four01kman

Now we are dealing with with the DOL requires, and what makes sense for good communications. An annual statement is all the DOL requires. To have an effective defined contribution plan, especally one valued on a daily basis, it makes sense to provide quarterly statements. The more information a participant has, it is hoped the better educated he or she is, and the better perceived the employer is for providing the plan.

One suggestion is this gives the participants the "illusion" of rights of ownership to the "underlying assets" in the non-qualified plan. The issue becomes interesting if the proxy vote is "passed through" to the participants and the participants choose not to exercise that right. Who then votes the proxy and how is it voted? If you do this, those questions should be answered in the plan document.

It seems to me the issue is two-fold. First, whether the plan complies with 404©; and second, if there is an aggrieved participant who sues, whether the plan can prove 404© compliance. It is not enough to simply declare that a plan is a 404© plan.

So long as individual is an employee, working full time, salary deferrals and employer contributions may be made, and no distributions are required.

Generally, you can exclude a class of employees. Remember, you must not have a covered group that favors the HCE, so you must meet both 401(a)(4) and 410(b).

With regard to the first part of the question, generally there should be no problem in rolling over 100% of the distribution from the profit sharing plan to an IRA. I'm not sure I understand why the plan would wait to pay 30% of the account balance, unless there is information not provided, such as, vested amount, when the gain/loss on the accont is determined, etc.

As a pre-ERISA practitioner, I started talking with Dick shortly after the passage of ERISA. I always found him approachable and willing to talk about issues. He would not always give the IRS answers to questions, but was willing to give his opinion on them. No matter what position he held at the Service, his approach to dealing with practitioners didn't change. He will be missed.

I'm not going to answer the specific question, because I don't know the answer. Keep in mind, however, the default of a loan does NOT create an actual distribution of plan assets, rather it is a deemed distribution, which creates a taxable event for the participants. The DOL issued loan regulations fairly recently which goes into this area in a detailed manner.

Try the Practising Law Institute. I think the web site is www.pli.org

Aren't we revisiting the "prudent fiduciary" issue? If the fund (or other secuity) is placed on a "watch" list, why wouldn't you advise the participants? Give them the same information as was used to come to that conclusion, and let the participants make the same kind of choices. Do they want new money to go there, do they want their existing investments to stay there? If you don't notify the participants now, and later decide to remove the investment (after, of course, it has lost some value), is there the possiblity of a recovery suit? My recollection is the courts have come down for both sides, depending on the facts and circumstances. But, if you have a 404© plan, why wouldn't you advise participants?

My recollection of the standard duty of fiduciaries is, among other things, to monitor the appropriateness of the investments offered by the plan. Also, there is a rquirement, often overlooked, to have a statement of investment policy which could well specify the benchmarks and other measuring criteria.

I''m not sure if you're confused or I'm confused. My recollection is for a non-5% owner who is still working for an employer after age 70 1/2, the RBD will be the first of the month following the employee's termination of employment. Unless, of course, the plan document sets forth a different date; e.g. the first of the quarter following termination of employment.

I agree with those that take the position true-ups only are made up of the match contribution, without any interest calculation. This is a timing issue, not an investment issue. If the plan allows "front-loading" of participant contributions, the true-up simply allows those participants to receive the total match the plan provides. Of course, the plan could provide for interest, but I've not seen one. Kind of like Ogden Nash's cow.

I would want to make sure a copy of all the notifications to the non-participating employees was kept, together with a memo regarding when the notices were sent and the employees notified of the plan and its match.

Trailing returns are the returns for past specific periods; for example, as of a specific date the most recent year-to-date, 1 year, 3 year, etc. returns. Rolling returns are the returns for periods of time measured from a specific date or period; for example, the returns for five year calendar periods starting with 1925. This would produce returns for calendar years 1925 through 1929, 1926 through 1930, 1927 through 1931 ... 1997 through 2001, etc. As you can see, the returns roll through the periods.

If this is truly a discretionary match and no match has been declared for the period, there is nothing to be done. Discretionary means the employer will or will not make a contribution. As noted above by K Johnson, if there has been an announcement of a match for the year (or for a lesser period), the match up to the end of the appropriate period has to be made, and then the discretionary match would end.

First, it is important to keep in mind that a safe harbor plan allows the Highly Compensated Employees to contribute as great a percentage of the pay as they want, within the dollar guidelines. Having said that, it seems the employer could amend the plan to eliminate the safe harbor contribution. The non-HCE deferrals could continue to be made without any change. The HCE deferrals either could be suspended, or limited as required by the ADP, or limited by a flat % deferral that is suspected to meet the ADP. An appropriate communication would have to be made to all eligible participants letting them know about the change.

I haven't seen this issue for a long time. My recollection is that in order for a discretionary employer contribution to be deductible, either the amount or the manner in which the amount is calculated must be communicated to the plan participants prior to year end, even though the contribution itself does not have to be contributed to the plan until the employer's tax filing date, including extensions. I don't know of anything that the Service has issued in the past 10 or 15 years that changes their original position. If anyone knows differently, please let me know.

I think the quick answer is whether or not the plan document allows such transactions. Generally, a self-directed account is specifically allowed to do or not do certain transactions; for example, no options transactions are allowed.

One place might be the IRS. The other is the governmental authority in Puerto Rico. Years ago, I was involved with Puerto Rico Plans and dealt with officials there, but I don't remember the name of the governing authority.

It would seem the only way to accomplish your goal is not to have termination of the existing contract. Once that occurs, I see no way to avoid the allocation of the gain. On the other hand, if there is a way to have a "transfer for value" of some sort without any gain recognition to your new arrangement, that might be a possibility. Existing Insurance Company A transfers the GIC (with its underlying assets) to New Company B in exchange for "x"(maybe $1 as valuable consideration) and the release of all liabilities. New Company B then issues, revises, amends (pick one) the contract to accomplish your goal. Maybe you need to find the right (and I mean, an appropriate) attorney.

I'm not sure there is any other answer than the Trustee (or Trustees) of the plan. They have a fiduciary duty to respond to proxy requests on behalf of the plan participants. My experience tells me that most plans do not pass on the proxy voting to participants, except in the case of employer stock.

Greta, Having recently gone through this on a personal level, the cheapest route is COBRA -- you're still getting some subsidy from the previous employer. Other than that, there seems to be no such thing as "cheap" or "inexpensive" individual health insurance. Also, it seems to be different based on the state the individual is in. Some states have a specific health insurance program for the otherwise uninsurable.

To my knowledge, no TPAs are involved in 529 plans. The recordkeeping for the 529 marketplace is done by the vendor or vendors that are offering specific state plans. There is an individual relationship between the plan being offered and the individual who buys the plan. It is not like qualified plans, where if the employer sponsors the plan, an individual account is kept.

AHayhow, You raise many issues in your request. There is no question about the need for qualified consultants providing advice and counsel to clients about college savings plans, including 529 plans. The number of available options is increasing almost on a daily basis. To be of value, you would have to know the various programs and which might suit a particular client better than another. To my knowledge, all of the state-sponsored 529 plans are offering mutual funds as the underlying investment. Therefore, you and others in your firm would have to be appropriately licensed to sell mutual funds. The decision of having your firm be a broker-dealer would require additional licensure and compliance. The entry into this business is no different than the decision to enter any other business, except the cost of entry here may be more substantial than you expect.