12AX7

Do the propose regs suggest that any 401 (k) contributions and loan payments made after 7 business days are automatically considered as "late" and therefore subject to the prohibited transaction rules? Until the final regs are issued, what are others considering if the deposit occurs after the 7th business day? We've already informed our clients about the proposed regs, but my feeling is that we'll be looking at more prohibited transactions until the clients change their deposit habits.

I'd like to get an idea of what software others are using to track clients and administration tasks. Over the past 5 years of so, we've looked at the major pension software vendors and saw nothing that met our requirements. In addition to tracking client contact information, we were looking for a system that can do the following as a minimum: - Create or identify tasks associated with plan administration (e.g. ADP/ACP Testing, Data Requests, 5500 Due Dates, etc.) - Assign plan administration tasks to individual employees of the TPA firm - Track due dates for tasks assigned to each employee of the TPA firm - Create management reports based on the above minimum criteria Currently, we're using spreadsheets, but we have various issues with this method due to the number of plans we currently provide services for. I appreciate any ideas or recommendations. We've already looked at offerings from Sungard, Datair and EBG.

I would like to make sure I'm understanding the 11-g amendment process correctly. Suppose a plan has 2 allocation classes (HCE and NHCE). If the employer is not satisfied with the results of the General Test after the end of the plan year, the employer is able to amend the plan at such time to create additional allocation classes that could result in either a higher or lower contribution for one or more participants, compared to the pre-amended allocations?

Right under my nose ! Thanks !

I know this seems like a basic question, but is it still permissable use pre-participation comp in a DB plan to develop a higher average comp for the plan's first year? Not that I believe it matters, but the plan would only cover a Sole Proprietor and the prior years' net Schedule C is much higher than it is for 2007. Thanks.

I used a professional location service and got an address, but no phone number. The letters we send go unanswered. Would it be reasonable to purchase an annuity for the participant under these circumstances?

I "inherited" a terminated DB plan and we can't find the last participant to payout. Lump Sum value is about $11,000. According to the instructions for Schedule MP, only a plan subject to Title IV can use the program. Is there something equivalent for a non-Title IV plan? Thanks.

I'm sure this topic has been covered before, but I can't seem to find search results. Anyway, if a plan is merged and the final plan year is less than 7 months, is the audit still required? CFR 2520.104-50 allows a merged plan to be a reason for a short plan year. However, this section discusses the deferral of the report, but perhaps not the elimination of the report. Would the surviving plan have the responsibility of audit after the merger? I'm a little confused on this issue. Thanks.

The freeze amendment states that no participants shall accrue additional benefits. From that perspective, could one argue that the plan could have new participants for purposes of the additional funding required on the FSA (> 100 participants). Without the addition of the new participants, the plan would be <100.

After a Defined Benefit plan is frozen, can the number of participants increase for "newly eligible" employees after the freeze date? My concern is for the extra funding required in the plan when the participant count exceeds 100 participants. The "new participants" would not have any accrued benefit since the plan is frozen, so are they still counted? Thanks.

Are plans subject to the AFTAP certification after a plan termination date? It seems that plans frozen after 09/01/2005 would be subject to the AFTAP calculation.

For what it's worth, last week Jim Holland commented at the ASPPA Northeast Area Benefits Conference that industry justification would be required for an NRA below 62, however he further indicated the service would not be devoting much resources at this time toward examination of plans with an NRA between 55 and 62. I have a few plans with an NRA between 55 and 62 as well. I also interested in knowing if these plans require the NRA to be raised to 62.

RMDs have already commenced. The 415 limit is very close to my calculation. No one else can be covered. I'm cautious about the purchase of the life insurance contract since they would intend to make lump sum distributions (direct rollovers), including the life contract to the participant soon after the excess assets were absorbed into the contract.

I was asked to look at a DB plan that is overfunded by approximately $1 million. Two participants are in the plan. One is 73, the other is 80. Both are beyond NRA and their accrued benefits are at 415. It was suggested that life insurance be purchased to reduce the excess assets. Has anyone ever seen this in a plan? Are there any other suggestions to avoid the costly reversion? Thanks.

Couldn't you exclude an employee from the gateway test if they terminated and had less than 501 hours of service for the plan year?

Would an amended vesting schedule be subject to a BRF test? I didn't think vesting (schedules) were. Can someone else confirm? Thanks.

"Other" person is not the same, therefore, not a Controlled Group. I have a good grasp on this concept and have worked with ASGs for professional services companies. This one has me a little baffled because of the company that only processes payroll for the employees that choose group health coverage. I've already suggested that they file for a DL with a request for IRS to rule on the ASG. They will think about it.

The "other unrelated person" has no attribution through Section 1563. The brother and sister do own greater than 50% in the 3 companies, but less than 80%. No same people own 80% or more, so they are not a "brother-sister" controlled group. The two payroll companies are owned 100% by the same person so there is a controlled group with respect to the companies that provide the payroll services. Is it safe to declare all employees members of a controlled group just because the companies that cut their paychecks are related members? Clearly, several of the 25 companies are not controlled group members. Their connection is through the management/payroll companies. All the companies want to adopt the same plan whether it's a single employer plan (for controlled groups) or a multiple-employer plan, if necessary. The plan will be a basic Safe Harbor Match and all other provisons of the plan will the same for each adopting employer. In the end there should be no issues with coverage. I'm just having difficulty determining if the non-controlled group members are perhaps members of an Affiliated Service Group.

I appreciate any help in determining if this situation is perhaps an Affiliated Service Group: There are a group of 25 companies that engage in currency exchange. By state law, each location must be a separate business entity and that is why there are 25 separate busineses. 17 of the 25 are a controlled group. Of the 8 remaining businesses, 5 are owned 50/50 between a brother and sister, so this group of 5 is a controlled group, but not with the other 17. The remaining 3 businesses have ownership split 3 ways between brother/sister/other unrelated person. Here's where it gets interesting. One of the company's sole purpose is a management facility that also does invoicing and payroll for the employees of all the other companies that do not want group health insurance. Another company's function is only to facilitate group health insurance. Therefore, anyone wanting group health insurance gets a paycheck from this company. Otherwise, an employee gets a paycheck from the management company. Are the non-controlled group members perhaps an Affiliated Service Group? I appreciate any opinions on this.

After an absence of working with DB plans I'm now starting to learn again about these plans and need to know if I'm on the right track regarding interest rates for Lum Sum Distributions. When calculating an LSD that is below the 415 maximum (prior to the PPA of 2006), the interest rate stated in the plan must be compared to the applicable GATT rate and the lower of the two rates would apply. So for example, if the plan rate is 5% and the the applicable GATT rate is 4.68%, then the payout is based on 4.68%. When calculating the maximum 415 benefit (again prior to the PPA of 2006), a flat rate of 5.5% is used if the plan rate is below 5.5% for the 2004-5 years. This rate would not apply for benefits below the 415 maximum. I know that the PPA of 2006 will change how these distributions are calculated and extend the PFEA rules with modifications, but I wish to know if I have missed anything with regard to the calculation (prior to the PPA of 2006). Thanks.