1.401(a)(4)-3(B)(5) contains a safe harbor for insurance contract (412(i)) plans.

1.401(a)(4)-3(B)(5)(iii) says that the benefit formula must be one that would satisfy 1.401(a)(4)-3(B)(4) if the normal retirement benefit were accrued ratably over each employee's period of plan participation.

1.401(a)(4)-3(B)(4)(i)©(2) says that the normal retirement benefit must be a flat benefit that requires a minimum of 25 years of service at normal retirement age for an employee to receive the unreduced flat benefit.

So 1.401(a)(4)-3(B)(5)(iii) seems to indicate that for a 412(i) plan, the benefit formula must be a flat benefit that requires a minimum of 25 years of plan participation at normal retirement age for an employee to receive the unreduced flat benefit.

Do I have this correct or is it just that a 412(i) plan must have a flat benefit that accrues ratably over an employee's years of plan participation with no minimum number of years of participation required to get the full flat benefit at retirement?

Rev. Rul. 74-307 basically says that an insured death benefit will be incidental if the face value of the policy does not exceed 100x the projected monthly retirement benefit or the premium is less than 50% (or 25% depending on the type of the policy) of the employer contribution credited to a participant's account.

Just what would one base this 50% (or 25%) on in a DB plan? Would it be 50% (or 25%) of the normal cost for the participant and if so, what do you do if you are using an aggregate method?

I do seem to recall that one can subsitute 66% for 50% and 33% for 25% if these percentages are applied to a normal cost calculated under the ILP funding method but cannot find a citation to back this up. Does anyone know where this comes from?

And finally, am I correct in my belief that these limitations apply to the insured death benefit under a 412(i) arrangement as they would to any other DB plan?

I am trying to determine when a plan's assets must be valued. I am working with a client that recently went from publicly traded to privately owned and am trying to determine all the situations when the value of its assets is relevant. Does anybody have a compiled list of situations where a plan's assets must be valued?

I was under the impression that for a small plan filer to be exempt from an audit (PYB after 4/17/01) they had to meet the qualifying plan assets/bonding requirement AND the disclosure requirement.

However, reading Janice Wegesin's article in the ASPA Journal (May-Jun 2002) I get the impression they have to meet the qualifying plan assets OR bonding. If they meet the requirement by bonding, then disclosure on the SAR is needed.

I thought disclosure on the SAR was needed in any case, unless and exception (like all assets are participant-directed accounts) applies.

I'm looking at the DOL Reg and I'm not getting it. What am I missing?

michele

Section 404(a)(6) of the Internal Revenue Code of 1986 (the “Code”) permits an employer to deduct contributions retroactive made to a qualified retirement plan. However, in order to take advantage of Code 404(a)(6), the plan to which the contributions are made must be in existence no later than the last day of the tax year for which the deduction is claimed. Consequently, while contributions may be retroactive made to a previously established plan, a plan cannot be retroactively established. The question presented is this: when is an ESOP “established” for purposes of the retroactive contribution rule described above. For example, if an employer has a tax year ending 9/30/2002 and would like to make and deduct a contribution for that tax year to the ESOP, is it enough if the plan document is signed by 9/30/2002 even though the stock sale/purchase transaction will not occur until later so long as the stock sale/purchase transaction occurs before the employer's income tax return is due and the other conditions contained in Code § 404(a)(6) are satisfied? Or, must the stock sale/purchase transaction be completed by 9/30/2002 as well? Must any documentation other than the plan document itself be signed by 9/30/2002?

Thank you very much in advance for your comments.

Presume a top hat nonqualified deferred compensation plan that contains language entitling a participant to receive group or individual health insurance at the Company’s expense for the remainder of the participant’s life following retirement or disability, and extends this benefit to the participant’s surviving spouse for her lifetime if the participant dies after becoming eligible for full retirement.

Does this present a discrimination problem under IRC Sec. 105(h)?

And does it trigger the FASB standards applicable to retiree medical expenses?

Any comments appreciated.

I was surprised at how much research trouble I had trying to find the answer to this relatively straight-forward question: Can SIMPLE plans, whether they be IRA or 401k, have loan provisions? Am I correct that SEP's cannot allow for loans?

Thanks

What recourse does an employer have if an employee submits a claim for reimbursement (which exceeds the amount contributed), while on an unpaid FMLA leave? The employee elected to continue coverage under the Health FSA utilizing the "catch-up" method upon his return.

Thanks, Joe

Our corporate Flexible Compensation Plan encompasses both medical and dependent child care. It has its own plan number and we have been filing a separate 5500 for the plan each year. I was told by the DOL that under notice 2002-24, I no longer have to file a 5500 for this plan at all. I spoke with one of our auditors, and he agrees with this stance; however, he had a converstion with another accountant that believed if your FSA covered dependent child care, you still had to file. All contributions to the plan are made by the employees themselves, there is no employer contribution.

Any input?

Can you have a 2 year eligibility and also have dual entry? Jan. 1 and Jul. 1 for example.. I know you can't for the pre-tax portion, but what about the match and profit sharing?

Thanks

I am curious what the most common practices are for employees who RTW after an unpaid FMLA LOA.

Our company policy is to reinstate employees benefits when an employee RTW after exhausting their FMLA. We continue benefits through the FMLA period, once the FMLA exhausts, the benefits do too. However the cost of keeping the benefits is the employee responsibilty, and premiums are recouped upon return.

Here's the senerio: An employee chooses to revoke elections for health benefits and FSA's (SECT 125) when going on an unpaid FMLA leave. But when an employee chooses to revoke the elections do most companies place responsibility on the employee to reinstate themselves?

Any thoughts?

Does a "Beauty School" qualify as a Post Secondary education under hardship safe harbor rules?

Can any payroll administrator please tell me how withholding is done on a lump sum cashout from a NQDC plan? I thought it was withheld at the supplemental rate (20%?) like a bonus, but I can't find definitive guidance in the IRS publications (or that it is treated just like any other W-2 comp?). However, it also seems that the 10% withholding rule applicable to nonperiodic distributions from a qualified plan might also apply to a NQDC. Thank you.

Does anyone know of a website or phone number we can call to see if a client has filed the form 5500 on time, or at all.

Thanks,

Kevin

We have numerous employers that have both a prototype DB and DC plan, drafted by the same document provider and sponsored by our organization. We have had the DC letter for nearly a year, and expect to receive the DB opinion letter shortly.

Is the restatement deadline 12/31/02 for the DC plan and 12 months after receipt of the letter for the DB plan, or are both deadlines 12 months after the DB letter?

I have been getting conflicting opinions on this, with the majority stating that both deadlines are 12 months after receipt of the DB letter. Additionally, I have read and re-read Rev Proc 2000-20 and 2000-27 in hopes of finding an answer, but have been unsuccessful.

Am I overlooking the obvious, having a stupid attack, or both? Thanks in advance for your input.

Have a Potential client who currently sponsors a 401(k) Profit Sharing Plan that is top-heavy. Under current law, they feel the plan is useless, because of the top heavy min. I have explained under EGTRRA, they can utilize the safe harbor match and contribute upto the max. 401(k) and match $ for $ upto 4% of what they contribute and not worry about top heavy. With all that, they are considering changing to a SIMPLE IRA.

Does EGTRRA apply to SIMPLE IRAs? If so, can they contibute upto 7,000 and match another 3% for those who defer based on any salary. In other words, what if someone earns 10,000 can they contribute 7K? And do they have to worry about top heavy given the fact the old plan was? Any help is appreciated.

I still think 401(k) safe harbor is better....

Should enrollment forms for self-insured group medical plans be amended to include a signature by the employee for consent or authorization to use medical information or should this be a case by case request or is the consent or authorization necessary for a health plan or just a medical provider?

Can a terminated plan use forfeitures to pay for deferred sales charges in a deferred annuity contract?

They currently use forfeitures to reduce contributions (and hadn't used all of them) and the document doesn't speak to forfeitures after plan termination.

Am I correct in understanding that if a participant has accumulated PS contributions that are more than 2 years old the 25% limitation for life insurance premiums does not apply? If this is correct, are the excess premium payments considered taxable distributions to the participants? The blue "Pension Answer Book" implies this may be the case.

I am attempting to compile a table of HCE limits. Does someone have the limits available for 1990 through 1998?

Thanks!