Up until when can I make a prior year sep contribution?

In a DB Plan if a participant returns to work after going into pay status (collecting retirement benefit) and meets all eligibility requirements for the plan would the monthly benefit then be adjusted according to the extra years of service and salary amounts seeing that the benefit amount is solely based on these two items? In the plan document the only provision that even comes close to answering this question is under Suspension of payments...which by the way are not allowed. The Employer is not even sure of the answer! This is my first year administering this plan and I can not find anything to support an answer.

We are a designated financial institution that uses the IRS Model Form 5305-SIMPLE. Therefore we are obligated to file reports with employers by October so that the employer can distribute materials to their employers. One way (and the simpliest) is to send the employer a copy of the IRS Model Form with the Model Notification to Eligible Employees and the Model Salary Reduction Agreement. Based on these documents the employees make decisions as to how much they will contribute next year.

The model forms have not been updated for EGTRRA (compensation and salary deferral limits).

Has anyone heard when and if the IRS will be updating these forms in time for financial institutions to meet their obligations?

Will the dates be extended until the IRS does publish model language? If the IRS doesl not publish in the near future, can we change the Model Notification to Eligible Employees and Model Salary Reduction Agreement to reflect the new limits?

I'd also like to hear how other financial institutions are planning on handling this.

Can either of the following situations be corrected by retroactive plan amendment:

1) In a 401(k) plan, deferrals were limited to 2% - 15% of compensation. Plan document did not specify the 2% minimum.

2) Plan was valued quarterly. Plan document specified annual valuation and did not give the option of other valuation dates.

In both cases, the plan has been operated consistently for ten years or so.

If retroactive plan amendments cannot be done, what would the corrections be?

What IRS program under Rev. Proc. 2001-17 would be used?

Plan A has an eligibility of 3 months. Plan B has an eligibility of 1 year. Plan A wants to merge into Plan B (Company B bought Company A). Some participant's in Plan A won't be eligible for Plan B. Does the Employer have the option to let those who met the eligibility requirements in plan A, but not plan B to continue to defer after the merger? Any one know where this is discussed?

Employer A with eleven employees is acquired by an employer B with 500 employees. A's health plan will terminate at the time of the acquisition. Two former employees of A currently have state "COBRA" coverage. Are these former employees of A entitled to COBRA under B's plan? What about employees of A that are not hired by B after the acquisition?

I think B's plan must cover both groups--any other opinions?

Kathleen Meagher

A municipality (city) client wants to know if it is possible to set up a vehicle (such as a trust) that will accept pre-tax contributions from retirees that will be used to pay for their health insurance premiums. Please advise on how this might be done and, if possible, who I might go to directly for assistance.

Thanks

I have a partnership where the partners charge the fees against their individual accounts or pay the fee personally because they all have different balances. The individual partners who pay their fee personally are taking the deduction as fee for investment management which is subject to the 2% floor on the Schedule A of form 1040.

The partnership pays the fee for the non-partners.

Can anyone tell me if the partnership paid the expenses for all participants, could the fees be allocated as business expenses to the individual partners for there proportionate share?

If this can be done, it would reduce the amount of self-employment income and therefore reduce the self-employment tax the partners pay.

Here's a good one! A participant in a 457 plan died. 60 years old. Spouse is sole beneficiary. An insurance agent read that you could roll 457 to IRA now, but didn't realize that you couldn't until 2002. The 457 plan was funded with a deferred annuity.

What they now want is to 1035 exchange the annuity in the 457 plan to a new annuity, in the name of the Trustee of the 457 plan, but with the deceased as annuitant! Then in 2002, the 457 Trustee, acting upon the instructions of the spouse beneficiary, will roll the money to an IRA in the name of the spouse.

I don't have a problem with the second part of the transaction, but how the heck can you do a 1035 exchange when the annuitant is deceased? (The logical approach, to me at least, if the 457 Trustee agrees, is to keep the money there until 2002, then just do a rollover.)

Just came across a 401(k) plan sponsored by a housing association that defines "employee" specifically by name (one individual). The term participant is defined as an employee who satisfies the eligibility requirements. Consequently, this plan was specifically written for one named employee of the association.

This employee is not a highly compensated individual (no highly compensated individuals are employed by the association).

As this plan does not benefit any HCE's , it is deemed to satisfy the minimum coverage requriements of 410(B).

However, I am still having a hard time letting this plan design pass my "sniff" test. I can "discriminate" as much as I like within the NHCE classification? There are 6 other NHCE's that are employed by the association.

Any thoughts on this plan design would be appreciated.

Would mutual funds be considered Pooled Separate Accounts that are required to be reported on Schedule D? Or is a Pooled Separate Account an invested solely offered by the insurance company?

A cash balance plan defines act equiv to be

30 yr treasury and gatt for lump sums and

71GAM, 7%, otherwise

They say that to convert cash balance account to annuity you divide by an annuity factor based on the 30 year treasury rate, but give no specific mortality table.

Question is - what mortality table s/b used or is most reasonable?

If the 71GAM is used, this results in a lower annuity factor and thus a larger accrued benefit and potentially larger lump sum. i.e. larger than account balance.

May K-12 schools offer any plans other than 403(B) plans?

We have a takeover Plan that has 5 different classes of employees. Eligibility and contribution rates differ based on class. What is the best way to initailly build the case on Relius?

I am new to the self funding benefit area and i am trying to find out what benefits are mandated by Erisa or the state. If you have experience with Self Funded plans, I would really like to talk to you about it.

My insurance company is telling me that there are no mandated benefits that we need to follow for the state since we are a self funded plan goverened by ERISA. Can anyone verify that?:confused:

Are Sec 403(B) plans exempt from providing a fiduciary bond even if the plan is subject to Title I of ERISA?

Situation:

Husband deceased, beneficiary is spouse, spouse wants to do a direct rollover to her 401(k) plan.

I know she can rollover to an IRA, but can she rollover to her K plan? If not, can she roll to an IRA, and then roll the IRA into her K? Were there any changes with the new laws that will take effect soon to allow for other options?

Thanks in advance,

JimJ

What happens when a plan that is not amended for GUST is merged into a plan that has been amended for GUST? I understand the normal merger rules (where I must preserve accrued benefits, optional forms, actuarial factors, etc.) but what about the effective dates? For example, the surviving plan was amended for GUST over a year ago. Therefore, for some provisions, it has an effective date that would be earlier than a plan that was amended for GUST right now (e.g., the "greater of" requirement for GATT changes - determining actuarial equivalence - to comply with 411(d)(6) would end earlier for the plan already amended for GUST). Any ideas? My thought is that the merged plan that does not survive would no longer have a separate existence (of course, it would not be considered terminated, since then I would definitely have to amend), so I shouldn't even worry about this - as long as the effective dates are correct for the surviving plan that has already been amended. However, counsel is telling me that I may have to worry about this. Any thoughts? My feeling is that that would be a terribly onerous administrative nightmare! As always, I greatly appreciate the help I get from everyone on these boards!

What happens when a plan that is not amended for GUST is merged into a plan that has been amended for GUST. I understand the normal merger rules (where I must preserve accrued benefits, optional forms, actuarial factors, etc.) but what about the effective dates? For example, the surviving plan was amended for GUST over a year ago. Therefore, for some provisions, it has an effective date that would be earlier than a plan that was amended for GUST right now (e.g., the "greater of" requirement for GATT changes - determining actuarial equivalence - to comply with 411(d)(6) would end earlier for the plan already amended for GUST). Any ideas? My thought is that the merged plan that does not survive would no longer have a separate existence, so I shouldn't even worry about this - as long as the effective dates are correct for the surviving plan that has already been amended. However, counsel is telling me that I may have to worry about this. Any thoughts? As always, I greatly appreciate the help I get from everyone on these boards!

I also posted this message on the Mergers Board. Thanks.

Is there anything in current (pre EGTRRA)law that prohibits a sole proprietor with no employees from having a 401(k) plan?