A COLI policy on an executive is likely to generate more proceeds than needed to fund a rabbi trust being set up in connection with a NQDC plan for the executive. I would like to arrange to pay to the spouse of the executive any proceeds from the policy in excess of that needed to fund the plan. Can this be done by (i) irrevocably naming the trust as a beneficiary of the policy to the extent needed to fund the plan and (ii) also irrevocably naming the spouse as a beneficiary of the policy to the extent of any excess, so that the policy pays the proceeds as their interests may appear?

I am being told by an administrator of a health plan that an employee cannot "drop" their health coverage at any time. It must be done during open enrollment. If an employee participates in a voluntary health plan with employee contributions, can they waive out at any time?

Does anyone know anything about a concept being marketed as a "secured trust" From the little I know about it, it appears to be secondary plan or trust that only comes into play if the primary nonqualified plan/rabbi trust cannot pay the full benefit due to insolvency of the employer.

Please see attached

Can anyone confirm that IRS released final RMD regs today, 4/16? I heard they did, and I would like to get a copy.

We are in the process of converting to a 3% employer contribution plan (from an employee deferral plan only).

We have one management employee who is over 75, makes under the HCE limit, and adamantly does not want to participate. Is there any way around this?

Thank you

Construction Companies A and B are a control group. The owner receives compensation from both companies. In order to land a large contract, Company A has been unionized. The owner falls under the contract for work done with Company A. The current 401(k) excludes union employees. Can the owner still contribute based on compensation received from Company B, or is he excluded completely because he is part of a collectively bargained contract?

Does anybody have any idea how the regs treat a spouse who has been released from prison? Can the employee add the spouse to the health plan?To the Cafeteria Plan? Did the former inmate "lose" coverage, because the gov't is no longer paying for the medical expenses? Do the health insurance companies have to allow this person on to the plan? What about pre-ex. Medical records would be impossible to obtain. Thanks for any input.

Clarification on EBAR testing: I read somewhere that if the EBAR for any HCE is greater than the highest NHCE EBAR, the test will not be passed.

Is this a correct statement? If so, why?

I don't think there's any guidance in this area, so I would like to know what common practice is in the following area:

How do you treat money of an alternate payee for top-hevy purposes?

If the money is segregated from the participant to the alternate payee, for top-heavy purposes: do you treat the money as if it still belonged to the participant, as an in-service withdrawal, or how do you treat the segregated money for top-heavy purposes?

If the money is distributed to the alternate payee, for top-heavy purposes: do you treat the money as if had been distributed to the participant (in-service withdrawl if participant is still employed, "regular" distribution if participant has terminated employment), or how do you treat the distribution to the alternate payee for top-heavy purposes.

The prior threads I found on this topic were:

http://www.benefitslink.com/mbmirror/11195.html

http://www.benefitslink.com/mbmirror/9220.html

What are your practices regarding how alternate payees are treated for top-heavy purposes?

Employer J maintains a 401(K) Profit Sharing Plan. Under the plan, an eligible employee is entitled to an employer match contribution of 100% of the employee's deferral up to 3% of compensation up to the §401(a)(17) limit. During the 1994-2000 plan years, an eligible employee, Employee W, inadvertently was credited with an employer match contribution based on compensation above the §401(a)(17) limit. resulting in an improper allocation for seven plan years. My correction for this defect based on Rev. Proc. 2001-17 would have been to take the improperly allocated match amount from Employee W. and place it in an unallocated account, similiar to a suspense account, to be used to reduce future employer match contributions in suceeding years. I have been told by some that the excess employer match contribution made to Employee W. should have been allocated to the other employees in the year of the failure under the Profit Sharing feature of the plan. Though the plan does have a profit sharing feature (discretionary), it has never been utilized by the employer since the plans inception. What is the most proper way to fix the defect described above?

I would appreciate a little education...

I converted an IRA in 1998 to a Roth (still active);

I also have a 401K with my employer...

Can I open another IRA and if so, are there any restrictions?

Thanks in advance

I made a $2000 Roth contribution in January 2001. Just learned our income went up to $158,000 so I guess I'm not eligible. Of course, as usual, I lost money on the $2,000 investment. It's now worth $1500. Am I correct that I need to withdraw the $1500 by the time I file my return (I extended) to avoid a 6% excise tax? Can I deduct the $500 loss on my 2002 return?

If an employer changes the conditions required for an employee to be eligible for a death benefit so that fewer employees will receive the benefit, do those changes affect current employees? Or is the benefit an accrued benefit that cannot be changed or reduced?

This concerns improving benefits for inactives (not simply COLA adjustments).

For the general test, what would the testing age be for retirees...current age or the same that would be applicable for an acitve (later of NRA and current age)?

Also, how would one determine NAR & MVAR for retirees? For NAR, do you use the current benefit level or the accrued benefit at retirement, to convert to a straight life annuity and divide by service and prior pay? Is MVAR = NAR or do you have to look at the most valuable retirement age even though we know when the retiree retired? It would be a pain to go back and unearth the accrued benefit for each retiree; we already have everyone's current benefit in pay.

Not-for-profit ("NFP")wants to terminate its underfunded DB plan (estblished several decades ago). NFP wants to do this AS SOON AS POSSIBLE because it is weary of the responsiblities and wants to focus on DC Plans.

NFP already has a 403(B) plan that was established some years ago.

NFP understands that it must bring the DB plan up to a fully funded status before it can be terminated, but would like to freeze the plan in the meantime.

The distribution options available to employees through the DB plan include both/either annuities and lump-sum payments.

The NFP understands that a termination contract may be an option...... is this true? Does this seem to be a viable solution even with lump sum payments as a distribution option?

In addition, is there any way to freeze the plan for a certain period of time so that evenually the NFP will not have to make additional contributions?

This is a charitable NFP without a great deal of $.

Thank you for any assistance.

I am trying to assemble a list of providers who offer prototype (i.e., non-model) SEPs.

Any and all responses are most appreciated!

We have a young doc's new PC buying 50% of assets of old doc's PC. The 2 PCs will then form an operating partnership.

Old doc has existing cross-tested PS plan. An advisor has suggested that he retain that plan (for benefit of staff and young doc) and form a new DB plan to shelter proceeds from sale of practice over next, say 5 years.

Questions:

1. Am I safe to assume that some form of affilliated service group rules will apply, so DB plan has to potentially cover docs and staff in all 3 entities? (Or does that just apply if OVER 50% ownership--or am I confusing that with controlled group issues?)

2. Assuming both plans have to recognize all staff, to what extent do the employer PS contributions for rank and file offset any required DB contributions or at least do double duty (i.e. 3% top heavy or 5% gateway)?

3. If there was an especially "old" staff person, I assume we would have to be sure to exclude her classification to avoid big DB contribution?

Thanks from a CPA who knows just enough about DB plans to be truly dangerous!

plan defines act equiv as 7% and up84 with a 1 yr setback.

for j&s payouts act equiv is 7% and up84 no setback for participant and 3 yr setback for co annuitant.

no for the dilemma.

say we have a participant age 65 and spuse age 60.

if the pension were paid as a life annuity it would be pvab using 7% and up84(-1). say this amount is 150,000.

then for a j&s, using the j&s act basis the pvab of such benefit is only 152,000. this difference is due to the different mortality tables for the different payout options.

i see this as a flaw and feel that the j&s factor should be a factor that would result in the pvab of such j&s benefit to be the same as the life option. i believe that all optional forms s/b act equiv to normal form.

any comments?

gary

Non profit corporation owned by a native tribal entity is thinking of establishing a 457(B) top hat plan. The 457 regulations do not define "government" or "state" in a way that incorporates native tribal entities. Should I assume that they must just be treated as a non-profit in setting up this plan? Concerns are the rollover rules and the "unfunded" nature of the plan.