wsp

I've got a p/s plan where the owner is over age 50. Owner is very generous to the participants and has provided 15% p/s contribution from year to year. None of participants are near age 50 however. Owner would like to take advantage of the catchup provisions. I've got another plan where i've set the plan limit to zero and thus only those eligible for catchup can defer, but all of the participants in that plan are HCE's. Can I do the same here even though the only person who can take advantage is the HCE?

I'm creating an amendment to modify an integrated plan into a new comp plan. Each participant is going to be in their own group. Of course I don't want use names in the plan document. Can anyone provide me some sample language that I can use in this amendment? Or is it as simple as saying "each participant shall be considered members of seperate groups" ?

Don't make the mistake of narrowing down your scope to such a scale as investment returns. Perhaps the swap took the funds from a 5% front end load with an excessive expense ratio to an institutional class fund where the fees are the the lowest available. Not to mention the fact that performance after a swap shouldn't be looked at over a window that is too small. If you're focusing only on performance, make sure you take into consideration the 5-10 year period BEFORE the swap. That's more indicative of a funds performance than the 6 months after it takes place. Remember, these are retirement assets. While it is disheartening to see any negative returns, you have to understand that negative returns will happen. Also, a fund swap may not have anything to do with fund performance. The fund swap could have been, and far more likely was, driven by a change in the plan's recordkeeper. It's very possible that although that single fund swap didn't work out, the 10-15 other funds that were swapped at the same time DID have better performance in the new funds. And, quite possibly, that one fund that didn't had such a small balance in proportion to the rest of the plan that it's returns, while bad for the individuals invested in that fund, are dwarfed in comparison. Lastly, a recordkeeper swap often happens because of service. Sometimes a short term loss is not a bad tradeoff in return for a recordkeeper that provides better service. As for why one would even use a 401(k)? Tax savings and simplicity....By deferring your income via a 401(k) you are essentially shifting the tax burden until your retirement, or to a point where YOU CHOOSE the timing and the amount of the taxes by taking into consideration the amount and the tax years of the distributions. Additionally, the amounts that can be put into a plan versus an IRA aren't even comparable. And for some, the IRA may not even be an option. In terms of simplicity, nothing beats an automatic payroll deposit. For a large percentage of Americans, that's the ONLY reason they are investing at all. Don't discount that as a factor either...Bottom line is that in return for these tax considerations and other benefits, the plan participant has to give something up; that's short term ownership of the assets. It's the only way that the government can ensure that all of the rules associated with being in a retirement plan are being followed. Ownership of the assets rests with the plan and responsibility for their safekeeping with the trustees. Lastly, you question why invest in a 401(k) if it might be trusteed by a Lay/Skilling lookalike? I would question why you would be employed by someone like that. 99% of the plan's are trusteed by people who take their roles as trustee seriously. They also recognize that personal liability associated with being a trustee is a bad thing if they can be proven to have failed to follow such safeguards; not to mention the losses to their own personal accounts should something go awry in their plan. Also, from what I understand, the main issue with the Enron plan was that the plan went into a "blackout" period just prior to information being made public that caused the stock price to plummet. Whether the timing was planned or not is up in the air, but that they were changing recordkeepers wasn't necessarily a suprise to anyone. Such changes aren't uncommon.

thanks...one of those things that you think that it really can't be that simple.

Where do you put the premiums paid by the plan to PBGC on the form 5500. Lump them in with professional fees? If that's the case then that line item won't tie to Schedule C. Or do you hsow them there too?

An old client brought in a Social Security Administration letter sent to a participant letting them know about an account balance that they may be due from the plan. SS letter was generated from the 1999 SSA filing. Unfortunately, the SSA filing was incorrect. For some reason the recordkeeper at the time reinstated forfeitures, made all participants 100% vested, and showed about a dozen people on the SSA as being owed account balances. Life goes on and participants show 100% vested account balances but nothing was done on them. 3 years later the plan terminates. During termination process this was caught and account balances were forfeited and allocated. However, those participants were not reported on the 2002 final filing. Hence the letter generation. Certainly I can create a form letter for each participant showing them that do not have a vested account balance, but it would be much easier to stop that letter from generating. Should I file an amended 2002 return with a new schedule SSA at this point? Or is it simply too late? Fortunately none of the above actions were mine as I started in June of 02 and final filing had already been completed. But, still my job to clean up the mess....

Yankees would certainly like Garcia, but he'd fail miserably. He simply can't thrive in that environment. Lifestyle was an issue with him with the Mariners...put him in NY and you're asking for trouble. And, if you're Arod and you get to pick and choose where you'll go. Would you pick Chicago? More likely he'll go to Boston, Los Angeles Angels of Anaheim, Seattle, or even Houston. Wherever he goes you can bet they'll make "minor adjustments" to the fences and stadium. No way does he go somewhere that might damage his ability to hit the HR. Only reason I put Seattle in there is because the town still does like him (they just won't admit it)...and the stadium can be easily modified to become a hitters park.

Mariners are actually considering it....though he'd stay at third. They'd let Beltre go and keep Arod. Talk is they're looking to split the difference between ARod's non-Ranger salary and Beltre's salary...End up raising total payroll by something like 2.5 million. I think Yanks would let him go for 2.5 mill per year. M's might even let them off without paying anything.

This shows that good will ultimately triumph over evil. Red Sox in '07!

If you offered those benefits to all employees even part timers you could probably have 300 of the top benefits consultants in the country join your staff. Bring them in each 1 day a year for available consultation with the staff and employees....And all just for access to those bennies! Now how's THAT for outside of the box benefits!

Ok, employees belong to seller until January 1. Seller is responsible for all payroll, benefits etc etc. Buyer is reimbursing seller but only to the extent that the numbers are frozen (no pay raises etc). So it's ok that they are deferring and matching. They are going to continue the match through the end of the quarter to maximize their own deferrals. By stopping safe harbor they would likely not only have to give up the remaining deferrals but have a refund as well. Deduction loss of their own deferrals exceeds the matching obligation. So on 12/31 all employees are terminated except for 2 owners. We have a partial plan termination and all are 100% vested. Big deal because all already are....Just pay out the people and wait? But effective 7/1 the company plans on opening up another store in different location. Do they move out of partial termination status once they rehire multiple employees? Do new employees have vesting schedule for p/s contributions? And what of the safe harbor status? Do we issue notice on 12/1 that the plan intends to be safe harbor for 2007 and then simply wait for the employees? None of them will be eligible until 1/1/2009. Do my clients effectively get maximum deferrals for 18 months with no matching obligation for their staff? Likely they will make all employees immediately eligible, but it just seems odd that they wouldn't have to.

I'm trying to get confirmation from my client on this. The client did say that they are allowing the participants to continue to defer though they won't be making any matching contributions. To me, and I'm certainly not sure...by allowing them to defer into the plan you are saying that they are still your employees. If it's a matter of convenience that they are running payrolls though they aren't truly employees and thus shouldn't be deferring at all. Correct?

Employer sells assets of company to another entity effective 10/1/2006. Same employer is contracted by purchasing entity to run the company through the end of the year. All payroll will be run through the payroll of the selling company but will be paid for by the purchasing company. Any payment of benefits (premiums) will be handled in the same manner. Who do these employees belong to? Is this a plan termination now? Or on 1/1/2007. All employees are continuing their employment in exactly same manner as they did on 9/30. Plan was Safe Harbor Plan. If they notify the employees now of the impending termination and their intent to discontinue the matching contribution what does that do? Obviously the plan is no longer Safe Harbor but do we simply test and move on? Matching contributions are made quarterly and are current.

Given that the liquidation takes a few days and the then the deposit to the new account also would take a few days there is 6-7 days out of market. Hence the notice... I know that the point of the notice isn't for something like this, but we still have to play by the rules.

I've got a client that had a plan that was in bad shape.... 12% participation with minimal interest in it. Through the help of a new financial advisor, decent education, the addition of a match and a change in the asset choices we've upped the participation to 50+%. However, the "old" money is with the old custodian. As of July 1 of this year they've been running with both recordkeepers. Client wanted to seperate the two processes and was willing to foot the cost so who are we to argue... Now we're going to consolidate the accounts. What I'm hoping to do is issue a blackout notice but at the same time provide them with a transfer request form that allows each participant to request a liquidation and transfer prior to the end of the blackout period. Since we're only talking about 6 people, the thought is that all would move their money voluntarily and we won't have to wait the 30 days. Anything wrong with this? Do we have to wait until 30 days to request the transfer???

Well here's the results: When asked to provide a source for this "IRS rules" comment, the broker backed down from that statement and essentially agreed to previous posts and posters. Client will be providing a room and providing employees the materials as well as opportunity to meet (on their own time) with broker. Since it's an entirely voluntary supplemental insurance product the client is not promoting it any more than providing appropriate explanation and space. Demosthenes is pretty much spot on.

I've read it...and read the "Guide to Auditing Employee Benefit Plans" to try to get the auditors persepective. I still don't agree with them. I'm with you on that it's not a series...I'd even go so far as to question whether it's a security as most MM's are actually considered cash or mutual funds. When looking at the form itself it's almost pointless to fill out: Purchase Price: 1$ Selling Price: 1$ Expense Incurred: 0 Cost of Asset ????? which time??? Current value of asset on transaction date??? Which time??? Net gain or (loss): 0 Rediculous and a waste of effort. There must be auditors that go through this board....Do you count them? If so, how do you report it on line 4j?

wait wait wait....I't consistent with ERISA to have no BIS rules therefore those rules are irrelevant??? That's clear as mud. Though actually I see the underlying logic. Instant eligibility is always the base. Plan document can allow more stringent eligibility requirements (up to a point). Plan document can also allow for the requirement to RESATISFY those eligibility requirements through the BIS rules. Having those in the document is a choice....so absent the BIS rules we go back to the original eligibility rules. In the case of the rehire...he's satisfied them. Works for me.... Well am I at least correct in assumption that vesting and distribution history isn't material???

Wouldnt the vesting and distribution come into play only in determining whether you reinstate the prior vesting percentage and not when they become eligible again? Of course I've been wrong on many of my other assumptions so me being wrong here wouldn't be a shocker either. Jpod...why immediate? I would think that Janets proposal would be more correct.

Except the expense that will be charged to the client and the time that will be required to add up 600 different numbers and provide support so that the auditors can then review those numbers and charge the client more is doing harm if it's unnecessary.

Sounds to me like no one is taking this plan seriously from the employer to the FA to the participants. New financial advisor combined with new investments would likely improve the participation. I'd venture to say that it wasn't at setup that this plan failed, but afterwards....My guess is that as new employees came aboard the plan was not being promoted and thus they were not participating. Original participants eventually separate and take distributions. Without new ones joining in the plan slides towards what you have now..... I'd try to reinvigorate current participants with "NEW NEW NEW" speak before I made any plan changes like adding a match or taking it safe harbor. Could very well be they simply aren't aware.

Company offers a straight profit sharing plan. Assets are managed and are not employee directed. Assets are split into 5 different brokerage accounts. Each account has a different investment philosophy so that when combined offers a diverse investment portfolio. Each time there is a sell of an asset the brokerage houses turn around and buy shares in a Liquid Asset Fund (MM fund) to house the money instead of leaving it in cash. Then when they buy a new asset they sell the Liquid Asset Fund to generate the cash needed to pay for the new asset. This is all automated.... Auditor is claiming that these buys and sells of the Liquid Asset Fund constitutes a series of transactions and are reportable. This can't be right, is it??? Trust is 10 million so it only takes 500k in transactions throughout the year to reach this point...only a few buys and sells plus a bond maturing to hit it.

I've never read a PD or any other documentation that dictates when and how the information would be provided to the participants. Very possible that it could be in a CBA. But everything else seems to be a "provide the information and support" or risk the fiduciary consequences of not doing so. Company doesn't disagree with the necessity of a meeting or series of meetings but requiring it to be at company expense and company time seemed to be a bit extreme. I have one other client that doesn't allow such meetings on company time but provides the brokers with a private room and allows all participants to meet before and after their regular shifts. They also pay the provider for such meetings outside of the contract realizing that they are requiring said person to be there all day. But for them it's still cheaper than having their entire crew of people stop working for an hour or more.

Client is complaining to us, their accountants, about their insurance broker who is stating that all employees who are eligible for the plan (not sure what type it is other than provider who shall remain nameless) are obligated to meet with her and it must be done on company time. Broker is citing "IRS Rules".... This is new to me...forced attendance on company time? Is she right?

That has to be the worst advert for a reunion that I've come across. So basically 10 years after graduating from ASU they expect you to be thugs and gangbanger wannabes? They certainly have high expectations of their grads.... No offense to you ttott.