We got a call from a client whose profit sharing plan has NRA of 60. They now want to increase it to age 65. Ignoring the fact that they want to do it because the owners are now 65 and they want to make everyone else wait for vesting (or maybe we can't ignore that?), is there anything inherently against anti-cutback rules on this? Pretty much everything we've found on the topic refers to "pension plans" (like 2007-69), so I'm not sure if that is meant to cover profit sharing plans as well. Thanks!

The plan sponsor of a DB plan wants to pay the mandatory federal and state withholding on distributions "as a 945 tax" (per the CPA) and then the corporation gets reimbursed from the trust. I assume that means that they just want to submit the pension distribution withholding along with their payroll taxes. Is that a problem? A prohibited transaction?

Two 401(k) plans, two employers in a controlled group. Neither plan is safe harbor.

The Big plan has deferrals and an annual discretionary match option. Calendar year plan. No match intended for 2008.

The Small plan has deferrals and a discretionary match. Plan year was 9/30, until 9/30/2008, when they had a short year ending 12/31/2008. They contributed a discretionary match for the 12/31/2008 year.

Small plan did not have enough NHCEs in the short plan year for the match portion of their plan to pass coverage, the ratio test result is about 45%. They have a NS PT that applies 410(b) failsafe language, but even after exhausting all of the listed steps, the plan does not have enough NHCEs to pass coverage for the match.

Big plan has a discretionary match option. They could decide to provide a match for 2008. Could the two plans be aggregated for coverage purposes for the match? One plan year is short, the other is 12 months, but they both end 12/31/2008.

A 401(k) plan has been filing Form 5500-EZ. The owner hired an employee who has become a participant in the middle of the plan year (7/1/09). Can he file Form 5500-EZ for 2009 since there was only one participant on 1/1/09 or will he have to file Form 5500 since the plan benefitted someone other than the owner in 2009?

With so much focus on failed banks lately, what happens to the benefit plans when a bank is taken over? I am assumiong without a plan sponsor, they would all be terminated, but who would handle the wrap-up & actual terminations of the plans? A 401(k) with no outstanding issues would be relatively easy to shut down, but what about a frozen DB plan with outstainding liabilities or a self-funded helath plan w/ COBRA participants? Anyone know how this would be handled or what has been done in the past?

The pension professional at our firm did not have the defined contribution plans amended for the final 415 regulations.

That professional is no longer with firm.

My understanding is that the 415 amendment should have been done by the due date of the tax return for the fiscal year beginning on or after 7/1/07.

So this indicates to me that many of our plans may not have amended their plans by the deadline.

My speculation is that the prior pension professional might have intended to amend for 415 at the time plans were restated for EGTRRA. DC plans need to be amended for EGTRRA by 4/30/2010 so it is conceivable to be timely for EGTRRA restatement but late for 415 amendment.

Am I missing something here?

What remediies are suggested?

Thanks.

Is the 2009 Form 5500 available yet?

For an off-calendar plan, what is the compensation to look at when identifying an officer who may/may not be "key".

Section 409(h)(3) states that the put option requirements do not apply in the case of a "plan established and maintained by a bank (as defined in section 581) which is prohibited by law from redeeming or purchasing its own securities."

What type of bank would be prohibited by law from redeeming or purchasing its own securities?

Thanks.

I know this may be a stupid question, but I've got "restatement brain"...

I have a 401(k) plan that wants to terminate. No participation, no money, etc. etc.

What notice do I give to the participants saying that they can no longer defer?

Thanks!

Does anyone have experience working with primerica as an investment advisor on a retirement plan? My impression of them has always been one of aggressive marketing tactics, usually to consumers with less than ideal credit. An arm of the company that works with plan sponsors on plan advisory services is unfamiliar to me. Thanks.

On June 26, 2009, Company B purchases the assets of Company A and hires its employees. Company A ceases operations soon after. Company A sponsored a Safe Harbor plan and did not deposit the SH nonelective contributions for 2009. Company B tells me that the purchase agreement removes them from all liabilities of Company A's plan and that no nonelective contributions will be made for 2009. The Trustee of Company A's plan now works for Company B.

What implications if any are there for the Trustee of Company A's plan? This seems to now be an orphan plan. Does the requirement for the SH nonelective now go away? I appreciate any insights into this matter.

I have a 12/31 YE safe harbor nonelective plan with the standard 21/1 YOS, entry semi-annually.

This is a takeover plan for us, and I noticed that last year (2007 PY) some ineligibles were allowed to defer, and thus were allocated the SH NE contribution.

I figured that, although some STILL aren't eligible, that since they also deferred in 2008, I'd allocate the SH NE to them this year too, since they received it last year.

BUT, for some of the ineligible inclusions in 2008 who deferred, should I also allocate a SH NE to them too, or count them as being exludable EEs?

The client does not want to amend the plan for earlier entry/eligibility.

I know that if the plan DID allow for non-statutory entry/eligibility, that I would not have to allocate the SH to the exludables.

Thanks for the help.

Plan document states that deferrals should be taken from bonuses. If that does not happen, how is it corrected? Are deferrals taken from next paycheck or skipped or returned from participant?

before 'going under' a prior TPA calculated 2007 cross tested contribution.

during this time the company with the plan switched ownership.

the prior owners paid the contribution to the new owner under the assumption it would be paid to the plan.

thus it ended up in an escrow account and wasn't deposited until December 2008.

so, is it simply late and therefore, even though for the 2007 year you have to use use 2008 comp to determine the 415 limit?

Regs. 1.411(d)-4, Q&A-2, subparagraph (d)(1) provides an ESOP exception to the protected benefit rules. "The employer eliminates, or retains the discretion to eliminate, with respect to all participants, a single sum optional form or installment optional form...."

QUESTION: Does this also allow the employer to change the commencement date of payments in the event of termination of employment from the end of the plan year in which the separation occurred to the year after the close of the plan year which is the fifth plan year following the plan year during which the participant separated from service?

Any thoughts on this and on (d)(2)(ii) of this same Q&A-2 (which seems to impose quite an administrative burden) would be appreciated.

If this has been discussed in the past, and a conclusion reached, please give me a link to that discussion.

In the past, we have utilized the same criteria to determine HCE as we used for the 401-K plan, therefore only pulling information once and using it for both tests. Since our plan year runs on a 7/1 to the following 6/30, we are preparing to do the year end testing. However, in the cafeteria plan regs effective 1/1/09, it defines HCE as :

"Any individual or participant who for the preceding plan year (or the current plan year in the case of the first year of employment) had compensation from the employer in excess of the compensation amount specified in section 414(q)(1)(B), and, if elected by the employer, was also in the top-paid group of employees (determined by reference to section 414(q)(3)) for such preceding plan year or for the current plan year in the case of first year of employment)."

Current plan year if the first year of employment is ignored for testing our 401K and pension plan. Is this a change in how the testing for flex spending plans is done?

I currently have a end of the year cash balance plan. The AE interest rate is the 30 year treasury with a 3 month look back. The interest rate for crediting interest is also the 30 year treasury.

How complex would it be to change from the 30 year treasury to 417(3) 3rd segment rate?

I have a Floor Offset arrangement where the DB and the DC plans are both effective 1/1/08, but the DB grants one year of past service credit to 1/1/07. My HCE will be at 1/10th of the $ limit both at the beginning of year and at the end of year after the offset of the 12/31/08 DC contribution. I'm doing an end of year valuation. The other participants have accrued benefits at 1/1/08 since there is no offset at that time ( and therefore have A TNC) but are completely offset out by 12/31/08. (i.e. one years DC contribution exceeds 2 years of DB benefit accruals. I therefore am getting a FT at 12/31/08, a cushion amount based on the FT, and a negative normal cost equal to the FT for all those participants who were zeroed out at the end of the year. I don't beleive that 411(b)1(g) protects the accrual at the begining of year ,yet am uneasy about a negative normal cost and the fact 'm getting a cushion amount on benefits that are zeroed out by years end.

Has anybody run into this situation before?

Any help would be appreciated.

Thanks in advance

Sam

Company seeks to adopt an adoption assistance plan. Does the plan have to have its own plan document or can it be part of the cafeteria plan document with the adoption ssistance plan having its own SPD? The plan currently has a main plan document with SPDs for domestic partner benefits, life ins., etc. Also can the plan be instituted mid plan year or does it have to begin with the start of a new plan year? Thanks.