Have a client who wants to designate his spouse as the primary beneficiary of his 401(k) account. No problem.

Next, he wants to name his daughter as contingent beneficiary if she is age 18 or over at the time of his death. Otherwise, benefit would go to a trust established for the daughter's benefit.

Anyone have issues with this?

Has anyone seen or willing to admit understanding how to value 415 lump sums when segmented interest rates are involved?

For example, assume the interest segments are 4.5%, 5% and 5.5% (funding). Now, a 62 year old retiring at 65 has a maximum benefit and the stream of payments begins discounting using the 4.5% for 2 years commencing at 65, 5% for 15 years and then the 5.5% for the remainder. The 415 lump sum limit is computed using 5.5% for all years. Which present value stream is adjusted OR am I missing something??

Is this requirement satisfied if the participant receives an annual or quarterly benefit statement or do they still need to receive a separate "Notice of Deferred Retirement Benefit"?

Thanks!

Does the Creditable Coverage determination have to be made by an Actuary?

For a non-calendar year PS plan with annual valuations on say 7/31, if the RMD is paid after 7/31, we generally subtract it from the 7/31 balance before calculating the next year's RMD amount.

Consider a regular calendar year plan and a participant reaches age 70 1/2. Say participant is paid next yr prior to 4/1. For RMD calculation in next yr, do you subtract that first RMD paid after valuation date, similar to example above?

Example:

Balance 12/31/08 = $100,000

2008 RMD paid 2/1/09 (based on 12/31/07 balance) = $3,000

2009 RMD calculated as:

Option A: $100,000 - 3,000 = $97,000 / 26.5 = $3,660

Option B: $100,000 / 26.5 = 3,774

Under ERISA Sec. 101(l)(1)(B), which I believe was added by PPA, the plan must disclose to a participating employer an explanation of how estimated WDL was determined, including "the actuarial assumptions and methods..., the data regarding employer contributions, unfunded vested benefits, annual changes in the plan's UVB..." Two questions: how much detail do plans generally provide for the "explanation"? and does the reference to "the data regarding" refer to employer contributions only, or to UVB and other items mentioned? In particular, does an employer have a right to all participant data to attempt to reproduce the plan's calculation of UVB?

I"m having a hard time understanding what a DC plan is allowed to do for a terminated participant who has left their account balance which has been greater than $5000 since terminating in the plan and the participant reaches the later of age 62 or normal retirement age. Can a plan distribute a balance at that time that exceeds $5,000 involuntarily at that age?

If a Profit Sharing plan (with no other contribution types) has not made any contribution whatsoever for at least 3 years, is it considered frozen and all participants would become fully vested? What if Forfeitures only have been allocated in that period?

What must laws must one amend a retirement plan after 12/31/06?

Actually, of course, the Pension Protection Act comes to mind.

http://www.irs.gov/retirement/article/0,,id=165131,00.html

http://www.irs.gov/pub/irs-tege/ppa_chart.pdf

If anyone recalls matters regarding the finer points of these amendments, feel free to reply.

Takeover 401(k) has a doc they say is Datair. It was signed in early 2007. The copy write date is "2002-2007". And the adoption agreement mentions EGTRRA vesting schedule.

I would appreciate anyone's opinion or direction on this question? Could this document be good for all of EGTRRA or do I need to restate it this year?

It is common for defined benefit plans to require participants pay $350 to obtain an updated statement of accrued benefits, once one has been provided for free in a given year? Would this constitute good faith compliance with FAB 2006-03?

Do we have guidance on how a rollover account in a DB plan is treated for 401(a)(9) calculation purposes. The calculation for the DB accruals is different now than for a DC account balance (years ago there was some support for calculating them on the "account balance" method).

So does a rollover from an outside plan within a DB plan get treated like a DC account balance for the calculation rules ?

We administer a 401(k) Profit Sharing Plan that allows for participant-directed accounts. A participant has attained NRA and will begin taking in-service distributions (S)he has a piece of property in the earmarked accont that was just appraised at $400,000. The participant also has a substantial amount of cash and mutual funds in their earmarked account.

The participant has elected to withdraw the property. In this case would the gross distribution be $500,000 (20% federal taxes = $100,000 plus the property worth $400,000) -- and is it required that the $100,000 in federal taxes be paid from the earmarked account since the funds are available in the account and since this is an eligible rollover distribution; or does the participant have the option to pay the taxes from his or her personal account (thus making the gross distribution $400,000 with zero federal taxes withheld)? Citations or any input on this would be very helpful.

Thanks!

Lots of problems here. Any comments are appreciated:

There is a 401(k) plan with a 6/30/09 plan year end. Safe harbor match contribution. In April, 2009, the employer decides he wants to stop the match. He never tells us (TPA). He claims he provided a 30 day notice stopping the match, but so far, he has not been able to give us a copy. I'm not sure where he would have gotten one from since we did not do one. Maybe the payroll company did one.

(1) If he did provide proper notice, can he stop like that mid-May? Does the documetn need to be amended as well? If he did a notice but not an amendment (and one was needed) is the cessation valid or is the employer on the hook for the rest of the plan year?

(2) Can he stop a safe harbor match in mid-year?

Thanks

A plan has an increasing benefit formula. At the beginning of the plan year, the AB equals $10 x YOS. At the end of the plan year, the AB equals $11 x YOS. The increase occurs in the middle of the year. This formula is from an amendment that has been effective for years, pre-PPA. The plan is a BOY valuation.

Assume a participant has 20 YOS at the BOY, AB = $200, and 21 YOS at the EOY, AB = $231. Does the entire increase go towards TNC? Does the increase get pro-rated, meaning PV $11 increase for TNC? I remember seeing something regarding if you have an amendment increasing benefits during the year that you would pro-rate the TNC. However, this plan does not have an amending during the year, it is just an increase in benefits from the plan formula.

How do you determine the funding for the plan year?

Back in 2004 the PFEA legislation was passed.

It included changes in connection with 415 lump sum payments.

It also required that DB plans be amended for PFEA by the end of the 2006 plan year.

I observe a one participant plan that of course did not make any pension payouts during 2004 and 2005.

This plan does not have a PFEA amendment.

Of course it will be amended for PPA, which includes the current 415 lump sum payout rules.

Does it seem necessary to add a PFEA amendment now?

Thanks for comments.

Particiant got a letter from the Social Secuity Administration saying he might have benefits from a plan we have administered since 2002. We have no record of him. The letter states he was reported in 1977. Of course he does not remember being paid anything. Client cannot find records back that far. Bank cannot find records - i.e. they have changed ownership etc.

Participant wants proof he was paid.

Any ideas how to deal with this?

Thanks

Pat

I have seen new plans created, either an EGTRRA 401k plan or a GUST DB plan, that include tack on amendments for PPA, 415 regs and in the case of DB plans good faith EGTRRA amendment.

When filing for an initial DL would you just file the Plan document with or without the tack on amendments?

Thanks.

I have a small plan for which I am doing the alternative reporting. There was a distribution in 2008.

The instructions say for the alternative reporting regarding Schedule R (p.9 of instructions): Identifying information and Part II. If I have nothing to report in Part II, do I still have to file it?

I have a plan that we report the Schedule I on a cash basis. At the end of 2008, there are three people with actual accounts.

The ER owes a 2007 top heavy contribution which is going to go to those three people plus another two people (and those two people are terminated). We have not reported the contribution on the Schedule I as a receivable (since we are filing on a cash basis).

For the participant count on Form 5500, do I put 3 account balances or 5 in 7(g)?