I've read a couple of articles on the final participant loan regulations and they seem to mention something about "credit card loans." Unfortunately, they assume the reader knows the what the heck they're talking about, and I have no clue.

What is this reference about?

The first of my questions concerns whether 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 allotment without also having to give the same stipend to the current participants. At least one other municipality in GA has authorized annual, automatic COLA's for its retired policemen participants, but those COLA's are part and parcel of that city's pension, and they do not necessarily owe their source of funding to that plan's overfunded surplus. We may also want to add such a provision to our workers' plan, but we would like to use the surplus as the means to the funding end.

Next, we are concerned about the State Constitution's anti-impairment of contracts provision. For example, if we were to authorize a 1.5% COLA, would we ever be able to scale it back (or undo it)? We do not suppose that the application of the aforementioned State Constitution provision would cause us much of a headache in regard to current employees, who are exchanging services for their pay (whether in cash or benefits), but the potential headaches Re: the retirees could be bad ones. The ERISA anti-cut back provisions come to mind (even if our governmental plan is not subject to ERISA per se), and the immediate, funding impact, on the actuarial bottom line also gives us pause.

We would welcome any input from your subscribers. Please suggest if and how ERISA Sections 420 and 401(h) may apply even though our plan is not subject to ERISA per se.

Is Short-Term Disability considered a reimbursable expenses under a flexible spending account if the employee is being taxed on it through their employer?

Does anyone know if a 457 plan can lend securities? Can you refer me to any information on this subject?

I konw there have been several threads on missing participants, and I've read most of them. However, in this case, the participant is dead, not missing. The beneficiary per the plan document is the estate, but there evidently is no estate, or no one to handle the estate. And there seems to be no living family - even distant family. Based on this set of facts, should the plan do anything different than what has been suggested in the missing participant threads?

Using a Safe Harbor NC allocation that shows dispartity between the NHCE and HCE, do you need to pass ABT on the allocation of that contribution only? Can it fail, but pass the ABT General Test(which includes all contributions)?

I do realize it will need to pass the rate group test. If it does that and fails, does it matter?

If under Prop. Reg 1.125-2 Q&A 7(B)(7) forfeitures must be used to pay administrative expenses or allocated pro-rata to employees and the employer opts to have the funds go back to the employees, can the employees apply these funds to any claims they have towards the 125 or do they receive a lump sum check? How are these dollars handled administatively?

Thanks

A plan's regular funding method is aggregate. For 2002 the eoy minimum normal cost is 32000. EAN FFL is 129000. The sponsor wants to contribute the full unfunded current liability

of 131000. Can he deduct the full 131000 under 404(a)(1)(D) as amended by EGTRRA 652,or his he limited by the FFL of129000? In either event what are the credits and charges to the funding standard acct for 2002? Must the funding method be changed to one that produces a range of contributions broad enough to accomodate the 32000 minimum and the 131000 (129000?) maximum?

A potential client was told S-corp owners and family members would not be allowed to participate in an FSA or POP plan. She was told by someone else that the owner would not be able to participate but she, as a family member, could enter the plan if she could prove that she was an employee. Has anyone heard of this? Thanks for any help!

I have a client who has about 170 employees. They want to do a carve out for 30 managers (not owners, officers or HCE, these managers earn $30-$40,000) and offer them a group medical plan. They want to offer the other 140 employees $40-50/month to either purchase individual insurance on the market or else a "seed" into the medical reimbursement (fsa) account. Can they do this? If so, and the managers are required to pay part of the premium, can this be done on a pretax basis?

Thanks.

This is a prison ministry that can afford very little in the way of benefits. I would like to help them if possible.

A client of mine is a dentist. He has a profit sharing plan. He recently purchased the building his practice is in. There are two other non related tenants.

He wants to create a realty managment company with his wife as either a sole owner, or possibly, with he and she as partners.

Their only income would be from rental income from the building.

Can the realty company have a pension plan without any conflict with the plan in the dental practice? I'm wondering if there would be a contructive ownership problem since a portion of the realty company's income is being derived from the spouse of the owner of the realty company.

Thanks!

Michael

This is an interesting plan documentation question.

Not-for-profit employer established a 403(B) plan in 1966, calling for employer contributions only (no deferrals), equal to 10% of compensation. Money is contributed to individual TDAs of employees.

At some point (possibly even prior to establishment of employer-contributory plan), employees are permitted to make salary deferrals to their own TDAs. This "plan" is not documented and would appear to meet requirements of ERISA exception for 403(B) arrangements with minimal employer involvement.

Employer now wants to restate plan document. Is it necessary to treat the entire arrangement (i.e., including deferral arrangement) as subject to ERISA and address in a single document? Or is it OK to restate the employer contributory plan, only, and not mention deferral arrangement? Is the answer different if the employee salary deferrals and the employer contributions are made to the same TDAs?

Can a required minimum distribution from an IRA account by in the form of an in-kind distribution of stock?

When employee's retire we automatically offer them a retiree plan and offer the COBRA coverage to the existing plan. Can the retiree elect both coverages? I recall reading somewhere that they cannot have a retiree plan and COBRA. Any suggestions would be greatly appreciated.

What is meant by the term "Plan Assets" in the following circumstance?

“Plan assets are reduced by undeducted contributions?”

See Gray Book Question and Answer 1990-1999, p 6. 2000 Enrolled Actuaries Meeting, Session 806

http://www.ccactuaries.com/library/onsites...000ea/806-B.PDF

Question 1993-14

Special Unfunded Current Liability Funding Limit–Various Issues

The following questions relate to the special maximum deductible limit under §404(a)(1)(D) which is equal to the unfunded current liability:

(a) Are plan assets reduced by the credit balance in the funding standard account?

Answer

(a) No. Plan assets are only reduced by undeducted contributions.

My quistion is how, and what is the significance?

Thanks for any light that can be shed.

Need to find a system or software for tracking vacation, sick leave, personal holidays, etc. Need accruals at different rates, recognition of max accruals, links to salary, and posting reports for accounting...any suggestions?

I am trying to find a software or system to use for tracking absences. I need to have something accrue hours based on years of service, recognize maximum accruals, link to salary, generate journal postings for accounting, and track different types of leave at different rates. Any suggestions?

Anyone know of Safe Harbor 3% notice templates?

We have elected a 3% QNEC for 2002. My understanding of IRS Notice 2000-3 and 98-52 is that an annual notice needs to be provided.

I'm hoping that there are sample forms somewhere on the net but I have yet to find them.

W-2s provide for an indication if the Employee is "covered" by a Qualified Pension. This helps the participant to determine if his or her IRA contribution is deductible.

If a Plan allows immediate eligibility to defer in to the 401(k) but has a Year of Service requirement to receive a nonelective or matching contribution, is the Participant who would otherwise be excludable for Coverage Testing of the Employer contributions still considered "covered" when it comes to completing the W-2?

Yes, I know I must still include such a participant in the ADP test.

Thanks.

Assume that a profit sharing plan has allowed an in-service distribution when it is not provided in the document. The in-service distribution would have passed the "seasoned money" or five years of participation requirement if the provision had been in the document. Also assume that it is an operational defect that can be corrected under SCP. What do you think of this correction method?

1) Participant repays in-service distribuiton plus earnings.

2) Plan is then amended to provide for in-service distributions prospectively.

3) Participant takes out his total account balance in an in-service distribution.

4) Participant rolls all amounts other than the repayment amount into an IRA on a non-taxable basis.

5) Participant takes the repayment amount directly as a non-taxable distribution because his repayment was done with after-tax dollars and so he is entitled to a basis(or investment in contract) in this amount.

Does this work?