RCK

What happened to the Red Sox Nation? Starting a new streak?

What do you mean by not remitting timely? Not as soon as possible, or not by the 15th of the month following the month of deferral, or . . . . And are you just preparing the 5500 for their signature? IF that's the case, I'd prepare saying that they did not submit in a timely manner, and if they do not like it, have them instruct you in writing to change it to a yes. You know that if they get caught, they are going to plead ignorance and blame you. Did you say a few clients (plural)?

This is the kind of scheme that gives the rest of us a bad name, and saddles us with all the code and regulations.

A wild guess: the problem is with the definition of recognized compensation, not the deferral %. I've never seen a system or a plan that allows for a 2.85% deferral, so I'm guessing that 3% is being applied to a base that is 5% smaller than everyone is expecting (3% of 950 equals 2.85 percent of 1000)

We've been doing automatic enrollment for 6 years, and have not had any problems. Here's how it works: Eligibility is age 21 and 90 days of service (with an hours requirement in those 90 days). When eligibility is reached, a packet is sent out. If they want to opt in, they can do so immediately. If they want to opt out, they have 45 days to do so. If they don't do anything in those 45 days, they are auto enrolled. I don't see why you can't do that, changing the periods as you see appropriate. I think the bigger questions right now are what the default contribution rate is and what the default investment election is. Should the rate be 2% so as to be painless, or 5% where your match caps out, or X% where it accumulates to something significant. Should the investment default be a stable value fund, an index fund, or a lifestyle fund?

Our 5500 preparer is telling us that it is no longer acceptable to create an attachment to the SSA, allowing one to put 50 people on the same page. As a result, we are looking at a SSA filing that is 600 pages long. I thought this might have come up before, but my search turned up nothing that was on point. Confirmation or rebuttal?

This is certainly a situation where you want to rely on the advice of professionals that you selected and have hired for that purpose. But if you want to listen to off-the-cuff answers from total strangers . . . . I agree that there is a wide range of possible facts and outcomes, and we'd need to know a lot more to give decent opinions. But if your ex disclosed the existence of a pension, and the divorce decree specifically awarded it to him, and his plan did not have a non-spousal death benefit, then I'd say it does NOT look good.

Correct--the assets of Plan B do not have to be liquidated and transferred to Plan A's investment vehicle to be Plan A assets. I had a long and painful argument about this a year or so ago with several layers of auditors from a big audit firm. I finally convinced their national experts that this was the case. In retrospect, I might send something to the holder of Plan B's assets, making it clear to them that effective 12/31/2005 Plan B no longer exists, so they are holding Plan A assets. This might help smooth the way for the auditors. OR you could liquidate the assets prior to the merger date, so that they could actually transfer on the merger date. But you don't want to do it before the merger date.

OK, I'll bite: why would you count comp from a different employer?

Yes, you have a 5330 filing for each tax year of the sponsor in which you have a PT. Assuming a calendar year tax year, the 2004 filing would include earnings on the missed contributions from date they would have gone in until the end of the year. Then the 2005 filing would be earnings on that balance from 1/1/05 until the date the contributions were made up, and earnings on the lost earnings until they are credited to the account. For a plan that we acquired, we had to go back almost four years.

This is a natural QDRO application. But it could be a loan if he wanted rebuild his pretax assets and was able to actually repay it. It does not meet any of the safe harbor hardship definitions. Ooops--E as in ERISA's response came up while I was responding. I ma surprised by that interpretation, but I stand corrected.

I really like MWeddell's 9 rules that summarize retirement investment strategy. I might argue some of the details, but as a package, it's a good set of rules. I would add that I strongly support the rule about employer stock--it's a risk that you would not be compensated for taking. A lot of employees would feel guilty about not owning stock in their employer. If that applies to you, change the rule to • Don't invest any RETIREMENT money in your employer's stock unless you are forced to do so. If you want to own employer stock, buy it through an Employee Stock Purchase Program. RCK

I'd add that deferral elections made under plan A are not valid for plan B. There's probably an interesting question here: can you have a prohibited transaction here for failure to submit the contributions in a timely manner to the plan, if there is no plan? RCK

If this was an asset sale, there was someone who was selling those assets, and presumably got the check. What happened to them--it's still their responsibility. RCK

We did it once for a location that was being sold (it was more complicated than that, but let's just call it a sale) to someone else. We created a special election form where they clearly authorized the continuation of payroll deductions from their new payroll, as well as a reamortization of the deductions if frequency of payment changed or if any payments were missed. We also very tightly defined the window for doing this--it was about three weeks right before the transaction date. If I'd been the receiving plan, I'd have wanted a copy of the promissory note, but they did not ask. As I recall, nearly 1/2 of the partipants with a loan elected to roll it. And pax is of course right--both plans have to allow this type of transaction.

I thought that one of the factors that the DOL/EBSA would take into consideration in determining whether deferrals were segregated out of corporate assets on a timely basis was the frequency with which you are required to submit your FIT withholding payments. According to my payroll contact, FIT withholding submissions are based on the size of those payments. For large employers, they must be made weekly; for slightly smaller employers, every other week; and for the smallest, quarterly. So you always have to meet the 15th of the month following the month of contirbution, but you also have to meet the FIT deposit rules. And that is regardless of what your procedures are, what your payroll provider wants to do, what the recordkeeper/trustee want to do, when you can round up the cash, . . . . . RCK

Since you have not gotten a response on your question yet, I'll jump in. I don't see any reason to differentiate a currency gain/loss from a market gain/loss. And if I did see a philosophical difference, I don't see any place on the 5500 to show it. RCK

I am reviewing calculations for an acquaintance who is employed by a school district. This school district's DB plan allows the participant to purchase additional benefit service for military service that happened PRIOR to his employment by the district. When I told him to check it out, I assumed that the cost of the additional accruals would be in line with the value of those additional benefits, or even that he would get a break because of his service to the country. He just got the "bid", and we were both surprised by the results. I calculated a value at 65 of the additional benefit of approximately $40,000, and a value today of that deferred benefit of approximately $16,000. The cost that they are quoting him is over $75,000. So my question is whether anyone has experience with a situation like this, and if so do these numbers seem reasonable? RCK

pax, accountants! Can't live with 'em, . . . . . . . pass the beer nuts. RCK FSA, EA

Indeed. Anyone knows that the signatures of mere students destroys the value. RCK FSA, EA

Linda, Sorry--if she terminates less than 100% vested, the nonvested protion of her Plan A account goes back to plan A, and the nonvested portion of her Plan B account stays in Plan B. RCK

Linda, Yes, each plan has to be clear that service elsewhere in the controlled group has to be counted for eligibility and vesting. Our plans are structured so that when Jane Doe goes from Plan A to Plan B, her account automatically moves with her. Her Plan A account keeps the original vesting schedule and if she terminates less than 100% vested, the forfeiture goes back to Plan A. Given how hideous this make the plan language, I'm assuming that it has to be done this way. Disclaimer: I work for a large plan sponsor, and four of our plans are on the same platform. Plan to plan transfers are automatic between plans on this plateform, but not into or out of this platform to our other plans. RCK

I can't provide a cite, but I can tell you that we do what you suggest. The participant ends up in two tests, with the earnings and contributions made to each plan. You do have to make sure that each plan defines vesting and eligibility service to cover both employers. You have to be sure that the 402(g) limit is applied correctly--you can't let them go to the limit in each plan. And you can't allow a distribution from the first plan just because the participant is not in that plan any more. Do you want to do automatic plan to plan transfers of existing acocunt balances? You have to be sure to handle vesting and forfeitures correctly. RCK

We've been doing it in our plans for several years (and plans do of course say that). It is available to everyone. It was pretty attractive to new employees who were being cashed out of their prior plans, because they did not have to wait or find a conduit IRA. It seems like many more people ask about it than actually follow through though. RCK

As a ball park guess, think $5,000 to $10,000. Less for a simple plan, more for brokerage accounts, etc. With SOX affecting the whole accounting industry, it is a seller's market. Keep in mind that they needed an audit before they got to you, and they had an auditor for that. There would be no reason to change auditors just because they changed recordkeepers. RCK