7806akp

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About 7806akp

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  1. Would an obligation to continue employment for 2 years after receipt of a tuition reimbursement be considered a "reasonable condition subsequent" under Reg. 1.127-2 so that a repayment obligation upon a termination of employment prior to the end of the 2-year period would not, on its own, cause an educational assistance plan to be discriminatory? The regulation includes the example of a 1-year continued employment requirement, but it is not clear if a longer period could also be considered reasonable.
  2. If an employee provides 2 weeks' notice to his/her employer of a voluntary termination of employment and the employer chooses to immediately terminate the employee but pay the employee in lieu of requiring the performance of services during the 2-week notice period, is the 2 weeks of pay "regular pay" from which 401(k) plan deferrals can be made?
  3. A plan excludes "overtime" from "compensation" for deferral purposes. Is "overtime" the full amount of pay (time-and-a-half) for any hour worked over 40 hours, or should "overtime," excluded from compensation for deferral purposes, include only the extra half pay for those hours worked over 40? There is no guidance in the plan document.
  4. A plan to be funded by a VEBA was established in the last part of a calendar year, but no money went into the trust until the beginning of the following calendar year. Is a Form 990 due for the calendar year in which the plan was established, or is the first 990 due for the calendar year in which the trust was established (i.e., the date assets were placed into trust)? In other words, can the trust be viewed as nonexistent (i.e., no 990 required) until the date that dollar one was placed into trust?
  5. Can the employer be the trustee of a 401(k) plan? I have seen it where an employee of the company is the trustee, but can the company itself be named as trustee?
  6. An employer maintains two 401(k) plans, which each provide for plan loans payable only by automatic payroll deduction. An employee has changed status so he is an inactive participant in the plan that holds his contributions to date ("Inactive Plan") and an active participant in the other plan which has a very low balance ("Active Plan"). The employee wants to take a plan loan from the Inactive Plan, but due to payroll issues, the employer is not able to process automatic loan repayments to the Inactive Plan while processing salary deferrals to the Active Plan. Any ideas for how to handle when the employee seems to have a right to take a loan from a plan, but the employer cannot handle the administration of the loan? The plan allows for elective transfers between plans, but the employee may not want to make the transfer from one plan to the other.
  7. The deadline is approaching, but we were considering it. I'd like to just be able to answer "no."
  8. Thanks for the helpful responses. I am not certain how to decide whether an increase in salary was significant for these purposes. I am fairly certain there have been no unreasonable compensation issues, but the "significant adjustment to compensation" language in the request is so subjective. ERISAtoolkit.com's example clearly involves a significant salary adjustment that could potentially raise unreasonable compensation issues, but what about a $30,000 pay hike for someone who previously made $100,000. Certainly significant to the individual, but I'm not sure if it is for IRS purposes. Should we look to the reason for the adjustment?
  9. An IRS information data request regarding a 401(k) plan asks whether there have been any significant adjustments to compensation or any unreasonable compensation issues with respect to any plan participants. What is the request getting at, and what constitutes a "significant compensation adjustment"?
  10. Employer wants to make nonelective contributions on behalf of a certain group of employees to a profit sharing plan created solely for the purpose of receiving such contributions. Employer has determined that it would like to define eligible employees as those with 2 years of service (with immediate vesting) as of the effective date of the profit sharing plan, and the profit sharing plan will be closed to new entrants after the effective date of the plan. (Basically, although there is no intention to do so, the employer could achieve the same result by putting all the eligible individuals on an exhibit to the plan and defining eligible employees as those individuals listed on the exhibit.) There are HCEs and NHCEs in the group of employees, but the plan is expected to pass nondiscrimination and 410(b) coverage testing. Does this plan design cause problems under Code section 410(a) or otherwise? Could this design cause the plan to fail to be a "bona fide plan for the exclusive benefit of employees in general"?
  11. Thank you so much for the quick reply. Very helpful information. Is there any guidance regarding this type of conversion that you could point me to?
  12. Has anyone ever heard of a one-time election to change the form of distribution in a DB plan after payments have already commenced (i.e., changing from a J&SA to a single life annuity)? The plan provision allowing for this requires spousal consent and proof of good health of the participant (among other requirements). Is this type of provision allowed under the Code? I cannot find anything stating that it is not allowed, but the actuary and I have never seen anything like this before. Any comments or help in locating guidance one way or the other is greatly appreciated.
  13. A 403(b) plan is changing from one approved vendor to another. Does the plan administrator have an obligation to notify terminated participants who have accounts or annuities at the old vendor that the plan's approved vendor is changing? The terminated participants are no longer receiving contributions on their behalf. On one hand, the individuals at issue are participants in the plan and likely have the same right to receive notifications regarding the plan as active participants. In addition, if the plan allows for contract exchanges, it seems the terminated participants would have a right to know about the switch so they can decide whether to transfer their contract to the new vendor. However, if the plan does not allow for contract exchanges and the terminated participants do not contribute to the plan, it seems the change does not affect the terminated participants and perhaps notice is not necessary.
  14. I guess I thought that because the title of the reg is "Corrective Amendments" and the reg refers to the "scope of corrective amendments" and appears to only discuss amendments for correction purposes. How else can an 11(g) amendment be used?
  15. The plan definitely does not provide for nonelective contributions. So, are you saying that a contribution can only be added for 2011 if it is being added to correct a discrimination issue under the plan?