a portion of her pension was excluded from the qualified pension fund. Is this allowable?

Steve

As a TPA we've always taken the approach that if an HCE is required to get a refund due to an ADP failure, that if there is any match associated to the ADP refund we forfeit this match. I know there is an opposing view to this but we've felt more comfortable forfeiting the match.

This was never a problem under are TRA 86 document which did not allow for pay period match. Now with the GUST restatment many plan's use the pay period match.

I don't see a way to determine the match forfeiture for an ADP failure if the match is done on a pay period basis other than to base it on the whole year.

Could someone please tell me where I can pull a copy of Revenue Code Section 72(m)7? Everywhere I've looked I cannot find it.

Thanks

We are trying to determine if non-qualified deferred compensation should be included in determining if someone is a highly-compensated employee for FSA testing purposes. I do not think so but I wanted confirmation. Any thoughts?