I have a company where Mr. A. has put his ownership 75% into a Trust for his 5 children. Nonrelated person owns other 25%.

I know Mr. A's Children are considered HCE by attribution as they are benficiaries of the Trust.

The Children's spouses are not considered HCE.

What about the Grandchildren? They don't have any direct ownership and their parents don't have any direct ownership.

I know that the 318 rules don't pass the direct ownership down to the Grandchildren.

I know that the Trust attributes ownership to the Beneficiaries prorata.

I am not sure that the Trust changes anything as far as the Grandchildren are concerned, unless thay are named in the trust as a direct beneficiary, not a contingent. Do I have to find out who the direct beneficiaries of the trust are and make sure that the Grandchildren are not beneficiaries?

Need for HCE determination. (Have owner, children, children's spouses and Grandchildren all working for the company)

Any thoughts? Am I missing something here?

Thanks for your help.

Pat

If a company has two plans, one for union employees and one for management employees and a participant in the union plan is promoted to management, is this a distributable event where he could roll his balance in to the non-union plan or event rollover to an IRA?

I know i'm confusing myself here but I want to make sure i am submitting the right information for determination letters.

We use corbel pre-approved Volume Submitters

1. with our older documents (which were accudraft) that have GUST determination letters I am pretty sure we have it down ....

the amends we are including with the EGTRRA doc -----(i)EGTTRA good-faith amend, (ii) 401(a)(9) amend (basically any amends that were tacked on to the GUST doc when we submitted for a GUST DL) PLUS (iii) automatic rollover amend (iv) Final 401(k) (v)Final 415 (vi)PPA/HEART) and and discretionary amends in between.

2. Am I correct in assuming that if a plan is new---lets say effective 1/1/2009 or even 1/1/2010, the only amendments i need to include are the final 415 amend and the PPA/HEART amendment when I am submitting for a DL? (maybe this is a corbel questions???)

I couldn't find this question in search, so I'm asking it here...

I have a plan that has been using a different match allocation formula since they signed their reinstated doc in 2005. It is their intention to match the way they had been, so the document is wrong.

Can I just retroactively amend the doc to correct the match allocation the way they have been operating?

This doesn't quite fall under Rev poc 2006-27 appendix B, section 2.07, failures that can be corrected by plan document.

So maybe I don't need to go through SCP????

Thanks in advance for your comments!

Self-employed individual (employer) has maintained and funded a SEP for many years. Hired an employee a few years ago who became eligible for an employer contribution in 2009 if the employer decides to fund the SEP, since it is discretionary.

Question: If the employer decides not to fund the SEP for 2009, can she make a contribution to her traditional IRA and avoid funding anything for the employee?

Second part: If the employer does not fund the SEP for 2009, is the employee still tainted as a participant in an employer sponsored plan and potentially limited in the deductibility of his own traditional IRA contribution?

Thank you.

A company is planning to buy out the contracts of several Teamsters truck drivers. The company is offering the drivers about $100,000 each. The drivers would like the company to negotiate a deal with the Teamsters allowing the buy-out funds to be used to purchase additional years' credit in the Teamsters pension plan (so the drivers can retire sooner). The drivers have been told this is not legal.

Is it possible to purchase extra years in a multiemployer pension plan?

I wasn't sure where to post this, so it's also posted in Multiemployer Plans.

Thanks for any thoughts!

A company is planning to buy out the contracts of several Teamsters truck drivers. The company is offering the drivers about $100,000 each. The drivers would like the company to negotiate a deal with the Teamsters allowing the buy-out funds to be used to purchase additional years' credit in the Teamsters pension plan (so the drivers can retire sooner). The drivers have been told this is not legal.

Is it possible to purchase extra years in a multiemployer pension plan?

Thanks for any thoughts!

My CA employer has an "opt out" policy where they offer compensation if an employee declines or "opts out" of medical coverage. There are several plans available, and one is at no cost to the employee.

In order to opt out, you must provide proof of medical coverage from another source, such as a spouse's policy.

Is it legal to require an employee to have medical coverage? Granted, if coverage is offered (especially if there is a plan at no cost)

one would think that no one would turn down coverage if no other coverage was available. I have coverage through my spouse's plan. I decided to opt out, and I'm asked to provide proof of other coverage in order to opt out. Does my employer have the legal

right to require me to have coverage from another source? What if I just don't want insurance coverage? Do they have the option

to ask for proof of other coverage since they are compensating me for this opt out option? I understand the premise, but

unless there is a law that requires insurance coverage from some source (and this is Calif., not MA) are they not within legal bounds to ask for proof of other coverage?

thanks for any replies.

Partnership sponsors a SIMPLE IRA for two partners and two employees. The partnership is being dissolved...one partner and one employee is leaving effective March 1, 2010....What needs to be done with the SIMPLE IRA that was sponsored by the "former" partnership. The remaining partner becomes a sole proprietor and wants to continue the SIMPLE for himself and the remaining employee.

Can they terminate one SIMPLE and start a new one with a new plan document naming the sole prop as the sponsor?

Plan administrator thought participants were to start deferring first of month after satisfying eligibility conditions. Document states enter the plan the day eligibility conditions were met.

I can find where EPCRS states if the participant was not given the opportunity to defer for the entire plan year you take them out of the ADP test. However, I cannot find any guidance for participants who are briefly excluded where the error is not discovered until after the end of the plan year.

I am assuming you do not take the person out of the test. This assumpiton gives rise to my next question -

Do you use full year compensation, compensation from date they started deferring or something else for the ADP test?

If you use compensation from the time they actually deferred, it might make the participant neutral when you use the average of the group to calculate the required QNEC for the missed opportunity cost. Seems logically but is it the right approach.

Any suggestions would be greatly appreciated.

A Plan must limit distributions to HCEs. An CHE elects lump sum payment and will receive annual until restricts are lifted an annual payment. The plan does not provide for escrow or other arrangements to facilitate lump sum payment.

(1) Does this annual payment constitute an eligible rollover distribution? While it may be based on a lifetime spread, it nonetheless constitutes a temporary series of annual payments of indeterminable length.

(2) If it is not believed this distribution constitutes an eligible rollover distribution, is it still necessary to provide "Your Rollover Options" with the participant's election package?

Note, the participant would be electing lump sum payment, which is not covered under this wonderful piece of paper. It is also of interest that the disclosure provides that "The Plan administrator or payor can tell you what portion of the payment is eligible for rollover." Don't bet on that!!!!

(I resent the requirement to make this statement as it suggests the PA will offer tax advice. If a participant presses, would it be incumbent upon the PA to obtain a tax opinion?)

A company has two plans: 1. A DB plan that covers the two owners and certain groups of employees while excluding other employee groups but passes coverage and nondiscrimination on a standalone basis, amd 2. A safe harbor 401(k) plan that provides the SH match and $0 PS and covers all employees that meet the 21 & 1 requirement. Since the key employees are in both plans this would be a required aggregation group. My understanding is that the 401(k) plan is deemed not top heavy because of it's safe harbor status. What top heavy benefit if any does an employee get if they are excluded from the DB plan and they do a $0 salary deferral?

403(b) plan provides that the required beginning date for a participant other than a more than 5% owner is the later of age 70 1/2 or retirement. Pretty standard. My question is if any participant in a 403(b) of not for profit has to take an RMD prior to retirement? There are no owners. Thank you.

I have a plan that stopped their safe harbor non-elective contribution during 2009 and they now fail their ADP test.

Is it allowable to use the safe harbor contribution that was made during the year as a QNEC towards the ADP Test?

We will be making significant changes in our health plans for 2011. We would like to provide employees with some kind of on-line tool that can be used to help them determine which plan would be the best choice. Any suggestions? Thanks.

Does anyone know if there are any penalties associated with not having a Summary Plan Description for a Welfare Benefits Plan?

EBIA ERISA manual says that an SPD is required for every single welfare plan, regardless of size. One of our clients had a DOL audit and the DOL made them go to a law firm and get a very expensive Welfare SPD (not the same as a wrap document so that you only have to file 1 5500).

I would like to tell my other clients about this, but they will ask what the penalties are for not having it, and I can't find that anywhere.

Thanks.

This is a unique situation and I'm having a hard time finding a resource. Executive of startup agrees to defer 50% of his salary each year for the term of his agreement. The 50% is payable upon a change of control (I didn't draft the agreement). Executive realizes that company is in bad shape and that the accrual of this deferred comp makes it a poor target. He wants to surrender or cancel these prior deferrals (and doesn't want anything in return). See any problems with amending his employment agreement to accomplish this? Of course, if they agreed to cancel the deferrals and pay out some amount, then of course its an acceleration, but that's not the case...they aren't paying out any of the deferrals and never will...they just want to document this by amending the agreement.

Problems?

My employer matches 10% of employee contributions. I've been notified that since I've reached 65 years of age and am still working full time, the employer will not longer match my contributions, while continuing to match others. Is this within the employer's rights, or does ERISA regulations state that this is illegal?

mif2000

The exclusive benefit requirement can be met using a custodial account or an annuity contract instead of a trust. Treas. Reg. §1.45-8(a)(3). Whenever a plan uses a custodial account or an annuity contract instead of a trust, the account or contract must expressly state the exclusive benefit language. Treas. Reg. §1.457-8(a)(3)(i).

A plan can "mix or match" different kinds of exclusive benefit arrangements-trust, custodial account, and annuity contract - as long as every plan asset is held under at least one exclusive benefit arrangement. Treas. Reg. 1.457-8(a)(3)(i).

Where all the plan assets are held under a custodial account or an annuity contract, the establishment of an outside trust is not necessary. However, for plans that provide for loans, or other assets held outside the exclusive funding arrangement (i.e., self-directed brokerage account), would the plan sponsor need to have someone or some entity appointed as trustee to fulfill the trust requirement?

We have a concern as a vendor selling 457b annuity contracts and custodial accounts. It creates additional steps and expense for us to set up an outside trust agreement/document with a bank for a 457b governmental plan that wants to offer loans. If this is not necessary, then the situation will be streamlined for all parties. The 457 Answer Book does not directly address this question, although Question 2:45 and 2:50 seem to imply that an annuity contract or custodial account can contain trust language and exclusive benefit language which our document does.

Bottom line, is this sufficient to not have to provide trust documents outside a plan document?

We have a 401K / Profit Sharing Plan that uses the Corbel Defined Contribution Prototype Plan document. The plan uses the American Funds Record Keeper Direct platform and all the plan assets are held at American Funds. Participant directed investments are permitted.

Now, one of the owners wants to have his balance at American Funds transferred to an account he has set up at Merrill Lynch by way of a trustee-to-trustee transfer and have all future contributions made on his behalf sent to this account rather than American Funds like everyone elses. The account he set up at Merrill Lynch is titled in the name of the Plan F/B/O the owner.

Is this okay? Would a plan usually have to be amended to allow for this? It seems to me that if all participants are not given the same access to a seperate account at Merrill Lynch then it would be discriminatory. I would think this type of request would be fairly common and I was just looking for some guidance on how to handle it.

Thanks for any help!