E as in ERISA

I was under the impression that unless the plan expressly provides then the participant's account shouldn't be "locked up" until there is a DRO under review. Prior to that time, it would be an infringement on the participant's rights.

The only time I've ever seen the Schedule P have any relevance was in an IRS audit of a plan, where it expected the party signing the Schedule P for the years under exam to be the one who signs the agreement to keep the statute of limitations open for the trust. At some point, vendors may balk at continuing to sign those agreements (especially if they have been or will be fired).

If they just want to manage their cash flow, they could consider increasing their income tax withholding out of that bonus and then decreasing their withholding for the rest of the year. Then you don't have to worry about the impact on the plan.

From an ERISA standpoint, this is what the preamble to the regulations on timing of contributions says: c. Partnerships. Two comments were received relating to when contributions by partners to section 401(k) plans become plan assets. The letters represent that, under 26 CFR 1.401(k)-1(a)(6)(ii), a partner's compensation is deemed currently available on the last day of the taxable year, and an individual partner must make an election by the last day of the year. They ask when the monies, which otherwise would be paid to a partner, but for the partner's election, become plan assets, inasmuch as partners do not receive wages. In the view of the Department, the monies which are to go to a section 401(k) plan by virtue of a partner's election become plan assets at the earliest date they can reasonably be segregated from the partnership's general assets after those monies would otherwise have been distributed to the partner, but no later than 15 business days after the month in which those monies would, but for the election, have been distributed to the partner.

Is the HCE a W-2 employee or a sole proprietor, a partner, etc.? If it's the former, I don't understand how the CPA got the wrong number for the tax return (the W-2 would have been netted). If he is self-employed, a partner, etc., then the rules may be different (he may actually be able to make the contribution after year end). But in any case, I think that it's probably too late now.

That section references 4972(d), which appears to include SEPs and SIMPLEs: (d) Definitions. For purposes of this section-- (1) Qualified Employer Plan (A) In General. The term "qualified employer plan" means-- (iii) any simplified employee pension (within the meaning of section 408(k)), and (iv) any simple retirement account (within the meaning of section 408(p)).

Did you ask the broker and/or mutual fund company to restore the loss to the plan?

It sounds like a forged distribution form was used. If the plan administrator or another plan fiduciary approved the forged distribution form, then the plan is involved. (The bank probably took direction from the plan administrator/other fiduciary regarding the distribution). Then the signature on the check was forged, too. At that point the bank potentially becomes involved.

Under the 401(k) proposed regulations, the latter solution would potentially be a problem in the future. A contribution made in advance of participants' service could not be credited to future deferrals. It would have to be treated as an additional employer contribution. (So you would probably want to make sure it was flagged as an error and withdrawn).

We're talking about ERISA 403(b), not IRC 403(b).

There are exceptions to ERISA Section 403's trust requirement for certain assets in insurance contracts or held with an insurance company. See ERISA 403(b).

Are the assets held with an insurance company?

I'm no expert, but my vote would be yes. It's a necessary employment-related expense. See Pub 503 -- it's not very specific -- but it provides the basic descriptions of the tests.

There are reasonable explanations for the differences. Is your account significantly larger than your brother-in-law's because of your rollover? They may be allocating expenses among participants based on the account balance -- so you are allocated more. However, that appears to be a pretty significant charge. Can I assume that it is a small plan, with few participants and you have a comparatively large balance, so that you are getting a large share of the base expenses? (If so, you might compare what it would cost to have it in an IRA). In a large plan with lots of participants, I would expect fees to be not much more than $100 per year per person (assuming that they are passed through at all). Or do you have a self-directed account and are executing a lot of transactions? There may be extra expenses associated with that. That said, they should be able to give you some explanation to you what the expenses are. If they are an ERISA 404© plan, they would be required to provide you at least some detail of the expense (how much detail is the subject of debate).

Is attorney C a "key employee" as defined for the top heavy rules. It's been quite a while since I looked at it, but if I recall correctly the part of the 125 and/or 129 discrimination rules that use the "key employee" definition are more likely to trip you up. See a Q&A on 125/129 for a small company at http://benefitslink.com/modperl/qa.cgi?db=qa_125&id=20

I'm oversimplifying it here....but this might help a little. A pension equity plan is a hybrid plan like a cash balance plan. But where the cash balance plan describes what the hypothetical contribution and earnings rate are, the pension equity plan describes the balance or potential lump sum that a person should have.

Why would total loss of the benefit be the outcome? Under the scenario that I'm suggesting, the insurance benefit would be available. The difference would just be how it affects the person's pay. It might, in fact, mean that the person who is choosing that benefit has less in total value and less take-home pay, if that is what you are saying. Say two persons are currently making $50,000 and the employer is paying $3,000 of the single's premiums and $5,000 of the married person's premiums (spousal coverage included). The jobs might be revalued at $54,000 each ($50,000 plus the average value of employer provided benefits). So the married person might take home $49,000 cash and the single might take home $51,000 cash. Fair? Depends on who you ask. There was an article the other day about the growing number of "singles" and the fact that they are generally making less than their married counterparts -- because they don't get as much in those other benefits. If there are discrimination suits, then the benefits could be lost altogether. (E.g., each employee would get $53,000 -- the $50,000 in pay and $3,000 in single insurance). A policy that allows each the flexibility to choose benefits might prevent that.

I understand 132, too. In fact, the point that I was trying to make was that transportation benefits are under a different code section. But you don't get credit under 125 discrimination rules for an employee's choice of transportation benefits under 132. And you have dollar limits under 132 that you don't have under 125. The heart of the problem is that we have so many different code sections. Each with their own limits, own discrimination requirements, and various other rules. I'm not saying that there aren't ways to provide many of these benefits pretax. I'm saying that it isn't easy to give each employee exactly the benefits he wants. Europeans have much more flexibility because their tax rules aren't so cumbersome. I notice you haven't even addressed how to solve the $16,000 401(k) problem I'm describing. What about this example. Two employees: an officer who has been given a 5% ownership interest and a $200,000 package and another employee making $50,000. Both have over five years of service. The officer wants to spend $20,000 on retirement benefits and $4,500 on medical premiums and $500 on an FSA and $5,000 on dependent care and $2,400 a year on parking. He wants 4 weeks of vacation and holidays. The employee only wants to spend $1,200 ($100 a month) on transit passes. He'd also like 4 weeks of vacation and holidays, but he doesn't want to take a risk that he might lose some of them at the end of the year. There are things that you can do to make a some of it work. But you can't make it all work without changing the first rule: that the employee's job has a total value and you're not going to provide any more (e.g., no employer contributions to a safe harbor 401(k) plan). The employee has to buy everything he wants out of those dollars. I'm not saying the European system is perfect. But in the 21st century, we need to have tax policies that match our diverse work force (more elderly, women and minorities) and the differences in their benefit choices.

Yes. That would be a loan from the employer to the plan. Even if its interest free, it probably needs to meet the requirements of PTE 80-26.

For starters, any employer contribution to a retirement plan would become a CODA. Assume an employee is currently receiving $100,000 of income, making a $10,000 401(k) deferral, getting a $3,000 profit sharing contribution and receiving $3,000 accrual to a cash balance plan. For simplicity, assume that under the European structure he would be offered $116,000. If he wanted to elect the same $16,000 of retirement benefits, the entire amount would be a CODA. He would be over the elective deferral limit and even if he could defer the amount, it would be subject to ADP testing and some might be refunded. Second, I would note that pretax transportation benefits cannot be provided under a Section 125 plan. Only certain types of vacation or holiday pay can be offered as an alternative under a 401(k) plan. Etc. The flexibility to choose among all benefits and perks without limitation is just not there.

Why not exclude them under 105? De minimis usually applies to donuts in the morning, etc. where it's impractical to keep track of what each person receives. I assume they are keeping track of who is getting shots....

Try using "match all words" -- or possibly boolean -- if you're searching on the site in general (or you'll get anything that has any of the words) or try including "and" between words and phrases on the message boards (or it will read them all as one phrase).

Are you asking if it's possible -- or just a crazy? An MPPP can be set up to provide a matching contribution to a 403(b). It has to be subjected to ACP, etc. But it's a definite contribution for purposes of MPPP.

I've only heard complaints about the packages that I'm aware of (e.g., 30-hour per week people complaining that they only got paid for 6 hours on a holiday, while everyone else got 8; compressed 40-hour per week people complaining they had to use 10 hours of a PTO bank; etc.). I can only respond that it is one of many factors that they must consider in deciding whether to work a flexible work arrangement. I understand that in Europe, some have gone to a very flexible compensation structure. The job is assigned a value and the person decides how much he wants in cash and how much he wants in "benefits" -- including not only pension, health, days off, etc. but almost down to the level of how many pens he or she gets. Not really.... But use of an office is sometimes one of the "benefits" from which to choose. It eliminates some of the discrimination issues (what benefits go to regular full time v. flexible arrangement; married with dependents v. single). It also forces employees to recognize all the costs to their employer. It's not possible to use this here yet, because our tax laws won't allow full use of it (e.g., 401(k) and 125 rules restrict what benefits a person can choose from).

Off the top of my head, my view is that "correction" isn't necessary until you have a distribution (including offset or deemed distribution of the loan).