For plans that are drafted to contain a true-up matching provision (ie, matching contributions are based on annual compensation rather than payroll period compensation), does the Employer have to wait until plan year end to make the true-up matching contribution? I have always seen it done at plan year end once the annual compensation is exactly known. However, I have a client who wants to make the true-up at the time the participants hit the 10,500 limit all at once based on projected compensation for the year, or alternatively, to true-up each payroll rather than waiting to the end of the year. Can this be done? Any comments would be appreciated.

A company sponsors two plans, a P-S and a MP plan. The trustee (not the participants) controls the investments in both of these plans. The broker mistakenly liquidated investments and paid a distribution for a particpant out of the wrong plan.

Can the broker truly fix this problem by simply transferring assets from one plan to the other? Is there a 5310-A filing required or any other notification to the IRS?

Any cite would be greatly appreciated.

Does a 403(B) require an annual 5500 to be completed and submitted to the IRS, like a 401(k)? Does discrimination testing need to take place?

DB is significantly overfunded. They want to freeze and/or termate the plan. Considerations are the following:

1) NRA = 65. Plan currently has a 50% reduction in benefits at ERA of 55, a 33% reduction in benefits at ERA of 60. What issues should we consider if they want to eliminate these reductions and allow full benefits at age 55 or 60 with a certain number of years of service - say 20 or 25? They have considered this previous to the freeze/terminate issue. I assume we would have to prove that this amendment was nondiscriminatory. How is this done? Just examine affected participants at the time of the amendment. If we freeze the plan will that eliminate further service accruals? What about someone who is age 54 with 25 years of service and then next year while the plan is frozen they reach age 55. I assume they will get the unreduced benefits. So how is nondiscimination measured if the number of affected participants is changing.

2) Considering using a 401(h) account to use part of the overfunded amount. Assume we would just have to freeze for now to allow for the 5 year window.

3) Considering adding a lump sum payout option for balances over $5,000. How will this affect the overfuneded status as most participants will choose to take lump sum and rollover to 401(k).

4) Timing of GUST amendments with amendment to termiate. Does it really matter which comes first. I have always done GUST amendments before amendment to terminate, can they be done after?

Any other thoughts I am missing.

A plan has a favorable determination letter by the Puerto Rico Treasury Department (La Hacienda), not the IRS. Is this sufficient or must the plan also obtain a determination from the IRS?

We have a money purchase plan funded with an insurance company annuity. Each year the fund withdraws for contingency and expense charges. The charges are shown as expenses to the trust on the Schedule A. The client wants to reimburse the plan for these expenses.

This is a small 3 life case, the contribution is around $25,000 per year. If the contincency fees are $5,000, can the client contribute and deduct $30,000?

Steve

Does anyone know of any rules governing the timing of ESOP contributions?

For example, ER has set up an ESOP with a plan year end of February 28. It is now 75 or so days after the end of the plan year. By what time is the ER required to purchase stock for that plan year? Can stock received after the end of the plan year through a 1042 election be contributed to plan for the plan year ending on February 28?

Any help that anyone could provide would be greatly appreciated.

Past 401(k) vendors I have worked with have provided the employer with a "checklist" to help the employer determine if a QDRO was acceptable.

The new vendor we work (Putnam) with tells me that they offer no such guidance.

Where can I find instructions for administering a QDRO?

Does anyone have any thoughts on this question.

Q&A-12(a) of the proposed regulations states that "An election to reduce compensation for a period by a set amount for such period may be automatically renewed for subsequent periods."

Q&A-12(B) states "An employer may provide under its qualified transportation fringe benefit plan that a compensation reduction election will be deemed to have been made if the employee does not elect to receive cash compensation in lieu of the qualified transportation fringe provided that the employee receives adequate opportunity to choose to receive the cash compensation instead of the qualified transportation fringe."

Are these talking about the same thing, or is (B) talking about initial elections and (a) talking about continuing elections already in place? Can an employer with monthly election periods require an affirmative election to get into the plan, and then automatically renew salary reduction elections each month without sending out notices to everyone who is participating. The participants would be told at the outset and probably periodically that they always can cancel their election at the beginning of any month, but they wouldn't be told this each and every month.

What do you think?

[This message has been edited by HIPAAdrome (edited 05-22-2000).]

Section 1056 of ERISA states that plan distributions should begin the later of:

termination

NRA

10th anniv of participation

Age 65

However, I've recently noticed many documents, including prototypes, state age 62 instead of age 65. Has the age changed and I just missed it along the way?

Under which circumstances must a self-insured plan hold employee health insurance contributions in a seperate trust account?

I am seeking advice about this question:

In a self-insured health plan,

when must deductions from an employee's wages be required to be held in a seperate trust type account?

Company A acquires Company B through stock or asset purchase and then merges the plans of both companies into one plan. Are the participant accounts from Company B's plan before the merger counted towards top heavy.

There are many issues involved. I suggest you do a search on the Message Boards first.

Most of the windows I have seen have been an increase in the pension benefit, such as a waiver of the usual early retirment reduction and an award of addtional years of service in the benefit computation. These are usually funded through the DB plan, usually for 2 reasons:

1. the plan has sufficient excess assets at that time to absorb the entire cost of the increased benefits.

2. including the benefit in a bonafide employee benefit plan will typically avoid the issue of age discrimination (ADEA). However, the window itself must not be considered discriminatory under related pension regualations.

There are also issues relating to FAS 88 accounting.

Please feel free to post additional Qs.

I have a DC plan that terminated 12/31/99. The owner rolled his balance over into an IRA in early 2000 before the year-end testing could be completed.

The plan has failed the ADP test. What are the requirements/filing issues for refunding dollars that are no longer in the plan?

Any citations would be appreciated.

I don't believe that setting a termination date creates a plan year end. Rather, when the final assets of the plan are distributed, then a year end occurs in conjunction with the final distribution.

What is their regulatory basis for creating a plan year end with the termination date?

A 75-employee company has a non-standardized prototype 401(k) plan. The adoption agreement provides for entry no sooner than the first of the quarter after employment, which the company selected.

The company has been administering the plan to allow employees to participate immediately upon hire, with no wait. Many employees did so. They are willing prospectively to make employees wait until the beginning of the quarter, but the plan has been administered contrary to the document for the last 18 months.

What to do?

The company DOES NOT want to repay the employees who deferred to early. So, I don't believe self correction under the IRS APRSC program would work, since they aren't correcting anything. (The amount's are probably at least several hundred dollars for at least a dozen or so employees.)

I also don't thing the VCR or SVC program will work, since again they do not want to repay the employees.

(Let's assume that no HCEs were in the affected group. I'm not sure about this, however.)

Any ideas?

Anyone ever consider why mandatory state tax withholding is not preempted under ERISA?

TPA paid out funds for orthodontia down payment based on estimated fee schedule, employee terminated a few months later, plan year has now ended. It was discovered that the orthodontia treatment was delayed and the down payment never used. Are these funds recoverable, and what is the proper method to recover the funds? Thank you.

I terminated my employment with a small company. Upon leave, I was asked to repay a required vacation (which I was forced to sign on when I started), as well as my insurance premium for the remainder of the month. Is this legal for my employer to ask me to pay insurance coverage for a full month after I gave notice simply because they pay their insurance company in advance? I signed nothing regarding the matter, nor was I informed about this upon hire. What are my rights?