We're cross testing a profit sharing plan and it fails badly. Plan has liberal eligibility and some of those "otherwise excludables" are HCEs, so we want to try separately testing otherwise excludables.

Rate group testing for the non-excludables (I'll call them "statutory participants") seems straight forward enough. Ignore the excludables as if they don't exist. Right?

Is rate group testing needed for the otherwise excludables who are benefitting? I assume so. How are the statutory participants treated? Is the concentration percentage calculated by ignoring them? Are they in the rate groups as non-benefitting, non-excludables?

If all rate groups are not at 70%, and we go to average benefits, are both groups lumped together? I think not; I assume you ignore the excludables when testing the statutory participants, but is the reverse also true, i.e. ignore the statutory eligibles when testing the otherwise excludables?

Lots of questions, I know. I did a search and couldn't find anything that addressed these specifics. The ERISA Outline Book comments seemed vague to me. Help would be appreciated!

Plan failed multiple use test by 0.05%. I've decided it's best to refund ACP money. Failed ACP test by 0.32%. Can I do the refunds so the plan passes multiple use test or must I get it to pass ACP test? Thanks!

Suppose an employer was formerly self insured, then ends that plan and goes out and purchases group health insurance. As a result of the market for group insurance if he wishes to purchase insurance he can only cover 50 of his 67 employees. In order to obtain the insurance he rewrites eligibility by effecting a "mangement carve out" (i.e., he covers 50 salaried employees and excludes from the new,insured plan the 17 non-salaried employees who had been covered under the old self insured plan) Is there a COBRA qualifying event for the 17 who have lost benefits? I think not. Although they did have a loss of coverage, it was not associated with a job loss or reduced hours. Does anyone think this is a COBRA qualifying event?

Client adopted individually designed plan effective 1/1/98 and executed a document that was drafted and executed at that time to include applicable GUST provisions. No DL was requested. Last year, the plan was restated to use "new and improved" (finally after the guidance, etc.) plan document for submission and both plans (the "interim" plan and the final plan, retro to 1/1/98 for GUST provisions, were submitted for DL. Now IRS is asking for amendments to the initial plan document, even though the issues are "corrected" under the newer document. For example, regarding HCE determination and election for "top paid group," the first document didn't state how the plan was operating--the language states that "if employer elects . . .". However, the second document does state that no elections have been made to apply top paid group for any year. I don't think that amendment is necessary to the initial document. Any thoughts?

Is anyone aware of a published Prohibited Transaction Exemption involving a commercial mortgage broker who sells and services loans to a qualified retirement plan or IRA? I am aware of Class Exemption 88-59 involving residential mortgages; my question involves commercial real-estate backed loans.

Is anyone aware of a published Prohibited Transaction Exemption involving a commercial mortgage broker who sells and services loans to a qualified retirement plan or IRA? I am aware of Class Exemption 88-59 involving residential mortgages; my question involves commercial real-estate backed loans.

Does anyone know if there is specific wording the DOL likes to see on Schedule C, when there is a change in plan auditors?

Hello,

We have several clients who have decided to merge their pension plan into their profit sharing plan as a result of EGTRRA. The pension plans has QJSA provisions and the profit sharing plans do not.

Since the QJSA rules apply to the pension money and not the profit sharing money, it is my understanding that the pension money should be accounted for separately from the profit sharing money. If so, how are folks handling the separate accounting in terms of valuation, distributions etc.? Any comments or thoughts would be very appreciated.

Thanks,

Charles

Hopefully someone can help me out here. I own a small company and am planning on installing a high deductible plan with an MSA. Can I use any insurer with a high deductible and set up the MSA with my bank or does it have to be an insurer that designates the plan as an MSA type plan?

Also, if I set up the high deductible can we have a co-pay card for physician visits such as $15 per office visit card?

Thanks for any help.

The ESOP purchased shares of stock from two individuals who were the controling shareholders in exchange for a promissory note from the ESOP itself (making payments to the two shareholders each month). The Company is not financially doing well and wants to discontinue making monthly contributions to the ESOP and thus they would default on the promissory notes. (The only collateral for the promissory notes are the stocks purchased). What will happen if the Company stops contributing to the ESOP (25% discretionary) and thus the notes are in default? I understand that the notes may not be accelerated but are in default only as the monthly payment comes due. What recourse do the two individuals have against the ESOP, company, stock, and employees? What happens to the rest of the employees since no stock will be released (since no loan payment will be made) and thus the employees will not recieve stock in their accounts? What liability does the company, ESOP and fiduciaries have with regard to this transaction. May the employees sue the Company. The promissory notes and the ESOP language is silent as to the remedy. Thanks for any help provided.

Calendar Year 401(k) Plan. Deferrals and Match only. Employer wants to calculate match as follows:

1) quarterly computation period, i.e, based on deferrals by Participant during quarter;

2) The employer will make matching contributions only to participants employed at the end of each plan quarter.

3) Employer will only match elective deferrals not withdrawn during the quarter.

Does this plan design require additional testing beyond the normal annual ACP or Percentage Coverage Test?

under the trust exemption of GLB, how can banks effectivly deal with privacy issues and the mandate vs prohibition on sharing client info/data??

anyone have a relevant comparison on the privacy issues under the two acts?

I have a participant who took a plan loan from his 401(k) plan. the company is now filing for bankruptcy (chapter 7) and the plan is being terminated. Short of paying the full balance off is there any way to keep the participant from suffering a premature withdrawl/defaulted loan? The loan balance is large so paying it off is really not possible. Any one with any creative ideas. I can't come up with any. Thanks

We have a client who sponsors a defined benefit plan subject to PBGC coverage and a profit sharing plan. There are three participants common to both plans who have left and are nowhere to be found (presumably out of the country). The DB plan is OK as payment can be made to the PBGC using the Missing Participants program. PS plan is a little more problematic.

One idea brought up in a brainstorming session was to deem that their PS balances are deemed to be "rolled over" to the DB plan and then paid to the PBGC. This allows total distribution from the PS plan and presumably allows for these participants to have a better chance to actually see their monies somewhere down the road. Any comments?

When can an existing plan adopt the safe harbor features. For example, we have a plan with a June 30 fiscal year-end, can we amend for Safe Harbor features effective July 1, 2002?

In addition, we would like to convert the plan on May 1, 2002. Do we convert the plan as is and then amend it for July 1, 2002?

Thanks.

MP had five-year cliff vesting, with forfeitures used to reduce contribution.

MP merged into PS this year.

PS plan has forfeitures reallocated on same basis as 401(a).

In 2002 there will be forfeitures due to terminations of many non-vested employees. In order for the forfeitures to be used to reduce, does the PS plan have to be amended due to the merger? Has this situation come up with anyone else yet?

Please advise. Thanks.

What is the "Caledar Year Election" and when is it used? I know what the calendar year data election is but am confused on the CYE

Is there any advantages/disadvantages to choosing to reduce the ACP to correct multiple use? What about ADP?

A plan's adoption agreement elects to reduce both ADP and ACP for multiple use. This seems like an odd election that will result in the greatest refunds for the HCEs.

Any opinions?

I have a client who is going to put in their annual 3% safe harbor contribution. Is it permissible to base that on compensation from date of entry into plan, if that's what document states?

Hi -

I have a question about communication requirements and/or practices to participants

We currently provide a packet of information on our Profit Sharing plan to all new hires and to newly eligible employees. The packet includes Fund Facts sheets on all the 17 funds we offer, a sheet showing a recent comparison of rates of return (going back 10 years), and the most recent copy of our SPD. The packet itself is contained within a large publication that gives general information about how 401(k)s work. We also provide quarterly statements to our Profit Sharing participants. On the Rates of Return sheet included in with the statements, is a note to contact HR for a current prospectus of any of the funds.

We do not provide prospectuses (prospecti?!) to new hires, nor do we distribute new ones each year. If we should change an investment election, we will provide a prospectus on the new fund to all participants. The fund fact sheets are also only provided in the new hire packets - or, again, if we change an investment election (and then we send out all the fund fact sheets on all the funds).

I can't find anything that tells me we must send out prospectuses to new hires or existing eligible staff. Nor do I see anything about sending out additional information about the funds like a fund fact sheet. Members on our committee are taking extremes in what they think is appropriate: status quo (not changing current practices) to sending prospectuses to new hires (and newly eligibles) and once a year to everyone, in addition to sending updated fund fact sheets every quarter to all participants. But, no one is sure what's required and what's simply "normal practice."

Is there something out there I'm missing regarding ERISA requirements? If not, what have you found to be the general practices in your experience? I want to make sure we provide up-to-date information to our employees - but not go overboard with the mailings.

Any thoughts would be appreciated.

Thanks.