Have you heard any rumors that Accudraft has been sold?

Let's say an employer maintains a 401(k) plan for its employees. A participant retires and then starts receiving minmum distribution payments in connection with his/her attainment of age 70 1/2. The checks are payable to the individual who is the participant and bear the correct social security number. Unfortunately, the participant moved without informing his//her employer of the change of address. Therefore, the checks are still delivered to the same home address in the name of the participant at the same social security number. However, in the meantime, an individual with the same first and last name as the participant has begun cashing the checks although s/he has also been reporting the distributions on his/her tax return. The error has since been discovered and the individual who had cashed the checks is now willing to pay the amount back to the plan.

My question would be what should be done by the plan other than through the SCP program of simplying issuing the checks to the intended participant? I see no qualification issue on the part of the plan since it paid the checks to the correct SSN and to what it thought was the correct address. Similarly the participant should not be subject to the excise tax because the circumstances should make him/her eligible to satisfy the reasonable error test resulting in waiver of the tax. Does anyone see anytihing else here that I have not specifically mentioned?

A client of mine is interested in updating its Plan's definition of Actuarial Equivalence to a more recent table. Are there any issues in doing that? I believe we need to preserve the old basis (as a minimum) during the year of the switch?

I know that some people talk about prices in terms of a percentage of annual revenue. What ranges are you seeing for non-producing TPA firms?

Would a TPA (fiduciary or not) be liable if an employer stops funding the plan so the TPA cannot pay participant claims?

I am trying to track down a copy of the Retirement Equity Act of 1984 (Public Law 98-397). Does anyone have any suggestions as to how I can obtain a copy online. I can't seem to find anything online using google. I need a copy b/c I am trying to determine the genesis for Q&As 4 & 5 of Treas. Reg. 1.411(d)-4. Any suggestions as to how I can retrieve a copy of the REA or the proposed regulation for 1.411(d)-4 would be helpful.

A 401(k) plan was with investment company A and switched to B a few years ago. A was involved in late trading and sent a bunch of settlement proceeds checks to the sponsor. The checks have prior trustees names on them, and B won't take third party checks anyway. The "pay to" description on the check is sufficiently mangled/shortened that the plan sponsor could (probably) deposit the checks to its own trust account. (It's a law firm and yes I mean the firm's trust account, not a plan account.)

Question - although it would be a prohibited transaction to deposit the checks to the firm's own account, writing a check or checks back out of the account immediately would correct the transaction, right? Would there be any lingering effects from this PT, other than the need to file a 5330 and pay an excise tax on the use of the money, $1 or whatever?

I'm weighing the hassles of trying to get the checks re-issued versus doing something "wrong" but easy.

thx

The owner wants to use part of his 401k plan account to purchase the whole life policy he currently owns on himself. Is there an exemption for this? I find the exemption for selling policies out of the plan to participants.

For current Datair users that may be using the Automatic Rollover provision:

Have you noticed Datair's definition of Missing Persons w/c appears to negate the ability to auto rollover (within 30 days) a terminated participant when you don't have a forwarding address (i.e. cannot locate them). The provision requires a 3 year wait before you can auto r/o the account balance.

I'm wondering if any Datair document users are even aware of this provision and if any are really adhering to the 3 year wait.

3.11.7 (prototype)

3.13.9 (VS)

Missing Persons. If the Trustee mails by registered or certified mail, postage prepaid, to the last

known address of a Participant or Beneficiary, a notification that the Participant or Beneficiary is entitled to

a distribution and if (a) the notification is returned by the post office because the addressee cannot be

located at such address and if neither the Employer, the Plan Administrator nor the Trustee shall have any

knowledge of the whereabouts of such Participant or Beneficiary within three (3) years from the date such

notification was mailed, or (b) within three (3) years after such notification was mailed to such Participant or

Beneficiary, he does not respond thereto by informing the Trustee of his whereabouts, the ultimate

disposition of the then undistributed vested Account balance of such Participant or Beneficiary shall be

determined in accordance with the then applicable Federal laws, rules, and regulations.

Line 8b. Schedule of Active Participant Data. Check “Yes” only if this is a multiemployer plan covered by Title IV of ERISA that has active participants

Finally looking at my first MB for 2008 and it looks like most multi's are now required to provide the age/service chart? Just making sure because they were always exempted from this before.

What is the timeframe for revoking a prior J&S waiver? I thought it was 90 days prior to benefit commencement date, but somebody else thinks it should be 180 days prior.

thanks!

I recently went to the Social Security retirement website and did some pro-formas for a client for his Cafeteria Plan, using the IRS Quick Calculator I was shocked to see that the reduction in Social Security benefits at retirement was much more than expected. The assumptions I used were as follows: dob: 07/14/61; annual salary; $40,000; retirement age: 68; I then ran the same scenario with a reduction of $5,000 a year and was shocked to see that the reduction in monthly income from Social Security was $134.00 per month or $1,608.00 per year at age 68. The savings (on the $5,000 salary reduction) assuming a 30% combined tax bracket was only $1,500.00 per year?? I realize that the Quick Calculator is only an estmate, but this is much more of an issue than I ever thought. Anyone have any ideas if this is correct or not and how do we handle this objection to participating in salary reduction plans?

Plan excludes hourly employees.

Participant will go from being a salaried employee to an hourly participant in October.

I think the assumption is correct that he will no longer be able to participate in the plan as he is in an excludable class.

For testing purposes/matching, what compensation should be used? Full year comp? Or comp up to the date he becomes hourly?

Any input is appreciated.

I'm having a bit of a disagreement with some of my colleagues. The issue is what amounts are totaled for purposes of the 409A separation pay plan exception. We can't agree on whether amounts that are exempt from 409A under the short term deferral exception are counted against the total permitted be paid out pursuant to a separation pay plan.

In other words, is the following permissible:

409A separation from service, participant receives a lump sum of $200,000.

One year later, (beyond the short term deferral period), participant receives an additional $400,000.

Clearly, the first amount is exempt under the short term deferral excpetion. The question is, is the second?

I'd love to know your thoughts.

This is probably easily answered.

Is there an additional restriction below a 50% lumpsum option when the lumpsum amount exceed the PBGC Guarantee amount?

For an individual age 55 is this $349,238?

If the Notice provided to participants only tells of the 50% restriction, is the Notice in sufficient?

What should we do now? Send additional Notices? Will we be fined?

I am sorry I should have said the Plan is at 75% funding.

Just looking for consensus since I don't believe we have any real guidance, but how are people doing the AFN for an EOY val?

The instructions seem to call for the AFN to report the FTAP for the year which the notice relates. So lets say we are doing the 2008 AFN. In the Funding Target Attainment Percentage section do you report the 12/31/2007 numbers (which we used to determine the 2008 AFTAP) or would we show the 12/31/2008 numbers (which would really be for the 2009 AFTAP).

Or would you show both 12/31/2007 and 12/31/2008 as two of the three year's of history?

Am I correct that we do not have regs for 2009 AFTAPs for plans with EOY valuations? If so, do we just do the same as we did for 2008: use the previous 12/31 values and adjust appropriately?

Clergy members of a for-profit organization does not want to receive the nonelective profit sharing contribution to which they are entitled. The plan is not using a standardized prototype document (so irrevocable elections not to participate not so much an issue).

Can these priests elect not to receive profit sharing contribution? If so, would a mere plan amendment address this? Does anything else have to be done?

Thanks for your input.

Clergy members of a for-profit organization does not want to receive the nonelective profit sharing contribution to which they are entitled. The plan is not using a standardized prototype document (so irrevocable elections not to participate not so much an issue).

Can these priests elect not to receive profit sharing contribution? If so, would a mere plan amendment address this? Does anything else have to be done?

Thanks for your input.

We got past PROBLEM 1, thanks to this forum, which was the IRS denying the 1st year plan contribution in year 2000. They have withdrawn that from their list of problems with The Plan.

NOW, the argument is over The Plan's use of a DC to DB converssion in the Plan's 1st year. A major national actuarial firm presentd this technique at the ASPA meeting in about 1999. (copy attached)

It worked like this:

At participant age 56

$519,689 was transfered into the 412(i) DB from a terminating DC Plan.

At 8.5% projected growth, at NRA age 62 the $519,689 would grow to $844,670.

Using the 1971 GAM Male mortality and 8.5% interest, the $844,670 would result in a monthly benefit of $7,484.

The life insurance and annuity funding contracts guarantee $5.34 per $1,000 at NRA 62.

To pay the $7,484 monthly benefit the insurance contracts must generate Guaranteed Cash Value of $1,401,455.

The level premium required by the life and annuity guaranteed cash value was $149,500.04. (Rev.Rul. 74-307 was used to calculate life insurance inclusion)

When the IRS takes this technique away, we have a "listed transaction" problem with the life insurance.

ANYBODY GOT ANY IDEAS? ALL HELP APPRECIATED!

2_Pages_ASPA_handouts_regarding_DC_to_DB_conversions.pdf