I have a client who wants to match 100% of salary deferrals from 6% to 8% and nothing from 1% to 6%. This is a highly paid, professional employee group, so ACP might be ok. However, I doubt it will pass IRS muster. Any thoughts?

first, this is how Qtech calculates vested balance.

Ending balance + prior distributions

multiply by vesting percentage

this is ees vested balance (as if he hasn't received a distribution)

then system subtracts distribution actually received.

Any difference is remaining distribution.

If ee has forfeited money, system is not smart enough to add that back into the equation, so things get messed up.

Possible workaround would be to enter distribution as a positive number in prior yr distribution field via DER.

This will 'negate' the distribution, so like the forfeiture it will be ignored.

Since you are running confirmation required, that implies share accounting, and therefore compounds the problem.

Again, the real problem is the forfeitures. they don't get readded to the equation.

example:

ee has balance of 1000, is paid 700 so ending balance is 300.(someone goofed)

system calculates as follows

end balance = 300

distribution= 700

toatl = 1000

vested at 80% or 800.

has been paid 700, so vested balance is 100.

printout shows ending balance 300, 80% vested, but vested balance = 100.

That actual maked sense, but looks extremely funny.

If forfeitures were involved, the numbers really get messed cuz system ignores them.

hope that helps.

I submitted a cross tested plan for det. Instead of using % of comp for each class, I used something like "each year the employer will notify in writing the trustee as of the amount of $$ to be allocated to each class. Within each classe $$ will be allocated proportionally with each participant compensation (comp on comp)", etc.

The $$ allocted to class A was (or intended to be)equivalent to 25% of comp for each participant. However, since the salary of one of class A participants was 160,000( the others had comp of $100,000) his allocation was limited at 18.75% (30,000).

The IRS agent called and claimed that in analizing demo 6, he reached the conclusion that the above violates the "comp on comp" allocation within members of the class. He suggested I go back to % definition of allocation, giving to class A "up to 25% of comp." Or to add another class for that individual.

Any comments? Especially keeping in mind that such can hapen to an initially homogenous group when compensation from one year to another can vary.

Thx

Recent

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If an existing profit sharing plan, with vesting, amends to SIMPLE 401(k), can the vesting schedule be maintained for the pre-SIMPLE employer contributions? (Forfeitures are used to reduce contributions.)

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I have a 401(k) plan that excludes bonuses, vacation pay, and sick pay. I ran the 414(s) test. The test failed with hce inclusion % of 95.4 and the nhce % of 89.2. I know there is no stated deminimus amount. Is it best to try to argue a deminimus amount, or should the employer give a QNEC, or some other correction method?

Company A sponsors a Section 125 plan and self funds health claims. Are the company contributions to pay claims included on the Form 5500 like the employee premiums are?

I can not find any guildence on if a ER can use a Simple IRA for any EE's that they do not provide benefits for under the Davis-Bacon Pervailing Wage Act. That is, are they prohibited from using a Simple IRA if they must give specific benefits to certian EE's under Fed regs. Any help on this is greatly appreciated. Thanks

I have a plan where the employer would like to pay the asset management fee/contract charge. The plan is self-directed and wrapped in a group annuity package. Can the employer pay this expense and get a deduction?

Reg 1.404(a)-3(d) seems to indicate these are not deductible.

I have 3 different retirment plans with my former employer. I am 53 and accepted 12 months ago an early retirement incentive package from my former employer.

The 3 retirement plans that I have are...401(K), Profit Sharing, and Defined Contribution. I want to elect a substantially equal payment option at this time. It is my understanding that such an option must remain in effect until age 59 1/2. I have two questons for which I am searching for answers.

QUESTON 1: When I elect substantially equal payments is the calculation based upon the total value of all 3 retirement accounts combined? OR, can the calculation be made based on the value of only 1 of the accounts? Can I choose which account to use for the calculation and distribution?

QUESTION 2: Upon reaching age 59 1/2 can I stop or reduce the substantially equal payments? OR, must the payment remain the same or must they be increased/accelerated?

Thanks to any help available. Also, please refer me to some documentation or something I can read on this subject.

A small employer was using a bank master plan document and the bank served as trustee. The plan has a 6/30 y/e. In February 1997, the plan sponsor fired the bank and self-trusteed the plan. However, the plan was never restated. I have been retained to provide administrative services and to bring the plan into compliance.

1. Did the bank document continue to be effective? I believe only regional prototypes have an annual filing requirement.

2. If we restate now, should the effective date be current or an earlier date?

3. If there is a "gap period", couldn't we cover it by restating effective back to Feb 1997 since the remedial amendment period will allow this anyway?

4. Any other ideas?

Does anyone know of any reason that an LLC taxed as a partnership cannot sponsor both a MPPP and a p/s-401(k) plan. A partnership can, and I find nothing which says a LLC cannot. Another consultant is telling my client it cannot be done, but has no citation. Thanks.

As of now only employees working 32 hours receive benefits. We are experiencing a growth in our part-time employees and are researching job sharing opportunities in some departments. I am trying to find out how other companies handle benefits in these two areas. Any information will be appreciated.

ERISA doesn't apply. State insurance laws don't apply (it's not insurance). COBRA, HIPAA, etc. do apply.

But is the basic law governing self-funded governmental plans simply state contract/state employment law (subject to the authority of the entity to establish such a plan)?

Are there other considerations?

Employees of a 501©(3) employer defer to a TSA program. All the requirements of 2510.3-2(f) appear to be satisfied; therefore, the program is not “established or maintained by an employer.” Despite the program not being covered by ERISA, the employer has filed 5500s. Is filing 5500s tantamount to making (or constructively making) an election to be an ERISA plan? If so, can an employer revoke the election and stop filing 5500s? Can the employer just stop filing 5500s? If the program is covered by ERISA is it always covered by ERISA? I believe in bankruptcy context, once an ERISA plan, always an ERISA plan; however, in preemption context a plan can drop in and out of ERISA coverage (I remember a 9th Circuit case saying that). Perhaps, there is no election element to being covered by ERISA and that filing 5500s has no effect on ERISA coverage. Can anyone help me? This stuff is over my head.

Plan Participant, 5% shareholder in C-Corp, will be leaving Company A to become LLP Partner in Company B. Needs dough to fund his share of the new Company B.

We plan on starting a new 401(k) Plan in Company B, which will accept rollovers (termination distributions). Since my guy will now be a partner in the LLP, is he barred from borrowing his rollover money?

He can borrow it before-the-fact right now..... It would just be cleaner to borrow from the new plan vs. the old.

Because it is rollover money, I don't think it's quite analguous (sp?) to the situation where a C-Corp stockholder becomes an S-Corp shareholder.

Plan Participant, 5% shareholder in C-Corp, will be leaving Company A to become LLP Partner in Company B. Needs dough to fund his share of the new Company B.

We plan on starting a new 401(k) Plan in Company B, which will accept rollovers (termination distributions). Since my guy will now be a partner in the LLP, is he barred from borrowing his rollover money?

He can borrow it before-the-fact right now..... It would just be cleaner to borrow from the new plan vs. the old.

Because it is rollover money, I don't think it's quite analguous (sp?) to the situation where a C-Corp stockholder becomes an S-Corp shareholder.

ERISA preemption aside, are you aware of any state laws that mandate an acquiring entitity to provide certain benefits to a target's transferring employees for certain periods of time after an acquisition? My question arose in the context of California law, but my review has not yielded anything obvious. I am uncertain of whether the reference applies to asset deals and/or stock/merger deals.

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I am reviewing distribution forms prepared by a TPA for a Money Purchase Pension plan and the forms do not include any explanation or waiver of the QPSA. I have always been under the impression that if the participant and spouse wish to waive the QPSA and designate a nonspouse beneficiary under a money purchase plan all of the notice and waiver rules must be met. In looking back over the 1.401(a)-20 rules though I see that a QPSA in a defined contribution plan is considered "fully subsidized". A-38(B). Also, A-35(a) could be read to say that no written explanation of the QPSA is necessary as long as the QPSA is fully subsidized. On the other hand A-37 seems to clearly require proper notices where the plan allows the waiver. Would appreciate any comments from anyone who may have delved into this lately. Thanks.

One of the assignments I've been given is to establish a PTO program for my company. As I understand it, this includes Vacation, Holidays, Sick Pay, and just about anything else that has to do with paid time off benefits for an employee. Can you explain a little bit more about these types of programs or possible direct me to a publication or internet link? Thanks!

Has anyone had the chance to review the recent (3/22/99) ruling in Lyons v. Georgia-Pacific Corp. Salaried Employees Retirement Plan? It seems to contradict everything I've ever thought about calculating lump sum benefits under 417(e). In a nutshell, the court has said that 417(e) must be followed only in involuntary cashout situations -- it does not have to be followed if the participant has a choice between an annuity and a lump sum. Any reactions out there? Is anyone taking this ruling seriously?