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

Employer is changing insurance companies. Premiums might be about the same or lower. However, the deductible will be much higher (there was no deductible previously).

My understanding is that this is a valid change of election event for the premium, but not for any medical FSA's. Is that correct or may a participant also change their medical FSA's to cover the increased deductible?

Regarding 1 participant plans that file form 5500ez.

Say the plan has less than 250k a 5500ez is not required.

My understanding is that it is not required to provide the client with a Schedule B.

I have some clients that do not want the Sch B since they do not want to pay for it.

We charge $300 for the B. Valuation charged separately.

Any comments on how others handle this type of situation?

Thanks

Non-public company has an ISO (is going public if this is relevent). Is there a requirement that the Company provides participants a formal Statement of their Options at least annually? Currently, the Company provides participants an Excel summary of their ISO's - only if a participant/grantee asks for one.

If so, could you also point to the source?

Thanks,

Eric

Under the 401(k) plan, key employees averaged deferrals of 4%. The plan was determined to be top heavy and a 3% minimum contribution must be made on behalf of non-keys. But what if key employees had an average of 2% returned to them due to a failure of the ADP test? Would the required contribution only be 2%? I don't believe the regulations address this directly.

My guess is that the entire 4% counts in determining the amount of the minimum contribution. Do you agree/disagree? As you can tell, this employer is strapped and looking for some relief. Thank you!

Can a defined benefit plan use its own plan assets to pay expenses related to self-correcting a plan document problem? The fees would go to an actuary who had to correct a formula that was calculated wrong by a law firm. Any guidance would be helpful.

Thanks

I'm not a DB heavyweight, so I'm hoping some of you will weigh in on this one . . .

Must the 415 limitation be actuarially reduced based on the form of distribution? Is the answer the same if the form of benefit is a 50 J&S?

If it is not required that there be an actuarial 415 reduction for a J&S, is there any circumstance where the 415 limitation can/will be actuarially reduced for a 50% J&S form of payment?

We paid a couple lump sums from our DB pension plan during early 2008. Our auditor is calling these annuity purchases. If they are annuity puchases then we can add them to the fraction that makes up the ATFAP, no? Please sort out the confusion.

I guess the question is: Do lump sums get added to both the numerator and denominator of the fraction?

Single owner plan. Zero 2008 Schedule C. Large past compensation causes $140k 2008 minimum required contribution.

I know that the MRC can be made without excise tax, but I can't remember what the max contribution can be made without Excise tax.

I think the client is confused because he wants to make the 2008 maximum contribution as calculated by PPA. I'm not sure of the benefit of making a larger than needed non-deductible contribution.

directly to our clients with instructions for them to attach it to form 5500. This is new (or rather old -- if you've been in the business a few years and remember when the IRS would send back a stamped copy of the 5558.). The 5558 form still says the extension is automatically approved.

Anyone else getting these or no anything about this seeming policy change?

Thanks