I'm working with a non-publicly traded ESOP with an 11/30 PYE. An employee who terminated in 2006, anticipating that the stock price will decline, finally sent in his distribution election form to rollover his stock & cash to an IRA. He also submitted a Put Option form to Put the stock back to the corporation in return for a 5-year note. He signed and dated the distribution form and Put Option form on 11/24/08.

As trustee and recordkeeper, we proceded to pull the stock from our vault to send it to the transfer agent and sent the IRA account opening paperwork to the participant.

The stock was reissued as of 11/28/08 to the IRA but didn't get back to me until Dec. 1st. I still have to send the stock along with the Put Option to the company after we determine whether or not the participant must sign the back of the certificate.

Here's my question...will his distribution and subsequent note payable from the company be at the 11/30/07 price, or the 11/30/08 price since we are now into a new plan year? Does the pricing hinge on the date of the Put Option or the date the stock is delivered to the company, the Put is accepted, and the note payable is prepared?

The plan document isn't specific to this situation coming up. The Put Option does specify that the stock will be valued as of the preceding year-end stock price.

Thanks

Participant turned 70 1/2 in 2007, so he must take his first distribution 4/1/2008. This is a db plan and we want to use the annual annuity method.

He has not yet taken his RMD, so now that we're late, how do we calculate his distribution?

Do we calculate the annuity payable on 4/1/2008 and then credit it with interest to the next distribution date? or should we just calculat the annuity payable now?

In a related question, if we pay out the annuity now, do subsequent payments occur on this distribution date, or is the next payment due 4/1/09 (since he should have taken the last payment on 4/1/08)?

Do terminated people with balances have to get the QDIA notice, too? Or just the people currently employed?

Participant who terminated in 2003 turned 70 1/2 in august, so this is her first year for an RMD. The plan has a 9/30 plan year end.

She elected to take an inservice w/d in May of about 2/3rds of her account balance. She was going to take the rest of her balance when the 9/30/08 valuation was completed.

I have worked on the trust accounting for the plan while waiting for the employer to confirm their P/S contribution for the PYE 9/30/08. the plan, like many, has suffered losses. As a result, this EE doesn't have the necessary funds left in her account to cover the RMD. What now?

We are running our network on citrix and have been unable to get the document registration serial number module to work. Is there anyone out there running on citrix who may be able to help?

Thank you!

I have a client with a 401k plan originally effective in 2001. Problem is they are a governmental entity and doesn't meet the requirements for a "grandfathered" governmental 401k plan. I have reviewed the correction procedure in the EPCRS and just want to confirm my understanding of it. It appears that the correction procedure under VCP is to cease all contributions and "distribute" the assets in the form of rollovers to the new plan (I am guessing a 457(b) plan). Is this correct? Has anyone else filed a VCP submssion for this type of failure? Thanks in advance for your comments.

I just wondered if you would be adding a forum for those studying for the ERPA exams. I'm not going to be taking them myself but I imagine there might be people interested.

Just a thought.

For eligible 457(b) plans for 501© non-profit organizations (not Governments), assuming no ER contributions.....

1. Are these plans exempt from Sec.409(A)?

2. Must the plan document specify what constitutes 'Substantial Risk of Forfeiture' once the EE separates from service, or do the assets simply sit in the account awaiting a request for distribution from the former EE?

3. Are account balances subject to Minimum Required Distributions at 70.5?

4. If so, can these MRD's be delayed while the EE or contractor continues to work for the ER?

5. May the plan allow for 'unforeseen' hardship in-service withdrawals?

6. If so, would there be a 10% premature withdrawal penalty if the EE is <59.5?

7. May the plan allow for loans?

Thanks

BruceM

If a plan has an AFTAP below 80% is there an exception to the benefit distribution restriction that allows the plan to automtically freeze and be able to make lump sum distributions? The AFTAP is above 60%.

Is there something online or perhaps a thread/post someone could link to here that provides a summary of rule changes for 2009?

Thanks

A participant terminates while plan AFTAP is deemed over 80%. By the time he returns the paperwork showing a lump sum election, the AFTAP has been certified to be between 60% and 80%. Is this lump sum distribution limited to 50%?

Anyone have any AFTAP letters which the participant is supposed to receive if the plan's AFTAP is <60%??

Would appreciate a copy.

steve@thepensionmaven.com

A business is formed in November of 2003, and institutes a 401k plan immediately. None of the corporation's owners are employees, so there aren't any HCEs by virtue of ownership. The plan operates on a calendar year basis. How do you determine HCEs based on compensation when there isn't a 12 month look back year? How do you make the determination for the short plan year 11/2003 through 12/2003, and how do you make the determination for calendar/plan year 2004?

If a TPA charges $100 to process a distribution and the employer - sponsor wants to pay that fee from the plan, how would the cost be allocated? Could it be netted with gains and losses? That would put more burden on those with larger balances. If it is charged pro rata per participant, someone with $50 in the plan would be more affected than those with larger balances. Since HCEs have the larger balances, I am worried about discrimination. The employer does not want to use forfeitures.

Any thoughts?

Jimmy

Suppose you have a calendar year 1 participant DB.

They were not able to provide investment information until after 4/1/08. The AFTAP was certified 9/15/08 at 87%, so actually 77%. Since then, they have made a contribution that will put them over 100%. Can they terminate the plan 12/31/2008 without benefit restrictions or must we wait until 2009 to terminate and have a new AFTAP done?

Thanks much.

Please let me know if any more information is required or I may not have laid out the facts in their entirety.

Corporation - A (not a professional corp.) is 100% owned by individual Mr. X.

Mr. & Mrs. X are the only employees of the corporation.

Corp. A performs services for an unrelated company B (Union).

Apart from the service fees that corp. A receives from B, B also provides W-2 to Mr. & Mrs. X.

Company B has such a relationship with many other companies none of whom are related with any other company.

Company B provides two plans, a Defined benefit plan and a profit sharing plan.

No employees of any corporation are excluded from any plan

None of the employees are required to make any contributions.

Now, ER of corp. A wishes to sponsor his own 401(k) PS plan.

What if any could be the hurdles in having such an arrangement?

We have a former vested employee from years ago who retired this fall and, after much himming and hawing, ended up taking the lump sum option (about $20,000). He couldn't make up his mind about a direct rollover and ended up sending us no paperwork for a rollover election. So we told him we'd have to take the default action of paying him 80% of the total and sending 20% on to Uncle Sam.

Trouble is, we didn't instruct the bank trustee properly and they sent him 100%. Weeks later, long after he had cashed the check, we discovered the situation. I contacted him and asked him to send 20% back so that we could cut a fresh check for withholding. He says he's decided to just let it stand and pay whatever tax is due next April 15. I didn't ask if he's rolling it over himself or just keeping the money.

So now what? I'm inclined to let it stand too because I can't see any other alternative if he won't send the money back.

I have a QDRO with Continental Can. It was sold to Kiewit, then became Viatech Continental Can Company, which was a wholly owned subsidiary of Suiza Foods Corporation. Suiza bought Dean Foods and changed the name of the company to Dean Foods.

I am writing Dean Foods to determine who is responsible for payment on the pension benefits granted by the QDRO.

Has anyone else dealt with this kind of issue? I hope I am going about it correctly.

Thanks for any insight or suggestions.

Mary

I thought I remembered reading a requirement that stated if you have a loan in default you cannot get a new loan.

I sure can't find it now that the situation has arisen.

Anyone have any clues on this or am I imagining it?

Thank you

The failure is to obtain spousal consent before payouts under a plan subject to QJSA rules. The owner/EE has about $1.4m in plan (after withdrawing a couple of hundred thousand dollars without the benefit of spousal consent). Spouse is cooperative.

However, under Rev Proc 2008-50, section 6.04(2)©, it is provided that if spousal consent to the prior distribution is not obtained, the plan may offer the spouse a choice between a QJSA survivor benefit computed on the benefits as though there had been no withdrawals or "a single-sum payment equal to the actuarial present value of that survivor annuity benefit (calculated using the applicable interest rate and mortality table under § 417(e)(3)). Any such single-sum payment is treated in the same manner as a distribution under § 402©(9) for purposes of rolling over the payment to an IRA or other eligible retirement plan."

Given that there is only $1m of creditor protection for IRAs, this 'correction' alternative could seemingly be used to rollover some of the $1.4m at issue into an IRA for the spouse and the remainder could be rolled over into an IRA for the employee. If for whatever reason a liability cropped up, more retirement benefits of this couple would be protected using this correction alternative than the spouse giving consent to the prior distributions. (This might also make easier estate tax avoidance in planning their estates.)

Agree? Disagree? See any flies in the ointment?