A fiduciary wishes to invest in an offshore private equity fund that is not a plan-asset vehicle. Assets are transfered to an account of a foreign bank in a foreign country. To become a member of the private equity fund, fiduciary must submit a subscription agreement that is accepted by offshore private equity fund. Under ERISA 404(b), a fiduciary must maintain the indicia of ownership of assets within the jurisdiction of the U.S.

It appears that the indicia of ownership for this investment is the subscription agreement and that because the fiduciary retains a copy in the U.S. that should satisfy ERISA 404(b). However, I cannot find any DOL guidance exactly on point stating this. Do you agree that retention of the subscription agreement in the U.S. should satisfy ERISA 404(b)? Do you know of any guidance on point supporting your position? Any thoughts are appreciated. Thanks.

Is a funding notice due by 4/30/09 for a calendar year plan that terminated in 2008 but has not fully distributed assets as of 12/31/08? What if the plan terminated in 2008 AND assets fully distributed by 12/31/08?

Thanks.

Client is a single member LLC. However, single member gave himself a salary for 2008 and reported it on a W-2. LLC has net income after deduction for salary.

Client wants to establish a SEP. What's the contribution calculated on? 20% of net self-employment income? 25% of comp? A blend? Aargh!!!

Any help would be appreciated.

Here are the facts:

Employee is terminated involuntarily by Company A on October 15, 2008. Employee is hired by Company B and becomes covered under Company B's health plan on November 1, 2008. Employee declines COBRA under Company A's health plan.

Employee is laid off by Company B on March 15, 2009. Company B is a small employer exempt from COBRA so Employee is not given a COBRA election.

Is Employee entitled to a "second-chance" COBRA election under Company A's health plan?

As I read the statute, I'm coming to the conclusion that Employee is entitled to a second-chance election under Company A's plan, but is not eligible for premium assistance. I had never thought of that being a possibility, so I'd like to throw it out for others' thoughts.

An "assistance eligible individual" (AEI) is a qualified beneficiary if (a) at any time between 9/1/2008 and 12/31/2009 he is eligible for COBRA continuation coverage, (b) he elects COBRA, and © the qualifying event was involuntary termination during the period in (a). Employee satisfies (a) and © but not (b), so he is not an AEI.

The "second-chance" election period is available to an individual who does not have a COBRA election in effect on February 17, 2008 but who would be an AEI if an election were in effect. Under these facts, Employee didn't have a COBRA election in effect on February 17, 2008, but he would have been an AEI if he had elected COBRA. It appears that he is eligible for the second-chance COBRA election and if he makes the election, he will become an AEI.

An AEI is entitled to premium assistance, but the premium assistance will not apply with respect to any AEI for months of coverage beginning on or after the earlier of several events, one of which is the first date that the individual is eligible for coverage under any other group health plan. Since Employee was covered under Company B's plan, it appears that he will never be eligible for premium assistance.

So, it appears that Employee can elect COBRA under Company A's plan, but he will have to pay the full premium. Agree? Disagree?

We were just been informed that a client is actually a PEO. They have been for several years (since 2003). Their plan is not in a document that supports a PEO plan (multiple employer plan).

Can this be corrected via EPCRS?

I am aware of the generally inconsistent treatment of fiduciary protection via 404© compliance, but I was wondering if there is any consensus as to how to draft so as to have the best shot at compliance. I have always been rather detailed in the investment direction section of the plan, even describing the then fund offerings. Lately I have been reviewing plans that are so skimpy they basically just state the intention to comply with 404©.

What's your experience?

404(o)(1)

`(A) the sum of the amounts determined under paragraph (2) with respect to each plan year ending with or within the taxable year, or

`(B) the sum of the minimum required contributions under section 430 for such plan years.

paragraph 2 is the FT + TNC + Cushion - Assets.

Plan termination in 2008 with max 2008 contribution made 10/08. Payouts in 2009. With the 2008 investment losses, employer wants to fund the amount needed to get the assets = LS's payable. Owner and daughter (less than age 26) ar the only plan participants, so no PBGC coverage.

404(o)(5)

SPECIAL RULE FOR TERMINATING PLANS- In the case of a plan which, subject to section 4041 of the Employee Retirement Income Security Act of 1974, terminates during the plan year, the amount determined under paragraph (2) shall in no event be less than the amount required to make the plan sufficient for benefit liabilities (within the meaning of section 4041(d) of such Act).

Since this is not a PBGC covered plan, do I need to calculate the FT and cushion on 2009 to make sure the total needed to fully fund LS's fits under the FT + Cushion - Assets? Do I have a special 'valuation date' of the date of distribution or use the 1/1 date used for the determination since that is what was used for 2008.

How long do you wait after you ask the SSA (or IRS) to forward your letters before you start moving accounts from a terminated plan? (assuming other avenues come up empty, as well)

A month? 3 months? 6 months?

OK, so the individual in question contributeds $4,500 of Roth before terminating. He now wants to withdraw the balance when it is worth just $3,000.

So I just want to make sure everyone agrees that he will not be able to deduct $1,500 of LOSSES on his 1040 - or would he? Seems unfair that he would only get taxed if it made money...

Is anyone else using "My PAA" through the PBGC's website to e-file Form 1? We are trying to use it for the first time, since the PBGC forms are not yet available on ASC's forms package.

We are trying to figure out how we want to deal with the "Plan Administrator's" signature on the e-filing. I would be curious as to whether TPA's are signing on behalf of their clients, or whether they are forwarding a link to their client to e-sign directly.

Thanks for any input!

Med

The pLan owned a life insurance policy on one of its participants. We always included the cash surrender value in the top heavy test determination each year. However, this participant died in 2008. For the 12/31/2008 top heavy test, is the full life insurance payout (approx. $1.3 million) included as a current year distribution for top heavy testing purposes?

Does anybody know what the deadline is for turning in expenses for HSAs and FSAs for FORMER employees? I believe both current and former employees who participated in the plan have until the end of the next year, but want to confirm this.

thanks!!!

A company with 10 employees sponsors a profit sharing plan.

An investment advisor convinced the trustee to puchase an annuity with

all the plan assets. The annuity is based on the trustee's age, there are no

provisions for the employees.

The trustee did not understand what he was purchasing. Does he have

any recourse in getting his money refunded? Can anything be done?

Is the trustee liable for any breach of fiduciary conduct?

Is anyone aware where I can obtain a template copy of DB Investment Policy Statement?

thank you.

The employer has given 30 days' notice of suspension of the safe harbor match. They said they had heard that "since this was a significant event, the employees have the right to withdraw their money from the 401k."

Is that correct?

We are comtemplating freezing our DB plan and starting up a 401k alongside it.

I know the 401k has certain tests internal to that plan so that matching contributions don't become too large for the higher paid employees, etc. (Those tests have acronyms that I forget just know - but that's not my question.) We've never had to do a similar test on our DB plan because, I am told, the plan is DESIGNED in such a way that whatever tests exist they are considered passed automatically.

My question is (please help me re-phrase it if you can read my mind and know what I'm talking about): Are there any tests that have to be done considering the two plans in tandem? Can the new 401k be designed in a such a way that any tandem tests can be considered passed?

A second question: We're a not-for-profit, but we can still have a 401k-type though, right?

X is the 100% owner of C-Corp business that has employees. X also 60% owner with unrelated Y of LLC business with no employees. Business activities of each entity are unrelated...Y has no connection with C-Corp. C-Corp has an existing SIMPLE. X would like to make a maximum SEP contribution based on share of LLC business income without involving C-Corp employees or violating exclusive test for SIMPLE.

It appears that this could be done in this case as the control group (brother-sister) test (1563 and 414(b)) is not met since X as the 100% owner of C-Corp only owns 60% of LLC, so the 80% test is no met.

I am uncertain how, or if, to apply the 415(h) test where 50% is substituted for 80%. Does this cause the above to fail?

Also, does X's spouse taking a salary at C-Corp pose any problems (community property state)?

Thank you for your thoughts.

For those that took the exam, are the review materials a must? Or can you buy the study guide and then review with Tripodi's books? The review course is pretty expensive, that's why I am asking.

Please provide your input and cite for if a notice is required for a suspension of employer match? I know that there is the Safe Harbor Plan requirement, but I can't seem to locate information on notification for non-safe harbor plans for suspension of 401(m).

EB Gardener

Does the DOL provide a safe harbor with respect to prohibited transactions that occur when a plan service provider gives nonmonetary compensation greater than $250 to a plan representative who is an employee of the plan sponsor? If so, can anyone point me to the relevant authority/guidance on this issue?