(1) Is anything in the works (under discussion in the IRS or Congress) to perhaps lessen the Lump Sum restrictions that will result when 2009 AFTAPs falls below 80% ?

(2) Is there any way to bring into the 2009 AFTAP calc the INCREASES in asset values since 1/01/09 .... to avoid a 2009 AFTAP< 80% ?

We're getting calls from plan sponsors about a report that Shephard Smith made today. They are concerned that they can't take money out of 401(k) plans anymore and I'm looking for information about what he actually said. I assume this was targeted at stable value funds that are being locked down, but am having trouble confirming.

If anyone saw this, I'd love to hear what the story was about!

I have a 12 participant profit sharing plan that acquired land as an asset 15 years ago. For the last 7 years, the land has been for sale. The state wanted to purchase the land as part of highway expansion but then backed out a couple of years ago leaving the trustees shocked. They have wanted to terminate the plan for about 7 years as well.

The plan also has an investment fund that is used to cover the administrative expense of holding the land until it sells. The investment fund has dropped to 1/2 it's value. The land is appriased for 2 million and there is $200,000 left in the investment account. We have two retirees and a recent death benefit claim. However the trustees need to conserve the investment account to pay for the $16K to $20K it costs to cover all of the ERISA requirements (annual appriasal, 2 million dollar bond, TPA fees) and local taxes.

So my question is, how do we legally cover the benefit cliams for our two retired people and our beneficiary without using up all of the cash flow needed to maintain the land until it sells? Worst case scenario is that it takes five more years to sell the land and thus at least $100,000 is needed in cash reserves.

Thanks.

Company A sponsors Plan A; Company B sponsors Plan B. After Company B buys Company A, Plan A is frozen and merged into Plan B. Company A employees begin accruing new benefits under Plan B. Normal retirement age (NRA) under Plan A was 62; Plan B's NRA is 65.

Plan B has been amended to provide that former Plan A participants fully vest in their frozen Plan A benefit at 62. Must Plan B also be amended to provide that former Company A employees retain the NRA of 62 with respect to Plan B accruals? If so, is that just for vesting purposes, or for all purposes where the Code triggers something at NRA (suspension of benefits, 411(b)(1)(H), top-heavy minimum contribution, etc.)?

This seems extreme, given that these are new accruals. On the other hand, not "lowering" NRA for the Plan A transferees would mean that each transferred Plan A participant would have two NRAs--62 for their frozen Plan A benefit, 65 for their new accruals. I can see an argument under § 411(a)(10) that the merger is an amendment lengthening the vesting schedule for Plan A participants with respect to post-merger accruals, as well as problems for the actuaries, but can't close the loop on whether two NRAs is flat out impermissible.

Thanks for any comments.

I am doing some research on the following scenario: Company sponsors self-directed 401(k) plan and wants to set up an LLC to hold land that would be leased by franchisees. 401(k) Participants would be given the option to invest in LLC through self directed 401k. The issues I am looking into:

1. Does the land meet the requirements of qualified employer real property as defined in ERISA 407? It meets the geographical dispersment requirement and no commissions would be charged on the transcations. Since it is in a participant directed account, it is exempt from the "10% of assets" rule. Does the fact that it is held in an LLC come into play?

2. Company wants to impose a $15,000 minimum investement in LLC option. My understanding of the nondiscrimination rules require the plan to test the number of participants with $15,000 or more, based on the first part of the average benefits test. If it passes this, the option is nondiscriminatory.

Any other issues I need to research further? Thanks.

Can someone tell me the difference and pros and cons of an HRA vs a MERP?

Thanks!

Full time participant (age 64) in a calendar year PS plan converts to part time in mid 2008. Total hours in 2008 are 800 so there is not a break in service. Rate of work in 2009 is about 400 hours and he no longer receives benefits. No distributable event since he has not been terminated from service. Does the change in hours make him eligible for a distribution of his account now? Or would working under 501 hours in 2009 make him eligible as of 1/1/10? Or is he simply not eligible until actual termination? Thank you.

A client has a balance in its forfeiture account that has accumulated over several plan years. The plan document allows forfeitures that have accumulated since the last anniversary date to be used reinstate previously forfeited accounts, pay any plan expenses, reduce employer contributions, or be realloacted among participants. Has anyone encountered a similar situation with respect to accumulated forfeitures that failed to be allocated timely, if so, how was the situation handled? Will the client have to go back several years and allocate the forfeitures in the years they should have been allocated, or is there an alternative method for handling this? Any suggestions would be appreciated. Thanks.

The 401(k) plan effectively terminated as of 12/31/08. No contributions have been made since that date and no new participants have been allowed to participate. In fact, the company no longer has employees, since the company was bought by another company that hired all of them. We are filing for a determination letter on June 30, 2009 and are not sure if the proposed termination date can be 12/31/08, or should we/can we use 6/30/09? Or does it even matter?

Thank you!

Does the DB and DC plan combination have to pass a comparability test from a rights and features perspective in order to permissively aggregate?

For instance DC plans can take a lump sum at termination of employment whereas a DB plan can only do it at early retirement and retirement?

Would this be a failure in the “features”?

Our company has now purchased two other companies. Both, including our site have 401(k) plans. It will be a controlled group situation. Can anyone share the risks and benefits of merging the three locations together under one plan? Is there a benefit other than the possibility of a reduced expense situation? Are there risks to merging these plans in a down market?

Really appreciate any helpful advice!

We have an individually designed plan that filed an 8905 that we are putting on a pre-approved volume submitter plan. It looks like we will need to use a separate trust agreement which we understand destroys reliance on a pre-approved plan. If this is the only change to the pre-approved plan, can we file a 5307 or do we need to file a 5300? If we file a 5307 and it goes through, do we get the 6 year reliance or are we still on the 5 year reliance for an individually designed plan? Any thoughts would be appreciated.

I have an ESOP that was timely submitted in Cycle B. To date, nothing has happened on the application. Does that plan receive extended remedial amendment protection with respect to any interim amendments required since the filing? If not, why not?

What is the proper order for credit balance adjustments for the following example:

COB as of 1/1/2008 = $100,000

MRC for 2008 $50,000

Discounted contributions as of 1/1/2008 $100,000 (contribution date 3/15/2009)

Actual Rate of Return for 2008 -40%

Effective Rate 6%

When does the sponsor need to elect whether or not to add the $50,000 excess contribution to the PFB?

Assume the sponsor elects to add the $50,000 excess to the PFB. What is the COB and PFB at 1/1/2009?

The AFTAP based on 1/1/2009 assets and 2008 contributions is 75%. Assuming COB and PFB are sufficiently large enough to burn to get to an AFTAP of 80%, does the mandatory burn take precedence over an election to use the COB or PFB to offset the MRC for 2009? In other words, can the sponsor make an election to use the COB and PFB to offset the MRC for 2009 before a mandatory burn takes place for the AFTAP?

Is 1099 compensation includable for retirement plan purposes? Plan Doc defines comp as W-2. what if employee was independent contractor and then hired full time midway through the year? do you only take into account his full time W-2 compensation?

I am working to put together a report on the history of retirement plans from the beginning of time. Does anyone have a good link or know of a good book or two that could help me put this report together? Thanks for your help!

A plan has a fiscal and plan year of 6/1 to 5/31. And the limitation year is the plan year.

The 415 regs are effective April 5, 2007 and apply for limitation years beginning on or after 7/1/07.

So this means to me that the 415 regs apply for the specific plan above for the plan year beginning 6/1/08.

The plan was terminated as of 5/31/07 and assets distributed 4/7/08.

First question is did the plan need to be amended for the final 415 regs? Since the regs were effective 4/5/07 (prior to date of plan termination) it seems that there is no harm if a plan amendment adopting the 415 regs was signed. Of course they would never apply since the plan assets were distributed prior to the date the rules appply (i.e. 4/7/08 versus 6/1/08).

Regarding application of the remedial amendment period:

My understanding is that the remedial amendment period for the final 415 regs is up until the due date of the filing of the 2008 tax return. The 2008 fiscal year ends 5/31/09 and thus isn't even due yet. So does this mean that an amendment is not required until for example 8/15/09 (due date w no extensions) to avoid disqualification and thus really never had to be doen for this plan?

Thank you.

I have several questions regarding the treatment of the otherwise excludables....

Plan information: 12/31 PYE, Prior Year Testing Method

I need to rerun the 2007 ADP/ACP Test. Since we are beyond the 12 month correction period, I believe I can not disaggregate the otherwise excludables into a separate group. Since the plan uses the prior year testing method, what averages do I use? In 2006, the plan did apply the otherwise excludable option. Do I now need to do a weighted average to adjust the 2006 average to be used in 2007.

In addition, since I am not allowed to disaggregate for 2007, how does that impact my 2008 test? For 2008, can I disaggregate?

Any help would be appreciated!

Has anyone used the DOL's online payment system for the DFVC Program fees? I'm not even sure if I want to mention it to a client as an option, not having tried it myself.

Thanks!

For 1 our unions, a spousal surcharge of $150/month goes into effect for 2010 for anyoen who has a spouse who has coverage with their employer but the employee still wishes to cover the employee on our plan.

Does anyone have a certification/affadavit sample form to use for this purpose?

Much thanks!

Lexy