Does anyone know of a plan sponsor that maintains 2 separate 401(k) plans that have different plan years? Why would an employer do this? How is ADP testing done? If the two 401(k) plans normally had no employees in common, but some of the participants from one of the plans had to be added to the other in order to pass 410(B) coverage requirements, would the ADP test be done using all participants from both plans, or could the ADP tests be done separately for each plan, aggregating the ADP for only the participants who deferred (or were eligible to defer) to both plans?

I have a client who is interested in a Cash Balance conversion. The new plan will feature a flat 13% pay credit and tie interest credits to 30-year Treasuries.

In transitioning to the new plan, the opening balances are calculated as the PVAB under the prior plan using the applicable GATT rates. On top of this, if a participant's projected PVB (yes, PVB) on the new plan is less than the projected PVB under the old plan, the client wants to give a transition credit equal to the dollar shortfall.

The problem is that 59 of the 66 HCE's (89%) in the plan are eligible for this very generous transition credit while the NHCE percentage is very small, about 19%. Does anyone have any suggestions on how to handle the discrimination testing? The intent is that all participant's will not be hurt by this conversion.

Thanks

Anyone have thoughts on clarifying the application of new Code section 414(v) to section 457 plans? Section 414(v)(6)(A)(iii) defines "applicable employer plan" as an eligible deferred compensation plan under section 457 of an eligible employer described in section 457(e)(1)(A). Section 457(e)(1)(A) states "a State, political subdivision of a State, and any agency or instrumentality of a State or political subdivision of a State."

This definition specifically excludes section 457(e)(1)(B), which would include section 457 plan maintained by "any other organization (other than a governmental unit) exempt from tax under this subtitle" (i.e., tax-exempt organizations. This distinction is not mentioned in the house, senate, or conference committee reports.

What is the rationale for not providing for catch-up contributions for participants of section 457 plans maintained by tax exempt organizations?

Can someone tell me in a nutshell what the issues are when an HCE is terminated, withdraws his/her funds from a plan and rolls the funds into an IRA BEFORE excess deferrals for the prior year have been returned. It would seem that some of his/her funds would not be qualified for a rollover into an IRA.

Any suggestions on how one would correct this if at all? What are the problems the plan would face?

Thank you.

[This message is also posted in the DB message area]

I was wondering if anyone has insight into the following:

Company sponsors a DB plan. The plan was frozen July, 2000. The Company is in the process of filing for a GUST determination letter. The Company would like to file with the 1998 Form 5300 forms and not with the proposed forms. The question is must the entire Schedule Q (including demonstrations) be completed?

The instructions to Schedule Q provide that only Parts I and II need to be completed if "the plan does not benefit any highly compensated noncollectively bargained employees. " It seems reasonable to take the position here that this is true and that no further information is necessary.

Is this a position that the IRS will buy?

Thanks in advance!

A client currently maintains an ESOP as well as a 401(k) profit sharing plan. The ESOP contains a money purchase feature.

I believe the client could merge the two plans into a "KSOP" if they want to contribute the match in stock.

If, however, the client doesn't wish to contribute the match in stock, can they still merge the two plans together?

Also, at this time, thier ESOP forfeitures are reallocated to participants. Are there any ESOP rules which would prevent them from using forfeitures as a credit for plan expenses?

Does anyone believe that retirement plans and/or administrators of retirement plans are subject to the Gramm-Leach-Bliley notification requirements?

Does anyone know of any good source of information on how to handle loans in DC plans? Specifically, I am looking for guidance in handling interest on late payments and distributions for participants w/ deemed loans.

Thanks

I see in the Instructions for Schedule Q that it is no longer required in conjunction with Form 5310. Are there any reasons for filing Schedule Q for a terminating money purchase pension plan with no significamt hidden issues???

I am looking for any information on the following questions:

1) Is it possible for 401(k) plan participants to pay the administrative fees associated with their account directly (with after tax dollars) rather than out of their plan assets?

2) If so, is the amount paid considered a contribution to the plan or is the employee still permitted to receive the full $35,000 for that year?"

EGTRRA provides that a plan may provide that the present value of a participant's nonforfeitable accrued benefit may be determined for distributions after 2001 without regard to the portion attributable to rollover contributions. The new model good-faith amendments seem to indicate that this provision may not be available for plans which are subject to the QJSA rules--"The following optional sample amendment may be adopted by plans that provide for involuntary cash-outs, other than plans that are subject to the qualified joint and survivor annuity requirements of §§401(a)(11) and 417 of the Code." Does this mean that a profit sharing plan which includes the survivor annuity requirements cannot adopt an amendment providing for the exclusion of rollover contributions in these calculations?

We have fiscal year plan with a 9/30/00 year end. Completed all the work. ADP & ACP tests both failed, refunds were made. Employer now informs us that the salaries provided us were incorrect.

With the new salaries ADP test fails, but not as bad; the ACP test fails worse. The net effect is that the HCE's received to large a refund. It is my understanding that the appropriate correction is to have the HCE's return the excess amount received. Is that correct?

Assuming the proper correction is to return the excess amount received, can I net the ADP and ACP test differences against each other and have the net excess retruned or do the HCE's have to return the ADP excess and get another distribution for the ACP excess. Example: HCE received a total of $200. $100 for the ADP test, $100 for the ACP test. Should have received a total of $180; $60 for the ADP test and $120 for the ACP test. Can I have the HCE return the net difference of $20 or should the HCE return $40 for the ADP excess and receive an additional check of $20 for the ACP excess?

Pursuant to the contract between the employer and the insurance company, a 401k plan has a surrender charge (first 10 years, decreasing percentage) for all withdrawals that aren't retirement, death or disability.

Within those 10 years the employer terminates the plan thus forcing all participants to have their funds disbursed and the insurance company takes a surrender charge out of every participant's account.

Is there any way for the participants to force the employer to pay this charge?

employer agrees in plan to pay "administrative expenses," but has stated this is not an administrative expense.

Are these provisions the norm (is there a br/fid duty claim for entering into this contract?)

Can there be a br/fiduciary claim for implementing the termination in such a way that each participant loses 7% of account?

Anything else you can think of???

Are Profit Sharing Plans exempt from aquiring fidelity bonds their first year? I allways thought so, but I didn't see anything in ERISA 412 stating that.

Also

If a bond is required the 1st year, what about a Profit Sharing Plan where the Profit Sharing contribution is a receivable. Would one be required then? Would if make a difference if the 5500 was done on a cash or accrual basis.

We have several employers that have both MP and PS plans that have the assets of both plans invested in one account. I have heard a few people say that comingling the assets of more than one plan of the same employer creates a Master Trust. I'm not sure that it does. Does anyone have any thoughts on this? Also if a MP and PS plan have all assets of both plans comingled, should there be only one trust EIN that both plans use, or should there be seperate trust EINs for each plan.

i have a controlled group of corporations that have seperate 401k

plans that have different matching formulas and investment options. is this set up permitted and if so what are the testing implications?

What have you found effective in cutting health care costs for employers with 150-200 employees. What are the typical heath care costs for this size group.

Is anyone aware whether 401(k) plan assets can be used to purchase DB plan service credits? I know that this is permissible for other 401(a) plans, but wasn't sure whether there was a particular restriction with respect to 401(k) plans.

When a plan sponsor maintains a 401(k) plan, and also maintains another DC plan with a different plan year than the 401(k) plan, what special issues must be considered?

How are 415 limits determined (if the limitation year for each plan is the plan year of that plan)?

How is 404 deductibility determined?

How is 410(B) coverage determined?

I am aware that for 416 top-heavy purposes, the plans are aggregated by using the determination dates that fall within the same calendar year.

To determine ADP and ACP tests [if the 2nd plan is also a 401(k)] the plan years ending within the same calendar year would be added.

To determine who is an HCE, plan years beginning in the same calendar year would be aggregated.

Are there other issues that require aggregation of the plans?

Target benefit plan adopted in 1989. Contributions calculated pursuant to formula in document. E/er has not filed 1997 through 2000 5500's and has other defects in plan. My understanding is that TRA '86 made changes to target benefit formulas. This plan doc was never amended for those changes nor for any other required changes since its adoption. Can anyone confirm that the target benefit formulas were amended? Clearly, the correct contribution would be one calculated as per the amended target benefit formula. Also, the plan purchased an insurance policy on a participant who was ineligible for a contribution as he had already hit his normal retirement age. The plan has paid the premiums on this policy since day 1. Any insight as to correcting the defect concerning the insurance policy? Anyone know of a good resource with respect to target benefit plans in general??

Thanks.