Are there any problems if a plan forces all account balances of terminated employees to be invested in a separate account earning fixed interest upon termination of employment while all active participants maintain the right to direct their investments?

I'm new to 403(B) plans...

Correcting 415 excesses appear different than handling 401(a)/401(k) plans.

I'm looking at Pub 571. It says, 415 excesses are includible in the employees income and deferrals may be distributed to correct the excess. Later, Pub 571 says if custodial accounts, 415 excesses should be corrected either by contributing less than the applicable limit in later years or by making "permissible distributions." A permissible distribution is a dist on account of age 59 1/2, severance, etc.

If a person isn't permitted to take a distribution (because deferrals aren't enough and he/she hasn't reached age 59 1/2), Pub 571 implies the amount is still includible in income. Is this correct? Does the amount stay in the plan as after-tax?

My second question is, can an employer choose reallocation as a corrective method like 401(a) plans?

Thanks

It is fairly well accepted that a firm shouldn't perform both the TPA function and the audit function. There are many CPA firms that do both. Are they just interpreting rules differently or is there is something in the setup of the company that makes it O.K. (i.e. separate divisions)?

Any suggestions as to the best way to work through this problem would be appreciated.

Former employee of X Corp. knows he accrued a deferred vested pension under X Corp.'s db pension plan. (He was a manager and eventually an officer, and he worked there for 23 years, so we're not talking chopped liver here.) He left X Corp. long after ERISA became effective, and db plan was still in existence at that time.

Subsequently, X Corp. was acquired, and its acquiror was acquired, and on and on and on. Former employee moved and never notified X Corp. or anyone involved with X Corp.'s db plan that he moved.

Former employee knows who the ultimate successor to X Corp. is at this time; it is a very large Fortune 500 Company. Former employee is approaching age 65 very soon, and has contacted the successor company and given them all of the documentation to help them find "him" and his pension, but so far no luck. They claim they are continuing to research this.

Based on a quick search through PBGC's website, former employee is not listed as a "missing participant" in a terminated plan.

Any ideas as to what the former employee can do on his own, or what "tips" he can give the HR people at the successor company to help them find him and his pension?

I've heard that an employer can replace the state disability fund in California with a voluntary plan, but can't find any information describing how to do this.

Anyone have any experience with this? I live in Pennsylvania and my employer just acquired a company with about 100 California employees. This is unknown territory for me so any suggestions would be appreciated!

Our company currently contracts with a PEO and receives all welfare benefits through them. We would like to cut the cord and build all programs in-house, however, are having trouble finding an insurer who is willing to quote us due to lack of claims experience. (which the PEO indicates they cannot provide.) We have about 270 work-at-home employees, most of whom are full time and a large majority are in California and Washington.

I would like to find a carrier who can provide nationwide coverage and is willing to quote us fairly quickly. We are targeting a "go-live" date of 1/1/03.

Anyone have any suggestions of carriers or TPA's who might fit the bill?

Hello,

Any advice regarding the ability to stop loan payment deductions from payroll at the request of a participant?

Our loan policy says that payments will be made from payroll deduction, so the thought is that as long as there is payroll to deduct from, the payment should be made. However, that is a hard message to deliver when someone is in financial trouble, so we are looking for an alternative.

Perhaps there is a way around this that I am not aware of.

Thanks in advance for any suggestions, links.

Is this a PT? Is a deemed distribution an issue?

Employee borrowed $50,000 on 1/15/1998 & made only the first payment due (2/1998) during the year 1998. Sporadic payments were made in the years 1999, 2000, 2001 & 2002. The loan still has not been paid in full. Interest continued to accrue for each monthly payment missed.

The loan agreement itself contains the language required with respect to interest rate, re-pmt terms, etc.

Loan called for monthly payments.

Employee is a plan participant, a HCE, a 50% shareholder, a plan trustee, and the plan administrator.

Form 5500 for the 1998 plan year reported the loan.

The statute of limitations bars the employee's 1998 Form 1040.

I'll appreciate receiving help on this.

The rule of parity applies only to a nonvested participant. I want to be certain I understand what is mean by nonvested participant. If a participant terminates with 60% vesting and receives a full distribution of the 60%, then rehires 15 years later, is he considered a "vested" or "nonvested" participant for purposes of rule of parity? I'm thinking he is a "vested" participant because he was vested at the time he terminated. Is this correct?

If he is a "vested" participant, then rule of parity will not apply to him and he must be given credit for years of service prior to break and be allowed to participate retroactive after meeting 1 year eligibility. Am I correct here?

Has anyone looked at the benefits/costs (not just financial) of filing under the Voluntary Fiduciary Correction Program for delinquent participant contributions under a 401(k) plan? Our client has filed IRS Form 5330 and paid the applicable excise tax and based its calculation on the earnings crediting methodology outlined in Rev. Proc. 2002-47 rather than under VFCP. The two are slightly different in that VFCP provides a "floor" based on IRC section 6621.

What are the penalties for not supplying SMMs or updated SPDs on time?

A client has just finished terminating a DB plan (standard termination), complete with a PBGC audit. We now hear from the client that several participants who received lump sum distributions have yet to cash their distribution checks. The trustee puts a stop on all checks over six months old. Assuming these participants are not considered "missing" (i.e., they timely returned election form and have been in receipt of other mailed materials), what is the best approach for handling the situation? Does this affect the status of the termination in any way (i.e., assets have not been fully distributed)?

Anyone aware of any prohibition under ERISA for a plan's trust fund to be invested in Corporate or Muni bonds.

is the plan prohibited from purchasing DEBT

1 in all cases

2. where the investment manager is not a designated QPAM

3. the plan can always purchase any type of debt instrument that it chooses.

much obliged

I cannot locate any authority on point setting forth the timing requirements for reporting deemed distributions of loans defaulted during periods of military service, except for a statement to that effect on page 5 of CIGNA's 10/01 Pension Analayst publication.

I agree with CIGNA, and I think a good-faith reading of the final regs concerning deemed distributions (as amended by SBJPA) would require that deemed distributions made on account of a defaulted loan for which loan repayments were not suspended by the plan (as permitted by USERRA) should not be reported as taxable distributions until the affected employee's period of military service expires. To report such a taxable distribution prior to the expiration of the employee's period of military service

would seem to go against the employee/benefit protection

grain of USERRA.

Please comment, and note any supporting authority for your comments. Any comment from CIGNA personnel would be especially appreciated.

This isn't exactly GUST related but I don't know where else to post.

This question regards the required compensation amendments for plan sponsors w/ certain cafeteria plan language. A vast majority of my plans as TPA are using the prototype of a certain investment house.

I asked the legal counsel of this investment house if they would be sending out Rev Rul 2002-27 amendments to all registered users and the response was that Corbel (the original drafter) would likely send the required updates to the investment house at some point, and then the investment house would send the update to the registered users some time after that.

I was given the impression that it would be a loooong time before this happens. I have never encountered this issue before. Would you just use the model amendment available for your clients? Or would you wait for the investment house via Corbel?

I just don't want to miss any deadlines because I relied on someone else to do the amendment (nor do I want to do duplicate work). Additionally I didn't get a lot of confidence from the investment house that I could rely on the amendment to be sent to me in a timely fashion - yet I thought one of the benefits of using a prototype was not having to worry about required updates.

Thanks for any opinions.

I'm looking for an employee leasing firm who will handle a company of our size. We have 5 employees but only 2 are actually "on the payroll" - the others are owners (we're not a corporation) or independent contractors. We want to explore employee leasing because our health ins. costs are skyrocketing and we'd like to farm out our payroll work, small though it is. The few leasing firms I've contacted say we are too small - they want at least 5 employees on the payroll.

example

employee a is an hce with comp of 200,000

employee b is an nhce with comp of 40,000

ee comp def sh3% psp pct

A 200,000 11,000 6000 23,000 11.5

b 40,000 0 1200 336

can i use the 3 pct sh in use of the gateway, and make this pass or do i have to give an additional contribution of 3pct because the hce received the 3pct sh

does not pass the smell test to me.

i have read a lot of your message responses and feel that you have a VERY clear understanding of the gateway contribution requirements.

please help

thanks so much!

lerae

What is an appropriate salary range for someone going into a position as an account administrator in the daily valuation dept of DC at a benefits firm?

She has a major in math and a couple years experience as a DB ret plan actuarial analyst at a similar firm. Left DB making in the mid $40's. Started ASPA take home exams...2 out of 3 complete.

What is an appropriate salary range for someone going into a position as an account administrator in the daily valuation dept of DC at a benefits firm?

She has a major in math and a couple years experience as a DB ret plan actuarial analyst at a similar firm. Left DB making in the mid $40's. Started ASPA take home exams...2 out of 3 complete.

We are taking over as TPA for collective bargained 401(k) and mpp plans, something we're new at. Match and mppp contributions are pretty standard, 100% of deferrals up to $1,000 for the 401(k) match and so much per hour for the mppp.

My question involves eligibility and accrual rights to the contributions. The CBA requires 2, 040 hours for eligibilty and accrual of a contribution. The document that the company has been using is a prototype with the standard 1,000 requirements.

1) Is the 2,040 hour requirement permissible?

2) If yes, is the use of a prototype by the prior TPA appropriate , or should an individually designed plan been used?

3) If the document and the CBA conflict, as they have here, would the CBA override the plan document?

Thanks.