DMcGovern

Anyone else receiving new spam sales messages? It seems to have started with the new version of the message boards. This is a great Forum for benefits people! I hope you can filter out these unwanted messages. Thanks!

Thanks to all for the replies! I agree that 412(e)'s are a pain and probably should be extinct, but I'm not the owner of the company. I will definitely read Rev Rul 2004-20 Thanks again

We just found out that the agent had a disability waiver of premium rider included on a policy for a 412(e)(3) plan. Would appreciate thoughts on if this should be allowed? Thank you!

Have you seen any prototype or volume submitter documents that would allow for a SHNEC less than 3% to HCE's? The ones that I'm familiar with only allow for the exclusion of HCEs from this contribution allocation. Not arguing that the regs would not provide this, but maybe it would be individually designed?

See EOB Chapter 1B, page 423 for definition of a domestic trust and additional information

Participant was incapacitated and had a POA. The POA signed the distribution request form for a lump sum. Distribution transaction took place, but unfortunately by the time the check was received the participant had passed away. Since the POA's rights end when the person is deceased they are wondering if anything can be done with the check, or should it be cancelled and wait until the death certificate is issued? Not sure if it matters, but the POA is also named as the personal representative and 100% beneficiary in the will.

Will Rogers: "This country has come to feel the same when Congress is in session as when the baby gets hold of a hammer." Mark Twain: "Suppose you were an idiot and suppose you were a member of Congress. But I repeat myself." And, "I don't mind what Congress does, as long as they don't do it in the streets and frighten the horses." Sort of shows that Congress has not been well-liked for decades, don't you think?

Isn't there a difference between how a contribution is allocated/calculated and how (when) it is funded? For instance, in the Corbel document it provides for options on when the match will be funded; in the plan & trust document section 4.2 for time of payment for employer's contribution it says it is up to the sole discretion of the Employer. (It further provides for ADP safe harbor match at least quarterly.) Wouldn't this permit the Employer to fund throughout the year, with a final determination on the annual allocation at the close of the year with a true-up?

Just a thought - I have not used the Corbel doc in a while, but I seem to remember that the Plan & Trust document had some language in it that would exclude NHCEs with less than 500 hours from QNEC allocations (depending on which type you are using)

Plan Sponsors should have (hopefully) received the service provider fee disclosures by now and are supposed to document their review of these disclosures for reasonableness. This may be a time-consuming and difficult task for many (all?) of the Plan Sponsors. I have only seen a couple of independent benchmarking services out there, and that would add yet another fee for Plan Sponsors. Just curious what others are doing, if anything, to assist the Plan Sponsors in this review? Thanks!

So, if we switch to an annual contract and will not receive $1,000 in indirect compensation during the year for any of our clients, the only clients that we would need to comply with the disclosure requirements would be those that would pay $1,000 or more of our admin fees from the plan's forfeiture account that year?

I see the iRS issued REG-153627, proposed regulations to add the Form 8955-SSA to the list of forms that provide for automatic extensions. Looks like we can rely on this proposed regulation - WHEW!

"I guess the DOL assumes that everyone needs to have a computer and email address" You are correct - and don't forget what "assuming" does! I wish they would stop and consider the vast differences these regulations have on large plans vs. small plans. Most of our clients are smaller companies - the people that sponsor and administer the plans are so busy just trying to keep their company afloat right now. Dealing with all of the changes for their benefit programs (including all the health care regulations) is quite overwhelming for them.

Assuming that clients are going to read a lengthy explanation about all of this, how do you disclose in detail that forfeitures may be used from time to time over the life of the contract (evergreen) to offset the TPA fees? It seems like that is the decision of the client. If they are the ones deciding, should it be a TPA disclosure?

We occasionally receive revenue sharing payments on a few of our clients. We were planning on just crediting their accounts for those amounts against their administrative fees. Would that eliminate the need to meet the disclosure requirements (we would disclose that any payments received from the investment company would be a credit to their account in our contract)?

Thanks, Lippy for your comments. I did follow the other recent thread on FTW, but it quickly moved away from the admin system. By controlled group testing, you mean a CG with more than one DC plan right?

Thanks for your comments, RPG - you have been very helpful!

Thank you for your comments - they are helpful! Just curious, you said that FTW "would not do one thing you needed so it didn't work out"....could you elaborate on this? I can't say I blame your actuaries for wanting to stick with a system that has all of the historical data in it and that they are comfortable with. That's another issue I have been wrestling with - how much would be involved in changing systems and actuaries.

I would like to start up this topic again. We are currently using Datair for our admin work; use ftwilliam for docs and government forms and Portal. We would definitely look into using the ftwillam admin, except that they don't have DB admin. Are others using the ftwilliam admin for DC plans and using something else for DB plans? If so, what are you using for the DB plans? Thanks so much for your input!

From IRS Publication 560: "Net earnings from self-employment. For SEP and qualified plans, net earnings from self-employment is your gross income from your trade or business (provided your personal services are a material income-producing factor) minus allowable business deductions. Allowable deductions include contributions to SEP and qualified plans for common-law employees and the deduction allowed for the deductible part of your self-employment tax." As I mentioned in my previous post, the contributions to a qualified plan for common-law employees INCLUDES salary deferrals.

In the ERISA Outline Book, Ch. 1A, Part A, 3.c. – “If the sole proprietorship or partnership has common law employees who are covered by the plan, the qualified plan deduction under IRC Section 404 that is taken into account to compute earned income includes the contributions made on behalf of such employees (or, in the case of a partner, the partner’s allocable share of the deduction attributable to such contributions), including the elective deferrals made by such common law employees to a 401(k) arrangement maintained by the employer…..The elective deferrals made by the common law employees are part of the employer contributions deducted by the employer (i.e. the sole proprietor, or the partnership, as the case may be) under IRC Section 404.” In addition, in the ASPPA DC 3 study guide Chapter 2 there is an example for the effect of elective deferrals on the self-employed individual’s earned income, “Jimmy’s earned income is reduced by the contributions made on behalf of the other employees (both elective deferrals and employer profit sharing contributions). It is further reduced by the profit sharing contribution made on Jimmy’s own behalf, but not for his elective deferrals.”

Sorry, I may not have the most current information on their billing method (hopefully someone else can confirm this). We only briefly discussed this with them quite some time ago, so it may be different now. If you look at their website in the information about how they charge for the various modules, it does not mention the participant fee. Only by number of plans. I guess if you are interested, that would be something to clarify. However, I will agree that when they say they don't have any hidden fees - it has proven to be true for us!

Agree with Shot in the Dark on all the other systems with ft williams! We also use Datair admin and are waiting for ft williams to add DB administration. One other thing to note on the ft williams admin, it is my understanding that their billing is somehow based on the number of participants. We have a plan with over 33,000 participants so they mentioned that this particular client would probably not be economically suitable for their admin services. Just something to keep in mind.

I seem to recall a post from Reish & Reicher that said the IRS has gone both ways on whether terminated participants is a reasonable classification. The first fact in the factual determination is the underlying business reason for the classification - if it benefits the employer (i.e. reduces their cost or allowing an increase to the HCEs), it would not meet this fact. It sounds like in this case, giving one particular employee - terminated and with low wages - would be determined to be benefiting the employer. I remember reading something about singling out people with low income to help pass the test would not fly under audit.

Thanks for your response Kevin!