Can an ILIT (irrevocable life insurance trust) buy a individual participant’s policy directly from a qualified plan. If yes, do they then avoid “the three year contemplation of death rule”?

Any particular cite to which someone can direct me?

Not sure why my topic on this question got closed, but...

Does anyone have an opinion on the idea that an ESOP that owns 100% of the stock can not have any 5% owners because the trust owns all the stock?

So even a person with a balance >5% of the stock allocated to them would not be a key unless they are an officer with high enough compensation.

Thanks

Once a defined contribution plan adopts an amendment to terminate, must the plan administrator wait to have all election forms before distributing assets to any participant? Another way to ask this question: If the plan (per Rev Rul 89-87) must distribute all assets within one year of termination date, what happens if some accounts are not distributed within that time period? If distributions had been made to participants within the one year time period, would they now be deemed to have been impermissible (assuing the participnat was not otherwise eligible for a distribution)?

Most people don't know that back in 1912, Hellmann's mayonnaise was manufactured in England. In fact, the Titanic was carrying 12,000 jars ofthe condiment scheduled for delivery in Vera Cruz, Mexico, which was to be the next port of call for the great ship after its stop in New York.This would have been the largest single shipment of mayonnaise ever delivered to Mexico. But as we know, the great ship did not make it to New York. The ship hit an iceberg and sank, and the cargo was forever lost.The people of Mexico, who were crazy about mayonnaise, and were eagerly awaiting its delivery, were disconsolate at the loss. Their anguish was so great, that they declared a National Day of Mourning, which they still observe to this day. The National Day of Mourning occurs each year on May 5th and is known, of course, as Sinko de Mayo.

When is a SAS 70 required?

Is there any regulating body? Any cites?

e.g. A recordkeeper who is the TPA and the Broker (does not have a 6 or 7, sells thru a life license). Plan assets eventually end up with a major insurance provider. Plan Sponsor says they write the bi-weekly contribution checks to the TPA company name (Did not confirm this as of yet).

I just want to double check because it could make a difference this year with a client.

It is my understanding that if an ESOP owns 100% of the stock there can not be any Key employee because of 5% ownership. The trust owns all the shares. So if a long term non-officer employee has an allocation balance that would be > 5% of the stock that person is still NOT a Key.

With a 100% ESOP that means only officers with high enough compensation can be Keys.

Thanks.

I have an employer who elected and gave notice for a safe harbor match for 2011. They want to increase the match to 100% match up to 6% of pay for 2011 and not lose either their ADP or ACP safe harbor. It is too late to amend the safe harbor for 2011 as that would kick them out of safe harbor. However a discretionary match that does not exceed 4% of pay is generally allowed. Am I correct that since the discretionary is not > 4% and we are not matching above 6% of pay deferrals they are OK for 2011? I've been reading the regulations and I keep getting caught up in the distinctions between fixed formula enhanced match and discretionary enhanced match rules. My concern is that if I look at the match as if it actually comprised of two matches - the safe harbor and the discretionary than I have an increasing match on the discretionary side ... it doesn't kick in until you defer in excess of 3% of pay. Or I may have just over-thunk the scenario.

Followup questions are:

If I am still safe in ADP and ACP safe harbor land - I presume that the discretionary match would have to be treated as a safe harbor match ? (i.e. 100% vest and limits on distributions).

If I am kicked out of ACP safe harbor I still retain my ADP safe harbor and just have to test the total match under ACP? I could then subject the discretionary match to vesting. Any other concerns?

In a perfect world they would like to apply the additional match only to contributions made after a certain date. I don't think I could do that with ACP safe harbor retained, but what if I am ACP testing?

No matter how 2011 works out they want to amend to a formula fixed match for 2012 which removes the uncertainties of 2011.

Any thoughts would be greatly appreciated.

Say a plan is frozen as of 1/1/2009.

At that time the participant has 3 yr avg comp of 100,000.

The dollar limit is 156,000 as of 1/1/2009.

NRA is 62 and employee is age 62 at 1/1/2009.

Plan provides for actuarial increase for late commenement.

Say as of 1/1/2011 employee has avg comp of 120,000 (counting comp for 2009 and 2010 after plan freeze).

Question is: Should late ret act increases be limited to 100k or 120K? that is, can hi 3 comp limit increase after plan freeze from 100k to 120k?

Hello everyone,

I am aware that an actuarial adjustment is done for retirement after normal retirement age. However, is an actuarial adjustment required/allowed if participant has not reached normal retirement age but is entitled to receive his service pension (e.g., before age 65 but after 25 years of service)? I have not been able to locate anything in the code discussing this issue.

Thanks

If a participant's compensation for a pay period is not enough to cover their deferral election what is the correct way to handle? Do you defer all pay to try and meet the election form?

Thanks,

I have a PS/401k plan where there is an elderly lady, age 78, still actively employed. She is not an owner of the business.

Their plan allows anyone over the age of 70 1/2 and still employed to waive the Age 70 1/2 required distribution until they terminate their employment.

Last month the broker who handles the investments told this lady that she should have been taking minimum distributions every year. He had her sign paperwork to take out a taxable distribution of around $10,000. Then he rolled over her remaining balance, around $200,000, to an IRA. None of this went through me as the TPA.

This lady has no immediate plans for retirement, is still receiving PS contributions, and does not want to cash in her PS/401k account.

Now that her PS/401k balance has been rolled over to an IRA, she no longer can waive taking her minimum distributions each year. Would the best suggestion be to rollover this balance from her IRA back into her PS/401k plan?

Any other suggestions?

If the 12-c is a cult calculator I guess I'm a member of a cult, I've got 3 of them:

http://online.wsj.com/article/SB1000142405...0326458056.html

We handle the TPA work on a DB non-electing church plan. Plan is terminating. The termination provisions permit the plan administrator to distribute assets in the normal or optional forms under the plan. The administrator has elected to pay out benefits in a lump sum to all. Is this ok - without sign-off by participant and spouse? Also, plan is paying out disability benefits in a monthly annuity - the document states that once the plan has terminated that the disability benefits stop. Is this ok?

I know this is a non-electing church plan so the ERISA rules do not apply, but there is QJSA language in the plan document.

I have a profit sharing plan with 4 participants that was sold to the client by an insurance guy. Each participant's account is invested his or her own variable annuity.

The annuity will only cut a check to the trustee, and they do not process withholdings on distributions. So the plan is needing to set up a trust checking account to deposit the distribution into so that the trustee can cut a check to the participant and process the withholdings on the distribution.

They are trying to set up the checking account, and the legal department at the bank is saying that they can't do it because the signatures on the plan were not notarized, and trusts have to be notarized when executed.

All of the plans I've ever worked with have the trust provisions contained within the plan, and I've never, EVER, seen a plan document notarized when exectuted.

Has anyone out there had this problem with a bank before?

Thanks in advance for any help and info board members can provide.

A SARSEP from 1994 (95305A-SEP and I doubt ever updated) changed to a 401k SH this year September 1. Due dilligence was done (or at least attempted!) to make certain this could be done mid year.

Major wire house using Pennserve said no problem. TPA sited a Q+A from another service that was, in hindsight, ambiguous and TPA simply sent the Q+A to financial advisor who interpreted "no problem".

Major insurance company, the wirehouse FA and TPA took over the 401k;SARSEP money from emplyees was put in the new plan (all ee's chose to transfer and knew they had choices) in early September. All notices were given.

NOW, TPA informs this could not be done and says client needs to hire an ERISA attorney and offers no other advice. During discussion between FA and TPA, the TPA says "not our problem, it's all on the employer; we had nothing to do with the SARSEP." TPA unwilling to meet with client as " we would simply say hire a lawyer". TPA says their representative asked employer if money had been put in SARSEP during 2010--"did you fund the SARSEP" or words to that effect--note "you". Client said no, because he/corp had not funded the 3%. He was not asked about ee contributions, which had been made each pay period.

There is plenty of blame to go around here and I am not looking for a fall guy although I can't understand the TPA's attitude. I believe they think they are culpable and are stonewalling. I just need a way to help er solve this and if "hire a lawyer" is the answer have some leverage to share the cost among parties.

I've read every post on the SARSEP topic (77 pages!) and still don't see a course of action--everything has a caveat. Any suggestions or opinions greatly appreciated as to how to fix without damage to ee's or er.

Can 5305A be retroactivly changed to a prototype allowing this?

What happens if er calls IRS for help (as ins. co or TPA or wirehouse is helping the advisor help the client)?

Sure, he should hire a lawyer but he is left in the lurch by the parties that were hired to help and protect him.

What are the responsibilities of the TPA in assuring a proper plan change?

I am the wirehouse advisor trying to help my client.He is the most generous employer I've ever run accross (phantom stock, extra 5,000 pay each year ee has child in college, great medical and other)--he does not deserve this. Note that all monies hit the accounts in timely basis, he put the 3% into the 401k, everything above board--just given lousy advise.

Thanks for any ideas, comments opinions.

Best Regards,

T.

a participant in a DB plan is actively employed and currently receiving minimum distribution payments as a lump sum. At the time their initial payment was made (3/08) and also when the 1/09 and 1/10 top-offs were paid this plan was at least 80% funded. Now we are about to pay the 1/11 top-off and this plan is currently funded between 60% and 80%. Can the 1/11 top-off be paid since at the time of their BCD (3/08) the plan was not restricted, or do the funding restriction now apply to the portion of the benefit payable attributable to the 2010 accruals? Any help would be appreciated. Thanks.

Thanks in advance for any help and info board members can provide.

A SARSEP from 1994 (95305A-SEP and I doubt ever updated) changed to a 401k SH this year September 1. Due dilligence was done (or at least attempted!) to make certain this could be done mid year.

Major wire house using Pennserve said no problem. TPA sited a Q+A from another service that was, in hindsight, ambiguous and TPA simply sent the Q+A to financial advisor who interpreted "no problem".

Major insurance company, the wirehouse FA and TPA took over the 401k;SARSEP money from emplyees was put in the new plan (all ee's chose to transfer and knew they had choices) in early September. All notices were given.

NOW, TPA informs this could not be done and says client needs to hire an ERISA attorney and offers no other advice. During discussion between FA and TPA, the TPA says "not our problem, it's all on the employer; we had nothing to do with the SARSEP." TPA unwilling to meet with client as " we would simply say hire a lawyer". TPA says their representative asked employer if money had been put in SARSEP during 2010--"did you fund the SARSEP" or words to that effect--note "you". Client said no, because he/corp had not funded the 3%. He was not asked about ee contributions, which had been made each pay period.

There is plenty of blame to go around here and I am not looking for a fall guy although I can't understand the TPA's attitude. I believe they think they are culpable and are stonewalling. I just need a way to help er solve this and if "hire a lawyer" is the answer have some leverage to share the cost among parties.

I've read every post on the SARSEP topic (77 pages!) and still don't see a course of action--everything has a caveat. Any suggestions or opinions greatly appreciated as to how to fix without damage to ee's or er.

Can 5305A be retroactivly changed to a prototype allowing this?

What happens if er calls IRS for help (as ins. co or TPA or wirehouse is helping the advisor help the client)?

Sure, he should hire a lawyer but he is left in the lurch by the parties that were hired to help and protect him.

What are the responsibilities of the TPA in assuring a proper plan change?

I am the wirehouse advisor trying to help my client.He is the most generous employer I've ever run accross (phantom stock, extra 5,000 pay each year ee has child in college, great medical and other)--he does not deserve this. Note that all monies hit the accounts in timely basis, he put the 3% into the 401k, everything above board--just given lousy advise.

Thanks for any ideas, comments opinions.

Best Regards,

T.

Is there any guidance as to the amount of distribution fees? Currently we charge $75 for all distributions, and are having a hard time agreeing on a non-discriminatory amount to charge participants with small balances of around $75. Does not seem fair to wipe out their entire balance - especially if it is all 401k - but also does not seem fair to charge the participant with a $100 balance and not the one with a $74 balance. What is the average amount charged for distribution fees by other TPA's? Does anyone use a percentage up to a certain amount? This is one of the methods we are now considering.

For purposes of this post assume no credit balances exist.

430©(6) says that if the funding shortfall is zero all prior bases are considered fully amortized and be zero.

In this calculation for 2010 is the FT computed at 100% or the transitional 96%?

430©(5) exemption of shortfall base:

430©(5)(B) Transition rule: provides that the applicable percentage (i.e. 96% in 2010) of the FT is taken into account for purposes of paragraph (3)(A). Paragraph (3)(A) of section 430© is "the funding shortfall for such plan year". So if the 96% is applied in (3)(A) this could provide a situation (and does) where at 100% of FT plan has a shortfall and at 96% of FT plan has a zero shortfall. And if there is no shortfall all bases are zero.

The above seems to raise a case for using 96% of FT to determine the funding shortfall (not just for purposes of a current year exemption), however, the Schedule SB seems to indicate that the 96% of FT is only applicable in determining if there is a current year exemption and is only applied to funding shortfall if there is NO exemption. So there is the no man's land when there IS an exemption and then the shortfall may (or may not) need to computed using 100% of FT.

thanks.

Question: What is the advantage of filing Form 8905? That is, is there any advantage of a 6-year RAP vs 5-year RAP other than the 1-year delay of paperwork?

Thanks for all responses.