A spouse beneficiary refuses to accept his deceased spouse's benefit under a pension plan. Can we simply send him distribution forms by certified mail and note in the participant's file that the spouse refused the benefits? Do we continue to accure benefits and pay her PBGC premium? Unusual sitution in this day and age...

Plan provides that an employee shall be eligible to participate on the 6-month anniversary of the employment commencement date or the reemployment commencement date, as applicable, provided he has completed one hour of service and is employed on such 6-month anniversary date. I interpret this to mean that if a person quits before the 6-month anniversary date and is rehired thereafter, the 6-month period begins to run again, even though the individual previously performed the one hour of service that was required to become eligible. I am assuming that the intent was to use the hours of service method of counting service (with a 6-month eligibility computation period and one hour of service requirement). Is this allowed under the law? Can a rehired employee be required to start over earning 6-months of service when he/she already earned the required one hour of service during his previous period of employment? My general understanding was that a rehired employee who had performed the hours of service required (one hour, in this case) prior to termination of employment would become a participant on the rehire date (assuming the rehire date falls after the 6-month anniversary) because the employee does not have to be employed at the end of the six months to get credit for the hours worked during such 6-month period. Reg. 2530.200b-1(b) provides in relevant part

In general, employment at the beginning or the end of an appliable computation period or on any particular date during the computation period is not determinative of whether the employee is credited with a year of service...for the computation period. Rather, these determinations generally must be made solely with reference to the number of hours...which are credited to the employee during the applicable computation period.

However, Reg. 2530.200b-1(b) also provides the following:

It should be noted, however, that in certain circumstances, a plan may provide that certain consequences follow from an employee's failure to be employed on a particular date. For example, under section 202(a)(4) of the Act and secton 410(a)(4) of the Code, a plan may provide that an individual otherwise entitled to commence participation in the plan on a specified date does not commence participation on that date if he or she was separated from the service before that date.

Does this provision of the Reg. mean that the plan can start over counting the 6 months of service for a rehire because the plan provides that the individual must be employed on the 6-month anniversary date in order to become eligible to participate?

Alternatively, perhaps in this case the plan document can be more restrictive about counting hours of service prior to a termination of employment since the plan provides more liberal eligibility provisions than the mimimum service requirements (i.e., only 1 hour of service in 6 months rather than 1000 hours of service in 12 months). Thoughts?

I have a non-profit who has only ever filed an "informational" return, which is to say the 5500 with just basic information and no schedules. They received an IRS letter that their 2006 return was not received. Is an entity filing in this manner eligible for the DFVCP? Also, is an entity filing in this manner now required to file a more detailed return in 2009 and going forward? Any help would be appreciated.

We have historically filed separate Form 5500s for separate investment options (funds) that are used in our various defined benefit and defined contribution plans. However, in preparing this year's 5500, I noticed that some of the funds contain a unitized investment in a portfolio that is shared between multiple funds and I am concerned that this may be treated appropriately.

My question is a follows:

Is it appropriate to prepare separate 5500s only at the unitized fund level or alternatively at the unitized investment manager level?

Attached is an excerpt from page 11 of the 2008 Form 5500 instructions. I have read this several times, but the treatment seems unclear.

The assets of a master trust are considered for reporting purposes to be held in one or more ‘‘investment accounts.’’ A ‘‘master trust investment account’’ may consist of a pool of assets or a single asset. Each pool of assets held in a master

trust must be treated as a separate MTIA if each plan that has an interest in the pool has the same fractional interest in each asset in the pool as its fractional interest in the pool, and if each such plan may not dispose of its interest in any asset in the pool without disposing of its interest in the pool. A master trust may also contain assets that are not held in such a pool. Each such asset must be treated as a separate MTIA.

Any help or clarification related to this issue will be greatly appreciated.

Vanguard has been administering a money purchase plan for one of our clients. Client got a notice from Vanguard that they aren't doing small plans any more and referred them to a company called ExpertPlan.

Does anyone have experience working with ExpertPlan or know anything about them?

Thanks!

Beneficiary died and left the account to 3 individual beneficiaries. They did not separate the accounts by December 31 of the year of her death. However, they want to give one beneficiary all his money now. Do you know if its permissible to divide the account into separate subaccounts so that the one can be paid out but the other two can roll the accounts or deal with their interests according to their own desires. I think they can do it but they just have to use the oldest life expectancy. the final regulations dont allow for this but there are some letter rulings and such.

10 years ago corporation institutes special post-retirement paid health insurance benefit for key executives (who are also 2%+ shareholders), pursuant to which these key execs would continue to receive company-paid health insurance for term of years after retirement - it was intended that the benefit be excludable from income.

At the time retiree health plan was implemented, corporation was a C corp. Two years ago corporation converted to S corp. and health insurance benefit to 2% shareholders became taxable.

Here's the question - upon retirement, key execs' stock is redeemed, so that at time receive retiree health benefit, they will not own any stock in the corporation, so does benefit revert to being excludable from income as typical retired employee health insurance benefit?

I have a client whose 401(k) Plan uses the "facts & circumstances" general approach to defining the conditions which qualify as "financial needs" for hardship distribution purposes. The Plan document does not delineate the conditions, but merely states that the employer shall adopt a written policy setting forth same.

This is my first encounter with the "F&C" approach to hardships and was wondering - other than the usual IRS "safe-harbors" - for those of you whose Plan or clients' plans use this approach, what other types of "financial needs" are being used?

Thanks for any and all input.

Has anybody dealt with lump sum payments when the AFTAP falls between 60% and 80%? I believe the proposed regs require the Plan to allow the participant to take 50% as a lump sum and elect another optional form of payment for the remaining 50%. Additionally, the participant could elect to defer commencement and receive a lump sum for the full benefit once the restrictions are lifted.

Another option, that is allowed but not required, is the Plan can pay 50% as a lump sum now and allow the participant to defer commencement on the remaining 50% to a point where the restrictions are no longer in place, correct? Are plan sponsors allowing this option?

A sole-prop has a requirement minimum contribution greater than their earned income for 2008. So part of the contribution is currently non-deductible.

Just a theoretical question: What would happen if they never have future earned income and never get a chance to take the deduction on the whole 2008 contribution?

For example, for 2008 the sole-prop has a $150K required contribution and can only deduct $100K. In 2009, the sole-prop’s source of income dries-up and they don’t anticipate any future income. So in 2009, the sole-prop elects to terminate the plan and rollover their entire benefit to an IRA.

What happens to the $50K non-deductible amount? Can it be rolled over? If they elect a taxable distribution is it subject to tax?

Any thoughts are appreciated.

I'm trying to understand what distribution options are available in a 457f plan. Does the balance get paid as a lump sum, or can the payments be spread out over a period of time? If the payments can be spread out, what is reportable as taxable income? I assume that it is just the amount received in the tax year, but I have seen a couple sources that imply that the entire account balance would be taxable.

Any insight would be appreciated. Thank you.

I am trying to find an ERISA attorney in or close to Shirley NY for a client of mine. This is to handle a beneficiary related matter for a QP.

Any recommendations/suggestions?

Thanks

what is the rule with regard to providing prospectuses to the participants that are defaulted into the default investment. i am thinking you need to furnish the prospectus after the fact just like with 404©. can anyone tell me what they are doing?

Are active employees over the age of 65 required to continue paying taxes on LTD benefits? Our employer pays for the premius; however, the employee pays the taxes on the premium. Once an employee reaches age 65 and is now eligible for social security benefits, do they continue to pay taxes on LTD premiums through payroll deductions?

Does an employer have the option to reduce or eliminate 403(b) matching contributions for employees with active participation in the employer DB plan while continuing to provide full 403(b) matching contributions for all other employees who do not meet the eligibility requirements for the employer DB plan?

A plan sponsor implements a 412i plan for himself (the owner and only participant).

The plan formula is a 100% of avg comp annuity at NRA.

He is to pay 50% life premium and 50% annuity premium as level premiums until NRA.

Say the policies guaranteed values result in a life annuity at NRA of 50k per year based on the life insurance annuity conversion rates.

Of course the owner will actually take a lump sum at NRA.

So while the policies can support a life annuity of 50k from the insurance rates, it would actually be worth a life annuity based on lump sum conversion rates of say 60k (the 415 limit).

Now the owner only received compensation of 40k in this the plan's first year.

So in effect the policy provides a projected pension (50k) that is greater than what the plan provides (40k) based on the comp of 40k.

Now in subsequent years the owner takes higher compensation and after three plan years he has an average comp of 75k.

So now his projected plan formula benefit is 75k, the insurance policy guarantee rates benefit is 50k and the 415 lump sum based on guaranteed values is 60k.

Instead of increasing premiums to address the increase in projected benefit the owner maintains the same premiuim level.

The thought being that if he terminates the plan at say NRA and the insurance values are not high enough to cover the 75k annuity he simply pays out benefits to the extent funded (ignore 436 for this discussion).

And if the values increase greater than the minimum guarantee, he has some space to avoid a surplus or at least the srplus would not be as substantial.

Now what would one suggest in terms of remedying th is situation? That is, to safeguard against an inevitable IRS audit.

Thank you.

I have a SIMPLE IRA in place for my employees. Under the Military Leave Policy it only speaks to 401k plans in terms of making up contributions. I am assuming that a SIMPLE IRA should be treated the same and returning employees can make up contributions just like if I had a 401K plan?????

Thanks

Wife named husband as beneficiary of her retirement account.

Wife died. Plan is insisting that estate is the beneficiary of her account and not her husband. They say:

Client elected to receive lump-sum payment of her benefits, beginning one day after her retirement date

She dies after completing and submitting the request to the plan, which had a annuity start date that came about for a date after she died.

The plan was notified of her death before they issued the check. Still, they issued it in her name, FBO her IRA.

Spouse returns the check to the plan, asking for it to be issued to him. They refuse and issue it to her estate. They claim that her estate and hot him, is her beneficiary.

They claimed she elected a Lump-sum sum optional form of benefit, with no beneficiary benefit. Her spouse consented to the annuity waiver, thus allowing the lump sum. However, they are claiming that her estate (and not her spouse) is her beneficiary because:

------- For beneficiary, they define as someone named by the participant to receive survivor benefits, who much qualify on the annuity starting date.

------- She died after her annuity starting date, therefore no benefit is due to her named beneficiary.

Can there legally be such a provision in a plan?

~~~~~~~~~~~~~~

Using different name to protect client.

Has anything change recently in determining an assumption for the expected rate of return on assets?

Thanks

We are still working on our EGTRRA restatements. We started them earlier this yr and plan to have them all done and signed by the end of 2009.

I was just curious to find out if we were the only one's still working on them, I feel like a lot people that I've spoken to had them done last year ....or are almost done.