Has PPA clarified that interest MUST be added to a lump sum distribution from a plan's valuation date to the date of payout? Or can we still use the LS calculated as of the most recent valuation date? Say a DB plan with a one-year stability period for 417(e) terminates on 12/31/09 (which is a valuation date) and distributes on 5/31/2010. Can the lump sum payouts be the same as if the plan had distributed on 1/31/2010?

Computer troubles have fried my brain. Please confirm that this is OK.

The only Employer contribution will be $1.10 on each dollar deferred counting deferrals up to 6% of Comp. No body excluded and no hours or last day requirement.

Notice 2007-6 provides cutback relief for an amendment that eliminates the excess of the participant's hypothetical account balance with respect to distributions made after the later of August 17, 2006 or the effective date of the amendment.

My question has to do with "distributions made after the later of August 17, 2006." With regard to this language, what is considered the date of distribution? Is it the benefit commencement date or is it the date the money is actually paid to the participant. For example, if a participant makes a request for payment on August 14, 2006, but does not receive the money until August 20, 2006, what is the date of distribution for purposes of PPA relief? I know some plans have provisions that say the benefits will be paid as soon as administratively possible after the request or benefit commencement date.

Any thoughts. (Please include citations to any authority.)

Hi,

Is there a requirement in the regs for plans that are 401k safe harbor to have at least quarterly entry dates (for at least the deferrals). I have scanned the regs but so far don't see anything.

Thanks!

In September of 08 a client stepped out of the management of his company because he had an "irrevocable letter to purchase the company" from his manager. The new guy took over but did not make the agreed payment's. April of 2009, the owner fired him and took over again. The manager had never deposited the 401(k) deferrals. Business has been so bad that the new owner has never deposited the $20,000. He just received a phone call from the DOL that he is being audited the last week of November.

Does anyone have any suggestions for him?

I have about a dozen DB plans (small one person type) that are on the balls of their ass financially and need to terminate their plan. If they want to close out the plan and roll assets out by 12/31/09 do they still have to restate or can we get away with "good faith" amendments?

Any input is welcome.....

The plan that I administer is still updating processes to avoid 415 excess annual additions. So, we had about 15 participants exceed the 415 limit for the PYE 03/31/2009. Using the EPCRS, we instructed the Plan Administrator to process the necessary refunds. Almost all overages are due to the fact that the Plan allows for after-tax contirbutions, and until the IRS said these corrections are no longer allowed (excpet through EPCRS), the company did not proactively limit or monitor these contributions. Preferring instead to refund excess amounts with the annual compliance test (i.e. the population was so small it was not worth updating systems to monitor pro-actively). The plan provides that refunds are processed in the following order: 1) EE after-tax (voluntary contributions) 2) EE pre-tax (elective deferrals) 3) ER match 4) ER non-elective.

One of the employees who was due a refund of his after-tax contributions happened to request a withdrawal of a portion of his after-tax contribution account, according to the plan provisions.

Does anyone know if his withdrawal has any effect on his total annual additions? That is, should we have reduced the 415 refund for him since he withdrew from this same source during the allowable correction period?

A client comes to you and tells you that it has a "frozen 401(a) plan" that the employer used to contribute to (for over 10 years), stopped contributing a few years ago (which is why they consider it "frozen"), that they have no documents for the Plan and want to "get rid of it". No employee contributions were ever accepted to the Plan, accd to the client. Mind you, the provider/trustee holding the money with respect to this plan claims no knowledge of any plan document of any sort, and simply confirms that is a "401(a) plan". No one is certain whether 5500s were filed, or if they were filed properly.

Now, I know we have to have further discussions with the trustee, as I cannot believe that they can dissafirm any knowledge whatsoever about this plan other than the fact they have the money and it is a "401(a) plan".

So... assuming it is in fact true that the trustee has no other information, is there ANY advice to give this client either than "You should present this to the government and beg for relief?" (Which is the only thing that immediately comes to mind as a plausible solution). It goes without saying that client will certainly not want to do that, and would like to simply do away with it as quickly as possible.

If you have a 409A-compliant employment agreement that provides for severance to be paid out over 2 years, can you amend that mid-term to provide for payment in a lump sum in a case where there has not been a separation from service and no separation of service is anticipated (i.e., although there is a legal right to the severance if terminated, the severance has not vested)? Seems to me that this would arguably create an impermissible acceleration of the severance benefits even though not vested at the time of amendment.

If the answer is no, could you amend the agreement at the end of the regular term and/or prior to automatic renewal to provide for different payment terms going forward?

A client wants to allow participants who have attained age 59 1/2 to withdraw elective contribution and matching accounts on request. Didn't there used to be an IRS restriction on that - to prevent participants from withdrawing their contributions as soon as they were credited to their accounts? Was all this replaced by 401(k) and 401(m) (I'm showing my age)? In your experience, what is a normal restriction for age 59 1/2 withdrawals - once a year?

I was wndering about the explicit rule on the QDIA notice. Once the initial notice is given to the participant as we did last year, are the ongoing notices only given to those participants that have been defaulted? That is how I am reading it this morning, but I wanted to double check, being that it is Monday and all

Does anyone know how to treat ER paid Health Insurance premiums for a self funded plan who allocates a liability on their payroll records for the ER portion of the Health Isurance premiums, but does not actually contribute this allocated amount to the self funded plan? They are just tracking the ER cost as a liability on the payroll reports. The question at hand is whether or not these allocated ER premiums should get taken into account when running the Key Employee Concentration Test when they are NOT actually paid; or should the EE portion of the premiums be the only item included in the Key Employee Concentration Test?

My understanding is the ER is just tracking these costs on their payroll. The only amounts being funded into the Self Funded Health Insurance plan are the various EE premiums being paid.

Thanks -

Nathan

Where a rehab plan has been adopted but an employer has not yet adopted a CBA consistent with the contribution and benefit schedules in such plan, I understand that the contribution schedule cannot be "forced" on the employer until after the existing CBA expires (details omitted). Until the employer adopts the plan, however, a statutory surcharge applies which provides an incentive (among others) to adopt it sooner.

Can the impose the benefit schedule under the rehab plan before the employer adopts it? I do not think so but if that's not right, I would appreciate your letting me know.

Thanks

Lets assume you have a one participant defined benefit plan sponsored by a sole proprietor. The plan's normal form of benefit is a 100% J&S annuity. Note that a single lump sum is one of the plan's optional forms of benefit. The actuarial valuation for the year prior to the enactment of the PPA funding rules was prepared on the basis the participant would receive a 100% J&S annuity from the plan which had the effect of increasing the funding obligation.

Is it reasonable to continue to fund for the 100% J&S annuity under the new PPA funding rules if the participant at this time indicates his intent is to indeed take a 100% J&S annuity from the plan? Therefore, we would fund for the annuity and use 0% as the probability of the lump sum. Is this approach too aggresive or can it be deemed unreasonable by the IRS upon audit?

Hello board,

We have a 401-K plan managed by Pentec and Southwest bank in Odessa. We only receive a statement once a year and are in the dark the rest of the time on our balance and loss/gains. This worries us because we are taking a monthly distribution and need to know the balance once in awhile to manage our future plans. Is it normal to get one statement per year? It seems odd to me. Thanks, Wes

I have a divorce and QDRO from AZ (where we lived). The retirement income comes from NV PERS. They have no process in place for domesticating an order from another state apparently. I was told several different versions. I have already paid a lot of money to have this done correctly. All I need is a judge to sign off on it in NV. I sent money with cover sheet to open case and now am told must provide QDRO form for judge to sign ...then why did I pay a lot of money in AZ to have this done by an attorney. Can anyone help????

A sole proprietor financial consultant has a 401k plan. She just became a 'statutory employee' for an investment company for which she is a sales agent. The investment company also has a 401k plan, and matches dollar for dollar. She expects about $10,000 in sales commissions for November and December 2009. The plan there allows for her to defer 100%, and so she would like to put all $10,000 into that 401k plan and get the match.

She would like to put $12,000 into her own 401k plan for 2009 as well--she's over age 50.

Can she put the catch-up $5,500 into her own 401k plan after just putting $6,500 of regular 401k deferrals into that 401k plan?

The language in her 401k plan does say one way or the other.

My firm has a safe harbor 401k plan with a fiscal plan year ending June 30. The 401k plan limits elective deferrals to 25% of earned income. A couple of owners put in $16,500 in early January. The year has been a disaster for their business and they only took payroll for the year equal to $50,000 each for the plan year, July 1, 2008-June 30, 2009. Twenty-five percent (25%) of $50,000 is $12,500.

Can we just treat the extra $4,000 that each put in last January as having occurred in July 2009, or do we have to actually force the extra $4,000 out only to have the two owners then put in right back in, before 2009 ends?

If a 457(f) plan calls for immediate vesting, does that/can that mean that there is now not a substantial risk of forfeiture and therefore can be taxable to the participant?

Thanks

Suppose you have a traditional DB sponsored by medical corporation A. Corporation A is owned equally by 3 separate corporations. Each of these corporations employ one physician. They are a related employer group so each of the physician corporations will adopt the plan as a participating employer.

I believe that each participating employer is only responsible for funding contributions for its employees. Could the contribution be allocated on PVAB's? Or would this be treated like a partnership where the contribution must be allocated on ownership interest only? Or would any reasonable method consistently applied be acceptable?

Thanks much.