rlb64

The % method charges participants who are entitled to the allocation. That didn't seem appropriate.

The liquidated amount will be used to allocate the full forfeiture amount due. Aren't the participant's entitled to an allocation of the full forfeiture balance as of 9/30?

I assume it's the fees.

Forfeiture balance of $5,000 as of 9/30/04. Balance went down to $4,996 due to a loss in the money market fund. The participants as of 9/30 are entitled to an allocation of the full $5,000.

I'm sure this has been brought up before, but what is the normal procedure for handling a loss on a forfeiture account after plan year end and the plan doc says to reallocate forfeitures? Should I process an asset based charge (as a loss) to all participants for the following plan year?

Plan is covering school bus drivers. They are paid for 38 weeks and not paid during the summer. Plan sponsor would like to limit loan repayments through payroll deduction. Does anyone have a suggest as to how to setup loan repayments for these employees? Thanks

I'll shorten a prior posting. Does anyone see a problem with a TPA reimbursing participants for prepaid fees? The proposed reimbursement is due to a client's decision to use the investment company's system for administering loans. Our practice has been to charge all expected maintenance fees at time of loan issue.

What's the risk of just paying the estate without the disclaimer? We're only talking about $190.

What about getting a disclaimer from the beneficiary and having the document determine who is next in line?

We do not reimburse when a participant decides to prepay a loan. As far as getting hit with a new fee... Isn't this the same as a change in recordkeeper? I would think new service providers charge participants their own maintenance fee and not the fee originally agreed upon in the loan agreement, even if higher.

We are a TPA. The investment provider does the daily val. However, the investment provider has not been able to track loans. That is, their system was unable to split principal and interest and update loan balances as loan repayments were deposited. So, it has been up to us to reflect loan activity and balances on the year-end participant statements that we prepare. Our loans fees charged to the participants were an initiation fee of $100 plus $30 per year prepaid maintenance fee based on the term of the loan. For example, a 5 year loan cost $250 deducted from the participant's account and no subsequent fees. The investment provider is now able to track loans. Their fee includes an initiation fee plus a $3 per month maintenance fee charged monthly against the participant's account. So, we have a problem. We'd like to transfer these loans onto their loan system, but we don't feel it's fair to have charged participants our maintenance fee and then turn around and charge an additional $3 per month fee. One thought we've bounced around is simply reimbursing the participants our prepaid fee (or portion thereof based on remaining payments). However, our concern is the IRS might view the reimbursement as a contribution to the plan subject to 404 and 401a4. Any thoughts or suggestions?

Why can't you just amend the plan?

Why would it be subject to the excise tax if not subject to ACP testing?

Are ERISA 403(b) plan subject to the full content requirements of summary annual reports?

Is a Non-ERISA 403(b) church plan subject to ACP testing?

Local Government has a money purchase plan and a 457 plan. The money purchase plan provides a fixed % of pay for only grandfathered employees and a match for only new employees. The match formula is based on deferrals in the 457. Does this sound ok? It doesn't seem like a money purchase plan should have a match.

I would think the SEP would have to be terminated if B doesn't want to be covered. Couldn't they both adopt their own profit sharing plan? It's just that B can't contribute more than A to pass 401a4.

Say a 64 year old employee planning on retiring in a year chooses not to accept his computer generated portfolio and instead chooses a high risk fund... I think the employer would prefer to have 404c protection against this stupidity. If an employer wants computer generated portfolios, it seems it would be better to remove participant elections.

Ok, but hasn't the provision of advice removed 404c protection for the employer? And, on what basis is Ibottson relieved of being labeled a fiduciary if they are the ones providing advice for a fee?

Jon, to me it seems Sunamerica could have produced computer generated asset allocations with the disclosure statement and brought it into education. Why wouldn't that work?

Good point.

I think it's confusing as well. The IRS should have clarified the following sentence under the reg: In addition, the employee shall receive credit for service subsequent to the transfer commencing on the day after the last day of the computation period in which the transfer occurs..."under the elapsed time method." I'd still be on the safe side and give credit for 2004 if he had 1000 hours. I think Katherine's right in that one could also argue it is a schedule change for which the participant should have been given an election to choose the old or new method.

It looks that way, see Reg 1.410(a)-7(g)

See Reg 1.410(a)-7(f), I think you still have to count hours to see if that would have produced a better result.

Lynn, I think last year there was a proposed amendment to the 411d6 regs to eliminate the 90 day rule, but I haven't heard we can rely on that. SoCalActuary: See Reg. 1.401(a)-20, Q&A4. QJSA rights can be limited to participant elections of an annuity. This tells me spousal consent can be avoided for lump sums, installments, and a J&50% survivor (normal form of annuity).