Some argue ethics are ethics; others, that ethics are a function of how much money is involved and what's at stake.

The struggling not-for-profit IHELPU has a frozen DB plan covering 200 participants where the FT=$4 million and assets = $7 million. IHELPU engages you to conduct a plan spinoff/termination study so they can recapture the $3 million and stay afloat. You've been the actuary for the IHELPU pension plan for years and they've always paid you out of the pension trust, except the cost of FASB. You tell them in writing up front that the study will cost 35K and that further this is an expense that should be borne by IHELPU and not the pension trust. You complete the study and send IHELPU an invoice which states on it that this is not an expense that should be borne by the pension trust. You promply receive a check and low and behold it is drawn on the pension trust. You call the executive director and he says if you want to get paid, cash the check. You remind him of the agreement and caveat regarding the legal issues and he cries that IHELPU's cash flow is in the toilet.

You know that it could be two years or so before IHELPU enjoys the asset reversion if their Board even decides to proceed with the spinoff/termination. Just to compound the situation, your office rent is coming due and owing to this lovely economy, your accounts receivable are coming in slow. Times are tough and you've been pushing your credit limit. You also know that if you go above the ED's head to the Board that that will be the end of you (you can't even get to the Board without the ED's involvement).

Any comments other than I need more to do so I don't have time conjure up situations like this?

I have a DB Plan which currently states that Surviving Spouse gets QPSA on the first day of the month following death of Participant. The actuaries hate this and want the payment to begin "upon application" by the Surviving Spouse. Is there anything that would NOT allow me to amend the plan to allow for the payment to begin upon application (date of Surviving Spouse's choice) as long as I limit it as follows:

- must be allowed to commence no later than month in which participant would have attained earliest retirement age (1.401(a)-20 Q&A 22(a).

- must begin no later than the later of 12/31 of the year following P's death or 12/31 of year in which P would have been 70 1/2.

Any insight would be appreciated.

Thanks

Different ARRA question: "qualified beneficiary" is defined pursuant to federal COBRA law. "COBRA continuation coverage", however, includes federal _and_ similar state law.

In NH, civil union partners are eligible for state continuation coverage, but obviously not under federal COBRA (as a "spouse").

It looks, then, like an employer subject to the state-level law has to follow ARRA but a civil union partner (or same-sex spouse in some other states) of an employee of that employer cannot benefit from the subsidy (and that employer needs to be careful about filing for the reimbursement of the subsidy). Is that how others read the law? That is inconsistent to me, but I think that is where the wording leads us.

I'm 62, have been retired since May 2006 retired, am living with wife and two kids on my pension and occasional freelance work, total income was way below the low-side threshold for Roth contributions. In March of 2008, I made a 2007 Regular-IRA contribution and a 2008 Roth contribution. Since I didn't hold a full-time job, though, was I even eligible for the Roth contribution? For Tax Year 2009, if I don't have any income other than my pension or if freelance income is less than the $6000 max Roth contribution, am I eligible for making any Roth contribution?

Two more questions, please:

1) As part of my 2007 tax declaration I forgot to file the Form 8606 for non-deductible IRAs. Am I right to think that since ALL my Regular- and Roth-IRA contributions have ALWAYS been NON-deductible, the oversight doesn't really have tax consequences, so that I can just file an updated Form 8606 with my upcoming 2008 tax declaration to record the 2007 Regular-IRA contribution and, on a separate Form 8606, show my 2008 Roth-IRA contribution??

2) I was SO depressed last year about my stupid investing, I never even THOUGHT about paying to convert my Regular IRA into a Roth. Now, the nearly-all-eggs-in-one stock I have in my Regular IRA seems to be headed out of deep red into green after all, so now I'm kicking myself for failure-to-convert stupidity! My income hasn't changed and won't, so can I convert NOW, even though it'll cost more because the stock has gone up???

Thank you very much in advance for helping me out!

Heres the scenario.

Employee has 401K plan with Company A. Employee leaves company A to go to work for Company B. He leaves his 401K plan with Company A. Ultimately Company A aquires Company B and so Employee is back in service at Company A. He now has a 401K plan with Company B that will remain separate. The payroll systems of Companys A and B are still separate. Is Company A obligated to allow Employee to take a plan loan from the 401K plan he has with Company A pursuant to DOL language that loans must be "available to all such participants and beneficiiaries on a reasonably equivalent basis". I know the DOL has said that loans can be limited to parties in interest making it so that companies do not have to make loans to former employees. By being back in service wouldn't he be a party in interest again?

Thoughts?

I have a question for anyone who might be able to help. 2 people divorce. Court orders percent of PP to ex-wife. Her and attorney sends in DRO and the PA declines it and gives them X amount of months to re-submit. Ex and her attorney do nothing. Ex goes and files for bankruptcy 1 year later

(after divorce) and does not file exemption on her portion of pension?

12 years later, ex is back in court and wants the state judge to amend or modified DRO.... How would that work out? Can she still do that? What about not claiming exemption on bankruptcy? Would this fall under Anti-alienation provision in the fact that :

ERISA states this:

One of the very few exceptions to ERISA's Anti-alienation format was provided by congress in the 1984 amendments to ERISA known as the retirement equity act, and codified as 29 U.S.C 1056 (d)(3)(A). This exception established Qualified Domestic Relations Orders, called QDRO's.

The section distinguishes between NON-Qualified Domestic Orders WHICH ARE NOT EXEMPT from anti-alienation under ERISA, and Qualified Domestic relations orders, which are exempt.

If Not What do you do with the fact that there was no QDRO... (and still isn't) Ex filed Bankruptcy without exemption of her portion of pension....and now wants a judge to reinstate a new order?

Thanks in Advance

Has anyone ever designed a plan & received a favorable determination where eligible employees are named individuals (plan passes the 70% coverage test) instead of by job classification/ pay level etc?

A very large client was recently told by ADP that ADP is not able to handle Roth 401(k) contributions. Can anyone confirm that this is true? We find it hard to believe.

Thanks.

A client is attempting to test a DC / DB plan combination for the death benefit. This is because the DB plan has life insurance and defines the death benefit as PVAB plus face amount minus cash value (the HCEs are in this plan with a smattering of NHCEs necessary to pass coverage). The death benefit in the DC plan is obviously the account balance.

A couple of questions have arisen:

1 When testing a benefit, right and feature - does the plan have to pass the 70% test or a 100% test when comparing the NHCEs to the HCEs?

I believe the answer is 70% when looking at the 'availability' of a benefit on a current basis. However, I read about 'effective' availability which might be an issue

2 Is it a simple comparison of what is available now OR must it be like the most valuable testing and compare the death benefit at all ages and take the most valuable??

I could not help the client as I have never tested a BRF.

Any help that can be provided is greatly appreciated!!

Code S404(a)(3)(A)(iii) reads:

Certain retirement plans excludes. For purposes of this subparagraph, the term “stock bonus or profit-sharing trust” shall not include any trust designed to provide benefits upon retirement and covering a period of years, if under the plan the amounts to be contributed by the employer can be determined actuarially as provided in paragraph (1).

What would be an example of such "certain retirement plans" which is not a DB plan? Is a Target Benefit Plan such a plan?

I have a plan with a change in control provision that provides as follows: "a change in ownership of the Company occurs on the date on which any one person or more than one person acting as a group acquires ownership of stock of the Company that constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Company; provided, however, that the preceding clause shall not apply to any acquisition of stock by any current shareholder of the Company." A change in control triggers payment under the plan.

My concern is that limiting the definition to the acquisition of stock by non-shareholders is a 409A violation. Under the regulations, the definition can be limited by providing for a greater percentage, but excluding the acquisition of additional stock by current shareholders is not mentioned in the regulations.

It is my understanding that the IRS has informally indicated that a plan sponsor can limit the change in control definition to make it more restrictive to trigger a change in control. However, I can find nothing in the regulations that would permit such limitations. Does anyone have thoughts on this issue?

Does anyone know whether there has been any guidance on whether the Annual Fudning Notice is required in a terminated plan where all assets have been distributed and Final 5500 is filed?

The final 403(b) regulations contain the following anti-conditioning rule:

"An effective opportunity is not considered to exist if there are any other rights or benefits (other than rights or benefits listed in §1.401(k)-1(e)(6)(i)(A), (B), or (D)) that are conditioned (directly or indirectly) upon a participant making or failing to make a cash or deferred election with respect to a contribution to a section 403(b) contract." Treasury Regulation § 1.403(b)-5(b)(2) (in relevant part).

This rule is of course similar to the following anti-conditioning rule, applicable to 401(k) plans:

"(i) General rule. A cash or deferred arrangement satisfies this paragraph (e) only if no other benefit is conditioned (directly or indirectly) upon the employee's electing to make or not to make elective contributions under the arrangement…." Treas. Reg. § 1.401(k)-1(e)(6)(i) (in relevant part).

However, the 403(b) regulation does not include the following exception, which is contained in the 401(k) regulation:

"(iii) Effect of certain statutory limits. Any benefit under an excess benefit plan described in section 3(36) of the Employee Retirement Income Security Act of 1974 (88 Stat. 829), Public Law 93- 406, that is dependent on the employee's electing to make or not to make elective contributions is not treated as contingent. Deferred compensation under a nonqualified plan of deferred compensation that is dependent on an employee's having made the maximum elective deferrals under section 402(g) or the maximum elective contributions permitted under the terms of the plan also is not treated as contingent." Treas. Reg. § 1.401(k)-1(e)(6)(iii).

I welcome feedback/thoughts on the following questions:

1. Should Treas. Reg. § 1.403(b)-5(b)(2) be interpreted to incorporate the exception contained at Treas. Reg. § 1.401(k)-1(e)(6)(iii)?

2. If the answer to question 1 is yes, should the reference to Code § 402(g) in Treas. Reg. § 1.401(k)-1(e)(6)(iii) be read to require that, to use this exception, a participant age 50 or older must not only exhaust the 402(g)(1)(B) limit ($16,500 for 2009), but must also exhaust the catch-up contribution limit referenced at Code § 402(g)(1)©?

Thanks

Is anyone aware of a special rule for determining the COBRA premium for a high deductible health plan. I'm thinking of a scenario that takes into account the deductible if it is paid by the employer. Thanks.

Did anyone take the ERPA exam during the winter session, if so...have you received your score yet?

AIRE stated that the scores would come in the mail by 4/30.

I was just curious to see if anyone has received their scores yet. We took the test toward the end of the winter session so I'm assuming we will have to wait until the end of April to get our scores!

Hi,

I am working on the testing for a plan. Stated in their plan document is a limit of 5% of deferrals for HCEs. Also, the HCE matching formula is stated as 0%. (NHCE 50% up to 6%) My problem is the plan sponsor is defining HCEs as employees whose base salary is greater than the limit. For example, if my base is $80,000 but my OT is $30,000 for a total of $110,000. I am not considered a HCE for purposes of the limit or the match--which means I can defer 10% and receive the match). I know their is some flexible in discriminating against HCEs, but since they are not following the terms of the plan would this be considered an operational/plan defect?

Here's my subsidy dilemma of the day: An independent school hires it's teachers from August-June. The contract clearly states that the contract ends on a specific date and makes no mention of extending the contract if a position is available or giving the teacher first dibs on a comparable position. The teacher signs the contract, knowing he/she is only employed until a certain date. Would this be considered involuntary or voluntary termination at the end of the contract?

My gut says voluntary and that the subsidy would not be offered, others in the office feel it would be involuntary.

Input please!

Plan termination question; when terminating a money purchase plan, must one fully vest all participants?

Money Purchase retirement plans that have insurance policies (other than ERISA fidelity bond); what rules apply?

What rules apply when a money purchase plan has insurance policies? I do not refer to the ERISA fidelity bond.

Help... can anyone point me to anything that indicates whether elective deferrals to a health savings account (HSA) are added back to compensation, to get to 415 compensation for HCE determination? My gut says yes, but I would like something else to say yes as well.

Thanks!

Med