I have a couple plans that are terminated.....one plan made a PS contribution many many moons ago and we are left with numerous participants without addresses and minimal balances. We were considering transferring their balances to 'Unclaimed Funds"

Another we have participants with substantial balances and would like to open rollover accounts but not sure how to go about it (where, how, fees, trustee responsibilities.......)

Here is the situation:

A business, ACME Widgets, appointed X (a company, not an individual) as investment manager for ACME's sponsored ERISA plan assets. X is not a bank or a financial institution.

X is the fund manager of a group trust. The Trustee of the Group Trust, Big Bank, is not Trustee of ACME's Plan.

X plans to invest almost 100% of the ERISA Plan's assets intothe Group Trust.

Is this permissible?

I see some old threads on pieces of the following question, but I would like to try to get an answer (if that's even possible) on the whole thing.

Situation: ESOP (C Corp) distributes shares in a lump sum. Participant exercises put option and is paid annually over the next 5 years (by the employer), w/ interest on payments after the first one. Newer ESOP so FMV is less than cost so no capital gain issues. Questions:

1. Does participant get a 1099-R from the plan showing a lump sum distribution of the total FMV on which they pay tax in the year of distribution? I don't see how the plan would have any other option, the participant's balance has been distributed, in spite of the fact that the participant won't actually receive all the cash for the next 5 years.

2. As the participant receives payments over the following 4 years, does the employer give them a 1099-int for the interest? If not, on what basis do you say so?

3. If the participant rolls the distribution, would the IRA trustee be the one technically exercising the put and they would then hold the paperwork evidencing the "adequate security" and the promissory note? Side issue, I have to think it would be rare to find a trustee willing to do that; among other things they'd have to value the note. If that's not the case, what would you say is being rolled when and how does that work with the 60 day rule?

4. Does a 1099-B come into play? I would think if the 1099-R reporting is as in #1, and the interest is as in #2, there is nothing left to report on a 1099-B. Of course if those aren't right, then maybe the B is used. If so, how? The B instructions say a corporation is not a broker if it purchases odd-lot shares from stockholders on an irregular basis, but it is if it regularly redeems stock. Seems a little grey.

Assistance is always appreciated.

Suppose a plan sponsor has a group health plan that consists of medical coverage options for actives and separate medical coverage options for retirees. Plan year begins January 1st. There is one plan document/written instrument and it files one form 5500. Does anyone have any thoughts on whether, to avoid PPACA compliance for the retirees, the employer could create a separate group health plan for the retirees (that is, create a separate plan document and begin to file separate form 5500s) effective January 1? Other than sparking challenges from the participants, I can't see any reason why this would cause a problem, since the preamble to the GF regulations discussing the retiree-only exception does not limit the exception to existing-retiree only plans. I'm wondering whether anyone had thought about this or perhaps has identified other risks. Thanks.

If a plan document describes the standard method for determining ADR, may qualified matching contributions be taken into account as allowed by Treasury Regulation 1.401(k)-2(a)(6) without an amendment?

If an amendment is required, may the amendment be effective for the entire year in which the amendment is adopted (calendar year plan), or are only matching contributions made after the adoption eligible?

I was recently asked the question if permitted disparity can be used to pass ADP and/or Top Heavy testing.

I have a 401(k) plan client who has NO intention of ever putting company $ into the plan. Because of that they have never allowed HCE's into the plan. Now some of their move vocal HCE's are getting antsy and we need to search for a solution. Again, the employer will NOT contribute any money.

Once of the partners at my firm mentioned something about permitted disparity. Does any know if this can apply in this situation?

i'm looking for the full disability table with these factors

age 20 Male .036% Female .017%

Age 30 Male .055% Female .043%

Age 40 Male .109% Female .1%

....

Age 60 Male .68% Female .465%

I'm also looking for a withdrawal table with these factors

age 25 male 9.9% Female 14.9%

age 30 male 6.9% Female 9.9%

....

age 50 male .4% Female 1.7%

age 55 male 0% Female .4%

age 60 male 0% Female 0%

i'm just trying to reconstruct a prior result.

Andrew

An employer maintains a cash balance plan which is general testing with other defined contribution plans also maintained by the employer. All eligible employees receive a 1/2% accrual under the cash balance plan so 401(a)(26) is satisfied. The gateway for the NHCEs is satisfied with employer contributions made to the defined contribution plans.

Can the gateway and 401(a)(4) nondiscrimination testing be satisfied with contributions made to an ESOP as opposed to a money purchase and/or profit sharing plan?

Furthermore, the cash balance plan benefit for non-owners is offset by the actuarial equivalent of the participant's account balance in any defined contribution plan maintained by the employer. Can the ESOP account balance be used for purposes of the offset calculation?

Is it possible to allow a terminated employee who is receiving severance pay to continue their 401k loan payments from the severance so that the loan will not go into default upon termination, but upon discontinuance of receiving pay?

EE has a large loan balance of almost 30k and owner is very concerned about it going into default and she would owe the taxes and penalty. She will be receiving severance for one year. Is there anything we can do? I am certain that he would be willing to make any plan amendments necessary if there is some way to deal with this.

Thanks for any thoughts!

A significant shareholder of a company wants to take an in-service distribution of his ESOP account and roll it to a self-directed IRA. Anyone think that that gives rise to a prohibited transaction with respect to the IRA? Possible issues flagged by others are:

(1) Because he is a fiduciary of the IRA, this could be construed as his using the assets of the IRA for his own benefit. (4975©(1)(E))

(2) To the extent he owns 50% or more of the company, the company is a disqualified person such that the rollover to the IRA could constitute a prohibited "sale or exchange ... between a plan and a disqualified person." (4975©(1)(A)).

I've reveiwed varous secondary materials on the IRA prohibited transaction rules and a number of DOL advisory opinions but haven't turned up anything squarely on point. (Most of the advisory opinions involve more affirmative "transactions" than a rollover -- having the IRA invest in, or make a loan to, an entity in which the IRA fiduciary has an interest, for example). Am I missing something?

I know the reg gives the example regarding a primary residence hardship and the loan causing the inability to get 3rd party financing for a mortgage for the residence, but should this be interpreted to say a loan should not be required if it would cause further hardship. Basically, if the person can't get 3rd party financing how would increasing their debt help them.

A local Union wants to sponsor a 401k for members/employees of 1 company. The company wants nothing to do with the 401k plan. Is this allowed?

We doint know the filing acknowledgment ID, the prior tpa is being unresponsive, etc.

(hypothetical situation, but I'm not seeing an obvious workaround, and this woiuld seem to be a common situation).

IF you want a 403b for the exedcutive director and 401k for the employees, I assume the 401k must have immeidate eligiblity to satisfy universal availability, correct?

We are looking at purchasing a web based client management system, but were hoping to find something with a workflow management/BPM piece along with it. Please let me know if you have any recommendations.

Yes I did complete item 4 on the original 5500 filed for this plan to show the change in EIN.

The IRS Letter request I received this week says the 5500 was not received and the letter indicates if due to a change in EIN just complete Section I of the letter which is simply company name, address, EIN filed, plan year ending filed with and fax back. But there was one other question in Section I that asks for the date filed with EBSA and Acknowledgement number. Since this form was not filed electronically, obviously it does not have such a number. So I made the mistake of calling the number on the letter - the DOL.

I was told that when there is a change in EIN, that I need to file an amended return for the prior year (2006) checking the box for a final return and showing no participants or assets at the end of the 2006 year and showing all assets transferring to the "same plan" with the new EIN. Then amend the year in question (2007) and check the box for the first filing for the plan. Both these amended returns would need to be filed electronically. Then I was told on the letter, rather then complete Section I for a change in EIN, I should complete Section II and check the box indicating the plan terminated or merged into another plan. I was informed that until I do this, I will keep receiving letters looking for forms on the old EIN, because this is the only way DOL can delete looking for a form on their system! When I later spoke to a supervisor I was told a company can't change their EIN? We have had several of these due to incorporation in another state, change from partnership to LLC, etc.?

I have several problems doing it the DOL way:

1) The year we terminate the plan we would report no assets at year end, but there was never a time without assets in the plan, and the audit report for the year would not match or have reconciling notes to the 5500

2) If we say the plan terminated or merged into the same plan under a new EIN, rather than just a sponsorship change, we may disqualify the plan by not having proper documentation to show such a merger

Not to mention this would be a lot of work!

Has anyone else had this experience?

If so please share your thoughts.

Situation is that dual status county hospital adopted a 457b top hat plan. Some kind of misunderstanding with the 501©(3) status and governmental status. So now they propose to convert the tophat plan into a governmental plan, to avoid plan termination and taxation to the executives. I am unclear on how to convert an unfunded top hat plan. I could see freezing the plan and allowing payouts as employees terminate, and adopt a new 457b governmental plan.

Does anyone have any thoughts and any other ideas?

Thanks!!

Does the definition of "employee" for purposes of IRC Secs. 105 and 106 inlcude "former employees" (i.e., retirees)? And, if so, what can I cite to for this proposition? Many thanks!

We have three SARs to mail (401k, pension, VEBA). Can we combine them into one mailing, and mail to a combined mailing list? This would mean that some would receive a SAR who are not an actual 'participant' for one or possibly two of the plans. I cannot find any documentation that says we cannot send a SAR to additional people other than participants.

Thank you for any assistance or direction you can provide.

I am working on a Cash Balance Plan with an offset Profit Sharing Plan. I understand the Profit Sharing allocation must be allocated on a uniform bases in order to satisfy the requirements, but does the "uniform" apply to both the HCE's as well as the NHCE's?

The Employer has two Owners who wish to participate in the Cash Balance Plan and are willing to contribute the Safe Harbor 7.5% Profit Sharing allocation to the NHCE's in the Profit Sharing Plan. They would like, however, not to contribute the 7.5% for the other two HCE's in the Plan. Is this possible or does this violate the "uniform" clause?