Lori H

Your actuary should have studied the FAS 158 disclosure rules, issued in September 2006, that explained the change. Those who don't read about current developments are doomed to constant surprise! Very true. Did FAS 158 replace FASB 87? Never mind, it did. Thanks for the link Janet.

Your actuary should have studied the FAS 158 disclosure rules, issued in September 2006, that explained the change. Those who don't read about current developments are doomed to constant surprise! Very true. Did FAS 158 replace FASB 87?

The client historically has received FASB 132 and that has seemed to suffice. However, they have new accountants. And apparently they did not find the 2007 admin to contain all of the required disclosures, especially the ones relating to SFAS 158. They claim they may not be able to issue a clean opinion on financial statements as the pension obligation is a material disclosure for both companies. The auditors are requesting an updated study with such elements and disclosures. I question this as it was never requested in the past from the prior auditor.

Is this a required disclosure when preparing an annual actuary report, if not, is it required in order for auditors to make a clean opinion on financial statements relating to a DB plan?

my thinking is that as long as its at least 3% and uniform and non discriminatory, you should not have a problem. i know there is a limit on the enhanced SH Match, but have not read anything in the Aspen publications regarding an enhanced SH QNEC.

a safe harbor 401k currently has the following employer funding: 3% safe harbor qnec, 3% employer p.s. and an employer match of 100% up to the first 3% of deferrals. I understand a Safe Harbor utilizing the basic safe harbor match formula could be enhanced, yet could not incorporate a regular match as well, but could they fund lets say a 5% qnec? This is a unique plan with unique features(i.e. employer funding, monthly entry, etc). We have tried to simplify matters, but this is a group of architects and simplification is not in their vocabulary.

No, it's currently not provided for by the Code. Guess they didn't think "portability" thru on that one. See Pub 590 page 65, Rollover from a Roth IRA http://www.irs.gov/pub/irs-pdf/p590.pdf THANKS masteff for the link. doesnt make a lot of sense, but at least they are clear on it.

is it an option? I know you can roll a roth 401(k) or 401(k) after paying taxes into a roth ira, but is the reverse true as well?

thanks for the link masteff and the responses. loans are anathema :angry:

I kindly sent the gentleman a fax, as I wanted to tangibly document our position, and explained that we could not go back and reduce benefits, yet could do so going forward. It blew my mind a few years ago when this guy just upped and decided he was going to and did take 40K from his ex wife/terminated participants account balance. I had to send him a terse letter to get that money back in the trust post haste. He still has not paid her out and I doubt she knows she has the funds despite us filing SSA's on the plans behalf.

I haven't discovered anything that would prevent a participant from voluntarily defaulting on a loan and paying the taxes. Am I missing anything other than it would affect the amount he could have on any future loans? thanks

a client, who in the past tried to have his ex wife's account balance distributed to HIM, is now wanting to go back and reduce the employer match from 100% up to 3 to 100% up to 2% of comp deferred for several plan years. What is a gentle way of saying, "sorry you can't do this?" He claims he told us this in the past, but it just was not the case.

Good point John. I will certainly pass along that the loan policy can not be a temporary program.

that was what we ascertained as well. The subject came up with the plan buying shares of the company stock, but that would most likely be a prohibited transaction. Adding the loan provision seems a lot cleaner, although are there ever "clean" loans in QRP's. fun fun fun

a 401(k) is considering adding a loan provision to its current plan in order to allow certain executives to purchase stock of the plan sponsor, which is privately held. Is there anything in the code that would forbid such an amendment? Off the top of my head, I can not think of anything, but there might be some party in interest issues that I have not considered. The loan provision will be available to all participants and non discriminatory.

so the trustee sets up an account in the name of the plan, allocates the diversified amount to the investment options chosen by the trustee and the participant directs the investments among the options. Alternatively, the plan and at the participants election, can distribute the diversified amount to the participant and report it as such on the 5500 and 1099. Yes?

We hardly ever see diversification, but a couple of participants are inquiring about it. What if they elect to diversify? The plan doc states that the plan may satisy the requirements by offering at least 3 investment options to the participant. In addition if the participant consents, the plan may DISTRIBUTE the portion of the ESOP stock account covered by the electionto the participant within the 90 day period after the election is made. So I interpret this to mean the participant can keep their money in the plan, transfer a percentage of it out of employer stock into another investment of which they must be given 3 choices OR they can elect to have that percentage distributed to them. My other concerns center around how the assets are held (I am assuming they must be segregated to a specific individuals account, but still held by the ESOP as an asset) and how do we purchase those assets? Can the participant contact a broker, tell me to send the broker their money, and then hold it for them by the ESOP or does it work some other way? Thanks in advance.

basic 401k has a 6 year graded schedule. 1000 hours year of service. AA states that for vesting purposes the vesting computation shall be the plan year. A participant in a calendar year plan has a DOH of 7/2/06 with 920 hours at year end and works all of 2007 with over 2000 hours. For vesting purposes this participant has 1 YOS and is 0% vested, correct? For discussion purposes, the plan has an option to choose the vesting computation to be the date an employee first performs an Hour of Service and each anniversary thereof. So if that participant was hired 7/2/06 and as of 7/2/07 worked 1000 hours. He would have 1 YOS by the anniversary. How would you compute vesting based on the remainder of the plan year 7/2/07 thru 12/31/07 if the part next anniversary is not until 7/2/08? Am I making this more difficult than it really is? Thoughts?

Not necessarily, I know ultimately the plan sponsor is responsible. However, if their is no TPA (and we know there are some plans that don't have one), this info would have to be provided to the plan sponsor by someone. I have no qualms with providing the notice, it's just it's never been in our scope of services. All black out notices I have ever seen have come from the provider and I was just curious as to others experience. Thanks for the replies.

Exactly. Seems the new/current provider would know this better than the TPA.

Huh, well fair enough. In years of doing TPA work, we have never been asked/required to provide one. These have always been handled by whoever is getting the plan assets. I guess will file this under our government compliance scope.

Hmm, well I would think that the financial adviser would be the one to coordinate the transfer of assets and the date the transaction is to occur as a non producing TPA has minimal access to assets. In some instances it would seem that taking over of assets would be a common transaction for financial institutions and that they would have a form Black Out notice that they would issue to the client. Seems pretty much standard procedure. Any other opinions?

It would seem since this is a money issue, i.e. money is being moved from one provider to another, that the financial company who is taking over the assets would provide the notice to the plan sponsor. Is this usually the case?

Well this is exactly what lead to this thread. The agent is considering replacing the policy with a higher face/same premium policy. Makes sense. I believe my inquiry was thoroughly addressed. Thanks for the comments.

Bird, So are you thinking that another option for him would be to take the insurance out of the plan altogether and replace the current cash value with personal assets outside the plan?