A union collectively bargained for an employer contribution on behalf of it 70 ee's employed at Company A.

Multiple questions:

1) Can the union sponsor the plan for that collectively bargained contribution? basically Company A does not want to deal with the plan and part of the agreement was that they were to fund the plan, not sponsor or admin.

2) Can the plan be a SEP? even though it is 70 ee's the ER contirbution is not much.

Which sources dictate this?

The applicable period for determining whether a partial termination has taken place is generally the plan year, but it can be expanded if the RIFs that span that greater period are related to the same corporate event. If a business has been faced with economic hardship for a 3-year period and made numerous RIFs during that period, would that be enough to link all those RIFs together for purposes of determining whether the 20% threshold has been exceeded?

I have a client that is retiring at the age of 74. She has a cash balance plan that is saying that they need to calculate the RMD prior to distribution and then the RMD can not be rolled to her IRA. This part I get. My question is, does the Worker, Retiree and Employer Recovery Act of 2008 that was signed into law in late December relieve the employer from this calculation? All RMD's from defined contribution plans are not required but I can not find anywhere if this pertained to cash balance plan rollovers.

Please direct me to where I can find the answer.

Randy Green

We have a new plan (no previous 5500) as of 1/1/08 and the total eligible participants as of 1/1/08 is 116. Does the 80-120 exception apply to file as a small plan or does it only apply for a plan to continue a previous years filing status?

If a dc plan offers a QJSA if married and a life annuity if unmarried, is the plan automatically subject to the QJSA rules?

If a dc plan provides as the normal form of benefit a 50% survivor annuity, is it subject to the QJSA rules such that it also has to provide a QOSA (ie, a 75% survivor annuity)?

I understand that the plan could be amended to eliminate annuities entirely.

Thanks in advance for any comments.

NHCE-1 accrues a benefit of 5% in a cash balance plan resulting in a cash balance of 8% of compensation. An older NHCE-2 accrues less than 1%. Therefore, we have to provide him with a TH minimum of 2%. As a result, his cash balance in the year is 12% of compensation. Does the plan have to provide NHCE-1 with a cash balance equal to 12% of compensation?

I have found other strings on here that discuss plan loan defaults, but none with just these facts, and none post PPA '06.

So here goes, for any one who might have opinions/insight:

-A 401(k) Plan provides that plan loans "will be repaid by payroll deduction."

-Minnesota employee now wants to revoke authorization for payroll deduction (based in my research, employee must consent under state law to deduction, and has right to revoke authorization).

-Employee has been told that taxes/penalties are involved if loan because a 'deemed distribution' and does not care; still wants to cease payroll deductions (and has no other plans to repay loan).

-Employer does not want to permit cessation of loan repayment by payroll deduction.

Questions are:

-Is state law the final answer here?

-I know that PPA amended ERISA to preempt state wage laws with respect to contributions to plans for automatic contributions - is there any chance that preemption could also apply here?

- I spoke on the phone with an EBSA representative, and he didn't seem to have a concern that this kind of default, in an individual account setting, raises an 'adequate security' problem such as to jeopardize the plan loan prohibited transaction exemption.

- The 1.72(p)-1 regs (see, e.g. Q&A 19(b)(3) anticipate that revocation of a payroll deduction authorization would result in a deemed distribution, although the example there is limited to subsequent [or second, post-default] loans, for which payroll deduction is mandatory). Since, per the plan terms, payroll deductions are mandatory here, too, I think this applies and anticipates that the employee has the right to revoke. Of course, these regs pre-date PPA '06, so I'm still not clear on if there's any chance of a preemption argument now.

-What about not following the plan terms if the repayment stops. I guess at that point, loan is recharacterized as distribution, so plan terms aren't technically violated?

Any thoughts on a clear answer about whether employer has to honor the request to stop the payroll deduction for repayment?

eprcs has the correction but they say to include earnings. is this actual earnings or is this some rate in the regs?

How can I estimate the interest premium under Section 409A? I am particularly concerned about the interest rate that is used for such calculation. I realize the rate used is the underpayment rate, which under Section 6621 is federal short term rate plus 3%, but I am trying to determine how that rate is applied, whether it is compounded daily, and whether IRS publishes an annualized rate.

Reg 1.401(a)(9) - 6 indicates that if any portion of a participant's benefit is not vested as of December 31 of a DISTRIBUTION CALENDAR YEAR, the portion that is not vested will be treated as not having accrued for that distribution calendar year.

This seems to indicate that when determining periodic RMD payments for an upcoming year, we have to assume the participant (if not already fully vested) will have an increased vested benefit by year end and increase the payments accordingly. What happens if the participant falls just short of 1,000 hours and does not get vesting credit? he would have been paid too much.

Am I interpreting this wrong?

If not, it sure would have been better to be able to base your current year RMD payments on the vested accrued benefit as of the immediate preceding 12/31.

Employer adopted 401(k) and safe harbor on Corbel adoption agreement with a special effective date of 7/1/09. Plan itself has a 1/1/08 retroactive plan effective date, is there a short plan year from 7/1/09 through 12/31/09. IN other words, are we prorating the 401a17 compensation limit (in half) for the half year the participants are eligible to calculate the safe harbor contributions?

Tax on the trust income due to plan disqualification; do all earnings of the trust turn taxable, not just those earnings traceable to the contribution made in the year where disqualification occurred? What official citation would support this?

I do not refer to a case of a rollover of unqualified assets, but a case of losing qualification due to other circumstances.

A law firm client maintains two 401(k) plans. The first covers just associate attorneys and only provides for elective deferrals. The second covers partners and staff and provides for elective deferrals and profit sharing contributions. It appears that the partner/staff 401(k) plan does not satisfy Code Section 410(b) Here are the numbers:

40 HCEs benefit under partner/staff 401(k) plan

147 total NHCEs (47 are associate attorneys)

100 NHCEs out of 147 NHCEs benefit under the partner/staff plan with respect to 401(k) deferrals

Ratio is only 68.03%

Any idea as to how we can pass? If we aggregate plans and aggregated plan is top heavy, the client would need to make a top heavy contribution to associates ... not a good solution.

Thanks in advance. Ed

Things haven't gotten much better for me lately. I am planning on moving back home to Florida to be closer to my family. At this point, I have come to terms with the fact that I’m probably going to have to file for bankruptcy.

However, after reading this article, I really want to think this through and find out how to get the best “deal” (as much of a deal as you can get from going bankrupt..).

I am planning on taking the article’s advice and consulting with my California lawyer, but thought I could try to get some other opinions first, especially since I won’t be able to consult a Florida lawyer until after I make the move.

Which state’s bankruptcy laws are more favorable, California or Florida? And if Florida, any locals know of a trustworthy Tampa Bay attorneys I can consult with?

A nonspouse beneficiary can roll over through direct transfer a distribution to an "inherited" IRA.

A participant can roll over a distribution of pre-tax contributions to a Roth IRA.

Can a nonspouse beneficiary roll over through direct transfer a distribution of pre-tax contributions to a Roth IRA?

A nonspouse beneficiary can roll over through direct transfer a distribution to an "inherited" IRA.

A participant can roll over a distribution of pre-tax contributions to a Roth IRA.

Can a nonspouse beneficiary roll over through direct transfer a distribution of pre-tax contributions to a Roth IRA?

I was contacted today by a fellow attorney who learned that a 401k plan he set up in the 1990s has never had a Form 5500 filed by the employer's accountant.

The DFVCP of EBSA immediately comes to mind. It is a small plan, so the cumulative penalty will cap out at $1,500. However, I'm concerned that it might take two to three months to locate the necessary information for those years' Forms 5500 to be prepared, before we can then formally file the DFVCP application (along with the fee of $1,500).

In the meantime, is there a way that I can put the DFVCP office on notice that we've found the problem ourselves, are voluntarily coming forward, but need a few months' time to prepare all the Forms 5500? I want to do this to 'inoculate' the situation against possible detection in the interim by the DoL/IRS outside the voluntary program, under which circumstance the government agency might assess devastating financial penalties.

Also, what procedure is there to avoid IRS late penalties?

Plan is daily valued w/match subject to vesting schedule.

When someone is paid out, non-vested amounts go to forfeitures on date of distribution of vested portion to employee.

Plan uses forfeiture account to pay admin fees.

Question-Document reads that forfeitures occur on last day of plan year. So do we have an issue? And volume submitter checklist we are working off of does not have option that forfeitures occur on day of payout so we'd have to change vs language.

The problem we see is that if we wait til last day of plan year, how can all expenses be paid on 12/31 and if they are not, can we really roll the forfeiture bucket to pay the next year's expenses???

Currently, Plan Sponsor files 3 separate Form 5500s for its H&W Benefits.

Wrap Document was drafted effective January 1, 2009 to consolidate into one filing for 2009 and forward.

What is the proper treatment of the 2008 filings for the 3 individuals Plans? I have received conflicting thoughts and wanted to see if anyone had a definitive guidance.

Should you:

Check Box B3 as a FINAL Return and Report 0 participants on Line 7? Under this approach, should you also show 0 participants on the respective Schedule A's or do you still want to give some acknowledgement to the fact that participants were covered during the year?

OR

Should you enter Code 4R on Line 8b - indicating plan will not file a form 5500 for next year pursuant to 29 CFR 2520.104-20 (i.e. will be less than 100 participants on January 1st of following year)?

Anyone have any published guidance?