We established a defined benefit plan for a new client eff. 1/1/01. As the company also started as of that date, for 2001 we were going to perform the initial valuation as of 12/31/01. As part of the proposal we developed an estimated cost for the year. The client established an account and made partial deposits during the year towards 2001.

Situation that is a little weird is that assets incurred a loss during the year. So:

Deposits $100,000 during 2001

Say credit $2,000 interest on contribution for FSA purposes.

MV of assets as of 12/31/01 was $90,000.

To establish AV of assets as of 12/31/01, I take MV Assets, subtract out contributions paid for 2001 to get IRC 404 assets. I then further subtract out interest for IRC 412 assets. Obviously I am coming up with a negative AV assets as of 12/31/01. Does this seem a little odd to anyone?

The code is clear that a "safe-harbor 401(k) plan" is required to provide the safe harbor match or safe harbor nonelective contribution only to NHCEs. In your experience, do most plans also provide the safe harbor contribution to HCEs?

Is anyone planning to post catch-up contributions to a separate source for recordkeeping (for testing purposes)? What about an election form (at least for those whose applicable limit is a plan level limit)? Lastly, many documents give plan administrators the power to limit HCEs to a lower deferral rate (determined by the plan administrator)- 5-6% or whatever rate they feel appropriate to help pass nondiscrimination. Would'nt this become a plan limit allowing catch-up?

Thanks

A question's come up with regards to when a participant can file a Salary Reduction Agreement and when it can be implemented on the payroll system. Can a participant legally have a salary reduction agreement implemented in the same pay period it is signed? The example would be where the agreement is completed within a pay period and the participant expects that deduction to be taken on the paycheck for that pay period ... kosher or not?

Thanks,

Kerryb@waushosp.org

I realize that:

An employer cannot have a SIMPLE plan, if the employer also currently "maintains" a SARSEP.

But, I'm not sure that I know what "maintains" means.

Here's my actual situation:

Years ago, an S-Corp established a SARSEP. It completely stopped using the SARSEP a couple of years ago and established a SIMPLE-IRA. It never took any formal steps to terminate the SARSEP (because a SARSEP is not a trust plan). All it did was set up SIMPLE-IRA accounts for each of its employees, started making SIMPLE contributions to those SIMPLE-IRA accounts and ignored the fact that the employees still have SARSEP-IRA accounts.

Now the S-Corp wants to switch back to the SARSEP. It wants to stop using the SIMPLE-IRA and start withholding SARSEP elective deferrals and making discretionary contributions to the SARSEP and do away with the SIMPLE-IRA. The reason why is...because the business is making a good profit now and it wants to take advantage of the $35,000 max contribution limits (allowed by SARSEP rules) .... rather than the measly max contribution allowed by its SIMPLE.

1. Since the SARSEP never died (terminated) .... can the corp begin using it again ?

2. What does "maintain" mean ? The corp never contributed to both the SARSEP and SIMPLE in the same year. Did it "maintain" a SIMPLE, while it also had an inactive SARSEP, because the SARSEP was still "available" for use ? Does "maintain" mean "available" ?

3. Can the corporation alternate (every other year) between the SIMPLE and SARSEP, as long as it maintains separate SIMPLE-IRA accounts and separate SARSEP-IRA accounts .... or is it now forced to continue with only the SIMPLE because it allowed the SARSEP to go inactive for a couple of years?

The state noncompliance issues concern me since most of my firms clients are in noncompliant states (NC, SC, GA). What are others doing? Are you sending a mass communication to clients concerning this? Thanks

Can anyone confirm whether or not an employer that sponsors more than one retirement plan must use the same limitation year in calculating the 415 limits even if the plan year ends are different?

I need some info on the 403b amnesty program, RP - 2001 - 17, where can I find this info on the IRS website. Also, info on any penalties and fees associated with this process. Thanks.

Does anyone know where I can get a complete copy of SOP 93-6 on line?

Has anybody heard when the new forms and instructions will be released? I checked the DOL website, but couldn't find anything giving an estimated release date. Thanks.

There doesn't appear to be any requirement in IRC 106 that employer-provided health coverage must be a group policy. The employer can also make tax-free contributions toward the cost of individual policies for its employees. Does anyone know any regulation, ruling, or other cite where this is explicitly stated?

Also, are there any guidelines for the administration of employer-provided individual coverage? Does the employer have to make payments directly to the insured, or can the employee be reimbursed under an "accountable" plan?

Finally, does anyone have a feel for how common such an arrangement is and/or if there are other pitfalls?

I need some guidance on if/how I need to file for my employers health plan.

According to documents received from the insurance company, our plan is a self-funded group contract. We pay the insurance company a "premium/fee" each month based on the number of employees we have. A portion of this fee is funded by our employees. And, we are billed monthly for the benefit checks the insurance company writes each month. We have about 25 employees.

According to 29CFR 2520.104-20, it would seem that we may be exempt from filing form 5500. However, I'm not sure that reimbursing the insurance company for claims paid qualifies us under item (B)(2)(ii) of that section (discusses benefits being paid solely from the general assets of the employer). I am leaning towards being exempt since it would seem we are just hiring the insurance company to administer the plan rather than having them "fund" it.

Any thoughts?

I need some guidance on if/how I need to file for my employers health plan.

According to documents received from the insurance company, our plan is a self-funded group contract. We pay the insurance company a "premium/fee" each month based on the number of employees we have. A portion of this fee is funded by our employees. And, we are billed monthly for the benefit checks the insurance company writes each month. We have about 25 employees.

According to 29CFR 2520.104-20, it would seem that we may be exempt from filing form 5500. However, I'm not sure that reimbursing the insurance company for claims paid qualifies us under item (B)(2)(ii) of that section (discusses benefits being paid solely from the general assets of the employer). I am leaning towards being exempt since it would seem we are just hiring the insurance company to administer the plan rather than having them "fund" it.

Any thoughts?

Top 25 HCE elects lump sum - is restricted ! - gets life annuity payments for a year per restricted rules - a year later he's un-restricted & wants a lump sum - how is the amount he's entitled to calculated ??

Has anyone provided benefit increases to former HCEs? The object is to provide QSERP benefits for inactives covered under a SERP. What are the issues and how should the coverage and nondiscrimination tests be conducted? The general test for DB plans for active employees deals with annual accrual rates. What about inactives (term vesteds and retirees), i.e., how do you determine their rate groups?

An investment of $2000 into a Roth last year and lost $500. I recharacterized it into a Traditional IRA. Should I claim a $2000 or $1500 as the income reduction? If I allowed only a $1500 reduction may I calim the $500 loss some other way?

Some of my associates are interested in knowing why it is so difficult to comply with 404© and if there are attorneys advising employers that the trouble and expense of attempting to comply with every minor detail of 404© may be time and money better spent on other things. Would really like to hear some positions opposed to attempting to comply with 404©.

After browsing thru 4 pages and nearly 100 threads here on the subject, [search results from "404©"] it appears that it would be very easy to demonstrate that any particular employer's plan would not comply - even though the Employer claims that they are complying.

Appreciate any comments.

I know that this question isn't related to plan administration, but I thought that I would get the best response here. I am planning to go to our HR person to discuss a raise and I was wondering what the "average pension/benefits administrator" is earning. Does anybody have any suggestions of what I should shoot for?? THANKS!

Is anybody interpreting the new top-heavy exception for safe harbor plans to only apply to plans that have NEVER had any other types of contributions.

EGTRRA 613(d) says:

.........the term 'top-heavy plan' shall NOT include a plan which consists SOLELY of -

(i) a cash or deferred arrangement which eets the requirements of section 401(k)(12), and

(ii) matching contributions with respect to which the requirements of section 401(m)(11) are met.

That is, does "SOLELY" in the statute mean that no other types of contributions were ever made to the plan or does "SOLELY" mean no other contributions were made for the current plan year?

Thanks.

I understand that the regulations do not require earnings to be calculated on excess contributions during the gap period if the plan so provides. So if the gap period turns out to be an 11 month period (for example) a participant's excess contribution will not have any earnings or losses during this 11 month gap period. I find this to be a little strange or unfair to the participant? Am I missing something?