I'm having a brain cramp. I remember that for small plans, there was an alternative to the long form SAR language in 2520.104b-10.

In lieu of preparing a full SAR, a Plan Administrator could distribute a notice that said a copy of the entire 5500 would be supplied on request. Another alternative was that a copy of the 5500 could be provided in full in lieu of preparing an SAR with the long form language.

I see that as late as 2007 TIAA-CREF was advising that these alternate approaches are still permissible. I just can't find the language in 2520.104b-10 anymore. Are my regs out of date, or is this small plan alternate rule to the full SAR in another location? Or, are these alternatives no longer available for small plans?

Thanks.

I'd be very interested to hear others thoughts on this one....

Our DB plan has recently (in the last couple of years) had a dramatic increase in the number of child support QDROs issued with respect to the plan. Most of these QDROs are not handled by attorneys but rather handled by child support enforcement officers and signed by the AG's office of the particular state. Certain of these QDROs call for back child support in a lump sum amount. (We require them to clarify that they actually want a portion of the PPT's accrued benefit which, if converted to a lump sum, would = [blank]). Some of these also call for a future monthly payment that represents what the court deems to be reasonable future support.

The plan has very detailed QDRO procedures that are given to APs (or their reps) upon notice of a proposed QDRO and freezes the PPT's benefit upon any type of notice that we are expecting a proposed QDRO, and we do not release the freeze unless it is 100% clear that no QDRO will be issued, the parties sign a notarized consent to that effect, or of course until the QDRO is qualified and processed. These procedures also clearly state that no payments under any QDRO will begin until (1) the plan issues a letter qualifying the order; (2) sixty days passes, during which time the parties can review the plan's interpretation of the order and object if necessary; and (3) the AP requests and completes election forms from the Plan administrator.

When we are in the stage of reviewing the proposed DRO and giving comments to ensure that it qualifies under the terms of our plan, we always make sure to remind APs of the fact that payments won't be made until the plan's process is complete, so that they can take that into consideration in determining the appropriate amount to be assigned. When an order calls for an "immediate payment", we ask that they change that to "payment as soon as administratively possible after the Plan qualifies the Order as a QDRO". Accordingly, if the June 1, 2009 order calls for a $5,000 lump sum (representing back support), and $500 monthly payments (representing future support), and that language is in the order, the plan will begin to make those payments as soon as possible following the administrative process discussed above (approximately September 1, 2009). Accordingly, on 9/1, AP will get a check for $5,000 and a check representing September's $500 payment.

This recent influx of these types of payments (in most other cases the AP only wants a lump sum) has us wondering whether the plan should be segregating the "future" monthly payments as of the date of the initial DRO under the 18 month rule. This is due to the language in IRC Section 414(p)(7)(A) (paraphrasing) "During any period in which the issue of whether a domestic relations order is a QDRO is being determined by a plan administrator, by a court or otherwise, the plan adminsitrator shall separatelyu account for the amounts which would have been payable if the order had been determined to be a QDRO " In that case, the $500 monthly payments should have been segregated as of June 1, 2009, and as of September 1, 2009, the AP would get the $5,000 lump sum, a payment of $1500 representing the three months of monthly payments, and a check for $500 for September. However, this seems inconsistent with my understanding of the 18 month rule, and perhaps more importantly (given the ambiguity regarding the interpertation of QDROs) contrary to the precise language of the order. If the language of the order contemplates the plan's review process and therefore payments are not "required to be made under the order" until that review process is complete, does the plan still have a responsibility to segregate those three months and pay it out, notwithstanding the terms of the order?

Sorry for the long post, and thank you for any thoughts.

501©(3) employer (that is not otherwise excepted from ERISA coverage) provides for a 403(b) deferral-only plan and is "hands-off" in such a way that it should be eligible for the ERISA exception under DOL reg 2510.3-2(f). (I recognize there are many pitfalls with this, but assume the exception would apply here.)

In preparing its plan document, the employer wants to provide that loans and hardships are not allowed under the plan. The only motivation for this is to avoid having to take discretionary action that would trigger ERISA, as the vendor will not agree to administer hardships and do everything required to administer loans.

Does the employer's decision not to allow hardships/loans violate the ERISA exception, by virtue of the employer exercising some discretion in "plan design"? This would seem to be a bad result, as the employer is trying to avoid ERISA application, but I welcome any thoughts.

A self-funded health plan has received uncashed claim reimbursement checks from the Claims Administrator. The cover letter from the TPA advised Plan Sponsor (Employer) that this unclaimed property may be subject to state escheat laws. The information I've been able to obtain regarding this issue is conflicting.

I have found documentation of 2 old lawsuits involving Aetna and BCBS in which it appears that the escheat laws are NOT preempted by ERISA. However, other commentary seems to indicate the generally accepted practice is to consider the funds forfeited and returned to the plan to apply against future plan costs (claims).

Can anyone please offer guidance or resources regarding this issue?

Thanks in advance,

Benny

I have tried so many ways to all his bosses and retirement places w/no help how to get what is do me. I am exhausted and having such difficulty. I need help w/different avenues before he wipes it all out! :angry:

I have a plan that the TPA thinks has always been a prototype (since 1976). Effective March 1, 2008 (fiscal year plan), I restated the plan as a volume submitter with one modification since the TPA only does prototypes. I have restated it effective March 1, 2009 on the same volume submitter with the one modification for EGTRRA. Does anyone know if I am going to have to produce the complete trail of plan documents to get a determination letter. The plan has never had a determination letter.

I have a plan that had several ACP excesses for 2007 that were forfeited instead of paid out. The people were not 0% vested (some were not 100%, but all were partially vested, at least).

What is the remedy? Are they paid out of the forfeiture account, plus earnings from the date the distribution was done? And is the ER on the hook for the 10% excise tax? The money was taken out of the HCE accounts, just not out of the plan.

Your thoughts are appreciated.

(The forfeitures were done before 3/15/08)

I have a safe harbor plan with a SHNEC for a clinic that excludes the employees of the hospital, which is a related employer ie they are a controlled group. The hospital has a profit sharing plan, which is not safe harbor. The clinic plan is failing coverage due to all the NHCE's in the hospital. RPT is like 50%. What happens in this scenario when one plan is a safe harbor and the other is not? Can you aggregate them for coverage, or does the safe harbor plan always have to pass on its own? Forget coverage testing for deferrals because the hospital has a 403b plan and so the clinic 401k plan can exclude the 403b plan from coverage for purposes of the 401k feature (1.410-b)6)(g))

Can the safe harbor plan be amended to include additional NHCE's from the hospital plan so that it passes RPT? I think it would need to be amended this year, or the entire safe harbor is blown and you would have to do a VCP filing?

Does anyone have experience with this?

IRC 4980(d)(2)(A) defines a qualified replacement plan as one in which at least 95% of the active participants in the terminated plan who remain as employees of the employer after the plan termination are active participants in the replacement plan.

I have a client whose terminating defined benefit plan only covers employees in a division that was shut down over 10 years ago. There are no active participants in the terminating plan. However, the employer does sponsor a 401(k) plan that covers current employees. Can they transfer the surplus assets in the terminating plan to the 401(k) plan and avoid the 50% excise tax?

We want to find out if other employers with Davis-Bacon contributions to their retirement plans have the same plan design as we do. Our plan is designed so a participant's wages are split into Davis-Bacon and non-Davis-Bacon wages. A regular profit sharing contribution is made that is a flat percentage of non-Davis-Bacon wages. The contribution on the Davis-Bacon wages varies according to the required fringe for each Davis-Bacon job. Do other plans just include the non-Davis-Bacon wages when calculating the profit sharing contribution like we do? Or do you include all wages in that calculation?

We have never signed the Form 5330 as paid preparers. Do other TPAs sign this form as paid preparer? If so, what liability does this open you up for?

We have a client who intended to have a non-Erisa 403(b) Plan. The plan operates as a non-ERisa plan and meets all of the non-ERISA 403(b) requirements.

Upon review of the plan document, the plan document states that the Plan is covered by ERISA.

The client wishes to avoid filing 5500s (and having an audit). My question is, can I restate the Plan as a non-ERISA plan now?

Thank you!

This Q&A was just published in the benfits link newsletter. If a plan uses the safe harbor standards for the hardships, this letter suggests that a participant would be required to take a loan before a hardship even if it would increase the hardship (i.e., disqualify the participant from obtaining a mortgage to buy a home). But they also said this at the very end:

On the other hand, there is commentary that suggests the regulations do not require a participant to take counterproductive actions under either a safe harbor or a non-safe harbor hardship standards.

Does anyone know what commentary they are referring to?

http://benefitslink.com/modperl/qa.cgi?db=qa_401k&id=93

Can a a participant roll over his after-tax account (cost basis only) to a Roth IRA this year regardless of income or would he have to wait until 2010 when the compensation limit goes away? The idea is to roll the cost basis over now to the Roth IRA and the earnings from the account to a Traditional IRA wiht his other taxable accounts

Has anyone seen/heard anything about IRS regulations or the IRS' position currently on whether a covenant not to compete will work as a substantial risk of forfeiture in a 457(f) plan?

A plan has a plan year that ends 7/31/09.

As of 8/1/08 the AB was 20k after 15 years of service.

As of 7/31/09 the AB is 40k.

The reason for the large increase in AB is due to a large increase in compensation.

So what happens is that the plan has no shortfall amortization, but a monumental target normal cost that is much more than plan sponsor wants to contribute.

If the beg. yr AB could be significantly increased to say 38k then the normal cost would be low and the funding would virtually all be a part of the shortfall amortiation thus reducing costs.

However, the 415 limit is only 22k at beg yr. so a large increase is not possible.

Of course this could be resolved if the AB at beg of yr and 415 limit at beg of yr. were able to b e based on the end of year avg comp but service at beg yr.

While the above probably isn't an option are there other creative ideas?

Thanks.

What are the ramifications of an employer failing to immediately respond to an appeal regarding COBRA premium subsidies? Say if the employer fails to respond within the 2 days upon receipt requested in the notice. Does anybody have experience with what the DOL does if the employer does not respond at all? Are there rules or more guidance with respect to the appeals process set out anywhere--I cannot seem to find anything other than the basic forms.

Our situation is one where we are advising employer that the individual is not eligible based on date of termination and that the appeal should be denied. Apparently some at employer do not want to be seen as actively working against the former employee and so some thought has been given to just not responding. I guess if I knew or felt the former employee had accurately described the situation and provided all documentation, that might not be so bad; however, in this case we have concerns with the way the employer is characterizing the termination / severance--i.e., employee is basically trying to claim amounts paid as severance reflect continued wages and pay as active employee which would carry him into eligible AEI period.

At the very least a nonresponse seems risky and possibly likely to invite additional DOL attention. At the worst though it concerns me that a nonresponse or non-explanation might be viewed as misrepresentation if the employer does not counter false employee claims.

Any guidance would be appreciated.

Form 5500 has the Schedule R which asks the question whether there was an election made under IRC 412(d)(2) [previously 412©(8) for retroactive amendments]. Since the 5500-EZ does not have a Schedule R does the 412(d)(2) election still need to be attached to the annual return (Form 5500) as explicitly required with the Form 5500 per Schedule R instructions ?

As the electronic distribution regulations say an employee has to affirmatively consent to receive benefits information electronically, are employers doing this? Or are any employers posting or sending out a notice saying distribution will be electronic unless a person opts out and gives instructions on how to opt out.

2-doctor medical practice sponsors a profit sharing plan.

Doctors are the trustees; employer is plan administrator

Participants have self-directed individual brokerage accounts.

Plan allows for plan loans and hardship distributions.

No other inservice distributions are allowed

In 2007 one doctor took $59,500 out of his account as a plan loan.

Repayments were deposited into plan account in 2007 in amounts sufficient to restore excess loan amount and pay interest.

Loan balance at 12/31/07 was $46,940

No loan payments were made in 2008.

In November 2008, same doctor took out an additional $25,000 loan from his account.

The first loan is in default (no payments in 2008), but can a fiduciary default on a loan?

Any suggestions on how they can fix this plan - VCP, VFC?