How much leeway (if any) do you have to alter (or restrict) the definitions of change in control as set forth in the regs? I am reviewed a NQDC plan which sets forth the reg definitions but then adds language that says a change in control won't be deemed to occur if the value of the business at the time of the transaction does not exceed a certain amount. Is this permissible?

Which method is preferred for reporting income for a NQDC - Rabbi Trust?

Why?

I am trying to find in ERISA how it defines the due date for a profit sharing contribution for a calendar year plan. I'm not asking about the deductibility rules (regarding extensions on corporate or 5558's). What does ERISA define for the 5500 as the rule for the deposit date? Is it October 15th?

I have a plan that provides for QPSA, small amount cash-outs, QJSA and life annuity only. It seems I must add an Optional Joint and Survivor Annuity (which I did in the PPA amendment). Now, revisiting the doc for a cycle E filing I think I need to add notice language and spousal consent. Any way around this? Thanks.

I'm thinking that as long as the 401(k) plan passes coverage, they can exclude the EEs from the for-profit businesses. But as more and more companies are added, they will no longer pass coverage if they continue to exclude that group of EEs. Are there other plan design options that they could consider? Or will they just have to bite the bullet and include the EEs from the for-profit businesses once they fail the coverage test?

A not-for-profit entity expects to add several for-profit businesses to it's growing list of companies. They currently have a 457(b) plan that includes only a couple of HCEs. They would like to include one or more HCEs from the new for-profit businesses in the 457(b) plan, but that's setting off alarm bells in my head. They also have a 401(k) plan, but I'll post that question under the 401(k) heading. Can HCEs from not-for-profit and for-profit businesses be included in an organization's 457(b) plan?

This doesn't seem right. I have a plan that has a participant who officially retired in 2004. Therefore, she was distributed out her account balance. Since then she has come back to work for the company on an "as needed" basis. The only problem is...she is working over 1,000 hours. Would this make her eligible for the plan again?

The document states that, "Upon retirement, a former participant shall cease to be a participant hereunder for all purposes except for receive distributions as set forth above."

It just doesn't seem right that she work for the company after declaring retirement and not have additional benefits....

Does anybody have an idea if there is anything regarding this topic in the Code? I will do some searching...

Thank you!

Partner in a safe harbor new comp plan with each participant in his/her own group is a former key employee - currently 3% owner with K-1 compensation under $100,000. Partners excluded from safe harbor contribution to give each partner flexibility in terms of profit sharing contribution. Plan is top-heavy and PS contribution is being made for 2009. IRC Section 416 and regs mention key, nonkey and former key employees as three distinct groups (my interpretation), but I cannot find anything that states whether or not a former key employee is included in the nonkey employee group for purposes of a top-heavy minimum contribution. In this case, the partner would be paying for a contribution for himself that he does not want to make - and then presumably, he would receive a gateway contribution??? Am I missing something that will give me the answer I want, i.e., former keys do not receive the top-heavy minumum?

SSO, anyone using this feature and having third party involvement. I.E. RELIUS, Investment/Recordkeeper Web,TPA(you)?

If so, is it working? We cannot get the client through the "portal" from Vendor to RELIUS.

I have a cross-tested PSP. Participants who terminate with more than 500 hours receive an allocation. One of the groups is Doctors who are hired after 2005. I have a doctor who enters in 2009 and is not highly compensated for 2009, and terminates in 2009 with more than 1,000 hours. He is zero percent vested. The document calls for deemed distributions to participants who terminate with 0 vesting and there is no mention of when the forfeiture occurs.

The problem I have is that this doctor is getting a fairly high contribution because the client wants to benefit that group. This benefit in turn helps the plan to pass non-discrimination as the doctor is new. But the whole contribution is going to be forfeited either in 2009 or 2010.

In my mind I'm thinking about the retroactive amendments when you fail a test and amend to increase the benefits for some NHCE's. I know that you cannot do this for non-vested terminees as it is not a meaningful benefit. Is there a meaningful benefit rule for general testing?

If the contribution and forfeiture both occur in 2009 does it make sense to include the contribution in the test at all?

I don't recall ever reading something that allows me to either exclude him from the test or to not count the contribution because it will be forfeited - but the fair part of my brain just thinks this should not work.

Thanks for any thoughts.

Our 401k plan's TPA just notified us that they are going to offer a new hardship withdrawal distribution procedure under which a participant will be required to e-certify the purpose of the distribution and provide specific details about his or her financial need. The plan uses the safe-harbor hardship rules. The TPA is proposing that participants will no longer be required to provide supporting documentation of the financial need at the time of the application. Instead, participants will be told to retain any supporting documentation and that the plan administrator reserves the right to request that documentation at any time. The TPA says that the regs do not state that separate written supporting documentation is required to demonstrate a financial need and in the absence of definitive guidance, its new procedure should be sufficient to meet any IRC requirements. Any thoughts?

The EBSA today announced that the EFAST2 electronic filing system for Forms 5500 and 5500-SF employee benefit plan annual reports has a new e-signature option. This option is designed to simplify the electronic filing process, especially for small businesses that use service providers to complete and file their annual reports.

Effective Jan. 1, 2010, retirement and welfare plans required to file an annual Form 5500 or 5500-SF must file electronically using the department’s new EFAST2 electronic filing system. More than one million Form 5500 reports are filed each year to satisfy annual reporting requirements under the Employee Retirement Income Security Act and the Internal Revenue Code.

EFAST2 is designed to improve the receipt and processing of the Forms 5500 and 5500-SF.

Under the new e-signature option, service providers that manage the filing process for plans can get their own signing credentials and submit the electronic Form 5500 or 5500-SF for the plan. The service provider must confirm that it has specific written authorization from the plan administrator to submit the plan’s electronic filing. In addition, the administrator must manually sign a paper copy of the completed filing, and the service provider must attach a PDF copy of the manually signed Form 5500 or 5500-SF as an attachment to the electronic filing submitted to EFAST2.

The service provider must communicate to the plan administrator any inquiries received from EFAST2, the Department of Labor, the Internal Revenue Service or the Pension Benefit Guaranty Corp. regarding the filing, and inform the plan administrator that, by electing to use this option, the image of the plan administrator’s manual signature will be included with the rest of the annual return/report posted by the Labor Department on the Internet for public disclosure.

The additional e-signature option will be available in the government-sponsored IFILE application beginning May 13, 2010. Filers using EFAST2 approved software to complete and file the Form 5500 or Form 5500-SF should contact their software vendors for information regarding availability of this new e-signature option as part of their software.

The current EFAST2 frequently asked questions have been updated, and a new fact sheet and set of frequently asked questions have been developed to help small businesses understand this new option. Those materials are available through http://www.efast.dol.gov. Assistance with the EFAST2 system and the Forms 5500 and 5500-SF is also available toll-free at 866-463-3278.

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I know that simple 403(b) answers are rare, but here goes...

Are 403(b)(9) in-service withdrawal restrictions the same as for 403(b)(1)?

Thanks!

The DOL just put out guidance for investors in Target Date Funds. Are any of you going to forward this to your employees?

http://www.dol.gov/ebsa/pdf/TDFInvestorBulletin.pdf

I have a client who wants to amend their loan policy to require that loans be repaid within 4 years rather than 5 Years. Is this permissible?

Thanks much for your help!

Due to an administrative payroll system error on one pay period only double the amount of salary deferrals were withheld from Participant paychecks. What are the appropriate correction alternatives? Is it acceptable to not withhold employee deferrals on next payroll to correct the error? Do the extra deferral amounts need to be removed from plan and if so by what method?

Any suggestions are appreciated.

I made my first post in the 403b forum, and didn't get a response, so I thought I'd come back home to the 401k forum...

I've come across a small dentist office where the dentist and his wife make salary deferrals into something called a "Supplemental Retirement Account" with Merrill Lynch. I've never heard of this, so I Google'ed it. Everything that popped up referred to either a 403(b) or a 457 plan for a college or university. Neither of which would be appropriate for this particular client.

Does anyone know anything about these SRAs?

Thanks!

There's a Quality Assurance Bulletin from 2006 which allows employers to categorically exclude part time employees as long as any part time employee who reaches 1,000 hours of service be eligible to participate in the plan. The plan must include this failsafe language. This doesn't seem to work well with a 401(k) plan that has a service condition more favorable to employees, such as 30 days, or immediate entry. I'm thinking that this concept was designed for plans that had a year of service eligibility condition. For example, a part timer can't make deferrals until they reach 1000 hours, but everyone else can begin making deferrals upon completing 30 days of service. My question is whether this failsafe approach is permissible in a plan that has a service period shorter than a year of service. If so, I assume we would have to test the different eligiblity provisions under 401(a)(4). By the way, the plans in every example have a year of service condition. Help!

Can you declare a discretionary match to apply to deferrals in the prior plan year?

In 2009, Company A and Company B are affiliated employers both participating in Plan A, which is a safe harbor 401(k) with an enhanced match of 100% of deferrals to 5%. Plan also permits discretionary match - discretionary percentage of deferrals to a discretionary cap.

Plan A permits each employer to allocate contributions to only its own employees. (coverage testing performed)

Mid 2009, Company A has financial trouble, so Plan A suspends safe harbor match. Company B declares a discretionary match of 100% of deferrals up to 5% of comp per payroll period to make up for safe harbor.

In 2010, things look better and company A wants to make up the match to its employees. Is there any prohibition to declaring a discretionary match for 2009 now? They have until end of 2010 to deposit the match and up to the due date of the tax return to contribute it in order to deduct for the taxable year and 30 days after that to include it in that year's annual additions.

ACP testing would be rerun including the discretionary contribution, and is projected to pass.

Is there any formal or guidance from IRS that says you need to declare a match to apply to Plan Year X before the end of the Plan Year?

Recently, my email address changed and in the interim, I missed some Benefit News Letters. I wanted to retrieve them in the same format. Here is a way to do so if you use a PC, provided you are using Internet Explorer (IE).

(1) In IE, ensure that you have appropriately designated your email program.

{Tools}{Internet Options}{Program}. Use drop-down menu to designate an implemented email program such as Outlook or Outlook Express.

(2) In BenefitsLink

{News}{Newsletter}{By Date} and select {lef mouse click} the newsletter

(3) In IE, {File}{Send}{Page by E-Mail}. The email template appears and designate yourself as recipient and send

Voila!