Assume an SAR otherwise meets the criteria for the exclusion from 409A in the -1(b)(5) regulation. Can you still meet the exclusion if the right to time the exercise belongs to the service recipient (rather than the service provider)? I realize that this is not a traditional "SAR," but I cannot find anything in the reg that says it must be the service provider who has the right to time the exercise. What we are trying to do is to give the employer the right to time the payment of phantom equity appreciation, and not necessarily limited to 409A-permitted payment events.

My understanding is that the new law allows account balance participants to avoid an RMD for 2009.

However, my understanding is that DB plan participants must receive an RMD in 2009?

Furthermore, if a DB participant receives a lump sum distribution in 2009 and is over 70 1/2, a portion of such distribution must be received as an RMD and the remainder may be able to be rolled over. Agreed?

Thanks.

We have a 401(k) plan (calendar year w/dual entry dates) that amended the plan for eligibility and vesting. The plan had required 1 year and was amended effective 01/01/09 to require 2 yrs of service for participation.

There is one employee hired 10/01/07 who satisfied the year of service requirement as of 10/01/08. Does this employee enter the plan on 01/01/09 since he had already satisfied the eligibility criteria during the 2008 plan year, or does the new 2 yr service requirement apply to him?

Put another way, which comes first, his entry or the amendment of the service requirement?

Since the plan previously had a graded vesting schedule, we obviously also amended the vesting to 100%. Does this affect anything if we look at participants' right to select which vesting schedule they want?

Yet another question about the safe-harbor non-elective contribution. Clearly at this point owners can't waive for 2008, at least not unde the rules as I understand them so the contribution due for 2008 has to be made, absent backruptcy along with plan termination where the IRS might have some pity for the client. And I think I've found this answer in at lest two threads in my search. You have the dual problems of following written Plan terms and 411 cut back issues.

But can the plan be amended now for 2009 to elimiante the safe-harbor nonelective only for HCEs who are more than 5% owners? That is NHCEs and non-owner-HCEs still get the 3% contribution. Or at worst freeze the 3% contrib for owners through date of amendment but full year 3% for all others? Has anyone seen this before? Probably a better question for the IRS than here but thought I'd try to get some other opinions.

I think the answer is no even though the alternative might be terminating the entire plan which just seems counter to good retirement policy. I know the IRS position is "well you should have done a maybe notice" but it is a bit late for that.

For corrective distributions for excess contributions, paid within 2.5 months of plan year end, for 2008 plan years, is the 10% withholding applicable if a W-4P is not completed?

I've heard that yes it is applicable since the distributions are taxable in the year distributed, and I've seen things from service providers saying that withholding within the first 2.5 months (6 months for EACAs) is not applicable.

Thanks!

I'm confused on how assets are valued in a PPA valuation. Is there an assumed rate of return on assets? Or is the only thing that matters the true market value at valuation date? Also, at what interest rate are 2008 contributions made in 2009 discounted back to 1/1/2009? Are the segment rates used for this?

Employer has EACA (not QACA) with auto-increase provision, which is set to go into effect May 1st -- usually the date that annual salary increase go into effect. Thanks to the economy, the employer has adopted a salary freeze to avoid layoffs. The employer does not want to burden participants with the auto-increase in their deferrals and asked if they could simply suspend the increase "until a later date". While I already told them that any suspension should be date certain, I was wondering if anyone else had this come up.

Amending the plan to remove the auto-increase completely or to delay the effective date for another year, does not seem to be an anti-cutback issue, since it has not taken effect. Concerned about the EACA notice sent last fall, but would think could re-notice everyone with the delayed effective date.

Any thoughts??

A pension fund is attempting to locate a missing participant. In the meantime, it is unsure as to what to do with the returned pension checks. Should the paper checks be placed in the participant's file? Or, should the money be placed back in the trust? Thanks.

about 9 years ago, Company 2 acquires company 1, and 80% of 1's people quit, leaving their unvested 401(k) contributions behind. Company 2 never merges the old 1 401(k) Plan into 2's Plan, so all of the remaining 1 people hold two 401(k) accounts. A few years go by, and nobody is left from the original 1 organization. What is supposed to happen to the funds forfeited under 1's Plan?

In reality, there were three companies involved. Company 2 was further acquired by Company 3, which did merge 2's 401(k) into 3's. But, I don't think it affects my original question, as 1's Plan was left alone..

what was supposed to happen?

Say a taxpayer has a plan year that ends on August 31, 2005. What serves as the latest date to amend for 401(a)(31)(B)?

http://www.irs.gov/irb/2005-51_IRB/ar12.html

Latest of (1) December 31, 2005, (2) the end of the plan year that contains March 28, 2005, or (3) the tax filing deadline for the employer’s tax year containing March 28, 2005.

That seemds to indicate that December 31, 2005 would serve as the latest possible day to amend the plan, as the play year containing March 28, 2005 ends on August 31, 2005; meanwhile, the tax deadline would fall on November 15, 2005.

Do I understand this properly?

Plans must be aggregated for top heavy testing if at least one key EE participates in both plans. But what does participate really mean? Does a KEY EE have to BENEFIT under the plan during the year or just have a balance in the plan. Sal Tripodi's book seems to say a KEY EE only need have a balance in the plan for the plan to be aggregated with another plan covering a KEY EE. So, a frozen plan in which a key EE has a balance would still be aggregated with an active plan that covers other KEY EEs and non-KEY. I guess this makes sense- I just want to be sure.

thanks!

I have an interesting dilemma...I have a participant in a Cafeteria Plan who is employed in the U.S.A; however, resides in the Domincan Republic (DR). Can he be reimbursed for medical expenses he incurs in the DR? Also, can he be reimbursed for childcare expenses in the DR? Lastly, he provides care and support for his elderly mother-in-law; would he have the ability to run her expenses through the plan as well, assuming she is a U.S. Citizen, or does citizenship make a difference? I would appreciate any feedback.

Does Section 1.401(k)-3(g) permit the reduction or suspension of safe harbor matching contributions mid-year, if the plan document specifically states that such contribution will be determined based on the entire plan year? Or does it permit reduction or suspension of safe harbor matching contributions only when such contribution is determined and paid throughout the year (i.e. each payroll period)?

Can an Employer/Sponsor add a Dependent Care benefit to their FSA, lets say in March 1, 2009? They have some employees that have a real need for this benefit and want to add it to their plan; their plan year begins January 1 and end December 31st....

An Employer provided incorrect data and the Plan failed ADP for the 2007 plan year. Excess distributed to the HCEE. 1099 done reflecting the distribution.

Error was discovered in 2008 and using correct data the Plan re-tested and passed ADP. Employer requested and received the overpayment from the HCEE in 2009.

Is the correction method for the participant to redo 1040 for 2007 and issue a corrected 1099? Is the employer required to contribute any earnings from the time the incorrect distribution was made until the time of the repayment?

Or is a vaiable alternative just to treat the repayment as after-tax creating basis for the employee, no revising tax forms or corrected 1099? Would the employer owe any earnings in this scenario?

Has anyone come across an official blurb on the March 15th deadline for 2008 ADP/ACP refunds? Is is Friday, March 13th or Monday March 16th?

Thank you.

Is there any kind of ERISA violation for making a decision to hire only part-time employees, or to hire a specific employee as part-time, in order to prevent the individuals from being eligible for the qualified plan--or to set employees' hours such that employees do not reach the h/s threshhold in the plan and therefore are never eligible for plan participation? (ERISA Section 510 relates to interference with the rights of a participant, not an employee or a non-employee.) Assume that there is no other discrimination invovled (i.e., race, gender, ADEA, religion, etc.).

I just wanted to issue a warning to those buying new computers. I bought a new laptop at the end of 2008 and specifically checked the Relius website and literature to make sure that the 5500 program was windows vista compliant. The website indicated that the software was updated as of 11/08 for Vista.

I am not computer savvy and bought a laptop that the salesman at a computer store recommended for my needs. I was able to load all my old programs except for the Relius 5500 package. After many hours on the phone with tech support it was determined that my operating system was a 64 bit system and the 5500 software is not compatible. I was told there was no workaround and I should buy the 32 bit vista program and reinstall everything. I was led to believe by tech support that the computer store was at fault for selling me a system that is meant for "developers". I immediately did a web search and determined that most new laptops were coming with the 64 bit system installed. I sent this information to Relius over a month ago and have never heard anything back. I followed-up with them today. I also requested that they change the information on their website to specifically indicate the versions of Vista that were compatible with their programs so that people in my situation did not buy the wrong operating system. As of today, they have not changed the documentation appearing on the website.

In its original form the PPA of 2006 mandated that effective January 1, 2009 a governmental plan may NOT credit its members' fixed return accounts with more than a risk free market rate of return. This requirement was repealed in December 2008. I need the legislative language that made the requirement and the language that repealed it.

Many Thanks,

Joel L. Frank

Pension Columnist

The Chief-Civil Service Leader

277 Broadway

NYC 10007

732-536-9472

A real estate management firm manages several properties and sponsors an immediate eligibility 401k plan for its employees. Several of the managed properties have an on site-custodian that works for the building and the building owners. As these custodians are the only employees in the building the managment company provides payroll services for the building owners for these custodians. ( They are on the management co payroll but not considered ees) Are these custodians now employees of the management company and thus eligible for the plan? Any help would be appreciated.