Effen

Do you have any HCEs?

Is there a definitive answer to this question? I have a client with a 403(b), with employer match. The investments are all mutual funds. The money is transfered to the 403(b) carrier with each payroll. Do they need a fidelity bond?

I guess I stand corrected, even the unions are now drinking the 401(k) Cool-Aid!

A multi-employer 401(k) would be extremely rare. Are you sure it is a 401(k)? Often they have DC plans that they think is a 401(k). The contribution rate is negotiated, or even set by the membership. They think it as "employee" contributions since it is "their" money, but in reality it is an employer contribuiton. If is is a 401(k), how do you track employee money from so many different employers? It has to be an adminstrative nightmare. I have seen several cases where the union guys have no real understanding of their plan and they assume it is a 401(k) and they solicite quotes based on what they thought. Sometimes even the attorney doesn't really know what it is if they are not strong in ERISA. If it is a 401(k), I'm curious what union it is and what part of the country? (Don't be too specific.) Good luck

I would say they have contributed 25K and they still owe another 5K to satisify min. funding requirements. This assumes that when the 30K was determined there was no explicit expense assumption, but even then, since the 5K wasn't actually contributed to the Trust, I don't see how they can call it a contribution. They should be able to deduct 3K fee and the 2K premium as business expenses, but not as employer contribution. I think they still owe the plan another 5K. When you say you "believe that the PBGC Premium isn't deductible", I assume you mean as an ER contribution. Is that right? Why would the client challange your conclusion? Just tell them if they don't put in another 5K, then you will show a deficiency on the Sch. B and they can explain their position to the IRS. Also, with the new deduction rules applicable in 2006, the max may be much higher.

Can't the plan pay its administrative fees? - yes, generally the "Trust" can pay most admin fees - see DOL guidelines for more info. Can't the plan pay the pbgc fees? - yes, the Trust can pay the PBGC "premium". (not sure about PBGC "fee" - the PBGC can charge penalties that can not be paid by the Trust) Can't fees paid on behalf of the plan by the er be considered contributions? No, a fee paid directly by the employer is not a contribution. It may be deducted as a plan expense, but it is not considered a contribution. Why is this important to treat it as an employer contribution and not an general expense? It is deductible either way. Are you trying to avoid a funding deficiency?

thank you!

Thanks Pax, do you have a link to that worksheet? I searched the SOA site and couldn't find anything.

If anyone has been doing projections beyond 2008, what are you using for estimated segment rates for Current Liability? At first, I was just using the RPA rate (5.78%) for all 3 segments, but I think that is a little low. An actuary at another firm recommended 5%, 5.6%, 6.1% for the 3 rates. Anyone have any idea? What would the segments be based on current market conditions?

Did it go through the Trust? If not, then it isn't a contribution.

You are correct sir

"Unregistered tROHPYwIFE" - is that sort of like a free agent?

SoCal, I'm not arguing your point, but we were involved in a situation where the IRS applied to tax to a "normal" employee in this same type of fact pattern. We were hired after the fact, but I know the IRS collected the tax because the employer paid it for her. This was 10+ years ago so maybe things have changed or maybe she just didn't argue the point since the employer was paying.

Then your plan may have a disqualifying defect... but then again, so do some of the most popular national prototypes on the same issue. If you didn't provide a Suspension of Benefits, then you must provide a roll-up (since you also said your plan didn't allow retro payments until now.) This is a 411(d)(6) issue. You can't just not pay the benefit. You may want to consider VCP if you want to be safe. Since you are amending now for the retro payments, why not make sure the amendment clearly defines how the retro payment will be determined. That way you will control what form it will be based on. Are you also planning on paying the significant excise tax on the missed MRD's the participant will incur when he files his 1040? This plan has some real issues.

You probably should look at what hospital A employees were told in 1994. There probably isn't anything legally wrong with what they did, although you do point out a potential HR problem. Chances are the merged hospital was well aware of the issue and still chose to do what they did. They way you perceived what happen in 1994 ("merger of equals") may have been the way it was presented to the employees, but behind closed doors it may have been B purchasing A and therefore B didn't want to pay for A's past service in B's plan. It sounds like you have properly identified a "problem". I'm not saying they did anything wrong, assuming everyone was given the proper notices. What they did was / is very common. It can be easily "fixed" with $$ if the hospital wants to fix it.

They are generally free and clear after the one-time payment. The one noted exception is if there is a mass withdrawal in the near future. I believe the Trustees can come back and reasses them a higher liability based on the mass withdrawal liabilities.

I would defer to your ERISA counsel for the final say, but.... if your plan doesn't contain language permitting retroactive payments, then I don't think you can do it. If it does have the language, I believe you still need the participant (and spouses) consent in order to pay the retro benefit. The IRS has been hot on this issue in the recent year or so. A cleaner way may be to do an actuarial roll-up. Also, watch out for MRD issues which bring major individual tax penalties. Specifically related to your question, yes, you must permit them to elect from the available forms of payment.

This may help (or not). It does discuss the differences between Settlor and Fiduciary functions and provides a few sites that may help. Also, the DOL released some guidance a few years ago related to fees. You might want to look around on their web site. http://benefitslink.com/boards/index.php?s...c=17493&hl=

Yes, one time payments are possible. If you ask, the Trustees should be able to give you a payoff number.

I don't know if they will/can connect the two. I had a client who submitted PS & DB plan documents to the IRS for approval (which they subsequently received), signed-up for the PBGC on-line stuff, then decided he didn't want the plans. Never filed 5500, never filed a PBGC, never paid my bill, never heard from either the IRS or PBGC ... although it has only been a year, so we still have hope. I would caution you about answering his question and taking him as a client. He has already demonstrated that he does not do well required filings. He also apparently doesn't seem overly concerned about fixing things since he asked for your opinion if he didn't. So let’s say you officially recommend that he does the delinquent filer thing, but then you also verbally tell him that you doubt the IRS will pick-up on it if he doesn't. Haven't you just told him that in your professional opinion you don't believe the IRS will catch him? I'm not sure that is a position you want to be in if the IRS does come calling. I suggest you tell him the delinquent filer program is the only alternative you are willing to discuss and that he should consult with his attorney regarding other possible options. Also, what makes you think he will treat his new plan any differently? Kinda like the woman who goes after the married man, then complains when he cheats on her

Why do you say it is not protected? Is this a DB or DC plan?

Assuming PPT means partial plan termination, I would say generally no. However there are instances where it could. Do a search of this board, I seem to remember a tread discussing this a few months ago.

Do a search on the multiemployer board and you should find a few threads. I would say it is common to use different assumptions for w/drawal liability, although it is by no means the norm. Segal uses a method that uses different rates depending on whether or not they are funded. They also use a rate that is tied to the PBGC rates. If you do a little poking around, you should be able to find a write-up.

Andy, I've been thinking about what you said and agree with some of it in principle. I believe actuaries had very little to do with the new law. The ASPPPA people were busy protecting as much of their 401(k)/small db plan turf as they could and the Academy people did their best and got a few changes made. Since we don't have a National Retirement Policy, Congress perceives a problem and they fix it. I agree PPA isn't the best, but you have to admit a system that permits a plan to run out of money because it has a credit balance is broken. I agree that PPA 06 will be the end for most traditional corporate db plans within the next 10 years, but I also believe that was always the intent, not unforeseen consequence. I am curious though, what was said at the EA meeting that sounded like the "key to the Rosetta Stone"?

I don't really understand the question. Separating into multiple employer plan? A multiple employer plan is one plan of unrelated employers. Then you say they ARE 4 separate plans of unrelated employers? What they are trying to seperate?