E as in ERISA

This is why it's better to hire an attorney on the front-end -- when you are establishing or amending the plan -- even if it's a prototype, volume submitter, etc. This may take you out of prototype status, etc. and may cost more. But you should get recommendations about better wording on forfeitures ("first to pay plan expenses, then allocated" instead of just "pay plan expenses"), expenses (making the plan primarily liable for legit plan expenses, but also covering the payment of expenses by the employer), etc. And hopefully it will save you from having to get caveated opinion letters later.

The trustees have to decide whether the plan administrator's compliance with the specific disclosure requirements will also satisfy their fiduciary responsibility to participants in regard to blackouts.

The sports teams can also be problems. Many are owned by persons/families that have a variety of other closely held businesses. And they "sometimes" forget about the controlled group rules.

The amounts that show up in the withholding box would typically be reported as a tax payment on the person's current year Form 1040. And I think that the $1,000 was clearly being applied to past year's tax liabilities and the participant should not be allowed to credit it against current year liabilities. So I would assume that it shouldn't be reported as withholding.

I guess that I can add "mind-reader" to my list of qualifications!

Based on previous answers, I'm guessing that Mr. Kirk Maldonado would say something to the effect of "Pay an attorney $11,000 to give you an opinion on what to do with forfeitures when the plan document only allows you to pay expenses (of which there are none) and the law generally doesn't allow reversions from profit sharing plans." Hopefully the better and cheaper answer is to pay the attorney to amend the plan and allocate the remainder to participants after expenses.

I didn't think that you could do a reversion out of a profit sharing plan (except maybe one very limited exception that I can't recall and rarely applies).

My reading was that the model language couldn't be used by a plan trusteed by an individual. But I would note that the Section 408 IRA rules generally require an individual retirement account to be trusteed by a bank and an individual retirement annuity to be issued by an insurance company.

Allocate to participants and pay out (less any fees required to calc the allocations and make distributions).

I agree. You can only eliminate going forward -- not for those who have already elected.

Is age 30 used in a cash balance plan to somehow address the whipsaw issue?

On a PSP: You can't eliminate the QJSA requirement directly; you can only eliminate it by eliminating the option that causes the QJSA rules to apply. If the life annuity option is eliminated from the PSP, then there will be no QJSA requirement. But if the life annuity option remains in the plan, the QJSA requirement will also remain.

Correct. The W-2 correctly reports that $13,000 was actually withheld from pay. The excess deferrals and excess annual additions are reported on 1099s because they are distributions from the plan.

GBurns -- What do you mean by "GET a lawyer (not an attorney)"?!?! How are you distinguishing the two? The two terms are generally used interchangeably. The distinction, if any, is that an "attorney at law" is a lawyer who has actually been hired to represent or act on behalf of another in a legal matter. So, once they hire the "lawyer" then he or she becomes an "attorney"!

I would also recommend buying a calculator. $25,000 beginning balance < 5,000> 529 < 5,000> IRAs < 5,000> mutual funds $10,000 (NOT $15,000) for checking account

If the non-collectively bargained was amended, is it possible that there is a board resolution authorizing BOTH amendments? (I'd check 1994 minutes. I think that it was UCA 92 and OBRA 93 and was required in 1994). I believe that if you can't find it you'll get referred to CAP to do the corrective amendment and pay the presumptive amount.

One always has to decide whether you want to follow the regulators' views (which may be the more conservative position but will likely avoid litigation) or whether you are willing to challenge regulators views when you feel they exceed statutory authority (which may provide more options but also includes risk of incurring litigation costs). You will sometimes find differences between law firms' and other consultants' advice based on the fact that the law firms are often more willing to challenge regulators' positions that go beyond the law, and others are trying to avoid litigation. Your choice of action sometimes depends on what the risk of litigation is, what the worst case scenario would be, and how willing you would be to pursue the challenge.

Yes. But my point is that you can't read the Soldiers and Sailors Act alone. You have to read it jointly with the regulatory requirement under ERISA that provides that the plan must charge the "market" rate. Other lenders are not subject to the restriction that they lend only at the market rate, so they may continue to charge the higher rate until the borrower asks for a reduction. But a plan must also satisfy the ERISA requirement.

Remember that ERISA has a specific requirement regarding interest rates: The loans must bear a "reasonable rate of interest," which is defined as "a return commensurate with the interest rates charged by persons in the business of lending money for loans which would be made under similar circumstances." The Soldiers and Sailors act applies to all lenders. So I think that the the fact that most lenders would be charging 6% during military service imposes a greater responsibility on the plan to use a maximum 6% interest rate. Participants periodically ask that they be charged more than the going rate on their plan loans (so that they can defer more). But plans are not allowed to do that because of the market interest rate requirement.

Now that you're calling it a GIC, I now partially understand what you mean. I understand the economics of the first contract (where you only get guaranteed rates until maturity). But I don't understand what is happening on the substitution. Or at least I don't understand why does the reporting to participants should affect the economics of the transaction? You don't have to actually distribute any gains to the participants in cash. I have some info that might describe the basics, but its not at my fingertips. I think that GAAP (Generally Accepted Accounting Principles or something like that) specifically describes how the asset and income are reported on the plan's financial statements. And then I think that would determine what gets reported to participants. So if the plan is audited, you might also want to check with the plan's CPA to confirm how it will be treated.

I'm not surprised that the clients said that about their auditors. Their typical response is "I have a recordkeeper, a lawyer, and an accountant for the plan -- between all three of them I'm sure I'm fine." But the recordkeeper's work is limited primarily to statements, testing, loans, distributions, etc. The lawyer's work is usually limited to documents and cleaning up past errors that are known. The profession hasn't historically "marketed" their services so they aren't usually "selling" packaged services (but it can be to their benefit to develop relationships with consultants who are actively marketing services and then bringing them in to do any drafting or legal representation when problems are identified). The accountant's work is only a financial statement audit, not an operational audit. They are only looking for (a) egregious type of violations that would result in disqualification and tax liability for the plan, and (B) specific violations that are required to be reported -- e.g., nonexempt party in interest transactions. If there is a fiduciary breach, the ultimate financial risk is on the employer not the plan. So that is exactly one of the "gaps" I mentioned -- the plan auditors aren't looking at the issue closely because it does not create a liability for the plan, but the company auditors aren't looking at it because they don't have a clue about fiduciary issues in relation to plans.

Is there something I'm missing? Are you saying that participants accounts show only the cost and have never been updated in prior years to reflect the market value? Plan assets are reported at current value not historical cost. E.g., if the plan buys a mutual fund for $9 a share and it increases to $18, then the shares are reflected at $18 in the participant accounting. The same is true for insurance arrangements. It's a little more complicated. There are several different values reported for an insurance contract and I can't remember which one you use. But I think that its one that estimates what you would receive if you cancel the contract in the current year.

You might consider introducing yourself to local attorneys, CPAs and/or other consultants and describing how your prospective services may complement theirs (you'll have to define some specific services first!). With all the focus on due diligence, prudence and monitoring, its a great time to be consulting. There are lots of gaps out there. You just need to identify them and explain how you can fill them. Good luck!

Assets are generally reported at current value, and the increases in value are recorded as income. For an insurance policy, you generally report something similar to the cash value and the increases in cash value. Technically the prior 5500s should be amended to record the annual increases, so that you don't have a full $30,000 to record as income in the current year. If they choose not to do that, you'll have to figure out some way to explain to the DOL on the current year 5500 why the beginning balances are not the same as the prior year ending balances.

I agree with Lynn.