If a Governmental organization has a "grandfathered" deferred compensation plan still in effect, if a modifcation to the terms change, would it then become subject to 457 rules? If so, could the assets then become part of a funded 457(b) Governmental Plan where the assets are now held in Trust? Or, if could only become part of an unfunded 457 plan, would it all become taxable since can not set up an unfunded 457(b) plan except for possibly a 457(f) plan?

Hi gang,

I've been asked to make a presentation in early August, and here's the description:

"Listen to ... Dave Baker ... share his thoughts on where the retirement industry has been and how technology will impact our work lives in the future. This is intended to be an interactive session so be sure to collect your thoughts and questions beforehand."

I'm having some trouble getting traction on the project.

What would be most useful to you as a practitioner? A list of new technology products and services that you could implement now, in order to improve business processes and your bottom line? Other angles?

Plan has last day entry for PS no age, no other service.

Plan does not require employment on the last day of the PY to receive PS allocation.

Participant hired 7/8/13 and terminates 10/15/13.

The person is therefore not employed on 12/31/13 which is the entry date.

However, they are employed during the PY and therefore meet the requirement to receive an allocation of PS.

Does not being employed last day then prevent them from entering the plan and thus no allocation.

My thought is if they're not employed on the entry date, they don't enter the plan and therefore no allocation.

Any other observations would be welcome. thanks

A plan has immediate eligibility and only allows deferrals. One job type is excluded which consists of NHCEs (normally about 18% of their workforce). The size of that group doubled in 2013, making them become about 36% of the workforce.

There is only one HCE. The HCE did not defer last year.

Can the plan test the deferral portion of the plan for coverage by using the average benefits percentage test?

All of the NHCEs are benefitting at the same rate or higher as the HCE (HCE rate is zero) - this seems too good to be true - what am I missing?

1/1/14 Pension Expense calculated using a 4.5% discount rate. Settlement threshold based on 1/1/14 Pension Expense is $1.0M. Lump Sum of $1.2M paid effective 6/1. Plan sponsor performs settlement accounting as of 6/1 rather than end of year. As part of settlement accounting, obligations are re-measured at a 4.00% discount rate. A few questions:

1. Is pension expense re-measured as of 6/1/14 at 4.00%? Is the resulting total year Pension Expense a combination of 5/12 of the Pension Expense determined at beginning of year at 4.50% plus 7/12 of the Pension Expense determined at 6/1/14 at 4.00%?
2. After the settlement accounting, does every subsequent lump sum trigger settlement accounting (because the threshold for the year has been crossed) or is the slate wiped clean and the plan sponsor starts building anew toward meeting a new threshold and a second settlement accounting for the year is performed only if subsequent lump sums exceed the new threshold? What is the new threshold? Is it based on the Service Cost and Interest Cost at 4.00%? And is it full year amounts or pro-rated amounts for 7/12 of the year?

Thanks in advance for all responses.

I have a nuts and bolts type of question: Does a 401k plan need a broker dealer? Does the size of the plan matter?

Thanks - Mike

We have quite a few pooled profit sharing plans with monthly broker statements that do not calculate the gain/loss. How important is it to go through the statements and calculate the realized and unrealized gain/loss? I go through each monthly statement and look for anything unusual, pick out the deposits and withdrawals, fees charged and the rest is income. The plan files the 5500 SF. It is very time consuming to go through the statements and record every sale and purchase to calculate the gain/loss.

So, I'm just wondering if there is a reason to go through all that to calculate the gain/loss? If so, is there an easy way to do it? some plans have 100's of buys and sells throughout the plan year.

Thanks for your input.

Supposedly, a plan or plans that fail the general test can provide contributions or benefits to current participants or provide contributions or benefits to those who are not yet eligible as long as the contribution or benefit has substance.

I have always been a little uneasy about the order of this.

For example, suppose you are testing a DB and PSP and the PSP has a last day requirement and a current NHCE participant terminates employment 4 days before the plan year end and the plans fail 401(a)4. However, the employer has 4 new employees who have yet to meet the eligibility requirements. If the youngest of the 4 is brought in and given a 10% of salary contribution, the plans easily pass.

With the few of these we have done, we always had some criteria such as the ineligible employee with the most / least hours is chosen, or all those hired before a certain date.

Is it possible to simply cherry pick?

Any comments / agreements / disagreements on this?

Assume the following:

(i) a QDRO for defined benefit assigns 100% of the participant’s accrued benefit to the alternate payee,

(ii) the DB plan provides as a death benefit the qualified preretirement survivor annuity but no ancillary death benefit,

(iii) the QDRO fails to treat the alternate payee as the participant’s surviving spouse, but it does provide that the death of the participant will not have any affect on the alternate payee’s assigned interest, and

(iv) the participant dies before benefits commence to be paid to the alternate payee.

Is the alternate payee entitled to anything (i.e., that is, doesn’t the alternate payee forfeit the assigned interest because only the survivor portion of the QPSA is now available to be paid as a benefit and the alternate payee failure to be treated as the participant’s surviving spouse leaves the alternate payee with no right to the survivor benefit)?

If the alternate payee is entitled to something, is it the entire accrued benefit (which doesn't seem right because if they were still married, the alternate payee would only be entitled to the survivor benefit under the QPSA) or the actuarial equivalent of the survivor portion of the QPSA?

May we amend and restate a safe harbor plan effective mid-year into the new PPA document? Or since it's SH, does that keep us from making it affective mid-year?

What is the max DCAP contribution for two employees that have a child, live together, not DP, the mom claims the child on taxes. I only find on separated/divorced parents. Thank you!!

Got a participant pushing hard about how he should be able to use a hardship distribution to pay him back for a pool liner that was damaged in a storm. I say no because the pool is not part of the "principal residence", and when I went to prove my point by looking up that definition I found it was not defined. So perhaps one persons definition of residence might include the pool (as distinguished from say a car which can be moved away).

Let me know if you have any light to shed. It certainly seems that there is room for a casualty loss deduction under 165 for the pool liner - but there does not appear to be a requirement under 165 that he principal residence be the property that is damaged.

Self-insured plan is looking for someone to "audit" their large claims, anyone know of a company that specializes in this type of work?

Key employee takes a loan from the unrelated rollover source. Does that loan now count in the top-heavy determination or is still excliduible. I would think it is still excludible, but can;t find anywhere it deifnitively says that.

Thanks in advance for any guidance.

For example, a calendar year plan is tested as of its 12/31/2013 determination date, and is determined to be top heavy. Which year's Non-key Employee compensations are used for calculation of the top heavy minimum contribution...2013's or 2014's?

Thanks

I am inquiring about a possible contribution problem with a 403(b) tax-deferred annuity plan that is exclusively employee-funded. The sponsoring employer has employees who have multiple "jobs"--you might be half-time in Department A and half-time in Department B and therefore be a full-time employee, but the accounting is separate by job. The employer-funded plan calculates its contributions based on the eligible compensation of all the participants' jobs. But due to a programming error the employer withheld percentage salary deferral elections based on only one job--usually but not always the one with the most pay. (People who elected a specific dollar amount per paycheck are not affected, just the nes who said they want X% of pay withheld.) This has been going on for several years. When the participant signs on to the employer's benefits web site and starts to enroll the site tells him the estimated dollar amount of the deferral so the participant knows ahread of time what the amount will be, but no one has questioned the deferral amounts. It was discovered by the employer during a routine plan review.

The definition of compensation does not provide for consideration of only one job. There is also the question of whether the participants are given an effective opportunity to defer, especially for the small number of people whose job on the system was the lower-paid one.

Systems changes are in process to correct the problem for the future, but they are wondering what needs to be retroactively, IF ANYTHING. Needless to say, the employer is not really pleased at the thought of doing a retroactive contribution, which would including having to track down terminated participants who have already received their distributions. My belief is that the participants knew the effect of what they were electing based on seeing it on the web site during the enrollment process and they could have "corrected" their deferral election before hitting "submit" if they wanted a higher dollar amount withheld. Is there any wiggle room for the employer here?

I was recently asked by an attorney to calculate probability of a person aged 57 dying before another person age 70. Pulling out my old (very old) copy of Life Contingencies by Jordon, I found the formula for the "q" that I needed.It looks like this:

1

(infinity sign) q

57:70

I don't have any software to calculate this value directly. I can develop it from scratch using an Excel spreadsheet, but, that would take me hours. Any suggestions?

Thanks for any suggestions,

Rick

Financial advisor office receives the contribution spreadsheet, misses it, and catches it 8 days after small business' last payroll, resulting in late deferral. Advisor firm wants to take responsibility of the small lost earnings amount. To what extent can they actualy make deposit on behalf of the company, or can the source of the lost earnings be the advisor firm. Or am I being too nitpicky?

Calendar year 401(k) plan.

If the plan terminates mid year, say 7/31 with the intention of getting assets distributed by 12/31 how is the ADP testing done in the final year?

Is the comp limit 7/12th of the 401(a)(17) limit?

What happens if the final distribution of assest is say 10/31? Would that change the proration to 10/12th?

Does this mean you can't do the ADP test before earlier of 12/31 or all asstes distributed?

If participants rolls to and IRA and later it is determined the plan failed ADP I know the procedures to fix but they can be something of a pain for both TPA and partcipant so we'd rather do refunds before hand if there are any but how can you caculate a proper ADP if you're not sure what the denominator is going to be for some HCEs?

Assume they are not running a short PYE for the year of termination.

Does this make sense?

I searched for some other threads on this but didn't find anything on point back to 2009 but maybe I missed it.

Can a defined benefit plan permit existing participants to elect on an individual basis to cease participation in exchange for eligibility in a defined contribution plan? My gut says no, but I've not been able to find anything that would prohibit this. Note that I'm not talking about waiving any benefit which has already accrued.

I've seen this in the governmental plan context, but I'm curious if it translates into a standard qualified plan subject to ERISA.

Thoughts?