rcline46

If the bene said Jane Doe, Spouse then it is invalid. If it said spouse, he has none. Bene is irrelevant anyway on distribution.

There is no way to keep them out. DO 401k with SH match - 200 to 6, provide notices but don't push the k for the seasonal ees. Or do auto-enrollment, delayed pay outs (yr or somethng).

Common misconception. There IS an ADP failure and the distribution is correct. Later you deliberately overallocate a PSP contribution to force catch ups. If those HCEs had not been eligible for catch ups, you would have had to distribute the excess deferrals (probably - according to the document). These are completely separate transactions. Now the regulations do not clearly state which test you do first! So if you allocated the PSP first to force the catch ups, and THEN did the ADP test, there would not have been a failure. Are we having fun yet?

Ok, question 1 - did the plan define testing compensation and FORBID the use of any other 414(s) definition of compensation? In the unlikely situation the answer is yes, the the previous answer holds. I had the IRS suggest the same thing as possible (but not required) in an EPCRS VCP situation. IE it did not affect the approval of the correction either way. If you could use any 414(s) definition then there is no ERROR as long as the comp used met a 414(s) definition. The test just was not the 'best' it could be, but it is not wrong.

First you have to pass 410(b) and then you still have to pass ADP/ACP with those excluded by class treated as -0-. Oh, of course the 410(b) pass is the ratio percentage test, right?

It is not a 412 issue, it is a 404 issue (and indirectly a 162) issue. And therefore it is not a MFSA issue. So if it is deductible under 404, there is no 10 year issue. Amortization basis cover both 412 and 404, but this is not a base issue. Consequently, in my opinion, it is all deductible in the year deposited.

In a direct question to Ian Dingwall about 3 ASPPA conferences ago, concerning the reporting of mutual funds, reporting of anything other than current value is not required and won't cause an audit. NO ONE keeps the records necessary to do it which is why in self-directed accounts the 5% transaction report is no longer needed. After a few years you just CANNOT know the cost basis due the payouts that have happened.

Who is record keeping? If true individual accounts that is one thing, if omnibus accounts then you may be able to do partial liquidation for a participant because the whole account is large enough. As stated previously, there is a severe fiduciary problem here, like the investment is not proper for a 401(k) plan to start with. I think you should notify the fiduciaries of the problem. And if you are the broker on the account, you should lose your ticket over this kind of sale.

If any benefits are paid from the trust, then the EIN goes on the Schedule R.

A plain reading of 410(b)(4)© and 1.410(b)-6(b)(1) leads one to the conclusion that the plan entry dates prevail for describing who is statutorially excludable.

The Final 401(k) regs state that you must use the plan's entry dates once the 12 months/1000 hour requirements have been satisfied - ie - daily, monthly, quarterly, etc. Remember that these regs were published in Dec of 2004 and all plans must comply for plan years beginning after 12/31/2005. Note that the IRS auditors are trying to enforce this during plan audits for the 2004 year.

I would tend to thing it is a BOY calculation, since large plan valuations are REQUIRED to shift to BOY valuatons in 2008.

Assuming a 12/31 year end, the auditor can do a 17 month audit, file as exception for 12/31/xx and attach the 17 month audit to the final 5500.

Earnings are allocated pro-rata to the various accounts. Distributions from the after tax account would normally prorata cost basis and earnings. In your posited case the entire account is less than the cost basis, therefore all distributions are of cost basis only. You will NEVER find any IRS or DOL authority as said by Harry-O. This is just plain proper administrative procedures.

I also admit to being a 'collector'. However, since it all goes to the staff who are unable to attend the conference, it is only items that they would have collected had they been there. It also reduces what the vendors must carry back and so is a benefit to them. It also makes it look like they have had a significant number of visitors so they will come back next year.

Sometimes you can use logic. Is the participant being paid? If yes, then deferrals are from pay. If no, then from where will the deferrals come? This is a Cash Or Deferred Arrangement (CODA), so deferrals cannot come from cash already in hand. If paying off a loan, then yes, even if the loan was originally set up to be deducted from pay because the loan is a separate obligation.

My memory tells me that if they were never eligible, and they had a plan year of under 500 hours after they were terminated, then the prior service can be ignored (if you are using 1000 hours type rule). If you are using elapsed time for eligibility, it gets very tricky with the service-spanning rules in 1.410(a)-7.

The problem would NOT be the election of the participant because they can still elect any optional form of benefit. What they cannot do is ignore the election and leave the benefit in the plan. Ok, so the optional form of 'nothing' has been removed. However, since the law permits the forced distribution, and the participant is losing 'nothing' then I don't see any cut-back. You car argue that the 'timing of distribution' has been removed but I would point out it is not removed for an affirmative election, only for inaction and of no consequence. Also the participant still has all of the optional forms once the benefit has been placed into their IRA.

All I can say is that the auditor had better be wrong! Report this specific case, region and auditor to ASPPA even if you are not a member of ASPPA. This is a very, very serious issue.

Pepe, the most interesting aspect of the US Retirement industry is that almost everyone in the industry got there by accident! They did not search out employment in this industry, they just sort of happened upon it. Once they decided they liked it, they then studied for and sat for the various exams to earn their qualifications. So although you may see certain designations requested in the job listings, they are not hard and fast requirements. Also the US is so darn parochial, they have NO IDEA what a CRC is or what topics you mastered to receive the designation. So come on in! The water is fine.

Review the plan carefully to see if the LIMITATION (YEAR) (PERIOD) is defined in the document. If in spite of the short plan year (bad design probably) the document may still provide a full limitation year!

There are fiduciary issues in the selection of ANY and ALL funds for investment. The fiduciary needs to show how the funds were selected (why, compared to what, decision process, etc). The fiduciary must prove the acted as a 'prudent man' in the selection. If those are the ONLY funds offered by the broker, and the broker gets a commission then it becomes questionable if the prudent man rule was followed. You need to read the DoL rules and booklets on fiduciary compliance and 404©. ALso read the explanations of the new PPA 2006 on investment advice.

And the same idiocy rules! Funding rates should never, ever, ever be Higher than payoff rates. If they are, then you are deliberately, with malice aforethought, underfunding a plan. As an actuary that is, in my opinion, not providing the proper service to your client. Now if your assets have consistently returned higher than the funding rates, then there is a reasonable position to recognize this in your discount rates. Plans that ONLY pay annuities from plan assets need to look to corporate health to determine if they should use insurance company purchase rates. Plans that pay lump sums need to watch true performance and the current (constantly changing!) IRS rates. But assuming a 7% APR and 8% discount today borders (in my opinion of course) on malpractice. Unreasonable rant over.

Now I love argueing without letting facts get in the way. Nancy needs to get the correspondence and bene option forms used for the distribution and maybe question the prior service provider on the distribution. We may find they did not disclose the issue, or maybe they did. The approach to the problem would be different as to the service provider (the client still needs to post bond/escrow if they are short!). An actuary can get their ticket lifted for messing up a Schedule B cost calculation. Maybe you can get the service provider on malpractice if they did not disclose the benefit limitation. Maybe not. Maybe they were asked for an illustration and the owner paid himself on an illustration. So there is much to learn, then we can bash to prior service provider, IF we are sure they failed the 110% test in 2002!

As a service provider, I would disagree with Effen on it being my problem. It is the Plan Administrator's problem and a Trustee problem to make such distributions. Now I would agree the service provider should have said something, but they cannot prevent such a distribution from taking place. And yes if you are short funded, get an ERISA attorney involved now.