It seems that this year, I've experienced a substantial slow down in how quickly auditors are turning around their audits and producing audited financials. There is always the last minute audit that does not start until 1-2 weeks prior to the deadline, but this year, I've got a larger than normal group of plans still pending completion of their audit.

Anyone experiencing the same thing? Any speculation as to why?

Thanks,

KT

Once again the orthodontic beast has raised it's ugly head...

After much debate here, I am putting the question to you:

Received a receipt (for $1,075) for "...payment for orthodontic payment plan covering services September 2002 through June 2003." With the language specifying "payment plan" instead of dates-of-service - and especially where they are looking for PRE-payment...I just don't feel that this is compensable under FSA.

WHAT IS YOUR SAGE ADVICE?

Oh, and just to make things more fun...the handwriting on the receipt closely matches the handwriting on the claim form... We have caught 3 participants in 5 years from this very same employer very clearly forging receipts. And 2 of them were done really badly too...

As a TPA, our firm has prepared numerous valuation reports and 5500's over the years subject to independent audit. These audits have been completed by CPA firms ranging from large national firms to small local firms. Since our firm is acting as the plan contract administrator and we prepared the valuation report and the annual return plan auditors generally have direct contact with us during the audit if they have questions and before the audit is released, they send us a draft to review.

I have one plan we have completed since 1997 the audit has been completed every year by the same auditing firm. Every year, they want additional information which we promptly provide. Every year they seem to find some nit picking item they want changed on the return plan financial section. This year it was a $ 21 matching contribution. Every year the firm fails to send us a draft of the audit to review and they don't even send us a copy of the final audit. It is like they are keeping a big secret. As it were, the $ 21 they wanted changed this year was correct in the first place, although their suggested change changed six or eight other numbers in the Schedule H. When it was pointed out they were in error, their response was it was "imnaterial" to the audit. If it was immaterial, why did they want it changed in the first place? The next item was that they couldn't resolve to the matching contribution. I suggested they review the plan document which addressed the matching level. Upon further review, it was discovered they had been using the wrong document as a basis for their audit for some period of time. Then an issue came up about the audit scope. Since 1997, we had reported the audit to be a full scope audit with an unqualified opinion. Until this year, they never made a comment to the contrary. This year they said it was a limited scope audit.

It seems to me that the TPA who is the contract administrator of the plan should not only be in the loop with the auditors, but should review the audit draft before it is finalized. Auditors make mistakes. Post Enron, auditors need all the help they can get. TPA's have knowledge from day to day activities of the plan auditors may not have nor does the plan sponsor. In this case, the auditors of this plan have filed several audits with errors as the result of using the wrong plan document. There may be inconsistnecies between the audit and the scope and opinion reported on the Annual Return as well. Since I have never seen a copy of any of these audits, I have no idea what other inconsistencies or errors may be in the audit.

We also have a plan we have served in the same capacity from start up in 1993 that has grown in assets and participants to the point of needing an audit for 2001. The plan sponsor retained a local auditor to complete this audit. We try to provide auditors with as much information as possible to make their job as simple as possible. First year audits are generally trying. As near as I can tell, these people spent four months working on this audit. In the four months, they never contacted us one time with one question. Finally, the plan sponsor forwarded a draft of the audit for us to review. The draft had no identifying marks of any type. No name of the auditing firm, the auditor who worked on the audit, phone number, address. Nothing. Nothing other than a $4,667 error in the beginning balance for the year. We were almost certain the transaction in question would confuse the auditors and had included specific documentation to substantiate this item and either they didn't understand the transaction or they ignored the information we provided. After notifying the plan sponsor of this error and advising them to have the auditors call us to discuss correcting this error, in two weeks, I have not heard a word from the auditors.

Both of these diverse auditing firms, one a fairly large regional firm and the other a fairly large local firm in a city of 500K. Both seem not to want to divulge anything about the scope or content of their audit to the TPA, even though it is likely that if items between the return and the audit could result in the rejection of the audit or an inquiry or possible audit by the PWBA, these firms seem to believe their only responsiiblity is to the plan sponsor.

Since these are the only two incidences of this type I have experienced with auditing firms, does anyone know why these firms are taking such a hard line position? Regardless of the elevated opinion of their qualifications, auditors do make mistakes. All you have to do is look to Arthur Anderson if you disagree. They seem to want to draw a line in the sand. I am of the mind set that maybe it is time that we the TPA should draw a line in the sand as well. If we aren't provided with a draft of the audit and unless we agree with the draft before it is finalized, maybe we shouldn't change the return or schedules?

Any ideas or suggestions?

Could someone just verify that my theory is correct in calculating this.

My client just uncovered that they withheld deferrals for one participant in July 2001 of $1,000 and failed to send them to the investment company and that again in Oct. 2001 they withheld $400 and failed to remit.

They have sent a check for the $1400, but I am now trying to figure the Gains and Excise amounts.

Should I calculate the excise tax (10%) on the 1,000 for 6 months and on the $400 for 3 months and then on the whole $1400 at 15% for the 9 months in 2002 which was when the error was uncovered and sent in?

Also, since there were so many losses to the funds in the plan last year, what should I use to calculate gains?

mbc

I need to know where I can get help. My former employer is refusing to sign

my transfer form (he has had it since July 9, 2002) because he is angry with

me. In April 2001, he attempted to cancel retirement contributions on a

money purchase pension plan so he could use another former employee's funds as

incentive to get him to come back and testify on work-related court cases he

was involved with during his employment. He wanted this employee to sign an

agreement wherein if he came back and testified during an 18-month period, he

would receive his expected retirement contribution of $7,000 less taxes (since

it wasn't deposited in the retirement account). My former employer promised

to pay me my retirement funds, $5,000 (in checks, less taxes) for that year

he was going to cancel because he didn't want me to be affected by his

dealings with this other former employee who refused to sign the agreement

when he found out he wouldn't be receiving his retirement funds. According to

the plan summary, we were owed the money as long as we worked more than 500

hours in the fiscal year, which we both did. I resigned from the company

because I was expected to lie to this other employee, who was still working

out his resignation notice, regarding the fact that I was going to receive my

money and he wasn't since he didn't sign the agreement. That would have been

illegal for me to receive "retirement" funds if the other employee didn't

receive them. And now, after hiring attorneys, our former employer deposited

the funds in our accounts in March, 2002, which is the month it has always

been deposited, like nothing ever happened, like no memo was ever issued in

April 2001 stating that the retirement contributions for the fiscal year

ending June 30, 2001 would be zero. I believe he made the contributions

because I resigned and he believed I would notify the other former employee

of what transpired. Note: In April 2001, the company only had 4 employees,

including the owner, me and the other employee who resigned in March 2001 and

worked until the end of April 2001. It is a family-owned small business. I

was a 10-year loyal employee and the other employee who resigned is a second

cousin to the owner. I need to know the legal issues related to the transfer

of funds to my new employer's retirement plan and are our attorneys' fees

Is there any way, short of a formal coverage determination, that we can tell if a company is a professional service corporation exempt from PBGC coverage? Are there any indicators, other filing differences, etc.?

At issue is a "consulting firm" run by an engineer with 3 or 4 employees that works for power companies.

We are calling the PBGC, but I thought that others might have dealt with this before.

A DRO is received for a daily valuation/participant directed plan that awards the alternate payee $x as of 10-14-97 plus or minus a proportional share of earnings and losses from 10-14-97 to date. Because of numerous investment changes, nearly five years of contributions and a couple of two hardship withdrawals, there is no easy way to calculate these earnings and losses.

Any thoughts on the plan's obligation to make the calculation, or for that matter, to accept the DRO as a QDRO?

Any thoughts on a correction method for a plan that has inadvertantly permitted individuals who were not common law employees to participate in the plan? (the plan admin. originally thought the individuals were employees and so let them participate; as it turns out, these individuals were, in fact, independent contractors and not employees).

The plan is a profit sharing plan with a 401(k) salary deferral feature and employer match. Most of the individuals in question have vested account balances.

This seems to be a different problem that inadvertant inclusion of individuals who have not met a plan's age/service requirements. I can think of several corrections for that problem: (1) retro amendment making them eligible (safe harbor self correction), or (2) return of deferrals and forfeiture of other contribs (non-safe harbor, IRS filing).

If these are the options, may deferrals be returned to these individuals and may vested amounts be taken from them even though they, technically, were never eligible to participate in the plan to begin with?

Please let me know TPA handles governmental

retirement plan called DROP(deferred retirement option plan).

Thanks.

Does anyone happen to know specifically where it states that loan repayments to a pension plan need to be made with after-tax money?

I know why it is that way, but need to be able to reference the exact source (assuming it is stated in Internal Revenue Code somewhere).

Much appreciated!

Does anyone have any data on how much COBRA costs non-COBRA participants? By how much would an active participant's premiums (per participant) increase as a result of people going on COBRA? Assume about 100 employees, nobody is now on COBRA, we hire 10 employees and at the same time 10 employees are terminated, elect COBRA and stay on COBRA for one year. Assume further that premiums for the participant now cost $100 per month total. After one year, on average, how much would a participant's premiums increase as a result of those 10 participants being on COBRA?

I thought there would be little harm in asking, even though I may not get a good answer.

PSP permits participants to take an in-service distribution. The plans requires that the distribution be a distribution of the Participant's entire account balance. MPP is merged into the PSP, and an account is created for MPP money (which is subject to the J&S rules).

A Participant (who was a MPP participant and has a MPP account in the PSP) wishes to take an in-service distribution, but his spouse refuses to consent. As the Plan requires that the Participant's entire account balance be distributed when the Participant takes an in-service distribution, can the Plan require spousal consent for the entire account for the sake of administrative convenience? Or because the PSP money is not subject to the J&S rules, must the plan permit a distribution of that portion of the account regardless of whether consent is obtained? Any thoughts?

Do we still need to reduce the 457(B) limit by the elective deferrals made to the SIMPLE IRA? So the combined maximum allowed for 2002 would be $11,000?

Thanks.

I'd like to see the heading info repeated on the additional page(s) when the amortization schedule exceeds one page. Also, pmt numbers would be helpful. If we could just print to file, I would be happy to edit the schedule, but since it's a standard report no such luck. Anyone else find this standard report lacking?

Does anyone have a custom report of a loan amortization schedule they're willing to share?

Any other suggestions?

Thanks!

Can anyone refer me to a good resource on PEO sponsored retirement plans?

Situation: A 100% owner of an S-Corp wishes to be bought out. They are interested in establishing an ESOP and moving the stock from the owner to the employees and new owner of the company.

I seem to remember form somewhere that S-Corps cannot set up ESOP's. I know that the contribution to an ESOP is not deductible by the S-Corp, but can they set up an ESOP?

Any thoughts and sites would be appreciated.

In a defined contribution plan, let's say a participant has accumulated $1,000,000 in retirement plan assets. He was divorced several years ago, and there was no QDRO. The former spouse agreed to waive her rights to the pension in lieu of other assets.

The participant is about to re-marry. Is the new spouse entitled to the entire plan assets of the participant in the event of his death ($1,000,000) in the event she does not sign a spousal waiver (assuming they have been married for one year at the time of the participant's death or retirement)?

I read where the language of a pre-nuptial agreement does not supercede the QPJSA, so it would seem to me that they are entitled to the whole thing without a signed waiver.

I would appreciate any comments.

Thanks.

Michael

For plans restated for GUST, with a restatement date of 1/1/02, when is the Summary Plan Description due to Participants?

:confused:

We have a copy of an court order for a participant to stop making his 401(k) loan repayments as a part of his Chapter 13 bankruptcy.

However, we are concerned that stopping loan repayments through payroll deduction will put the Trustee in a bad position. The loan program, note and pledge say that the participant will repay the loan through payroll deduction. As long as the participant is drawing a paycheck, isn't it the obligation of the administrator and trustee to make sure that loan is repaid as required? Can this ruling supersede those obligations?

And, if the employer/trustee/administrator allows him to stop his loan payments, do we default the loan an ddeem a distribution? continue to accrue interest on the outstanding balance on the books? ever begin payments and collection again? when the participant does finally quit and receive a distribution of the rest of his account, what do we do with the accrued interest since the default/deemed distribution as I don't think we include it in the taxable distribution reported to the participant?

Thanks for your help!