A privately-held CPA firm wants to provide pension/ERISA consulting and investment advisory services to audit clients. My understanding is that providing these services to non-audit clients is okay. Providing these to audit clients may be problematic.

Would ERISA consulting be considered "expert services" under the ACT?

Is it true the provisions of the ACT would only apply to clients that are publically-traded companies?

Any input is desired.

In an earlier question, I asked if the trustees of a governmental plan (specifically, the DB plan of the municipality's Police Officers and Firefighters) can use part of the plan's overfunded surplus to make a COLA increase to the retirees' health insurance coverage without also having to give the same stipend to the current participants. Thanks to your responses and research, I know that they can do this. Now I need to know whether:

(a) the Trustees would have an obligation to listen (and, perhaps, to bow) to current participants if they were to object to such an allocation; and

(B) whether the Trustees could turn a deaf ear to such potential objections even if the allocation to increase the retirees' medical coverage were to be taken, not from the overfunded surplus, but from the City's (plan-sponsor's) current and future (annual) contributions?

I have reasoned that the Trustees could authorize such a "reasonable" allocation (i.e. one that was not clearly unreasonable), even if not taken from the surplus, because they, as fiduciaries, have the authority to decide which allocations, when made to which recipients, are justifiable. Not every participant must benefit from his participation in exactly the same way. Certain retiree benefits, if reasonable and deemed worthwhile by the Trustees (as fiduciaries), may need to be funded whether or not the current participants ever receive or share in those or similar benefits.

Do you agree with me?

Am I correct or mistaken?

Employer has a M/P 401(k) Plan since 1997. Assume that the plan has operated in accordance with the safe harbor provisions since 1999. Has provided a timely annual notice, given 3% nonelective contribution to the correct individuals, etc. The plan does not have a match. The plan has never been amended to include safe harbor provisions. Can the safe harbor provisions be retroactively included in the GUST restatement?

Suppose a profit sharing plan has pooled investments for all plan assets other than participant loans. Each participant who has an outstanding loan makes his/her payments to a savings account (earmarked account).

In late 2001, the plan committe and trustee decide to make all loans pooled investments (i.e. liquidate earmarked loan repayment accounts and transfer proceeds to the plan pooled account). The pooled investment return was -17% for the 2001-2002 year. Instead of earning 1.5% in the earmarked savings accounts, all participants with loans suffered 17% losses. Furthermore, the committe and trustee did not inform participants of the change to pooled loans. Now one participant claims he would have repaid his loan had he known the loans would be pooled.

The committe and trustee truely had the best intentions for all participants in mind when they made the decision. They felt that the pooled account (professionally managed) would produce a higher average investment return over a period of time than the earmarked savings accounts.

The plan is not subject to minimum funding and I believe the right to direct investments is not a 411(d)(6) protected benefit. Of course the committee should have informed participants, but is there any legal requirement to do so? Would this participant have recourse against the committe who are fiduciaries?

Thank you.

If an employee terminates from an employer with a 401k Profit Sharing plan and the employee has deferred and receives a PS allocation for 2002, can that employee start their own business and contribute full contr to a SEP for 2002??

If an existing profit sharing plan wants to contribute 25% for 2002, must an amendment increasing the formula be in place by 12/31/02, or will just doing the EGTRRA restatement before 9/30/03 be OK? Thanks.

I have a guy who wants to set up a defined benefit plan for himself, contribute to it, and immediately turn around and take a loan out from the plan.

Is this legal?

How do loans from DB plans work?

I own a TPA firm with about 20 employees. i'm looking for creative ways to offer incentive compensation to my group.

Any ideas that have worked?

Do you need a good faith amendment signed by 12/31/02 in order to avoid the multiple use test for 2002?

Have a client who is terminating his traditional 401(k) plan and starting a SIMPLE IRA. Can we rollover the 401(k) balances into the new SIMPLE IRA?

Do you see any problems in terminating the 401(k) and starting a SIMPLE IRA.

Under a SARSEP, is the total of each participant's deferrals and employer contributions limited to 25% of the participant's compensation? Thanks.

Are the spouses ( or either of the spouse's) signature required on a divorce decree? or is the judge's signature sufficient

Setting up a plan effective 1/1/02. No prior plan exists. Dr. with two employees. EE A works over 1,000 hrs/yr and is in the plan. EE B worked under 1,000 hrs in 2002 but worked over 1,000 some year in the past.

Do I have to let EE B into the plan (and give a contribution).

Also, that person would be non-excludible for the ADP test even though working only 1 day/week currently (and for past few years).

I understand that I can exclude service for vesting pre-2002 but can I exclude service pre-2001 for eligibility? (Count 2001 as elig. year so enter 1/1/02.)

(I am thinking my fact finding may not have been as good as it needs to be: "Did any employee currently working under 1,000 hrs ever work over 1,000 hrs in any past year?")

I took these from Plansponsor.com

(to the tune of God Rest Ye Merry, Gentlemen)

God Vest Ye Fully Enron men

And save your 401(k)

You trusted your retirement to Andy Fastow and Ken Lay

And now you will be toiling until your dying day

It’s a good thing you love your job so well,

Why didn’t you sell?

It’s a good thing you love your job so well.

(to the tune of I’ll Be Home for Christmas)[/b

I’ll amend by Christmas—

You can count on me—

All your plans for EG-TR-RA,

Drafted so carefully.

Christmas Eve will find me

Typing busily

I’ll amend by Christmas

Although it tortures me.

(To the tune of Silent Night)

Privacy, Security,

EDI, transaction sets.

Who’d have guessed back in ‘96

HIPAA would give us such fits?

Just extend the deadlines, please,

We’re begging on bended knees.

((To the tune of Jingle Bells)

Skimming through the regs,

Reading through my files,

Every week it seems,

They add more to my piles.

Congress just can’t stop

Adding to this mess,

And although I wish they would,

The agencies won’t rest.

Oh, EG-TR-RA, HIPAA, too,

Change tables for mortality,

required distribution rules,

Sarbanes-Ox-a-ley.

Oh, SPD content rules,

Blackout notices,

Indexed limits change again,

So does EPCRS.

Just about the time

I read a rule’s proposed

And just when I am sure

I’ve nailed it on the nose.

I open BenefitsLink

Aren’t I the fool,

It seems that they have published

A revised interim final rule.

Yeah, HRAs, IRAs,

Waive the excise tax,

30 year Treasury rate,

file urgent claims by fax.

Jingle Bells, Jingle Bells,

Jingle All the Way,

Oh what fun it is to work

In the benefits field today.

(to the tune of Jingle Bells)

Amending all our plans

Checking every clause

Signing on the dotted line

Complying with the laws

Our actuary says

It’ll cost an arm and leg

To change our plan design-

So I guess we’ll just have to beg

Oh – Legal bills! Legal bills!

Congress strikes again

Just when GUST is going out, EGTRRA’s coming in

Oh – Legal bills! Legal bills! Piled up by the score

Just when you thought you were done

Hey – Here come some more!

(To the tune of O Come, O Come, Emanuel)

O Come, O Come, Saint Alan Greenspan

And save our bacon, you’re our man

Take pity on us in our sad plight

And make our 401(k) accounts take flight

Reduce! Reduce! Those interest rates

While we go spend our income tax rebates

(to the tune of Silver Bells)

Your plan is broken – time to fix it

You’ve been doing things wrong

Why not seek some compliance resolution?

Self-correction, VCS or file for VCO now

It could be your only solution

I – R – S

I – R – S

They’re processing your application

Write a check-

What the heck-

It beats disqualification

(to the tune of Jingle Bells)

My health plan’s not the best –

I feel so depressed

My 401(k) sank –

I’ve no money in the bank

I think I need some Prozac

For my anxiety attack

My state of mind is scarin’ me-

I need some mental health parity!

Special enrollments, mental health

Maternity hospital stay

Coverage certificates-

That’s H-I-P-A-A!

Oh-special enrollments, mental health

Maternity hospital stay,

Coverage certificates-

That’s H-I-P-A-A!

(to the tune of I’m Dreaming of a White Christmas)

I’m dreaming of a new tax bill

Just like the ones I used to know

I’ve a fatal attraction

For Congressional action

With acronyms all lined up in a row

I’m dreaming of a new tax bill

With every pension plan I write

May your 401(k)’s be healthy and rise

And may all next year’s tax bills be wise

(to the tune of We Wish You A Merry Christmas)

We wish you a big fat health plan

We wish you a big fat health plan

We wish you a big fat health plan

With un – managed care

And a health FSA for you and your kin

To pay for Viagra and for liposuction!

We wish you a funded pension

We wish you a funded pension

We wish you a funded pension

And a Roth IRA

And a generous match with no ACP test

And big profit sharing with immediate vest!

We wish you a top-hat SERP plan

We wish you a top-hat SERP plan

We wish you a top-hat SERP plan

With a rabbi trust

And a gold parachute in case you should fall

And retiree health benefits to cover you all

I have a plan with a 12/31 plan year end; however, it operates on the fiscal year end of September 30.

The plan contains a discretionary matching contribution with an allocation rate of 100% on the first 4%.

For the 2001 plan year the employer had their CPA calculate the matching contribution. Appanently, they told the CPA to calulate the match based on the fiscal year compensation; however the plan document is written so that compensation is based on the plan year.

The CPA was getting ready to calculate the 2002 match and happened to call me. When I explained that the match is based on plan year compensation they told me that is not what they did for 2001.

I went back and reviewed the allocation and reran the numbers using plan year compensation. It is a small plan - 10 participants and it ended up that 2 ee's got a overmatched (but only by amunts of $13 & $50) while 4 ee's got undermatched by amounts ranging from $100 to $400 - This includes an HCE who was undermatched the most.

Would this be considered an operational error? Can I just fix this by having them make up the match owed and forfeiting the two overmatched? Does if make a difference if I correct before of after December 31, 2002?

An employer (Employer A) has three principals with the following ownership percentages: owner 1 - 40%; owner 2 - 35%; owner 3 - 25%. In addition, each one of these principals has a separate, non-affiliated company in which he owns 100% - owner 1 - 100% of Employer B; owner 2 - 100% of Employer C; owner 3 - 100% of Employer D. Employers B,C and D each have 2 - 3 employees. All three principals each make over $200,000 in their respective companies (including Employer A). Employer A has a Profit Sharing plan in which each principal is maxed out at $40,000 contribution. Each principal wants to start a new plan for each of the other employers (ER B, ER C, and ER D). Each principal knows that he cannot have a contribution allocated to him for ER's B-D. The question is, can each principal's compensation earned in Employers B,C and D, be used to increase the 25% of compensation limit for each of Employers' B,C, and D plans, even though the principal receives no allocation of contribution in each of those plans? The principals want to increase the contribution allocation to the other participants in the new plans for Employers B,C, and D. I hope this is clear. Thanks in advance.

:confused:

Can someone participating in a medical reimbursement account (of a flex plan) claim orthodontia expenses for a grandchild that they have paid? The grandchild does not live with them but the parents could not afford it so they paid it for them. My answer was no because the child was not their legal tax dependent, but I would appreciate confirmation on that.

I understand that if a plan invests in Employer real property it must be QERP and subject to certain restrictions. But, if the plan is investing in real estate does that need to meet the diversifcation req't, no more than 10% ? is there a distinction between any real estate or real estate that is to be QERP?

Client dies at age 68 in 2000. Wife is beneficiary of his Profit sharing balance. She is 68 in 2002. He would have been 70.5 in 2002. She has never touched his plan monies since he died.

Does she have to take RMD in 2002 becouse of his age? Or can she wait until SHE is age 70.5 ??

Thanks

Please forgive what is probably a very simple question, but I want to make sure I'm clear on withholding before I close payroll and I have a 401(k) question.

Scenario: S-Corp has 401(k) plan that was used a couple of years ago for non-elective profit-sharing for members (Company also has money purchase pension which has defined contribution). Since then it has been used only for owners. Owners say funds contributed are non-elective and should not be taxed. Issue is if it is elective or non-elective since it is only dispensed to certain individuals, all of whom are owners/dependents. (Incidentally, Top-heavy is ok because it is balanced by money-purchase pension.)