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?

We administer a small DB plan that terminated 12/31/2007. However, the client failed to provide us with necessary information to complete the termination in 2008. He was divorced and had medical problems. This also lead to no AFTAP as of 10/1/2008. The plan has only existed for 4 years. We sent the client the notice of benefit restrictions to provide to the 4 participants including his former wife.

The plan would have had a 2008 AFTAP of 98%. However now the plan has lost about 45% and any 2009 AFTAP will surely be less than 80%.

We received a QDRO ordering the plan to distribute benefits to the Alternate Payee as a lump sum. They cannot do this due to the AFTAP < 80%. Has anyone run into this problem yet?

I just found out a doctor client has an interest in a clinic where he regularly performs services. I'm gathering details, but it looks like an affiliated service group. Four docs own around 9% each of the clinic with the balance owned by a large corporation. I'm getting more details on them.

The clinic apparently has a 401(k) with employee deferral only-no employer contributions. For 2008 my doc's plan is a 3% safe harbor and this year also contributed a SH match along with maximum deferrals.

The question is what is the fix? Do you include 9% of the eligible clinic employees salaries in my doc's plan? Do you look at the best plan of all AFS members, calculate a contribution for the eligible clinic employees have the clinic deposit it? I've looked in "Who's the Employer" by Watson but don't see the solution.

Thanks for any help.

A company makes contributions to their profit sharing plan until 2006. They do NOT have a 401k, there are no deferrals, it is profit sharing only. The last year they made a substantial contribution was for 2005.

In 2006, 2007, and 2008, they make no contribution to their profit sharing plan. They have forfeitures each year. The plan uses forfeitures to reduce employer contributions. The employer contributes nothing so the forfeitures are therefore allocated each year.

So far, $300,000 of forfeitures have been allocated since 12/31/2005. I looked at 411(d)(3) and 1.411(d)-2(d) and IRS Announcement 94-101.

1. Suppose they actually had profits in 2006, 2007, and 2008, but they just did not make a contribution. What must happen now to the amounts that were forfeited in 2006, 2007, and 2008? Would they have to be restored to the plan if they terminate the plan in 2009?

2. Suppose they did NOT have any profits in one or more of the years 2006, 2007, and 2008. Now what happens to the amounts that were forfeited in 2006, 2007, and 2008? Would they have to be restored to the plan if they terminate the plan in 2009?

3. Now suppose they are a non-profit organization. Now what happens to the amounts that were forfeited in 2006, 2007, and 2008? Would they have to be restored to the plan if they terminate the plan in 2009?

Follow this link to see that rarest of creatures - not only an ERISA cartoon, but a funny one.

http://courtoons.wordpress.com/2009/03/19/erisa/

A law firm has two shareholders that hold their ownership interests in professional corporations. There are also two associates with their own professional corporations. The law firm also has some support people. I am assuming that the two non-shareholder professional corporations receive at least $105,000 from the law firm. As such, it would appear that an ASG exists as the law firm would be a FSO and the non-shareholder professional corporations would be B organizations.

If that is the case, are the two non-shareholders treated as HCE's for purposes of the ADP test? Of course they made deferrals while the two older shareholders did not make deferrals.

More importantly, are the two non-shareholder attys treated as key employees for top heavy purposes?

Thanks in advance. Ed