ljr

It's the old supply vs demand which usually doesn't happen to employee benefits people. It happened to me once because we did not want to relocate. So, I took a position with a lower salary and worked my way up again. I understand how you feel but guarantee you it's better to get in the door than insist on a salary that employers won't pay. Best of luck to you!

At one time, self-employed persons could not trustee their own qualified plans unless they were incorporated. They couldn't borrow, etc. When the most recent round of changes made these plans essentially the same as qualified plans esablished by corporate entities, did they also allow the self-employed individual to serve as trustee of his/her own qualified plan? Site? Thank you!!!!!!!!!!!

We are a bank trust department and just received notification from Fidelity that they are implementing a 1% to 2% early redemption charge for all Fidelity Advisor International funds. The definition of "early" ranges from holding for 30 to 90 days. The charge goes to the fund to reimburse it. This is effective for shares purchased after 3/31/04.

I agree it does not make sense, but I think you need annual valuation for 5500 reporting purposes and for participant statements.

I too feel the whole timing thing is getting out of hand. Unfortunately, the new rules would put 401(k) participants at a slight disadvantage. However, retirement plans are long term investment situations and over the long run one day one way or the other won't make much difference. The issue seems to be that those of us who provide 401(k) services ending up with the one day delay will be at a competitive disadvantage to fund families that may be able to offer direct and faster service.

OOpppss - I assumed there were various parcels of real estate! Sorry.

Possibly they could sell some of the real estate to an unrelated party to generate cash for distributions? Your client is experiencing the result of investing exclusively in illiquid assets which you probably warned them about.

Since the entity still exists, it should probably document the plan is terminated as to all contributions as of xxxxx date and intends to distribute to participants ASAP. A 5500 needs to be filed as long as the plan holds any assets.

Existing plan has a two year wait for eligibility with 7/1 and 1/1 entry. Upon entry, participants are 100% vested. It's a profit sharing plan for a partnership which has always contributed 15% of total compensation, allocated comp to comp. They want to add a safe harbor 401(k) provision and use their fully vested contribution for the safe harbor non-elective. They would also make catch-up contributions available. Is the two year wait a problem? Site? The objective, I believe, is to let the partners take advantage of going over the 415 limits by the catch-up amount. Should the 3% safe harbor non-elective contribution be tracked separately from any additional profit sharing money? I'm thinking it should, but maybe I'm complicating things? Thanks for any help and ideas!

We are a bank with a trust department. The original post describes a transaction that is considered "tying" services which is not permissible for the bank. In reality, it probably happens informally more often than we'd think. Unfortunately, I cannot provide a site. Unless things have changed in the past 10 years, banking rules prohibit a loan transaction being conditioned on the company taking the loan bring their qualified plan to the bank. I would also tend to agree it's PT from the plan's perspective as stated by other replies. It would be interesting to know if the bank put their proposal in writing. I hope for their sake that they didn't and that the whole thing was a miscommunication.

Yes, a plan can have multiple investment advisors, each of whom is a fiduciary and responsible for managing the money under his control. You/your client should contact an ERISA attorney about the proper documentation for investment managers.

I've seen something similar for a hospital but I think the employer contribution was "profit sharing." Maybe this was considered a good idea back in the late 1980's and early 1990's? The employees could chose where they wanted their 403(b) money to go and the employer's money went into a managed pooled trust account.

Mike - I stand corrected. You are absolutely right about the dollar down method. I must have forgotten what year it is.

What do you mean by a "pooled Plan?" What are you proposing to do with the money you receive pending its being split and invested? Uninvested funds aren't a good way to go. But, if you temporarily invest money while you wait to split/invest it, you'll end up with money market earnings to allocate. Unfortunately, I cannot answer your question about the DOL's opinion as they only address getting the money into the plan, not when it must be invested.

While it's good to plan to pass testing, it remains that the only way to max out for the HCE's is to have refunds. The TPA said it was an estimate. You should alert the HCE's to what will probably happen so no one is caught by surprise after they file their tax return early. It will all work out when testing is done. As someone else said, timing of contributions doesn't affect who gets a refund, it's the percentage of compensation and it feels unfair.

This may be too general, but try: http://www.benefitslink.com/articles/trustee.html If the stock is closely held, your client would be well advised to have an experienced corporate trustee review the annual appraisal of the stock. I'm assuming they already have ERISA counsel who drafted the ESOP.

Can anyone describe the point in doing it at all? It sounds like a potential administrative nightmare.

You are at the mercy of the institution that made the distribution so suggest you contact them ASAP and NOT negotiate the check they sent you. They can reverse the transaction and issue a new check to the IRA rollover institution of your choice. Whether they will depends upon how cooperative they are. What happens then is that the $9,000 they withheld from your funds is a credit toward their institution's other retirement plan withholdings for 2003. That's why it's important to get to them right away. Once you cross into tax year 2004 this can't be done.

Digmydog - as to how to get the financial institution to forfeit, we do it upon the Plan Administrators request. It goes to a "participant" account called "forfeitures" and is handled at the end of each plan year. Or did I not understand your question?

We are a bank trust department and use the Corbel documents. As to rolling to an IRA, you are correct in that what financial institution would take the money without the participant's signature on their IRA forms. Banks are required to know their customers and have very stringent procedures we have to follow based on the American Patriot Act. The Corbel document has a specific section that discusses what to do with plans that have no election in the adoption agreement regarding forfeitures - such as a 100% deferral 401(k). See 4.3(e) which states: ". . . . If no election is made in the adoption agreement, any remaining Forfeitures will be used to reduce any future employer contributions under the plan. . . . " Note that money due a lost participant and forfeited must be restored should the person show up and request it. I've never heard of it happening but always warn employers they will have to make a contribution to cover the distribution should the plan lack sufficient forfeitures to cover it.

TIAA-CREF has a great reputation so the most recent post is indeed a good idea. You can also check with other highly rated insurers such as Northwestern Mutual, etc. If you friend is concerned about a lifetime income, he could get the kind of annuity that guarantees some payment after his death. There's a type called installment refund whereby the insurance company would pay his beneficiary any dollars remaining at death. For example, if the annuity cost $500,000 but he received only $400,000 in payments, his beneficiary would get the remaining $100,000. No, not a great investment but the only way to absolutely guarantee an income for life, and I'm not a great believer in insurance products. A managed trust account would most likely be a better investment but can't guarantee the lifetime income.

A less awkward way if you have individuals rather than an institution as a successor trustee is to ask the successor individual trustees to present a copy of their ERISA bond. Hopefully the bonding company will check into any felony convictions and you don't have to ask.

How did this person manage to "take" their money when the owner of record is/should be the Trust? Maybe someone made an error in processing the distribution?

The employer calculates both the deferral and the match. They send the deferrals off to the provider(s) selected by the individual employees and they send the match to the Trustee of the 401 plan. The match is subject to testing. I can't help you with the exact details of how all this was handled because we were trustee and investment manager of the 401 plan and someone else did the recordkeeping.

See regulation section 1.415-6(b)(7) which relates to crediting annual additions to a plan for a plan year. The deadline for taking a tax deduction is by the filing/extended filing date. However, if they contribute within 30 days after the due date of their tax return, the contribution can be allocated to participants even though it would not be deductible for that year. We had this come up and were able to allocate the money but referred the client to their CPA as to what to do about the deduction.