austin3515

'If you have the ERISA Outline Book, see Chapter 2, Section 3, Part III., 3c. (2002 edition). Probably didn't move in the 2003 edition. Sal says "In fact, the employee does not even have to be employed on the last day of the computation period to receive credit for the year of service."

Not a 401(k). I'm basing the question on what I read in the ERISA Outline Book (and in the DOL Regs as follow up). Both indicate that you do not need to be employed at the end of the computation period. In fact, both indicate that you cannot consider whther or not they were employed at the end of the computation period. Ordinarily this is not an issue because the entry date is typically AFTER meeting the eligiblity requirements. If the employee is not employed on the entry date, the Plan can provide that the employee never becomes a participant. But alas, in this case, there are retroactive entry dates. Therefore, the employee is creditted with a year of service on November 14, 2003. Plan Entry is retroactive to January 1, 2003, and he WAS employed on that date! Please rebut as I always thought you both are saying was the case. Thanks!

Calendar year Plan requires one year of service with 1,000 hours of service for eligibility, and 1,000 hours each plan year for an allocation. There is no last day requirement. Entry Date is retroactive to first day of plan year in which eligibility requirements are satisfied. Hire Date = November 15, 2002. Termination Date = September 30, 2003 Employee works more than 1,000 hours total for the employer (and so during the 12 consecutive month period beginning on his hire date). Am I threfore correct in saying that the employee became a participant on January 1, 2003? Also, the employee worked more than 1,000 of his total hours during calendar 2003, and so he should therefore get an allocation? Am I mistaken anywhere?

Effective date of the Plan is 1/1/00. Employer executed an "ad hoc" amendment to provide a one time contribution to all participants employed on 12/31/99, provided they have met the Plan's eligibility requirements as 12/31/99. The contribution is based on compensation as of 12/31/99. Can a plan have such a contribution before the effective date of a plan? It seems to me that this is an effort to circumvent the requirement that a plan must be executed before the end of the year. Has anyone seen this before? Are there any PLR's either for or against this, or regulations? I did find this: §1.401(b)-1. Certain retroactive changes in plan See the last sentence. (a) ... Section 401(b) does not permit a plan to be made retroactively effective, for qualification purposes, for a taxable year prior to the taxable year of the employer in which the plan was adopted by such employer.

That;s exactly where I saw it too!! That's why I love thse boards!

Can anyone tell me if the DOL was quoted anywhere as saying that the fact that certain TPA's or investment companies refuse to accept (or charge additional fees for) more than 1 deposit per month should not factor into the analysis of when participant contributions can be segregated. I think they also said that the fiduciary should reevaluate a relationship with a company that precludes the ficuciary from fulfilling his or her responsibilities. Any help would be great.

Three separate controlled groups in one Plan. The entities are related only through a common ancestry--i.e., a portion of a company was acquired, and two other divisions were spun off and are ownd by two totally unrelated parties. Does each of the 3 separate employers need a fidelity bond covering the Plan?

How long should records be retained related to the 401(k) Plan? I'm not asking about the reporting stuff, which I know is 6 years, but the information used to calculate contribuions: 1) Payroll records 2) Employee Election Forms 3) Quarterly valuation reports 4) You get the idea. Thanks,

You can always terminate the Plan, just not retroactively. (I suppose unless there are no withholdings from 10/1 until the day the resolution/ammendment is effective.) But the match from the first nine months is already accrued so you can't eliminate that. Don't forget all employer contriubitons are 100% vested if terminated.

If a client agrees to pay employees the cost that would have been incurred under a health insurance plan, had the employee elected to be covered by the employer, can that compensation be excluded from compensation for purposes of benefit accruals? I know the definition of compensation can be anything, as long as not discriminatory, but is this something that has been seen by other people? I don't see any direct references in the plan document to such a provision. Thanks

Shoudl a sponsor obtain a board resolution for its profit sharing contribution? Are there any requirements out there regarding how to prove the intended contriubion, other than looking at the actual deposit.

That makes a lot of sense. Thanks!

Can a sponsor require employees to fill out a form affirming the fact that they do not want to participate in a 401(k) Plan? The point would be to prevent that employee from coming back and suing for not being offered the Plan. Any technical references would be ideal. Thanks

I just saw somehting that indicated that IRAs are not subject to the anti-assignment rules. Can husband roll into an IRA and then give the money to wife - i.e, roll into her IRA? Thanks, Appleby. I tend to think your right, but we heard of someone who somehow pulled it off without a QDRO. I know not everyone follows the rules, but I'd just as soon hear if there is another way. Thanks,

Husband has a 401(k) Plan with a previous employer. Husband and wife are in the process of a getting a divroce. Wife wants to receive a portion of husbands account balance as a rollover without obtaining a QDRO in the interest of accelerating the process. Is there any way to do this? Is there a loop hole for married people that one spouse can roll to the other spouse's account?

I also found in the "available on a resonablyu equivalent basis" definition of the DOL regs that you should employ the same criteria as a commerical lender. The Equal Opportunity Crecit Act or soemthing like that prohibits not providing loans on the basis of age. So there are two laws which I think are being violated by even considering age here.

I had an interesting question from a client: Is there any rule prohibitting a loan to a participant who is 63 (only 2 years from Normal Retirement), that will not be repaid in a time frame that can reasonably be expected to be repaid. (for example, over a period of 20 years, long after the employee will retire).

Nothing is more certain than death and taxes that's for sure. I totally agree with all of you. I'll let you know the resolution

What you said about demonstrating the ability to segregate the funds in twod ays is true. And I don't dispute that the DOL would give them a hard time on this if they came in. But I have spoke to a few ERISA attorneys on this and they all seem to agree that it could be argued that as long as the money is in within the outside 15 day window then the area is gray enough to give the sponsor the benefit of the doubt. But it is a matter of professional judgment. And the lost earnings do go to the affected participants in order to make them whole. Also, if 8 months have elapsed between the time of the late deposit and the time of the correction, than you would certainly need to calculate "interest on the lost interest" in order to make the Plan whole.

He didn't quote, but that is a good question. It's not part of the Plan Document.

You would have to calculate "interest on the interest." You haven't schedule G yet, so just to be safe, the interest, plus the "interest on the interest" is the PT to be reported on Schedule G.

A TPA just told me that all trades are executed on a shares certain basis. If there is a trading error related to the deposit being a day or two late for whatever reason, then the TPA needs to ensure that the right number of shares is deposited to the account. Therefore if the price of the fund decreased, the TPA can keep the extra money, and if the price increases, the TPA needs to make up the difference. Per the TPA this is very isolated (a few times a year). HAs anyone seen or heard of this? Is this a common policy? They made it sound like everyone does it...

If you're saying that the money was only 2 weeks later than usual, and not outside the 15 day outside window, I agree (as an auditor) that calling that a PT is a bit aggressive. Mind you the DOL may agree that it is a PT, however, there is substantial grayness involved before the outer window such that the benefit of the doubt goes to the client... If I saw this I would include it as a management letter, indicating that they should pay better attention and be aware of the risk.

Can it be a vague reference? Like "fees may be deducted?" or "if fees are deducted it will be based on account balance size?"

Can a sponsor sponsoring a 401(k) plan stop paying administrative expenses, and instead charge them to participants on a monthly/quarterly basis without notifying participants of the change? Assume the document allows payment of expenses, and that the expenses are reasonable (flat charge per month per head).