Has anyone run across a provision in a money purchase pension plan that requires the participant to no long work in the industry for 12 months prior to receiving access to their benefits? The 12 month waiting period only applies if the participant is under NRA or early retirement age. I've heard of this for defined benefit plans, but never in defined contribution plans. Its a collectively bargained multiemployer plan.

Any know if such a provision is valid, and if so, what provision of ERISA applies?

The Plan Administrator elected a default investment. Assets were incorrectly put into a different "default" investment. The incorrect default investment meets the requirements for a "qualified default investment" but, of course, is not the one that was identified to participants. The incorrect "default" investment has performed better over time.

Any suggestions as to how to remedy this error? Thank you,

How do you typically handle health FSAs in a stock deal when buyer and target companies both sponsor FSAs? Do you convert balances and elections over to buyer's health FSA? Do you open enrollment for target's employees and let them submit new health FSA elections under buyer's plan? Not sure there is any legal authority that supports taking new elections but would be interested in hearing people's views on this. Thanks.

With the plan documentation requirement and 5500 reporting and audit rules kicking in for 2009 plan years, is it still possible to argue that sponsor involvement is limited enough for the plan to be exempt from ERISA?

Further, do any real benefits remain that flow from satisfying the exemption?

What should a sponsor consider when trying to determine whether or not to go for the exemption?

I'm off to study FAB 2010-01 and 2007-02 and would appreciate anyone's thoughts.

nevermind. thanks

I've worked for several TPA firms and over the years and I've learned there are things that are required by law, and things that are not required but are good practices of each employer.

1st Scenario

If the plan states that the Employer has the right to amend the plan from time to time, and then decides to freeze the plan, would a resolution to freeze the plan be enough to freeze the plan? Should the TPA then draft a corresponding tack-on freeze amendment? Or is it safe to include the freeze date within the restated document, simultaneously?

2nd Scenario

If the Employer chose to freeze the plan and signed a resolution as of 2009, but did not amend and restate the plan until 2010, which includes the freeze date of 2009 per the resolution, was the plan freeze done timely? Should there have been a tack-on amendment or restated document for the 2009 year to cover the freeze. Is the resolution enough?

We finally submitted our first Form 5500 filing with Relius Web client. It came back with a "submission failed". Under status history it showed the following:

"The list of errors/warnings below were accepted at time of signing:

No validations were reported."

I have an incident with Relius but it takes a while to get a response on the incidents due to the amount of calls they are getting. It said I need to contact technical support when I researched that particular issue.

Any ideas??

My understanding is that the electronic filing requirements only apply to plan years beginning on or after January 1, 2009. I just wanted to verify that for a noncalendar plan year ending 9-30-09 we can still mail the paper form and schedules. The 5500 due date was 4-30-10 and a Form 5558 was filed extending to 7-15-10.

Please let me know if I have this right. Thanks!

Plan provides that payout under performance-based comp plan that does not utilize STD exception provides that payments under plan are offset by any amount that service provider owes to company. The plan has other failures that are eligible for correction under 2010-6, but I am not finding any relief for this provision.

The appropriate correction would seem to be to simply eliminate the offset.

Anyone know how these are being handled or have any ideas?

A grandfathered plan can deny an adult dependent coverage if he is eligible to enroll in an "eligible employer-sponsored health plan."

Does an "eligible employer-sponsored health plan" include a plan of which the employer is not the adult dependent's employer? For instance, if an adult dependent's spouse has health coverage due to her employment and the adult depedent is eligible to participate in his spouse's plan, can the parent's health plan deny the adult dependent coverage under the parent's plan because he is eligible to participate in his spouse's plan?

Plan has many participants on workman's comp which is paid by an outside party. Thus, they don't pay through their payroll system, and do not deduct loan payments. Should participants on workman's compensation be required to make loan payments assuming this is not considered a bonafide leave of absence since they are receiving pay? If they are receiving compensation from a third party via "workman's comp", is this still considered being paid, and thus they are required to continue to make payments just as an active participant (in other words, they LOA regs would not apply)?

I am looking for guidance as to if a participant out on LTD receiving workman's compensation should make payments or not in order to determine how to proceed with many delinquent loans that are well past the cure period.

(1) The Plan defines the Normal Retirement Benefit as 1% x FASNRD x Min (svcnrd, 25).

(2) The Plan defines the Accrued Benefit as (1) x svc / svcnrd where FASNRD is determined at time of determining accrued benefit rather than at NRD and svcnrd is a projected amount.

(3) The Plan provides in the early retirement section that for an employee who retires from active service after age 55 and 10 years of service calculate the early retirement benefit as the amount computed under (1) with svcnrd determined as svc and FASNRD is determined at the time for determining the accrued benefit. I.e., eliminate the proration.

So, a participant is age 57 and has completed 12 years of service, then I would consider his accrued benefit to be the greater of (1) and (2), which means (2).

But what about someone who is age 45? We would determine his accrued benefit in accordance with (1) but then when valuing the funding target, recalculate the benefit when we loop to age 55? Obviously, if the participant left today, formula (1) would apply. This would mean if there were no pre-retirement decrements, we would value his accrued benefit using only formula (2)?

I have been assured over the years (though not necessarily am I convinced) that the we are talking about an early retirement subsidy rather than backloading.

I am trying to confirm the computation of "net pension income " for partners ( K-1).

Before any pension cost deductions you begin with their K-1.

Then you subtract the partner's share of any employee contributions ( 3% safe harbor and any profit sharing allocation )

The you subtract the partners own 3% safe harbor contribution plus his share of the profit sharing allocation.

Finally you subtract his self employment tax deduction.

THis gives you his "net pension income " to calculate the 3% safe harbor as well as his share of the profit sharing allocation.

You do not subtract his 401K plan salary deferrals in this calculation.

Is this correct ?

THank you.

Has anyone heard about an investment product known as a premium life insurance arrangement. Under the arrangement, the multiemployer plan would purchase so called index universal life insurance policies for its participants and the participants would be the owners of policies and would receive 20% of proceeds and would agree to assign 80% of proceeds to plan. Any thoughts on the validity of such an arrangement?

If an employer is exepmpt from PBGC coverage for their DBP because they are, say, a service employer with fewer than 25 EEs....and the business goes bankrupt, who takes over the operation of the DBP trust and services the plan?

If the plan is underfunded, who speaks for the plan in BK court in persuing any company assets to bring the plan to full funding to pay accrued benefits?

Thanks

BruceM

Two or more high net worth clients (who are unrelated) with large IRAs form LLC capitalized 99% non-voting and 1% voting. The purpose of the LLC is to provide enhanced investment opportunity and long-term growth. IRAs contribute assets to LLC and take back pro rata ownership of LLC units. No owner has voting control (alternatively an unrelated independent third party owns voting interest – either economic or non-economic). LLC would have typical restrictions on transferability, distributions, liquidation, etc. (except each member would have the right/obligation to distribute NV units from his/her IRA to meet RMDs and comply with applicable law and IRS rules). Clients do Roth conversion in 2010 or 2011. Qualified appraiser values the LLC units, which should be eligible for marketability and minority interest discounts (which also depend on type of assets/investments in LLC, as determined by independent voting member/manager).

Would there be a UBTI issue? If so, is there a work around?

Obamacare requires coverage be provided by employers with some exceptions.

There are 4 configurations of coverage, specifying the amount of annual deductible that the employee will face.

Has there been any indication from the government whether the employer can purchase a higher deductible policy and couple it with a buy-down (MERP) so that the net coverage to the employee is the same as if it were just the lower deductible policy?

Can a Third Party Administrator who is neither an enrolled agent or holds a Power of Attorney, obtain a signed authorization from the client along with the signed 5500-SF and submit the form by obtaining author credentials? Would it help to obtain a Form 8821 also signed by the client? The I.R.S. does not recognize my rep# as an unenrolled preparer.

Your advice would be most helpful.

Thank you.

DPSRICH

A COBRA notice was sent to the ex-spouse of an employee and the amount was incorrectly calculated. The correct premium is only a small amount more than what was quoted (approximately $5.00). The former spouse has already made 2 payments. Can an amended notice be sent with the correct premium and a letter requesting payment of the balance for the two months already paid?

A large plan is selling one of its stores, the number of affected participants is 20, the total number of participants is 230. I know the rule of thumb is 20%, however, in this case, since the ER is selling the store, what are the chances of this being a partial termination? Since the ER is the one initiating, I am tempted to to call it a partial term to be on the safe side, any thoughts?

Thanks!

Jason