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.

I have read IRS Notice 2009-82 which included sample language for Plan amendments. The amendments speak about the RMD-eligible participant being able to choose whether s/he wants the distribution. Has anyone seen any sample language for that election form? Thanks.

Company X maintains a 401(k) plan. Participant C was born on 10/9/1940 and started receiving minimum distributions during 2010. On February 4, 2012, C dies. Under the RMD regulations, the lifetime RMDs end with the year of the participant's death even if the participant dies before payment for that year was made. This raises the following questions:

(1) To whom should the 2012 RMD be paid? and

(2) How should the 2012 RMD be tax reported?

401K plan document defines compensation as 3401(a) compensation. Also states that "compensation for any self-employed individuals shall be equal to such individual's earned income". In an LLC, which gives the owners a W-2 reporting wages subject to self-employement taxes, and then also gives the owners a K-1 showing negative self employement income, is the owner's total self-employment income the net of W-2 and K-1 self employement income? (obviously the answer is yes). I know that an LLC should not really be giving owners W-2 wages - but it happens. Now, situation is that owners have been allowed to defer on W-2 wages and the ADP testing has been done using W-2 wages. Now, in September, we are getting the K-1s and have negative self employment income. Surely this happens all the time. What is the correct solution? Can you point me to an ERISA reg?

Thanks!

Double post found here: http://benefitslink.com/boards/index.php?s...mp;#entry187400

Is there any issue with changing the NRA in a defined contribution plan from age 55 to age 60? THis plan has a distribution requirement at NRA(no earlier) and former participants payout date will now be extended another five years. It doesn't seem like an cutback issue because the benefit is not being reduce - the availablility to access the distribution has been delayed. THis is similar to loan and in service withdrawal features. I look forward to your feedback. Thank you.

401K plan document defines compensation as 3401(a) compensation. Also states that "compensation for any self-employed individuals shall be equal to such individual's earned income". In an LLC, which gives the owners a W-2 reporting wages subject to self-employement taxes, and then also gives the owners a K-1 showing negative self employement income, is the owner's total self-employment income the net of W-2 and K-1 self employement income? (obviously the answer is yes). I know that an LLC should not really be giving owners W-2 wages - but it happens. Now, situation is that owners have been allowed to defer on W-2 wages and the ADP testing has been done using W-2 wages. Now, in September, we are getting the K-1s and have negative self employment income. Surely this happens all the time. What is the correct solution? Can you point me to an ERISA reg?

Thanks!

I just got off the phone with a client who is being confused by his broker. The broker asked me for a plan termination cost quote on this client's plan last week. When i spoke to the client today, he said the broker told him to terminate the current plan and open a new one (somewhere else, I guess). The plan is a plain 401(k) that has deferrals & rollovers. It covers the owner and his spouse, and doesn't have enough assets to have to file a 5500-EZ.

Isn't there a time period that you have to wait before you can create a new plan after terminating the old one? I thought it was 2 years, but I am having problems finding that in the ERISA Outline book....

So, here's the situation and I just do not have time to look up the ramifications of what the attorney is doing, considering the time of year and it's not a calendar year plan.

Have a non-calendar profit sharing, Sept. 09 year end. Have a calendar 401(k). The profit sharing plan had very large sums of money prefunded to it in order to prepare for the normal allocation they provide at year end. Here lies the problem, the company was bought out and for other reasons, they can't allocate that money and we're talking about a lot of money, 6 figures. They thought they would just pull it out, wrong. The attorney thinks it can be solved by mergining the profit sharing with an existing 401(k) (yes they were too separate plans, two docs...) and use that money to fund the match for the year.

My issue, the merge into the 401(k) is after the money was already deposited. Suggesions? The attorney also wants to 100% vest the profit sharing as of the prior plan year in order to maybe make this look a little better in the eyes of GOD aka IRS, DOL.

I have a conference call today and I need someone to help me find why this is not okay so that I have regs in front of me.

Thanks as always.

I have an Employer that sponsors a small 401k Plan (23 accounts, $2.9M in assets). The Employer was recently purchased by another company and the decision was made to terminate the plan and distribute the assets. The Employer currently pays to have a Directed Trustee (who is also the recordkeeper). When informed of the impending plan termination the Trustee said they must have either 1) an FDL via 5310 filing; or 2) an indemnification letter from the sponsor before they will distribute assets to the employees. The sponsor refuses to do either. He doesn't want the employees to wait for the FDL and he refuses to sign the indemnifciation letter. He floated the idea of amending the Plan to remove the directed Trustee and name himself Trustee of the Plan. Seems too simple a solution so I thought I would see if anyone else had run into this situation before and what their experience was. Anyone have any comments regarding this situation? Any advice would be appreciated!!!

Our benefit plans will be renewed on 1/1/10. This new Illinois Law will be effective for us at that time. How are other Illinois employers, that can share with me, how they are determining the cost for those dependents, if the full cost is not paid by the employee? The law seems "cut and dry" but I don't think that is the case.

I got a call from a 501c3 orginaztion who has had a 403B with Mutual of America ( employee deferals only ) for many years. - About 30 employees out of 50 participate.

They are getting mixed recommendations about whether to stay as a non erisa plan or change to an erisa plan.

Can anyone give some pros and cons on each ?

Thanks

A Group of Professionals created a Muti-employer DC and DB Plan; each Professional had a individual LLC/PA (which was his employer); a Main LLC employed the Staff; all the individual LLC/PAs, were members of the Main LLC.

Each of the individual PAs, were Participating Employers in both Plans (and signed the appropriate Adoption Page).

My PA membership in the Group was terminated 1 year ago, by the Group; adding insult to injury, they want to keep the non-vested (contributed by my PA) portion of both DC and DB Plans (3-year cliff vesting).

I have since, joined another Group, which has a DC Plan only.

After reading the Plan documents, I found this clause:

Discontinuance of Participation by a Participating Employer. A Participating Employer may discontinue its participation

under the Plan at any time. To document a Participating Employer’s cessation of participation, the following procedures should

be followed: (1) the Participating Employer should adopt a resolution that formally terminates active participation in the Plan

as of a specified date, (2) the Employer that has executed the Employer Signature Page of the Adoption Agreement should

reexecute such page, indicating an amendment by page substitution through the deletion of the Participating Employer

Adoption Page executed by the withdrawing Participating Employer, and (3) the withdrawing Participating Employer should

provide any notices to its Employees that are required by law. Discontinuance of participation means that no further benefits

accrue after the effective date of such discontinuance with respect to employment with the withdrawing Participating

Employer. The portion of the Plan attributable to the withdrawing Participating Employer may continue as a separate plan,

under which benefits may continue to accrue, through the adoption by the Participating Employer of a successor plan (which

may be created through the execution of a separate Adoption Agreement by the Participating Employer) or by spin-off of the

portion of the Plan attributable to such Participating Employer followed by a merger or transfer into another existing plan, as

specified in a merger or transfer agreement.

Questions:1) since I did not officially discontinue participation, am I still a Participating Employer?

2) it seems that as an employee I can't take the non-vested funds, but as a Participating Employer, I can discontinue participation and move ALL the funds somewhere else; the question is where?

3) My individual PA, has no Retirement Plans of itself and since I have joined a new Group, I have no need to continue the individual PA (New Group has no individual PAs).

4) can I rollover both DC and DB funds, into my new Group Qualified DC Plan ? merger? (they don't have a DB Plan).

Complicated issue, but any comments or suggestions would be appreciated.