chris

A participant has requested an "itemized accounting and valuation" of his individual account balance. All plan assets are held in the general trust and the participant has no segregated account. Wouldn't it be sufficient to provide an SAR along with the participant's benefit statement for the current year? Thanks.

A participant has requested an "itemized accounting and valuation" of his individual account balance. All plan assets are held in the general trust and the participant has no segregated account. Wouldn't it be sufficient to provide an SAR along with the participant's benefit statement for the current year? Thanks.

Thanks for the help.

The adoption agreement is dated November 28, 1989. It was a prototype doc. sponsored by an ins. co. The ins. co. said e/er couldn't rely on its letter if ins. co. was not handling administration of plan. E/er thought ins. co. was handling plan b/c ins. agent who sold all of the underlying ins. policies to the plan was handling administration. Unclear as to when ins. co. or agent thereof ceased administering plan. Ins. co. will not provide copies of amendments to prototype document and e/er not sure where they might be or if e/er ever received them. Even though there is an open issue as to intervening amendments e/er wants to try and amend and restate based on document as-is. Probably more than you wanted to know but....

The adoption agreement provides "E6 TARGET BENEFIT FORMULAS .... A Participant's Monthly Retirement Benefit shall be equal to: FOR A NON-INTEGRATED PLAN Fixed Benefit a. (x) _12_% of such Participant's Average Monthly Compensation beginning at Normal Retirement Age. Total benefit reduced by 1/20 for each year of service less than 20 years." The Corbel information seems to say that if it is to be a safe harbor plan and if the benefit is to be a % of average monthly compensation (without multiplying by credited years of service) then the number of years must be 25 or more. (I misspoke in my earlier post regarding 35 or more.) Since the target benefit formula was amended to 0% of average monthly compensation after Dec 31, 2003 and the plan was terminated effective Dec 31, 2003, I was assuming that going with the 25 yrs/ reduction of 1/25 for each year less than 25 would not hurt anything....??? Don't know if this shed any light on it or not. Thanks for any help you can provide.

Trying to amend/restate a target benefit plan using Corbel's volume submitter document. Old adoption agreement provides for a participant's total benefit to be reduced by 1/20 for each year of service less than 20 years. Corbel's checklist seems to state that the term cannot be less that 35 years, ie, 1/35th for each year of service less than 35 years. I guess it would need to be 35 in order to maintain safe harbor status????? There shouldn't be a problem with utilizing 35 as the plan was recently terminated prior to Dec 31 and everyone is 100% vested. Any comments on using 35 to maintain the safe harbor status given that it has already been terminated?? Thanks for the help.

It will ultimately depend on the plan document language, but in your example I would think that A would get the allocation and B would not assuming the plan doc. has language as discussed below. The doc's we use are volume submitter doc's from Sungard Corbel. They allow for you to provide for an alloaction to a participant who has terminated employment b/c he/she has become disabled, retired (early or normal), or died during the plan year REGARDLESS of hours of service. The implication is that if they have not terminated employment because of one of those reasons, then they are subject to the 1000 hrs/last day rule. The plan language may say that it doesn't matter why an e/ee terminated employment, whether it be retirement, death, disability.... b/c they will still be subject to the 1000hrs/last day allocation req's. Again, plan doc. will control.

For the most part, the plan document should address all of the issues you mentioned. Regarding the retirement/going to work for another company issue I would think that issue would be resolved by whether or not they meet the plan requirements for retirement, i.e., retirement age, years of service, etc.... If they do, then they are entitled to an allocation if the plan doc. says so. In order for an employee to retire he/she would always have to terminate employment. Therefore, meeting the plan requirements for retirement will control. The fact that the e/ee ends up working somewhere else should not matter. Regarding e/ee's working past retirement age, I would think they would still need to work the requisite 1000 hours to receive the allocation. The only free pass I know of re getting an allocation without working the requisite number of hours is the the very one you stated at the beginning of your post, which also will be controlled by the plan doc. language.

How about requiring employment 1 year after the education is received in order to get reimbursed?

I guess the 401(k) does NOT allow for catch-up contributions?

Maybe the "next twelve months" language is there so a participant cannot reimburse him/herself for tuition he/she paid in the past and thus the language helps to ensure that it is a due and payable expenditure and thus a hardship......?

Don't know the specifics as to letting IRS/DOL know (I would assume the fact that a 5500 shows up with XYZ, Inc. PSP on it would be enough....???), but as to the corp. side of the issue, the corp. would need to adopt the plan (assuming the doc. allows for other employers to adopt) or corp. would need to set up new plan with same provisions (I guess?) and have the sole-proprietor plan terminated and assets rolled into corp. plan.... sorry for the run-on sentence.......

From 98-52, re the notice issue.... "The requirement that the notice be given within a reasonable period before any year (the timing requirement) is deemed to be satisfied if the notice is given at least 30 days (and no more than 90 days) before the beginning of each plan year to each eligible employee. For employees that first become eligible after the 90th day before the plan year, the notice can be given no more than 90 days before the employee becomes eligible, and no later than the date of eligibility." See last line.

Target benefit plan is a prototype document. ONe portion of the adoption agreement entitled "Target Benefit Formula" states that " A participant's monthly retirement benefit shall be equal to 12% of such participant's average monthly compensation." E/er wants to terminate the plan as of 12/31. E/er will fund this year. My thinking is that in order to terminate the plan not only would the e/er need to do a consent of directors re termination, but that the adoption agreement regarding the e/er providing funding to give a participant 12%...needs to be amended such that it reads 0%... That way even if there is a problem with the termination, eg, assets not distributed in a timely fashion, etc...., then the e/er will still not be obligated to fund.....? Any suggestions? Thanks in advance.

You would have to notify the partcipants of the amendment....typically done by way of a summary of material modifications. Basically, tells the participants in plain english as to what got amended and how it's different. Generally must be provided b/f deadline for 5500 I believe. ON a different note, I assume the plan has a last day of the plan year employment requirement such that the allocation provision, ie integration, can be amended this late in the cal. year....???

I assume the plan document does not address it..?? I use Corbel's volume submitter doc's which speak to actually "segregating" a terminated participant's account. If the plan does not address it, then I guess the plan could let the terminated participant know that it will remain in the plan account and invested with other plan assets unless he/she takes a distribution. In short, if the participant wants to call the shots as to investment, then participant needs to take the distribution.

Plan provides for eligibility in accordance with IRC 105(h)(3)(B)....ie can exclude part-time e/ee's defined as customarily not more than 35 hours per week. E/er wants to amend plan and provide that e/ee must work at least 35 hours each week in order to remain eligible. IN other words e/er wants to track actual hours worked instead of relying on the "customarily works" language in the Regs. under IRC 105 (1.105-11©(2)(iii)©). Seems to me this isn't doable b/c you'd have to wait until year end to see if anyone was/was not eligible. For example, you could have an employee who works 36 hours every week except for the last week in December who was reimbursed for med. exp's during the year who now becomes ineligible......... Any comments or suggestions??? Thanks in advance.

Use of personal funds may end up being prohibited transaction. Safest to have all paid by/through plan assets so that there's no commingling...... That's an example of problems with having real estate inside a retirement plan....

As to 1/1/03 effective date for the 401(k)......clearly, e/ee's can't defer comp. already earned. Thus, adopting the 401(k) today, but effective 1/1/03 would not appear to be a problem, however....... You would have to communicate it to the employees so that there's no existence of a plan issue, but employees will be aware at same time that purpose is to start 401(k) as of 1/1/04 and that there's not much left to defer in 03 (unless the e/ee is paid enough such that he/she would be able to defer the 402(g) limit in one pay period. Practical problem would be where e/ee wants to defer for last part of December and you say they cannot do it........ Otherwise, try a volume submitter doc. from Corbel.

Dealing with a participant who just returned from military service... USERRA seems to say that the make-up contribution is determined on actual rate of pay in effect at time of mil. service, or if actual rate indeterminable, then use preceding 12 months to determine rate of pay. USERRA aalso says that no earnings are due on the make-up contribution and no forfeitures need to be allocated. If the participant is there the first 2 months of the plan year and then returns after plan year end and actual rate of pay is undeterminable, does that mean that: 1) total comp. (=) 2 months' actual comp. amount (+) 10 months comp. based on preceding 12 months of comp. pay rate; 2) no earnings are computed on the make up contribution; 3) no forfeitures are allocated to the participant's account....? I may be making more out of this than necessary, but just haven't dealt with the issue previously..... Thanks for the responses.

C corp currently pays 50% of health ins. premium for all e/ee's. Any discriminatin issue if corp pays 100% for a separate class of e/ee's, e.g., officers? Keep in mind that the officers are all >5% shareholders. Also, corp considering adopting a mandatory retirement age of 65, however, corp wants to continue funding the health insurance for one e/ee who is older than 65 and who also happens to be one of the principal shareholders. Same question as above... The health plan is not "self-insured" for Sec 105 purposes. I see less of a problem with the first scenario than with the second... Thanks for any comments, suggestions....

As referenced above, have the dircetors of the corp. sign off on a consent terminating the plan as of date x in preparation for the subsequent dissolution of the corp. Consider submitting the plan to the IRS, if need be. Keep Rev Rul 89-87 in mind in terms of distributing assets as soon as administratively feasible so the IRS does not disregard the termination and treat it as an ongoing plan.

To sum up your post...regardless of the dollar threshhold, if the only people that are prevented from self directing are NHCE's, then there's a clear discrimination issue...? I guess the difference b/t a dollar threshhold re self directing and a dollar minimum requirement for loans is that the reg's. allow for a minimum to be set on participant loans...? Wouldn't setting the threshhold at a point where some of the NHCE's can self-direct be an argument against discrimination in favor of HCE's? There may have been prior posts on this next issue, but what about the effect of the TPA charging each self-directed account $x per $1000 of acct. balance for admin. costs (bookkeeping, balancing, etc...) or some similar type of arrangement?

Probably, b/c the plan sponsor, ie, the sole-proprietor, has passed away. Would be similar to a corp. that was dissolved while it maintained a PSP...

A "single member LLC" cannot be taxed as a partnership since it only has 1 member. It will taxed as a sole proprietorship.