New to this forum, and need some serious direction and guidance.

I have a set of multiemployer, jointly-trusteed employee benefit plans as clients, with the Boards of Trustees being appointed in equal number by the sponsoring union and employer association. The Board for the DB pension plan (the plan administrators as such term is defined within the trust agreement and plan document) have discovered through a recent change in its counsel (me) and actuaries, that the calculations for retirement benefit options previously provided to plan participants nearing retirement, were based upon incorrect conversion factors and actuarial equivalence calculations. Additionally, prior plan professionals did not include language for relative values and financial effects in notices to participants. Undoubtedly corrections are required, indeed even perhaps provision of new benefit election option notices to participants who have retired making prior elections based upon faulty information.

I explained to the Board, as plan administrator, that the plan (through its sponsors - union and association) needs to proceed with corrections for these apparent operational failures through a VCP filing. Unfortunately, the Board is unable to reach agreement that it will directly pay the filing fee, the professional fees to be incurred, nor the sanctions that may be assessed by the IRS in connection with the desired compliance statement. Additionally, the Board will not present this issue to their appointing authorities, the union and the association, as the plan sponsors, for their possible agreement to pay all applicable fees, sanctions and costs.

The plan has an errors and omissions policy, and the board members are covered by a waiver of recourse rider to the policy. The premiums for the rider have not been paid improperly with plan assets, but rather directly by the plan sponsors on behalf of their respective appointees to the Board.

Is there any way that I, or outside counsel on behalf of the plan, can pursue relief through the IRS' VCP process with payments made by the plan itself, in order to protect and preserve the tax qualification status of the plan, and therefore, in the direct interest of the plan participants and beneficiaries?

Guidance is appreciated, as this has to be addressed shortly, and resolution of the funding issue achieved so that a VCP submission can be drafted and remitted to the IRS for the protection of the plan's participants and beneficiaries.

A fire district is establishing a 401(a) plan that will provide employer matching contributions made in proportion to elective deferrals made to their 457(b) plan by their full-time employees. They also wish to provide for an employer discretionary nonelective contribution that would be made on behalf of “volunteer firemen”. These volunteer firemen are not W-2 employees, leased employees, or independent contractors. The contribution represents a bonus they earned as a result of their completion of courses certifying them as firemen.

Since these volunteer firemen are not considered common law employees of the employer, I do not believe they can participate in the plan.

What do you think?

I have a client/friend who has a 401k for his employees and a former employee who left 850 days ago has $100,000 in the plan still just received all of the Distribution Notices and Rights from the Employer on what they can do with the money........a little late....the employee is throwing a fit and threatening to contact the DOL. Is there any penalties or laws for the failure to provide this information over 2 years later? I thought I read somewhere the employer has 90-180 days, and could be subject to $100 day fine.

Is anyone returning the deferrals or does everyone follow the EPCRS correction and amend the Plan?

Have a plan that allows hardship withdraws for safe harbor standard reasons. If a participant pays their mortgage payment and property taxes separately and they have received a foreclosure notice for the back mortgage they owe. If they sent in back up for the past mortgage payments, this would satisfy the hardship requirements to prevent foreclosure. If they also sent in a property tax bill they owe would the property tax bill be eligible to be include with the hardship withdraw under the safe harbor reasons?

Thanks for your responses

Section 4204 says that the buyer must post a bond for a 5-year period beginning in the first plan year after the sale year. Does that mean for example that if a sale occurs in July, the bond must be in place by Jan 1 for a calendar year plan? If the sale occurred on December 25, is there a delay allowed for the purchaser to purchase the bond, etc.? Is there any guidance on this point? e.g. PBGC Opinion Letters?

Does anyone else have clients who use an eligibility of "6 consecutive months" of service? We have a client under audit who has this eligibility. The Plan allows anyone who works at any time during a month (i.e. even 1 hour) for 6 consecutive months to enter the Plan. The IRS auditor doesn't like the wording of "6 consecutive months". He is claiming that if an employee worked 2 weeks in January and then 1 week in June, those are "consecutive" months for that employee and would count as 2 months toward the 6 months. What do others think?

We have a client who terminated employment with a hospital & had an outstanding loan through his 403(b) plan. He was permitted to continue making loan payments even after termination. He missed one scheduled payment and was informed that he had until March 1st to make a payment, which was the last day of the cure period, to prevent the loan from being defaulted. He remitted a loan payment in mid Feb but the amount of the check was off by less than $1 from the scheduled payment amount. The trustee refused to accept the payment and the check was returned to the participant prior to the March 1st deadline. The trustee also refused to accept a replacement check which could have been received by the deadline and, therefore, defaulted on the loan. Does our client have any recourse against his former employer claiming that he was treated unfairly & the loan was defaulted prematurely?

Plan is looking into establishing a match whereby only first year employees receive the match. On the employee's one year anniversary, they would no longer receive the proposed match. The hopes are that once they are signed up, they won't stop deferring just because the match is no longer provided.

Assuming that I could write in an excluded class of, "Individuals employed for one year or more," would the plan be facing potential coverage issues?

Any ideas are appreciated. Thanks!

Hopefully someone can help me with this situation -

I have a small DB plan that is not covered by the PBGC and terminated on 12/31/11. Anyway, the assets are not sufficient to cover the liabilities, so the plan sponsor has decided to make a contribution that is sufficient to cover the unfunded liabilities.

The company has already filed their corporate tax forms for 2011. Can this contribution be deducted in the 2012 plan year?

I know if this were PBGC covered, under IRC 404(g) they can certainly deduct amounts paid under various sections of ERISA, (i.e. 4062) however since this plan is NOT covered by the PBGC I don't think these regulations apply.

Thanks for your assistance!

Sponsor has a participant who has terminated and become an independent contractor. As an independent contractor he or she provides services for the business from which he / she terminated - provided that the definition of independent contractor is met - the participant is considered terminated from the business and therefore eligible to take his / her distribution out of the business' retirement plan in which he / she had a balance - correct?

We have an internal debate as to whether Announcement 2011-82, eliminating features of the DL program that "are of limited utility to pan sponsors in comparison with the burdens they impose," applies to 5310 submissions upon plan termination, as well as to 5307 submissions. I don't see that 5310's are included in this change, but if they are, I suppose we need to modify our plan termination process.

Any opinions?

Dog

hello -

working on our maternity leave policy. we are a company of 30 people. are there any surveys of what small businesses are offering? can anyone share their policy if they are under 50 ee's and FMLA does not apply?

thanks!

Seems funny that that I've never seen this. Employee's normal entry date would occur July 1, but employee will be out on medical leave. Does employee "enter" the plan on July 1, or not until "returning" to work on August 15th?

Seems to me that while on leave, the employment relationship has not terminated, so entry date stays at July 1. Of course, if not receiving a continuing paycheck, then no deferrals possible.

Thoughts?

Is there a process in place such that an ERPA can attend a 'non-sponsored' course of relevant material and apply for recognition of that course?

Code Section 411(a)(6)(D) provides that for purposes of determining a participant's vested percentage, a plan can disregard the prior service of a "nonvested particpant" after five consecutive one-year breaks in service. Code Section 411(a)(6)(D)(iii) defines "nonvested participant" as "a particpant who does not have any nonforfeitable right under the plan to an accrued benefit derived from employer contribuitons." Here's the question: If a participant is fully vested, but takes a complete distribution of his or her benefit under the plan (such that the participant no longer has "any nonforfeitable right unde the plan to an accrued benefit derived from employer contributions"), and is rehired after five consecutive one-year breaks in service, can the plan disregard his or her prior service in determining his or her vested percentage going forward?

Sal Tipoldi's treatise subscribes to the "once vested always vested" view, but without any authority. Based on Treas. Reg. Section 1.411(a)-6©(1)(iii), it appears that whether a participant is "nonvested" should be measured at the end of the break in service priod, and not the beginning, which would argue for disregarding the prior service and making a rehire start over with zero years of service for vesting purposes.

Any help with authority would be appreciated.

My boss is wondering how other TPAs are handling the Participant Fee Disclosures.

Is the TPA providing the Plan Sponsor with any information regarding the disclosure requirements and letting them know it is the PA responsibility to comply or is the TPA gathering the data and preparing the disclosures without PA assistance?

What about the fund data, is TPA taking the responsibility on gathering and benchmarking, etc or are they getting that data from the Investment Advisor?

We had a conference call with Sungard yesterday (we are currently using Relius) and their new Wealth Station module seems like it will provide a lot of the data we need and in a usable fashion but we want to be sure we need the module before spending the money on it if the advisor should be giving this information to the plan administrator and not us.

Thanks!

How would you feel if your boyfriend/husband wanted to get life insurance on you or the both of you? Whole family? This isn't about me, it stems from something that happened in my city where a girl took out life insurance on her 11 month old and then she later drowned in the tub I just don't know if I'd feel comfortable having life insurance on me so young. Just makes me think. Kind of like a prenuptial agreement would be a slap in the face to me. What about you?

May litigation proceeds relating to a life insurance contract ever be treated as plan assets if the insurance contract was previously held in a qualified plan and subsequently rolled over to a different retirement vehicle?

Thank you.

17 years this month!

I know I have learned a lot from others' comments, questions and the like.