Regarding plan amendments to small closely held companies sponsoring a defined benefit pension plan.

Say a company has an owner who is also the President and Trustee and maybe another owner who is also a director and then maybe a few employees in the company (or not).

When adopting the plan or a plan amendment is it necessary to have a resolution or consent of the Board even if the Board memebers are going to sign the plan amendment, or is the amendment alone sufficient?

Thanks.

Resolution to terminate 401(k) plan well over 1 year ago. Most of participants have filled out distribution paperwork, but there are 5 that have not responded. We have sent out the paperwork several times. They are not technically missing...more like unresponsive because we believe that we have the correct addresses. The balances are all well above $5,000. One is close to $300,000 and we do not want to roll this over without good authority that we can do so. What can I do to get these participants out of the plan? Can I roll them over to an IRA without authorization when above 5K? As the TPA we are incurring expenses for filing 5500's, etc. and the plan sponsor is out of business and will not pay us so we are not receiving fees for this. Custodian will not take fees out of remaining participants accounts even with Trustee authorization. Any help would be greatly appreciated. Thanks.

Do you know anyone who prepares IDP 401(k) documents or other DC documents for each cycle? For example, someone who currently has or is working on an IDP 401(k) document with updated language for all of the cycle D LRMs within the document (not as add-on amendments)? We've tried a few firms so far with no luck.

If a participant elects to defer 5% as Roth 401k, is the 5% calculated on the gross wages or the wages after all tax withholdings have been done? I have a payroll company that is applying the percentage after the withholding and I am not sure if that is correct. I need to have some backup for this and have yet to find anything.

Thanks for your help!!

What is the process for termination? Is there a formal process for paying excess assets (i.e. a certain method for paying such excess assets)? I gather that one would have to pay in accordance with Trust and Treas. Reg. 1.501©(9)-4; have sponsor adopt termination (is that termination of plan or VEBA); and file final Form 990 and 5500.

Any thoughts on this process? Thanks.

In defining the services that a TPA provides for a 401k plan, do you consider the following to be "core" services?

a. Calculation of ER contribution for the year (ex: 3% safe harbor)

b. Reconciliation of contributions (i.e., the employer reported that John Doe deferred $ 100 in 2008; can we confirm that it actually went in?)

Obviously, the really core stuff seems to be 5500 forms and compliance testing. However, as our industry evolves, it seems that "some do and some don't" do the above things. Clearly those who don't can charge less.

Can you call yourself a TPA if you don't do these services? Or is it really undefined? I'd be interested in hearing your views!

One-man business has a DB plan. For the current year, the actuary says you can contribute from zero to $150,000. To me, that means the plan must be fully funded, so the guy doesn't have to put anything in this year. But let's say he put's in $50,000. Can he deduct the $50,000, or does the fact that the minimum amount is zero mean that he can't deduct anything?

Our DB plan provides that retirees can be rehired for up to six months as temporary employees. Does you plan provide for rehiring retirees? If so, are there any restrictions regarding how long the rehired retiree can work, either in elapsed time of hours per year?

Thanks in advance.

Jim

I am confused and need clarification. If I have a 403(b) Plan that wants to implement a safe harbor match in order to avoid ACP testing, are the rules the same as 401(k) Plans? I'm having great difficulty finding information specifically for the safe harbor match in a 403(b)? The specific issue is, the elective contributions part of the 403(b) is immediate entry. The want to to put a 1 year wait on the safe harbor match. In my mind, which is with 401(k) plans, is that no, can't if you are eligibile to defer you are eligible for the safe harbor match unless you are utilizing the statutory exclusions. However, there is no 401(k) testing in an 403(b) plan so it's really unrelated. Question is, what are the eligibility restrictions when you are trying to implement a safe harbor match for ACP testing in the 403(b)? Also, can you point me where you found the answers?

Thanks.

Single-employee corporate plan sponsor adopted DB plan effective January 1, 2002. In 2009 his S-corporation will have no income and lots of expenses. In 2010, his corporate income will be high once again. He would like to take an in-service distribution before 12/31/09 to offset the S-corp loss that will flow through to his personal return.

Now, Mike Preston has already warned us that taking an in-service distribution requires a 1/1/09 AFTAP of 110%. No problem, that requirement is met.

My question is whether there is any problem amending the NRA from age 65 and five years of participation to age 62 and five years of participation. The client's DOB is 5/3/1947, so he is 62 now and has 7 years of participation.

I know this is off the beaten path, but this is my home so I thought I would approach the geniuses on this Board.

A banker/investor type person approaches me and says he wants an actuary who can provide present values of blocks of bank owned life insurance policies for investors to purchase.

I am not sure of all the details of the overall investment strategy, but it is clearly not life settlements. I even have to determine if these policies still require premiums.

Well mathematically this isn't hard based on a chosen life table and a discount rate.

The skill or challenge would be to arrive at an appropriate life table and appropriate discount rates.

Individual health of the policy holders is not to be provided so it really boils down to an appropriate life table.

And payments to the investors of course will be over a period beginning now and going perhaps thirty plus years into the future.

One thought is to consider the yield curve or some pattern much like we use for our pension obligations.

Of course another key point is how the banks will invest the money they receive as payment for the policies as they are the ones setting up the arragnement and need the return on assets to be acceptable.

From the investors perspective it is much like a bond where the lower they pay the greater the yield.

With that said any thoughts on how to research an appropriate life table and discount rate?

Thanks.

2008 AFTAP<60% and 2009 AFTAP<60%. Plan benefits and new particpants were frozen in 2006. A 436 participant notice was issue timely for 2008. Is another 436 participant notice required for 2009 since everyone in the plan received the notice in 2008?

I am thinking it is not required but I'm not sure of that so I want to see what others are doing/thinking. Thanks.

When a plan was restated from an individually designed plan onto a prototype in 2004, plan sponsor elected, and indicated in an adoption agreement, that plan assets were not to be invested in life insurance products.

At the time of the restatement, individual participant accounts held, and currently continue to hold, life insurance products.

Client is arguing that the investments are not impermissible because they existed at the time of the restatement. The prototype plan is silent as to grandfathering in assets in existence when a plan is restated.

It seems that the plan sponsor should have either elected that the plan could hold life insurance investments (to reflect the assets that were in life insurance at the time of the restatement) or the life insurance investments should have been liquidated at the time of the restatement.

Any guidance would be appreciated.

Calendar year plan with safe harbor nonelective feature. Plan provides that are employees are eligible defer and receive safe harbor nonelective contributions after completing one month of service with quarterly entry dates.

Employer wants to amend the plan to provide that employees are eligible to defer after one month but are not eligible for the safe harbor nonelective contribution until they completed 1 Year of Service with quarterly entry dates. They only want the amendment to apply to employees who are hired after the date the amendment is signed. They plan to sign the amendment ASAP, prior to the end of the 12/31/2009 calandar year.

Is this a permissible change since the change in provisions does not affect anyone who is already a plan participant? They have not been provided a safe harbor notice yet since they are not plan participants (or even employees at this point) so is the issue about making changes mid-year in a safe harbor plan irrelevant?

P.S. I am aware of the issues with regards to testing the group of employees who are not eligible for the SHNE if there is an HCE who falls in that category.

Your opinions are appreciated.

Thanks!

Laura

A participant wants to take a distribution from a 401(k) plan.

The plan does not permit investment into life insurance products but, unfortunately, the participant directed that deferrals were to be invested into life insurance, and it appears that the plan administrator complied.

Now, the participant wants to liquidate the life insurance (that shouldn't be in his account in the first place) and take a permitted in-service distribution of what had been life insurance investments.

I want to confirm that this is an EPCRS situation, and if so, the correct method of correction.

Any guidance would be greatly appreciated.

Employer receives a discount on service fees for administering the employer's health plan if the employer designates an affiliate of the service provider as broker of record to market voluntary benefits to the employer's employees.

Does that arrangement alone raise any issues that the benefits will become subject to ERISA because the employer has too much involvement with the arrangement or because the employer is receiving consideration in connection with the voluntary plan?

Thanks.

Would an RMD still be required for 2009 from a rollover account within a defined benefit plan assuming the defined benefit portion was continued?

WRERA and Notice 2009-82 both refer to defined contribution plans and IRA's specifically and the Technical Explanation of WRERA refers to defined contribution plans as defined by Section 414(i). Regulations Section 1.401(a)(9)-8, Q&A-1 states:

". . . The distribution of the benefit of the employee under each plan must separately meet the requirements of section 401(a)(9). For this purpose, a plan described in section 414(k) is treated as two separate plans, a defined contribution plan to the extent benefits are based on an individual account and a defined benefit plan with respect to the remaining benefits."

Based on WRERA referencing defined contribution plans and the regulations stating that a rollover account in a DB plan should be treated as a defined contribution plan, I would argue that the distribution would not be required.

If my thinking is right, I would assume that DB plans in this situation would have to follow the "clarification" laid out in Notice 2009-82 and be required to adopt amendments reflecting the change.

Just curious...What is everyone doing about the new 402(f) notices? Are you taking the IRS models as is, combining them into a single document, updating the old notice with new info?

We currently have a Flex Transportion program offering pre-tax contributions toward the cost of transit passes and parking as defined in section 132(f). We were recently approached by a few individuals regarding qualfied bicycle commuting as added by President Bush in last 2008. At about the same time, we were also approached by a national flex transportation administrator who claims the qualified bicycle commuting benefits is entirely employer paid and cannot be deducted from employees salary on a pre-tax basis. I have read the regulations which aren't helpful and the guidance which doesn't mention bicycle benefits. Has anyone had any experience with this or can shed some light on this?

I thought at one time i read that if the employer elects an averaging method of valueing plan assets, they could always switch to Market Value method, can't find where i may have read this. If i am correct does anyone have a cite? And if i'm not correct, please let me know. Thanks.