rcline46

We are receiving pressure from a broker who claims that an actuary should be involved, actually must be involved, in the asset allocation of a plan. He is pushing a Dynamic Asset Allocation method and says the actuary should be making the decision on the asset allocation (not the actual products, but the allocation). Especially to 'de risk' a plan as it approaches 100% funding. My first impression is that this will make the actuary a fiduciary to the plan which is not a good thing. Second, this could increase the actuary's income to do the analysis (ala Fasb 158 or whatever its called today). But more importantly, I think the broker is trying to minimize their liability. Are there any thoughts the actuaries out there care to make on this new tactic?

Employees are kept by EMPLOYER in Relius. YOu have to delete the employer to get rid of them.

I think there is a huge problem - it is likely that two years of accruals have taken place under the old formula, so that accrued benefit cannot be taken away. THe new formula and accruals are likely to take place until 2012. And since cost is now tied directly to each year's accrued benefit, no cost changes for 10 and 11.

Unless the loans were structured by an ERISA attorney, they are in a HEAP of trouble. Loan from 401(k) - this would have to be a balance forward plan, and the investment policy would have to permit 3Rd party loans, and it would have to be prudent investment. My best guess is that the loan does not fit in all three categories. Loan for IRA - it seems that the owner of the company loaned money from the owners IRA to a third party. An IRA, to my knowledge, cannot do loans except in some really oddball situations. If you mean the soon to be employee borrowed from his own IRA, no can do - it is a distribution from the IRA, and may even have disqualified the entire IRA. Don't know where you find these people, but they need to have very good legal representation because they are playing with fire while standing in gasoline.

I am at a loss as to how catch ups were not matched in this situation. Match is only on 5% of pay, and I cannot see any situation where 5% would have triggered a catchup. Ok, a bad failure in ADP testing MIGHT do it, but since givebacks are $ down, probably not likely. Can you show an example where a recharacterized contribution to catch up was not matched?

Tom, interesting question. The 'problem' is that a valuation date has effectively nothing to do with coverage. Coverage has to do with eligibility. Note in this example, that we have two entry dates with one valuation date. So in additon to whom is covered based on an entry date, coverage (and the related topic - benefitting) has to do with not only who comes into a plan, but who has left the plan without receiving a benefit. A valuation only means determining the liabilities and assets at one point in time, and the valuation date does not even have to be related to any particular entry date. For example, a daily valued plan. Due to IRS pressures it is now rare to have a DB plan valued at other than the first of the plan year or last day of a plan year. It is possible that a person could have entered a DB plan, earned an accrued benefit, and to have been paid in between valuation dates. A fun exercise because everything would have to be hand calculated, but possible.

12/31/2011 if NOT an entry date. Coverage relates to those who have satisfied eligibility AND reached an entry date. Otherwise they are NOT eligible to participate in the plan. If NOT eligible to participate, then 401(a)(26) does not apply to them.

In a daily val environment, you can run TH on the first business day of the new year, no need to wait. Top Heavy is a successful plan design! It should always be planned for. I know you had a takeover, but regardless it should have been planned for. Shame on prior TPA.

For 401(k) amounts, absolutely not for S Corp owners. Deferrals for W-2 income must come from payrolls.

We have had to grow our own for quite some time. Spend a lot of time training and sheparding them through classes. There is almost no trasferability of skills out of this industry. It is practically a dead end, and actually rather small. Finding people who have training and want to stay in is like finding hen's teeth. You may want to start recruiting from accounting courses in junior college or even right out of high school.

What if there are subject to CDSC?

It is really quite simple - if the trustee/owner takes their benefit, what incentive do they have to see that all other distributions are made? To chase down missing participants? To make decisions on non-responders? NONE. Therefore, the asset holder has funds they cannot distribute because they are not a fiduciary. The TPA cannot make distributions because the TPA is not a fiduciary. I will gladly tell the owner/trustee (and I have) that if they do not like my holding up their distribution, they can call the DOL and complain. I have even offered to try to conference them in, and let the person explain why they won't do their duty. Of course this does not apply to everyone, but how do you know?

Get a new asset provider. Don't let the wagon drive the horse!

Very badly since the law requires the plan sponsor to keep copies of all documents, properly signed and dated.

It would be a strange document that did not permit in-service at NORMAL retirment age, although I did see one that delayed inservice to age 70. Amend the darn document retroactively, file under EPCRS and be happy.

Ok Ok. The fact is, the rules for D-B or prevailing wage conditions and applications is somewhat up to the states. SO not only federal contracts, but state contracts can call for D-B/P-W wages. In New York, there is an hours pro-ration required when people have both D-B wages and normal wages, which can cause a crediting of additional hours. There is also a 'hold out' rule for other benefits (which means deposits may be delayed) and actually a vesting rule! I have heard that Massachusetts (I know it is a commonwealth and not a state!) has some additions to the fundamental D-B rules. So, if you have one of these plans, you should speak with a labor attorney for the state involved, or research the prevailing wage rules for that state. The rules might affect how the amounts are credited. Once actually IN a plan, the plan has to have its own rules. There might even be a requirement that the plan have an independent trustee!

Why does everyone think a -11(g) amendment is ONLY for corrections? That is not true. However, it does have other consequences.

Most, but not all, plans allow for discretionary contributions. Make sure your document does not allow for it. If it truly only permits elective deferrals then only an amendment using the rules under 1.401(a)(4)-11(g) could create 'space' for a contribution for 2011. Note that the IRS has opined that any contribution under this provision has to be deducted in the year of the amendment, in this case 2012.

Mr. GBurns - that is the magic of D-B contributions. Yes they are employer contributions, but they are by law 100% vested, and by law May (document issue) be used as QNECS, and what is not used as a QNEC, can also be used to offset employer profit sharing contributions. Wonderful plans they are. A few other quirks if you are interested in pursueing, and maybe some state law glitches (even in a qualified plan), etc, etc, etc. Still wonderful.

Ah, Mr. Presson, you may be able to use the D-B contributions as QNECs to help pass ADP testing, so I would say you would (and can) combine the plans for testing.

If A and B do not offer consulting to other companies, I am not sure that you escape 'common law' employee status, or that you might end up with some kind of affiliated service group.

Oh wonderful - a carve out, standalone DB plan. Certainly legal. Hopefully you charge enough to keep the carve out running because of the extra work. And yes, you can pick whatever classifications you want.

Harleybabe - I can see why they want to charge. Controlled group - ASSUMING the owners are not related - I don't think so Affiliated Service Group - I would jump straight to Management Function Group. Relationship and management services are totally unknown here. You would have to get details on this which is where fees come in. Once you get the ASG situation worked out, and that is usually the tricky part, then you are on to whether you have a single employer or multiple employers.

I would put it differently. A related rollover is a rollover of money that was in another plan of the employer at any time in the past. Employer includes controlled group and affiliated service group. For example, the employer maintained a money purchase plan and terminated it 3 years ago. Employee rolled funds into a separate (conduit) IRA. Employer now starts a 401(k) plan and employee rolls this IRA into the 401(k). That is a related rollover. It is the same as if the employer terminated a defined benefit plan, and the employee did a direct rollover of the DB into the 401(k). All of this is addressed in 416 and the regulations for 416.

Relius in Jacksonville offers their system with online rather than site licensing and access (their ASP system). Its more of a usage charge. You could try them also.