We have a DB plan with 2 participants. One participant has terminated employment. The owner is trying to termiante the DB plan and get the terminated participant's benefit out of the plan. The problem is that the terminated participant is being "difficult" and claims they will not accept a distribution.

I believe the employer can simply purchase an irrevocable annuity for the terminated participant, but I have two distribution questions: (1) Could the employer distribute a Lump Sum to the participant (assuming the plan allows for a lump sum upon the plan's termination)? (2) Alternatively, could the employer unilaterally transfer the "difficult" participant's benefit to the employer's profit sharing plan without the participant's consent? Of course, the benefit would retain the same distribution features of the DB plan and would be tracked separately within the profit sharing plan.

At the ASPPA annual conference, Lorraine Dorsa mentioned that she tries to avoid using an employee's name when defining a rate class for benefit accrual (DB plans), to avoid the possibility of it creating a problem because of the 'similarly situated employee' issue. This approach was mentioned not just for NHCEs, but also for HCEs.

We have a few plans where the HCE accrual rate groups are defined by using the HCE's name, for example "Group A consists Captain John Smith, an owner-employee" and the document has a definition for owner-employee.

I think the potential problem exists any time one person ends up in a class by themselves, regardless of what language was used to get them into their own class.

Do you think this poses a significant issue or problem that would merit re-writing a few plans?

Got a primary residence loan where the orignal term was 15 years. Currently, the loan will be fully repaid in 6 years. Is there any reason that this loan cannot be refinanced into a signle loan, repaid in 5 years, together with receiving additional proceeds of $X?

Great West is saying we can't., but I don't believe them!

Does anyone have thoughts about how to advise a non-federal governmental plan sponsor who has recently converted from a fully-insured to a self-funded health plan with respect to nondiscrimination testing under 105(h). Initially, my thoughts were that because there is no explicit exemption from 105(h) for governmental plans (unlike in the qualified retirement plan context where governmental plans are exempt from 410(b)), self-funded governmental plans need to be tested.

But I recently spoke to someone who does nondiscrimination testing for one of the large benefits consulting firms and he said they don't really have governmental clients that they do the testing for and he may never have seen it. He doesn't think that 105(h) nondiscrimination testing is on the radar of governmental employers and he thoughts were to maybe hold testing a self-funded governmental plan at this point because: (1) no guidance has been issued for testing fully insured plans under PPACA yet and governmental plans (fully-insured and self-funded) might be exempt entirely, and (2) there has been little to no enforcement of 105(h) for self-funded plans and the Service won't start with a governmental plan.

Any thoughts? Has anyone heard anything about governmental plans being exempt from nondiscrimination testing when the guidance is issued?

A municipality let go about 30 employees in July 2009. These employees sued for wrongful termination and won. Now municipality has to reinstate them as if they never left and pay them for all the back pay. Of those that were contributing to 457(b) deferred compensation plan, nine took lump sum distributions and one set up installment payment distributions.

Is plan required to restore participant accounts by allowing participants to payback distributions and adjust for any gain/loss? Also, would plan be required to withold for pre-tax elective deferral contributions from the judgement award of back pay?

With the risk of oversimplying things, company adopts a 3% participant directed profit sharing for hourly employees and a 3% cash balance for salaried employees. Company must permissively aggregate both plans for 401a4. Would the participant direction among other benefits be considered a benefits rights and feature that must be tested? Would both plans need to be tested for BRF? What are the issues?

A recent 5310 filing for a DB plan (plan adopted effective October 1, 2003) came back with a request for a check for $1,000. The plan is and always has been on a prototype document, is a very small plan, and has at least 1 NHCE.

The agent said: "The plan does not qualify for the $0 user fee under Section 620 of EGTRRA due to the fact that it is an initial plan that was not submitted by 2/02/10, the end of the EGTRRA remedial amendment period.."

We will have them refer to the Form 8717 instructions. I assume these instructions are still current and correct when they say "the application may be eligible for elimination of the user fee provided the plan was first in existence after January 2, 1996." Is this still true, or is the agent correct?

As part of a planned standard termination process, a defined benefit plan sponsor wants to permit participants who are already in pay status -- e.g., receiving an annuity form of payment because they've retired and previoiusly elected to commence benefits -- to elect to have their remaining plan benefits converted to and paid in the form of a single lump sum (with appropriate spouse consent if the participant is married).

Has anyone come across this maneuver? If so, is it permissible? How about in the situation where NO plan termination is planned?

Many thanks?

I am restating a long-frozen IDP in anticipation of termination and a 5310 filing. The plan has one participant. No contributions have been made for more than five years. The plan has a GUST letter, a good-faith EGTRRA amendment and a PPA amendment. The employer is a Cycle E filer.

The plan document provides for permitted disparity, graded vesting and a service requirement for participation. I'd like to get rid of these provisions in the restatement, as they are irrelevant given the plan's frozen status. I was planning on giving the restatement a general effective date of 1/1/2010, with specific earlier effective dates as required. Can I drop the unneeded provisions from this restatement? If so, can I do so effective as of an earlier date than 1/1/2010?

Participant born 11/1936, has received previous RMD's.....deceased 2/2010, with wife as sole benny.

Is an RMD required for 2010, and how is it calculated (her age/his age)?

Thanks in advance!

the following websites

http://www.ssa.gov/OACT/COLA/AWI.html

contains the info that can be used to update some of those valuations on the plan limitations table I have no idea what some of them might be used for, but what the heck.

The National Avg Wage base can be found on this page.

Cost of living table found here:

http://www.ssa.gov/OACT/COLA/colaseries.html

taxable wage base (hey at least i know what this one is used for!)

http://www.ssa.gov/OACT/COLA/cbb.html

bend points

http://www.ssa.gov/OACT/COLA/piaformula.html

all the history, how the calculations are done etc are discussed - I suppose if you have insomnia or something like that.

I am not too familiar with insurance contracts in retirement plans and hope someone can help me. The 5500 I am working on has an insurance contract with The Hartford. The Hartford provides schedule A information. They (The Hartford) also provide Schedule D information for all investments in the contract, so I"m assuming these investments are all PSAs. If I mark the funding arrangement on page 1 of the 5500 as "TRUST" and "INSURANCE", complete Schedule A and put the MV of the insurance contract as PSAs on schedule H, then I get and error message that there is a conflict between the funding arrangement "INSURANCE" and $0.00 assets in BOY and/or EOY on schedule H of Insurance General Account. IF PSAs are wrapped in (aren't they always?) an insurance contract, then which type of assets are they for Schedule H purposes.

Any help would be greatly appreciated.

Thanks.

Patricipant in a 401(k) Plan has a life insurance policy and dies. Face Value is paid to the Trust and then distributed to the participant. Assuming that the PS 58 costs have been reported each year, it is my understanding that the cash value of the policy is taxable to the beneficiary and that the excess above the cash value is distributed tax-free. How does the tax-free portion get reported on a 1099-R?

Takeover fun!!

What are the implications if a plan document calls for prior year testing for both the ADP and ACP test, but the prior TPA used current year testing for both for multiple years. The plan was safe harbor more than 5 years ago, so I don't see any reason for them to have been forced to switch.

Thanks!

We have a balance-forward PS plan that holds some closely held company stock. All participants signed requests for the stock to be retained.

We are now being told by the OCC and an outside counsel that an independent appraisal should be done for proper valuation. We have the annual reports, etc. from the company and call quarterly to confirm current sales price. The company will not agree to cooperate with an independent appraisal.

If we sell the asset, it would have to be back to the company and probably for a significant loss. We want to retain, but do not know how to value the asset to satisfy the DOL. What valuation methods would be appropriate?

The employer would agree to self-trustee to avoid any future problems with bank regulators but we don't want to advise him to do that if the valuation problem will still exist.

I am struggling here today to put my finger on how the regs treat changing medical plans when adding or removing a dependent (i.e. birth/adoption/marriage or divorce). Is there anything in the regs that would require the employee to maintain coverage in the same medical plan. I see the topics mentioned about work location and an HMO. However, outside of this situation - can we permit employees to elect a different plan?

We are self-insured on all of our plans, so it really doesn't matter to us. Any advice would be greatly appreciated.

Plan administrator of multiemployer pension fund frequently receives proposed reciprocal agreements with retroactive effective dates. If the pension funds agree to reciprocate retroactively, there seems to be a 411(d)(6) problem.

Example: Visiting employee begins work in our jurisdiction on January 1, 2010. Our plan administrator is unaware that the employee in question is a visiting employee. On September 1, 2010, visiting employee's home fund forwards a proposed reciprocal agreement with a proposed effective date of January 1, 2010. By this time, visiting employee has earned a year of credited service under our plan. If we reciprocate all contributions received to date, the visiting employee will forfeit his accrued benefit under our plan, thus violating 411(d)(6).

The fact that the visiting employee is not vested does not seem to matter since 411(d)(6) protects "accured benefits" (i.e., not just vested benefits) from plan amendments that would otherwise decrease them. Counsel to funds requesting retroactive reciprocation seem to think this is a problem only if benefits are vested (which seems wrong to me).

Is anyone aware of any authority indicating that 411(d)(6) is not a problem under these circumstances?

We are debating the deadline for an interim amendment for a non-electing church plan. For example, the 401(a)(31)(B) amendment was generally due the later of a) 12/31/2005 or b) the due due of the tax return for the year that contained 3/28/2005.

If the organization is not required to file a tax return, does that mean their deadline is earlier than everyone else, meaning 12/31/2005 is the final deadline for a calendar year organization? Is there any guidance for that?

Need some help. I need to reply to an attorney - Situation.

1. Participant was thought to be terminated, but in fact went to Part time. Company stopped withholding loan payments.

This happend in July. Plan allows participant to make payments by check.

2. Attorney said he had until December 31 to make up the last quarters payments Aug/Sept or the Loan will be indefault.

(Plan has 3 month grace period) One of the loans have it's 5 year date 12/4/ 2010. Attorney said if he makes the payments through September - he is making quarterly payments and the grace period would postpone the default until 2011 (better tax year for the participant as he will have less income)

My research has come up with the Treasury Regs 72(p) don't really address the problem above. It states that the cure period cannot extend beyond the last day of the calendar quarter following the calendar quarter in which the missed installment payment was due. I found something about the IRA Q&A with ABA on 5/9/2003 that said the IRS says that the Cure (grace) Period can apply to the last loan payment, even if that payment is due at the end of the 5 year period.

Anything newer???

Are we okay not defaulting the 5 year loan until 2011???

Pat

This isn't humor, but I wanted to avoid wasting people's time on a regular topic forum. I know many of you here are, like me, elderly enough to remember the Rolling Stones. I just heard a rendition of "Sympathy for the Devil" done, get this, in full country and western mode. This included a woman "singing" (and I use that term VERY charitably) through her left nostril, full twang, Southern accent, scooping and sliding to hit the notes, "fiddlin" and all the rest of the horrific style that represents the worst of hard-core country music.

It was so bad that it beggars description. Wrong on so many levels! Since I didn't hear the intro and it was played n a college radio station, I was wondering if it was merely professional satire, like Weird Al or something from Saturday Night Live. Anyone else had the misfortune of hearing this?