Kristina

I disagree with rcline46 and agree with AndyH. Seasonal employees are never terminated until the next season. (If they don't come back, they terminated. If they return the following season, they had a 1-year break-in-service.) Therefore, they are retaining credited service and are included in the participant count for 5500 purposes. This plan would only have to file as a large plan if the count was over 120 for the year in which it went from small plan to large plan. However, do you know what year that was?? This is why pension professionals should never use the term "part-time" or "Part-timers" and should train their clients to think in terms of over 1,000 hours or under 1,000 hours. Whoever designed the plan eligibility requirements did not ask the correct questions at design-time.

The 2000 5500 forms are backordered. If one is unable to obtain the correct years forms before the filing due date, one can make the case for using the prior year forms.

Welfare benefits are not my forte, but my question for you is this: What will prevent the DOL from looking for a final 5500 on the disaggregated arrangements that had filings in prior years if you do not file final returns for those arrangements? Therefore, I think you need to file the final return for the arrangements as well as a first filing for the new welfare plan which should have a different 3-digit code than the other arrangements. Hopefully, someone with more welfare experience will validate or invalidate my comments.

It makes sense that the 3115 is not required as they define who may file as "the applicant is the taxpayer". Qualified plans are not taxpayers.

Since you are taking over the plan for administrative purposes, it is a logical time to make a change from the cash basis to the accrual basis. To accomplish this, attach a statement to the 5500 series for the plan year in which you make the change. This statement must be on a separate piece of paper and can not be written on the Sch H or I. The statement should state that the plan was on a cash basis and a change has been made to the accrual basis. Provide a breakdown by plan year and amounts to total the amount shown on the Schedule H or I. Also, on the attachment be sure to include Items A thru D from the Sch H or I and that it is an attachment to the Sch H or I and include the line number you are commenting on. This should resolve any questions an IRS auditor might have in that transition year as they will have access to the 5500 series as filed. With the DOL's ban on stapling, I used the term attachment loosely. Perhaps enclosure would be more accurate.

If the plan is "funded" by salary reduction thru a Cafeteria Plan, the Cafeteria Plan would file. Not the welfare plan with less than 100 lives.

Tell the truth (without more detail than you really need) in a cover letter explaining why the filings had not been done in the past and asking that all penalties be waived. Reassure the agencies that the error has been corrected as soon as it was discovered, will never occur again and procedures are in place to ensure that all future filings will be timely.

I would recommend that you bring the filings up to date. You would be throwing the plan on the mercy of the IRS for years prior to 1999 and they have been very cooperative with plan sponsors to date. For 1999 you would be dealing with the DOL for a year in which they are somewhat disorganized and have not yet made it thru all of the filings that were filed for 1999. Also, while there is the tax issue with the participant contributions, there is no continuing trust to complicate things. Coming clean seems a better choice than hoping there is no audit or that the DOL will not notice that there was no filing for prior years.

to Bill Berke, Viatical policies are policies that are owned by unrelated parties who are not participants in the plan who find themselves in the position of being in such poor health that they offer their policies for sale on the open market. Those investing in the viatical policy pay a given amount of the face and/or cash value and take over ownership of the policy and continue paying the premiums. The investor is betting that there will not be too many premiums required to keep a policy in force before the insured dies. These policies do not fall within the incidental death benefit requirements of a qualified plan nor is there an interested party involved normally. The moral issue involved here is the fact that the investor is betting the insured will die soon. On the other side, the insured is receiving benefit of the proceeds during his life to pay expenses might bankrupt his family otherwise.

Datair offers a windows-based Task management system which can be customized to your TPA system. This is a stand alone system and can be used to supplement your valuation software.

They will get the 3% safe harbor on the participation compensation plus 3% top heavy contribution on their pre-participation compensation which would be subject to vesting. Their total allocation is 3% of their total compensation for the year.

When you say "Qualifying Plan Assets" do you mean for the purposes of the new small plan audit guidelines? And are these policies ones that the plan has purchased from the insureds and is holding as an investment of the plan with the expectation that the insured will die and the plan will receive the gain of the investment?

In the really old days, before TEFRA let's say, Highly Compensated, Key employees never retired, never took distributions except for death benefits and with the estate taxes at that time it was passing to the spouse with no taxes, I believe. The political environment at the time was concerned that this was money that they had planned to receive taxes on, but it was not happening. If I remember correctly, some of Rosty's little helpers were also concerned that the rank and file employees were having to pay taxes on the amounts they received, while the evil owners were dodging taxes. Hence RMD's.

The 401k deferral portion of the plan can not require more than 1 year of eligibility. The 401m match portion of the plan can allow for a 2 year eligibility requirement, but the match would have to be 100% vested at all times.

Have her check with the American Diabetic Association. They will know if her state will provide the diabetic supplies she needs or if there is another way for her to get such supplies on a low cost basis, just in case no one comes up with an insurance option for her.

The 80-120 rule is also based on the number of participants as of the beginning of the plan year. Therefore it is based on the number you show on line 6 of the 5500. Which is not supposed to be the same number you have on the prior year's 5500 for the end of the year participants as new participants often enter on the first day of the plan year. If you still qualify to file as a small plan, you may rely on the audit waiver in the new final regulations, which by the way are effective for the plan year beginning after 4/17/2001. This means that you will not have to worry about the new small plan audit rules until you file the 5500 series for 2001 in 2002 sometime.

Since your beginning of the year numbers should match what was reported on the 1998 5500, the only adjustment you would make would be to include your IBNR claims in the plan expense section as well as the end of the year payable on line 1g.

If you are talking about the IRS hand print forms (green line) then no you may not make copies. If you are talking about a machine print form which will be scanned, then the DOL estimates that you may make one generation of copies without destroying the scannability of the form. The DOL has warned that a copy of a copy is unlikely to scan appropriately.

Per the Form 5500 instructions, when there is life insurance in the qualifed retirement plan Item 8b is marked as well as 8a. Therefore, carrying forward that logic to the Schedule A, one would mark #7d and put the premium amount in line 9. This is a change since the DOL took over the 5500's and is not in line with what 5500 preparers have done in the past, but it has been confirmed with the DOL that this is what they expect to see when there is life insurance in a qualified retirement plan.

John, A direct filing entity is a bank, trust company, Financial Institution or insurance company that files as a DFE. This means that they file a 5500 series as the Direct Filing Entity listing all of the plans which invested in their MTIA, CCT, PSA or 103-12 on Page 3 of the Schedule D. If the bank, trust company financial institution or insurance company your plan deals with does not file as a DFE, it means you will have to do additional work on the Schedule H in that you will have to list the underlying assets of the PSA or CCT on the Sch H instead of showing the total on the Pooled Separate Accounts or Common Collective Trust lines. Therefore the special requirements only impact large plans. A MTIA is required to file as a DFE. A Master Trust Investment Account has funds of more than one plan sponsored by the same employer. For example, XYZ Corporation 401k Profit Sharing Plan and XYZ Corporation Defined Benefit Pension Plan are invested in the same Master Trust. You will also report the MTIA on the Schedule D. A CCT Or Common Collective Trust holds the assets of many plans under one trust. The Bank or financial institution would be able to tell you if they are a CCT and if they intend to file as a DFE. If they do not file as a DFE, it is no big deal for you as the plan normally receives a report showing that plan's portion of each investment held in the CCt. CCTs are not required to file as DFE's. Whether the CCT files as a DFE or not, you must complete a Schedule D for each plan that invests in the CCT. A PSA or Pooled Separate Account is issued by an Insurance Company. They too are not required to file as a DFE. If they do not file as a DFE, they will have to provide you with the underlying assets to report on the Sch H. (Good Luck). The insurance company will have to tell you which accounts are true PSA's. It is common for PSA's to be held in a group annuity which also holds assets that are comingled with the assets of the insurance company. Whether the Insurance Company files as a DFE or not, you must complete a Schedule D listing each PSA. A 103-12 Investment entity was the hardest for me to peg. The IRS and the DOL could not give me examples of such an entity except to say that if you have one, you know you have one and you have been subject to special filing requirements since ERISA. An investment entity holds the assets of two or more unrelated plans. (My thought was Plan A and Plan B own Hotel C in which 103-12 IA invests. I know there are people who have these and I would love a better explanation.) A 103-12 is not required to file as a DFE. Whether the 103-12 files as a DFE or not, you must complete a Schedule D showing each 103-12. The financial institution or insurance company is the only source to determine if you are dealing with a DFE or not. And if you have small plans, it does not change your filing requirements if they are or they are not DFEs. I hope this helps.

QDROphile. If the trustee is relying on 404c to reduce his fiduciary liability for the investment decisions of the participants, then he must provide investment information to his participants at least quarterly. An investment broker or salesperson should be morally obligated, if not legally so, to help the Trustee to provide the investment information to the plan participants if 404c was the basis for his sales presentation.

Lisa, Thanks for setting me straight on this. I was assuming that the question referenced a 401a plan. Ouch, that assume thing will get you every time. For my further education, does section 318 govern who is a key employee for the purposes of a cafeteria plan?

At one time, Keough plans had more restrictions on them than corporate plans had. Under the rule of parity (TEFRA '82 I believe), sole proprietor sponsored plans follow the same rules as corporate plans. Therefore, even though there are those who reference Keough plans (named for the senator/representative who sponsored the original bill allowing sole proprietors to have qualified plans), they, in effect, no longer exist as separate plan types. When someone refers to a Keough plan, you know they have been around the qualified plan field for at least 18 years.

Alright Kevin!! If your plan document does not provide for quarterly allocations of the employer contribution, then quarterly allocations can not be done. To do so would be a defect. If your plan document allows for quarterly allocation of the employer non-elective contribution and requires 1,000 hours to receive the allocation, then your document was very, very poorly drafted. And you have a contradictory document where the earliest one would be able to allocate on a quarterly basis would be the second quarter of the plan year assuming that all employees work 40 hours a week.

A fully insured welfare plan has no trust. The Schedule H is used to report trust activity.