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457 Plans out of compliance with the SBJPA '96.


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We have accounts remaining with us at this late date. Our company was never providing full administration of these plans and the SBJPA '96 forced us to exit the 457 line of business completely. Despite our best efforts, accounts remain with us still.

It was our understanding/opinon that we could not redeem these accounts without written instructions from the plan administrator/employer.

But now what happens? Has the IRS said what they can/will do to plans found to be out of compliance with the SBJPA '96 after 1/01/99?

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While no specific guidance yet exists on those 457 plans disqualified by the SBJPA amendments, the IRS has issued a technical advice memorandum, TAM 199903032, which discusses the consequences of a failed 457 plan in general. (The TAM requires the Adobe Acrobat reader, a free download if you don't have it already, to view or print.) Trust me, the consequences are truly bizarre; you can click here for an analysis of the effects of the TAM.

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Employee benefits legal resource site

[This message has been edited by CVCalhoun (edited 09-29-1999).]

Employee benefits legal resource site

The opinions of my postings are my own and do not necessarily represent my law firm's position, strategies, or opinions. The contents of my postings are offered for informational purposes only and should not be construed as legal advice. A visit to this board or an exchange of information through this board does not create an attorney-client relationship. You should consult directly with an attorney for individual advice regarding your particular situation. I am not your lawyer under any circumstances.

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Thanks! Currently I'm having a browser problem - my helpdesk is working to resolve that - a new version of my internet explorer is being blamed. As soon as they resolve it - you can bet I'll go after that TAM.

I'm late to ask - but are you aware of any way we could have "forced" these assets out of plans we know to be noncompliant with the SBJPA after Jan 1, 1999? It was our opinon there was not - while I'm fairly sure we are accurate (I dont' think we could have liquidated assets and forwarded them to the plan administrator without written instructions) - if there were any way to force these assets to plans elsewhere (plans that should be in compliance - but the other Co. can worry about that) we would entertain it.

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  • 3 weeks later...
Guest Brent Rowell

Are you "administrator", "trustee" .... why don't you have the power to change ownership back to the institution that 'owns' this plan?

I thought any administrator or trustee could always back out (resign) ,,, assets would remain intact

I'm probably missing the boat but it sounds pretty simple ... Laws governing trusts etc.

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Brent

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