Takeover Plan.

Document from Insurance company says Multiple Employer Plan.

5500 Filed as a Multiple Employer Plan, but had the name of the ER that we are working with listed as the ER

What do I have to do to Make it a Single ER Plan?

What about the weird Plan number 333 - does it have to change to 001?

Looks like the Adoption Agreement was set for this particiular Employer.

I don't know much else except it was done by an Insurance Company.

What do I need to look for to change this over to an regular 401(k)

Appreciate any insight and where to look for answers.

Thanks

Pat

A self-employed individual has a net earned income of $100,000 (after subtracting 1/2 SE tax)

Their DB contribution requirement is $90,000.

Can they defer $16,500 into the 401(k) plan, or are they limited to $10,000?

Assume no employer contribution to the DC plan.

An exception to the anti-acceleration rule exists for "limited cashouts". My question is whether this permitted acceleration applies only to the form of payment (i.e., paying a lump sum when the plan provides for installments) or can it also apply to the timing. For example, if a plan states that distribution will be made exactly 1 year from the date of termination could we use this Section of the Regulations to pay a lump sum within 90 days of termination (assuming it is less than the 402(g) limit and otherwise meets the exception)? Would it make a difference if the normal form of payment is a lump sum 1 year from termination and we pay out the lump sum within 90 days of termination?

I have been given the task of completing 1099-R forms for distributions that have occurred with plans that my company handles as TPA. Does anyone have any tips or tricks for compiling information or easy ways to follow up without sounding pushy to clients?

All responses are welcome and appreciated.

The plan sponsor under a very old PLR (8031091) appears to be required to count hours of service for the time periods that are the basis for severance pay.

If a participant is terminated during the plan year with 800 hours, but receives severance pay for 3 months, is the plan required to count those hours of service (for vesting) which are represented by that severance pay?

A plan participant died after filing a beneficiary designation naming her husband as her primary beneficiary and her son as her secondary beneficiary. The husband never claimed benefits from the plan or completed his own beneficiary form. Now the husband has also died.

The son is requesting payment as his mother's secondary beneficiary. Should the benefit be paid to the primary beneficiary's estate or to the original participant's secondary beneficiary?

Our plan provides that an unmarried "Participant's" default beneficiary is his estate but should this apply to a Beneficiary as well?

I am having trouble understanding the benefits/reasons of having a retroactive effective date (say 1/1/2002) for an EGTRRA prototype restatement, executed for example 1/1/2009.

If we made the effective date 1/1/2002, would this whipe out any nonamender defects? For example, client did not timely adopt a 401(a)(31)(B) amendment....but the provision is now correct in the new plan restatement (since plan is effective 1/1/2002 and the 401a31B amendment is in the plan document effective 3/28/2005). I would not think this would eliminate the nonamender error, but am I wrong? If it doesn't, then in theory the document is not really deemed effective in 2002.

If you have a GUST prototype that has been timely amended for all required law changes....why would you not simply make your EGTRRA restatement date the date/year executed (1/1/2009)?

What are the reasons to make the effective date 1/1/2002 instead of 1/1/2009?

I must be overthinking this issue, but I am going back and forth with my administration software support on the issue of deferrals in a fiscal year, adp failures, and catch-ups. I see some old threads on this, but am just not sure how to wrap my arms around it.

The facts:

Fiscal 10/31 plan. An HCE defers $1,500 from 11/1/08 to 12/31/08 (none of which is catch-up due to 402(g)) and then defers $18,700 from 1/1/09 to 10/31/09. So, his total deferrals are $20,200 for the plan year, $2,200 of which are 2009 catch-up due to 402(g) limit. The ADP test fails and his refund is calculated as $3,650. Since he still has $3,300 left in his 2009 catch-up, he only has to take a $350 refund. So, at this point, he has deferred $18,700 in calendar 2009 and has used up his $5,500 catch-up.

Administration software tells me that his 402(g) deferrals are only $13,200 for 2009 as of 10/31/09 ($18,700 - $2,200 - $3,300) and he can still defer another $3,300 in 2009.

There seems to be a logic problem here.

My problem is this ..... if this were a calendar year plan and I defer $22,000 and the ADP test fails and I get a $3,652 refund, I end up with $18,348 in the plan when all is said and done and, therefore, have a net tax deduction for the year of $18,348.

So, why, just because I have a fiscal year, can I do what they are telling me and have $22,000 deposited in the plan (the $18,700 I already have and the $3,300 they tell me I can still contribute in 2009), fail the test by $3,650, get a $350 refund, meaning I end up with $21,650 in the plan (and, therefore, a $21,650 net tax deduction).

It sure seems like I just got a $3,300 windfall just because I have a fiscal year.

Treas. Reg. Section 1.401(k)-3(e)(1) provides that "a plan which includes provisions that satisfy the rules of this section will not satisfy the requirements of section 1.401(k)-1(b) if it is amended to change such provisions for the plan year." Presumably, the reference to "the rules of this section" refers to anything even touched on in 1.401(k)-3. However, Announcement 2007-59 allows certain minimal changes to be made mid-year without violating this rule, and appears to be the IRS's only guidance on this regulatory provision (although the Announcement specifically requests comments on whether further guidance is needed). Does anyone have any experience as to how the IRS is enforcing this rule? An IRS agent I spoke to expressed the view that absolutely no changes are allowed of any sort, once the plan year is underway, that would in any way change the information provided in the safe harbor notice, even if the change is highly favorable. Does a mid-year change mean the plan is disqualified outright (since 1.401(k)-1(b) deals with "coverage and nondiscrimination requirements")? That seems unduly harsh if the change is a minor one that doesn't affect the level of safe harbor contributions or other core elements of the safe harbor design.

Thanks.

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