Mike Preston

Summary: Use 8%. Remember that the interest gets charged until actually paid, unlike regular FSA interest which is only charged through the end of the plan year.

I am not convinced that this is an ASG. It sounds like it might be an expense sharing arrangement. Get a copy of Who's The Employer. (Cheap at twice the price) Read it. If it provides clear guidance on your situation, follow it. If not, hire an attorney to figure it out for you. The author of Who's The Employer is who I would hire. In fact, I have done so. Can't get any better than the source. Caveat: He is also my partner in a computer venture (the PIX BBS) so I am biased. He is still the best.

The way I read the OP was that somebody filling out an adoption agreement elected to be covered by the QJSA rules and that election was "in error."

You are ok under 401(a)(4), typically, because you are providing additional benefits to a group of people (Exempts with between 3 and 6 months of service) that would probably be 100% NHCE's. The only time I might be concerned would be if the timing of the amendment was intended to generate a benefit for those who are HCE's. An unlikely scenario.

The answer, of course, depends on the language of the document. But I'd be surprised if the matching was anything other than treating the catch-up as a regular contribution subject to the overall match limitations int he plan. In this case, the regular contribution gets all the match this individual is entitled to.

What kind of plan? DB? No problem. DC? There is a series of PLR's, I think that state while the answer is yes, such reimbursements are treated as contributions, subject to the rules on annual additions and on non-discrimination. The annual additions issue isn't much of a problem these days given that the annual additions limitation is 100% of pay. The non-discrimination issue is a bit touchier now that we have the gateway requirement in order to cross-test. I haven't read the cites in a number of years (maybe somebody else has them handy), but I have always wondered how the IRS got around the fact that such a reimbursement on behalf of any terminated participant's account would necessarily exceed the annual additions limitation, given the fact that compensation would be zero.

Vesting must be credited for all years where another plan was maintained unless the old plan is not what is referred to as a "predecessorr" plan. The old plan is not a predecessor plan with respect to the new plan if the old plan was terminated more than five years before the new plan was set up. See 1.411(a)-5(B)(3)(v)(B).

I think it depends on the definition of casual employee.

Note that an exclusion of casual employee (or part-time employee) can, even if it results in a plan that satisfies 410(B), result in a plan that fails 410(a). See example 3 of 1.410(a)-3(e)(2).

No. ERISA would pre-empt such a law.

There is no question that your suggestion works, mwyatt, but is giving up one's automatic change in val. date the best course of action? In the end, that is the decision that must be made.

Which seems to fly in the face of a rationally designed national RETIREMENT policy. Anybody want to increase the penalty for withdrawals before age 59 and 1/2? Like, say, to 25%?

I would think that any of the items you mentioned might be taken into account in a BOY valuation with specific assumptions. Think of the concept of select and ultimate. Lots of things work this way, don't they? For example, one can take into account, but needn't have to, an amendment made after the valuation date and before the end of the year. One can include new entrants that enter the plan in the year after the valuation date. Has anybody ever heard of the IRS actually challenging the use of anything that takes place during the year in a BOY valuation? We know that you can't take into account things that happen after the end of the valuation year, like amendments, etc. But that sort of acts to define the limits, I would think.

Blinky, what is it about experience matching one's assumptions that bothers you?

Wow. Things sure are getting confused. four01kman: I don't think that fees for processing distributions are settlor functions. There is no question that reasonable fees for distributions can be charged to the plan. However, that is not a comment on whether those fees can be appropriately charged directly to an individual's account for that individual's distribution. I, personally, have a problem with charging them directly to the individual. That doesn't mean I support the concept that they are settlor functions. Similarly, I do not support the concept that an appropriate allocation fees can't be charged to an individual that has an account balance consisting exclusively of the top-heavy minimum benefit. Again, I don't think there is any question about this. The only question is whether the fees in question can be applied directly to an individual's account. If, instead, applied as an overall expense of operating the plan, they can be charged on a pro-rata basis to all participants, IMO.

The logic, I believe, that is used to support using end of year compensation when doing a beginning of year valuation is that projecting compensation beyond the valuation date is an assumption. Assumptions must be reasonable. How reasonable is an assumption that ends up matching experience precisely?

Actually, since fees and expenses are just a specialized version of investment earnings, the logic would say that one's account balance couldn't be charged with investment losses, either. I don't buy it.

Sounds like you are saying that if the Bank holds true title to the assets of the partnership, that is good enough for the shares in the partnership to be considered qualifying assets. For example, if there is a piece of land owned by the Partnership, if the piece of land is recorded as owned by the Parnership, with "Bank" listed as the General Partner, you think that is a qualifying asset. I presume the same would apply to actual securities. If there is a trading account established with a brokerage firm, if the name on that account is "Bank, as General Partner for Partnership", then assets in that account are, in your opinion, qualifying assets. Do I have that right?

The way I read the question the assets are held by the Bank as general partner of the partnership, not as Trustee for a plan. Does that change your response, Archimage?

I don't *know* the answer, as I haven't looked it up, but I would be very surprised if the answer is yes. One cannot go from regular 401k to SH 401k without giving the proper notice before the beginning of the plan year. One CAN go from a non-401k to a SH 401k after the beginning of a plan year, but only up through the 9th month of that plan year. Could the rules have been structured so that a SIMPLE 401k is the same as a non-401k as far as the rules go? I doubt it. You want to read 98-52 and then let us know what it says? (I think that is the cite that controls).

One is allocations. The other is net earnings and expenses. I don't see the connection at all.

I think it was in connection to the fact that EGTRRA changed the limit on DC annual additions to 100% of pay. In a bottom up QNEC situation, you end up giving 4 times as much as you would have under the old rules where the limit was 25% of pay to the lowest paid individual. The guidance we will get will be with respect to implementation of EGTRRA. Look for it sometime in 2006 or 2007. ;-)

I think the time you spend making sure the provisions from one prototype to the next are consistent will be time very well spent. Remember that EGTRRA amendments are not required. The important thing is to ensure that your administration matches the dcoument provisions. If there HAS been an EGTRRA amendment, as there probably has been, it is likely that administration for the years in question will be different than it would otherwise have been. The GUST amendment, if the plan is a prototype eligible for the typical extension, which it probably is, is due by 9/30/2003. You should be fine on that. The EGTRRA amendment, in most cases, should have been executed by 12/31/2002 in the case of a calendar year 401k/ps plan. The only thing I would be concerned about would be if the EGTRRA amendment wasn't done by then, but the plan was adminstered as if the new law's provisions applied anyway.

Unless the document also lays out the cross-testing methodology, and would therefore incorporate the same un-increased 401a17 limit, so confirmed.

I'm not aware of any stock request that is published on the net. That, of course, doesn't mean one doesn't exist. One thing your friend might try is copying the people listed in the Summary Plan Description on her next request. For example, if there is a listing of members of the Plan's administrative committee, copying those folks should get things going for her. She should make sure that the letter she is sending is addressed to the Plan Administrator as defined in the Summary Plan Description. This might come as a surprise, but there is no requirement under ERISA for the plan to provide her with a "what if" statement regarding her retirement benefits, although many plans will do so. The plan is required to provide her with a benefit statement of benefits accrued, but that need only be provided once in a 12 month period. Has she received such a statement in the last 12 months? With all that said, here is a sentence that is somewhat cold, so you might want to lighten it a bit, depending on what impression you are trying to make: "I am requesting a statement of my accrued benefits under the Plan pursuant to ERISA Section 101(a) and 105(a)." It sounds like your friend doesn't want to use any language that might be perceived as negative. If she changes her mind, and wants to shake things dramatically, she might say something about the fact that a response is expected within 30 days. If she wants to go even further, she might reference ERISA Section 502©(1), which authorizes her to ask a court to provide her with $100/day for each day that the company is late (that is, for each day beyond 30 days that they do not respond). Please note that I'm not suggesting that she do anything to upset the people at her company's benefits department. So she might want to check with a benefits lawyer to review her requests to date to determine whether it is appropriate for her to remind the Plan Administrator of its responsibilities under ERISA. She might also consider contacting the American Academy of Actuaries (http://www.actuary.org/palprogram.htm) to see if someone they refer might assist her with understanding her benefits. They might be willing to contact the company she works for and request a statement of her benefits on her behalf. I wish her well.