In completing the Schedule A for a Form 5500 for a profit sharing plan with individual ancillary life insurance policies for some participants, should I complete Part II which looks very similar to what I completed in the past or Part III since I said that the plan provides welfare benefits in accordance with page 14 of the instructions?

I'd appreciate some opinions on what constitutes a "more than de minimus" comp differential for 414(s) testing for DB plans.

If a DB plan excludes bonuses, for example, and all HCE's are at the dollar limit, therefore recognizing 100% of their comp, and the NHCE comp ratio is 98%, is this a violation of 414(s)?

Assume the plan is a safe harbor and wishes to avoid general testing.

I realize this is largely a matter of opinion, but I'd like to hear what standards others use. We tend to take a very conservative approach, i.e. any greater percent for HCE's may be a problem.

I am in the process of drafting GUST amendments to an individually-designed DB plan which provides different benefit formulas for different groups of employees, but my question involves a non-GUST issue. The basic benefit formula in the plan provides that a participant's "annual rate" of retirement income will be x% of his final average compensation "at normal retirement date" times his years of credited service "at normal retirement date." "Normal retirement date" is defined as the first day of the month following a participant's 65th birthday. A participant can keep on working past age 65 and retire at a date later than his normal retirement date. The plan contains a suspension of benefits provision that appears to comply with IRC Sec. 411 and ERISA Sec. 203. However, it contains nothing expressly stating that a participant who is entitled to benefits under the basic benefit formula and keeps on working past his normal retirement date will continue to accrue benefits for his post-normal retirement age service. Nor is there any language stating that such a participant will receive the greater of (i) the actuarial equivalent of his normal retirement benefit computed as of his normal retirement age, or (ii) his normal retirement benefit using years of service (including those completed after age 65) and applicable compensation determined as of his actual retirement date. It seems to me that there may thus be a violation of IRC Sec. 411(B)(1)(H). A second benefit formula (applicable to a different group of employees) states that the "annual rate" of retirement income will be x% of the participant's final average compensation "at his normal retirement date or later retirement date" times his years of credited service "at his normal retirement date or later retirement date." This formula seems to comply with 411(B)(1)(H). Am I missing something about the first formula? Could a plan have a formula like that and still comply with 411(B)(1)(H)? It is my understanding that the plan got a TRA 86 determination letter. Any help or insight is greatly appreciated.[Edited by janie on 09-13-2000 at 05:01 PM]

An employer has just noticed that an employee was inadvertently not allowed the opportunity to defer at 1/1/00. The plan document states that a partcipant can commence deferrals on 1/1 and 7/1. Since this person was not given the opportunity at either of those dates, is there a problem with letting the employee commence deferrals now?

Obviously if we could allow the employee to defer now the employer is stuck with only a partial year correction under Rev. Proc. 99-31.

Thanks for you help.

I am new to Cafeteria Plans but have been administering Qualified Retirement Plans for years. I am going to be taking over the administration of our clients Cafeteria Plans and wanted to see what thoughts existing administrators have on software options. Any input would be greatly appreciated.

Does the IRS or the DOL have any definitive regulations (guidance)for a Loan Default? Does a specific amount of time have to pass before the loan is in default? Is a Plan Administrator the only person who can deem a loan in default? Thanks to all who can give guidance on this issue. DSW

I'm sure this has been asked before, but I can't find it.

If a brand new company starts 1/1/00 and has a plan effective 1/1/00 are there any HCE's in the Plan for the first plan year (Note that there are no owners participating in the Plan).

There are several officers (not owners) earning >80,000 in 2000. However, for the prio year (1999) there were no employees.

Are all participants considered NHCE's for 2000?

Nondiscriminatory classification test- 125 plan

1.Would full-time employees be considered a reasonable classification (i.e. 125 plan includes anyone eligible for medical but medical plan excludes part-timers)?

2. Who is considered benefiting,anyone who is eligible to participate in 125 plan or must it be those actually participating?

3.If the ratio % is below the unsafe harbor % does this automatically fail test or can one use a facts and circumstances approach?

It seems to me that this is a 2 prong test consisting of;

1) subjective classification test and

2)objective safe harbor test

Say 2) is met, i.e. ratio % is more than safe harbor %, when would 1) be not satisfied? Refer to question 1. above, I have an employer with a disproportionate share of part-time ees , almost 75-80% of non-highly workforce and 50% of highly workforce, but the objective safe harbor test is satisified since there are many of them , i.e, my concentration % is 96%

This question may be a mute point if part-time is a reasonable classification

I am reallly rambling now

and I thought pension coverage testing was hard, it just seems more defined I guess, making bright line testing easier.

Thanks for any input

Pat Insall, CPC

125 plan fails 25% concentration test for 1999 calendar year.

It is a premium only plan (POP) with medical premiums taken out on pre-tax basis of ee's pay

What is HCE taxed on , amount of pre-tax ee premiums withheld or maximum they could have withheld under highest option?

What are the mechanics of correction? amended 1999 W-2 including above amount and an amended 1999 1040?

Thansk

Two Questions:

1) Has anybody seen/heard of a DB plan using a df. of compensation for purposes of computing benefits which includes nonqualified deferred compensation? (assuming the plan can pass nondiscrim. testing, I believe the DB plan can use such a df.)

2) Any problem with including deferred comp. in the df of comp. but provide in the plan document that deferred comp. will not be included in any plan yr. in which nondiscrim. testing cannot be passed? Does this violate the definitely determinable benefits requirement of Reg. 1.401-1(B)(1)(i)?

Any thoughts would be appreciated.

PLR 9009052 states that accrued paid time off is includible in an employee's income when not subject to substantial limitations or restrictions. "Limitations & restrictions" include maintaining a minimum number of accrued hours, a maximum number of accrued hours (above which hours are automatically converted to cash & distributed to employee) and the requirement that hours be cashed in in blocks of, for instance, 40 or more. What is not clear is whether a 40 hour block of time that can be cashed out, but is not cashed out, is taxed twice: once when it is "included in income" because not cashed out, and again when it is actually converted to cash and distributed to the employee. Any comments on or experience with this issue? What is the status of IRS enforcement in this area, if any?

We are quite frustrated with our current software for calculating RMDs, pre-59 1/2 distribution options and general retirememt distribution projections for clients. I won't state which one we're currently using, but I'd like to have input from anyone out there who relies on such software for retirement/estate planning. Any recommendations?

Does any PPO or Indemnity plan administrator right now provide a company's employees with secure internet access to the data on their medical claims? In that way an employee has access to the claims data on a 24/7 basis.

I have a plan that waits five years before allocating forfeitures and I have setup forfeiture accounts for the past 4 years that hold each years' forfeiture amounts. Are these accounts included in calculating the top heavy percentage or are just the balances in the participants' accounts included.

For a client who wanted to take early withdrawals, I had prepared projections based on a series of substantially equal periodic payments to avoid the 10-percent tax penalty. The projections under each method i.e. minimum distribution method, amortization method, and annuity method, differ. What the client now wishes to do is to start receiving a specify amount of distributions. Is it possible for the client to do this?

A plan sponsor desires to use automatic enrollments starting 1/1/2001, the first day of the next plan year. Given that we are still in the remedial amendment period, is there a requirement that the plan document contain the wording to authorize the automatic enrollments (prior to the GUST restatement)?

Thanks.

Does anyone know where I can get a copy of committee reports relating to the enactment of ERISA? Specifically, I am looking for reports relating to 4021(B)(2). Thanks.

Prior to expiration of remedial amendment period, plan sponsor amended plan to incorporate required changes under TRA 86. In operation and prior to amendment, plan sponsor began adding elective deferrals to 414(s) definition of compensation. Plan amendment included a retroactive effective date. Was this improper, considering that the change was elective, rather than required? Can anyone give me any authority?

In reviewing IRS guidance relating to GUST amemdment procedures, the IRS seems to permit plan sponsors to amend their plans on a retroactive basis with respect to certain elective law changes, such as the new 401(k) safe harbors. However, in reviewing similar IRS guidance relating to TRA 86, etc. amendments, the language is not as clear.

Thanks.

Also, does anyone know of any rules that would grandfather an old 457(B) plan from having the minimum distribution rules apply to the plan? Thanks.

Could a participant in a 457(B) plan have made a 242(B) election? Thanks.