Effen

I don't know the legality of it but I have worked with single employer collectively bargained plans that have joint trustees (union/employer). This can become problematic because as a single employer plan, the employer has all the liability to fund the negotiated benefit. I have seen situations where the union wants "their people" (actuary, investment guy, custodian, etc) who are often beholden to the union instead of the Plan or the employer. This can cause problems for the employer if they want to look at the impact of various changes without the union's knowledge. For example during a period of negotiations. It often evolves into a situation where each side hires their own consultants. This is especially true in larger plans where each side can afford it. I think most smaller single employer collectively bargained plans are totally controlled by the employers, except for the negotiated benefit level.

Do you guys also blame the athletes when the owners agree to huge salaries and then cry poor? Generally, the unions traded wages today for benefits tomorrow. The companies took their savings as spent it on other things. The unions aren't the only ones to blame, the companies agreed to provide the benefits. I know the unions have their share of issues, but I think the companies deserve some of the blame for unfunding their pension obligations. Ownership constantly gives in to union demands to avoid labor conflicts. They make future promises and then fail to fund them. Then they go bankrupt anyway and shift their unfunded liability to the government. (Airlines, Steel, Auto) The unions ended up trading todays wages for tomorrows benefit and ended up with neither. I'm just pointing out that there are two sides to every issue.

I agree, no NHCEs... no discrimination problems (at least as far as 410(b) & 401(a)(4)).

I am fairly certain that the spin-off (assuming it is really a spin-off) does not trigger full vesting, but I don't have a reference.

Do you mean "multi" or "multiple" employer plan? A multi-employer plan is a collectively bargained plan and when an employer leaves it could generate a withdrawal liability. ie: Ironworkers, bricklayers, steamfitters, teamsters, etc.. If it is a "multiple-employer" there is usually a contract or document that details what happens when an employer leaves. These can be very complex issues, where a good attorney is generally required. Also, I think 403b's are only available to non-profits. So maybe you have a multiple employer plan comprised of non-profit entities? I think we need some more info to properly understand your question.

The SOA page doesn't appear to have been updated since 10/31/05. Any idea why? Does anyone have the 12/1/05 rate?

Thanks Mike. That was very helpful.

benefits link I think the attached contains your answer. As you will see, I was shown the light.

How is this a 404 problem? Catch up contributions are not employer contributions. The employer already took the deduction on the payroll side. It is compensation, that the employee chose to defer. The employee has a problem and Trustee has a problem, but I don't think it is an employer deduction problem. Maybe the Trustee can simply return the 401(k) contributions since they are not permitted. Did the 2004 W-2 reflect the 2004 catch-up? If so, he may have to re-file his 2004 1040.

Catch-up contributions are employee $s, not employer $. Therefore, I don't think he has an employer deduction problem, but he has has a personal deduction problem. Maybe he also has a problem as the Trustee for accepting 401(k) money into the Trust when the Plan didn't contain proper language. Interesting issue. Maybe you should ask him to check real hard in his files and he just might find that amendment that added the 401(k) option. Even if he found it, it sounds like he still would have a $3,000 problem since he contributed both catch-ups in 2005. Sounds like the accountant may have some 'splaining to do.

Could you provide more details on the $6,000 excess? Exactly how was it determined? What was the "mistake in fact"? Didn't he know the amount of his compensation when he made the deposit? Sounds more like "ignorance of fact". You will also need to check the language in the Plan document. Plans often contain language relating to non-deductible contributions.

You need to read Rev. Proc. 2000-40. I believe it is only pre-approved if the change in normal cost and accrued liability is less than 5%. I think a lot depends on the size of the plan, but 10% is pretty high. You may want to contact the prior actuary and discuss potential reasons for the difference.

I received an invitation to join the College of Pension Actuaries (COPA) which is "a newly formed organization devoted exclusively to pension actuaries in good standing with the JBEA". Their objective is to "serve the professional needs of our members". I notice several significant names associated with this new organization so I refrained from immediately "filing" it. Since Mike Preston is listed as a director (as well as Kevin Donovan, Ed Burrows, Larry Deutsch and others) I wondered if Mike could share a few more details about its purpose. Since most of the names appear to be "ASPPA People" is this new organization somewhat in response to ASPPA's drifting away from pension actuaries? What is the mission? How can you "serve" your members better/differently than all the other organizations (Society, Academy, CCA, ASPPA, etc)? The mailing was fairly generic and I wondered what the real drive of the new organization will be. I think this could be a good thing, but I wanted to know more about its goals.

I have seen some strange vesting rules used by multi-employer plans, but they tend to be more generous, not more restrictive. A lot would depend on the number of hours he was working. Either way, I believe employee contributions are always 100% vested. However, he may think they are employee contributions, when in reality they are employer contributions. Since they negotiate the contribution rates, and usually trade pay for contributions, they often think of them as "my money", when in reality it is employer money.

Jim Holland

No takers? Even a guess would be appreciated.

Someone was watching TBS last week. If only they could have shaken off those flying monkeys!

Big Company A is owned by Bill. Bill decides to sell Big Company A to Bigger Company B. Since Bill doesn't want to sell widgets anymore, he forms LLC 1 on June 15. LLC 1 has no employees or assets until July 3rd when stock sale to Bigger Company B has closed. On July 2, LLC 1 has 5 employees, 3 highly paid and 2 administrative. All worked for Bill at Big Company A. LLC1 will be in a completely different and unrelated business than Big Company A or Bigger Company B. Bill owns 100% of LLC 1 Also, there is a small piece of Big Company A that Bigger Company B didn't want. On June 30 Bill forms LLC 2 and spins out the employees and assets of Big Company A that Bigger Company B didn't want. LLC 2 has 5 high paid people and 50 low paid people. Bill owns 100% of LLC 2 On July 3rd Bigger Company B purchases the stock of Big Company A (Note, stock sale). So, Bill now owns LLC1 and LLC2. Up until July 3rd, Bill owned Big Company A. Also, note that on July 2nd, Bill ownes Big Company A, LLC1 and LLC2. LLC 1 had no assets or employees, but LLC2 and Big Company A did. Question: 1) If Big Company A funded the 415 max in their DC plan before the sale, can LLC 1 start a new plan and fund the 415 max again? 2) If the highly paid individuals were HCEs in Big Company A, are they HCEs in LLC 1 and LLC 2 or are they treated as new employees? The basic question is, are Big Company A, LLC1 and LLC2 part of a controlled group? I know LLC1 and LLC2 are, but do I need to consider the benefits provided by Big Company A in my analysis? Any sites would be appreciated.

interesting.... have you ever worked on one?

You have a multiemployer plan that has a 401(k) option? Now I'm really confused. How do they handle salary deferrals? Did the employers agree to payroll deductions? Does each member really have the option to defer any amount they choose? Are you sure it is really a 401(k)? Many multiemployer organizations have profit sharing or money purchase plans that they often refer to as "annuity plans". These annuity plans require a set amount of money to be deposited per hour ($.50) for each member. They are often treated like 401(k)s in that the men may have control over the investments, and since they agreed (through negotiations) to the contribution rate, they may even think of it as a 401(k) plan, but in reality the $.50/hour is employer $ and the plan is just a profit sharing plan. I have never heard of a multiemployer 401(k) plan. I would be interested to know more about it, if it really is one.

What is the reason for your question. Why does it matter? Assuming the benefits are collectively bargained, there are generally no discrimination issues within the multi-employer plan.

prior post MRDs apply to the vested benefit. You can keep him non-vested for at least a few years. Regarding your questions, the answer should be in the plan docuement. Since it is a new plan, you have a nice opportunity to make sure it says something you think is reasonable and something that you can calculate.

Because I suggested that they exclude the dead husband. Lame D. pointed out that this would cause the plan to fail 401(a)(26) because it doesn't cover 2 ees. Covering 1 of 1 is fine, but not 1 of 2. 401(a)(26)(A) IN GENERAL. --In the case of a trust which is a part of a defined benefit plan, such trust shall not constitute a qualified trust under this subsection unless on each day of the plan year such trust benefits at least the lesser of -- 401(a)(26)(A)(i) 50 employees of the employer, or 401(a)(26)(A)(ii) the greater of -- 401(a)(26)(A)(ii)(I) 40 percent of all employees of the employer, or 401(a)(26)(A)(ii)(II) 2 employees (or if there is only 1 employee, such employee).

I agree with Mr. Duck. I forgot about the 2 person minimum.

Why not? Is the business entity still valid after hubby's death? Now, if you are suggesting that it is a 412(i) plan and you want to purchase life insurance for the dead spouse, then you may have some issues. But the simple fact that he died, shouldn't have any impact on her adopting the plan. You might want to exclude him to avoid any chance for raised eyebrows at the IRS, or did you want to provide a benefit for him?