If a defined benefit provides only a single life annuity (for unmarried participants) and a QJSA (for married participants) as possible forms of payment, along with a lump sum mandatory cash-out for benefits with a present value not in excess of $5,000, is there any need for the complicated 415(b)(2)(B)/415(b)(2)(E) language regarding benefits paid in a form subject to 417(e)(3)? Although, conceivably, a $5,000 cash-out could exceed the participant's high-three compensation, when converted to a single annuity form, that appears unlikely, but I haven't found any affirmative IRS comments allowing the 415(b)(2)(B) language to be omitted where the only possibility for a lump sum payment is a mandatory cash-out.

Thanks.

If an employer and the union agree to limit participation and contributions to current employees, excluding new employees from a multiemployer plan, would that agreement trigger partial withdrawal liability? The employer would continue to contribute for current employees at all of its locations.

If this is a partial withdrawal, how would the liability amount be calculated? Based on my rudimentary understanding of the math involved, it looks as if it would be negligible.

I have always been under the impression that every trust of a qualified plan needs its own EIN for deposits and distributions. Now I am not so sure. My experience is that after several years of inactivity, a trust EIN is no longer valid. What are your opinions?

In my EBIA manual, it tells me what I should include in the plan document. However, is it that general that I can simply follw those instructions and generate a plan document without any sort of template? Are there more detailed instructions/templates/examples for plan documents out there?

If the employer contributes to an employee's DCAP, can the employee elect the full $5000 out of their own check and then add the employer's contribution on top of that?

Similarly, if the employer limits the MFSA election to say, $3000, and also contributes to an employee's MFSA election, can the $3000 limit be exceeded by the total election?

I would like to file a buch of delinquent 5500's (small plans 1997 - 2007) ... but the 5500C/R series was discontinued many years ago.

I would like to file all of them using the most current version of Form 5500, even though years 1997, 1998, 1999 were originally required to be filed on a Form 5500C/R.

I heard a rumor while standing in line at Wal-Mart that the IRS now allows old delinquent years to be filed on the most recent current version of Form 5500 (rather than 5500C/R) if those old years are filed under the DFVCP program.

Since I have had bad luck from acting on rumors in the past, I thought someone at BenefitsLink might know if the rumor is fact or fiction.

Thanks

a small safe harbor 401k just received its new restated doc. plan has basic matching safe harbor formula with a discretionary pro rata profit sharing option. The odd thing about the adoption agreement is that in it they also have the New Comparability Gateway option checked stating the plan will satisfy the minimim allocation method identified as follows: reallocate preliminary contributions or hypothetical contributions paid to HCE's to NHCEs so that the allocation to each NHCE equals the lesser of the amount described in 2 of the other options.

Well this is not a New Comparability plan, so is there any reason that would be checked?

Additionally, this is a participant directed plan, yet it is NOT intended to comply with ERISA 404©. What problems could occur by not complying with 404©?

This is a paychex volume submitter plan with a corporate trustee

What options does a client have if they missed their 60day window to rollback excess RMD funds back to their IRA? The Client is 73 and took an in-kind distribution to their Trust account.

My clearing house said they are out of luck and with a letter the IRS should grant them an exception.

Any help would be great.

Here is the rule

The client may roll the same shares back in the account that they took as a distribution; however they must be very careful in doing this. Share prices change daily (depending on the security) and the anticipated amount returned to the account could be more or less than necessary (creating a more complex accounting problem). While Fidelity will honor this request, you need to strongly encourage the client to consult a tax advisor before making the request to ensure the client is aware of any tax implications. Also, in this case, the distribution took place on 10/30/08, more than 60 days ago. This could raise a red flag at the IRS since the 1099-R for 2008 will show the full distribution and the off-setting 5498 will not show the rollover until 2009.

I have read that, effective after 12/31/2009, non-spouse rollovers are required to be made available from qualified plans (rather than just permitted to be made available), but I cannot find that PPA '06 technical correction provision in WRERA '08. Does anyone know where that particular provision resides in the new Act?

Being laid off is not considered a distributable event, correct? How do determine if someone who is "laid off" actually has a "severance from employment" so they can take a distribution from their 401(k) plan? The document does not reference the term laid off.

I have a client who has a broker (a friend of the owner, surprise surprise) that is steering them towards a particular TPA, and the CFO has the feeling this is motivated by selling of a product. She wants to understand what is going on and what value the broker is adding. They have a small employee population (less than 50).

I am not familiar with the role of a broker in 401(k) set-up and administration. Can somebody provide some general info. on the broker's role and how the broker and TPA are compensated? (and the issues to be concerned with)

Thanks!

A quick search of recent news articles has turned up the following list of companies that have suspended their ER match.

Sears http://www.businessinsurance.com/cgi-bin/n...05&id=14914

Motorola http://www.wsbt.com/news/local/37071614.html

Starbucks http://www.wsbt.com/news/local/37071614.html

Fed Ex http://www.wsbt.com/news/local/37071614.html

GM http://www.wsbt.com/news/local/37071614.html

Ford http://www.wsbt.com/news/local/37071614.html

NCR http://www.wsbt.com/news/local/37071614.html

GateHouse Media http://www.planadviser.com/investing/article.php/3436

Denver Post http://www.bizjournals.com/denver/stories/...29/daily19.html

Eastman Kodak http://www.nytimes.com/2008/12/21/your-mon...1retire.html?hp

Resorts International http://www.nytimes.com/2008/12/21/your-mon...1retire.html?hp

Unisys http://www.usnews.com/blogs/planning-to-re...401k-match.html

Is this just media hype, some high profile companies that make for a good sound byte or half column article, or are folks seeing the same thing in their practices?

Trying to determine if the trend is widespread enough to justify an attempt to study and quantify the effects of reduced in flows on various market sectors. I'm also wondering how many of these Companies eliminated DB plans and swapped in a 401(k) or enhanced 401(k) plan, in order to soften the blow.

An Employer adopts 2 new plans. One is a 401(k) profit sharing plan and the other is a DB plan. Suppose the DB formula provides 0.50% of pay as an accrual (for the non-key EEs of course). In order to use the 50% cushion in the first year, the DB plan includes one year of past service.

The plan documents are written in a coordinated fashion such that the top heavy minimum of 5% of pay is provided as an allocation in the DC plan for anyone who is in both plans.

Under Treasury Reg 1.416-1 M-4, a year of service for top heavy minimum accrual purposes is to be credited in a manner that is consistent with the plan's definition of service for benefit accruals under the regular plan formula.

How is that rule satisified? Must the DB plan provide a 2% minimum accrual for the past service portion of the plan?

Calendar year 401(k) PSP w/ 3% SHNEC and discretionary match (50% up to 4% of pay). Investments are pooled. Participant became eligible 7/1/2008 but just given enrollment forms 1/1/2009. My understanding on how to calculate the corrective contributions under 2008-50 is as follows: (1) 3% of compensation for the period: 7/1/2008 - 12/31/2008, times 50%, will satisfy the "missed deferral opportunity"; and 2) 2% of 7/1/2008 - 12/31/2008 compensation to satisfy the "missed matching opportunity". Are these two statements correct?

Next, we need to adjust the corrective contributions for earnings. The trust had a loss for 2008. If we determine what the actual plan losses were, then can we simply apply that percentage for half of the year to the total corrective contribution from above? Or are there any other "simplified" methods to calculating the earnings (losses) adjustment for corrective contributions?

Any input would be greatly appreciated.

Thanks!

I should know this, I know....

Do I let forfeitures share in earnings (well, a big loss!) in a pooled account, balance forward plan?

Thanks, marna

Ok, mind is still in Holiday mode. One too many spiked EggNogs. Ok, more than just one too many

calendar year plan. Plan Failed ADP for 2008.

New rules say 2008 corective distributions made in 2009 are taxable to participant in 2009 or does participant get to choose between 2008/2009 ?

3/15/09 still have any relevance any more ?

thanks

If the underlying welfare benefit plan has 121 or more participants at the beginning of the ERISA plan year, the plan is subject to audit. Must the audit include sampling of employer seeding of HDHP participants (regardless of whether they actually make HSA contributions) noting that employer seeding will be allocated to individual HSAs to be invested and accumulated to meet future health care needs?

We're having a difference of opinion on how to handle this situation:

New 401(k) safe harbor with short initial plan year of 10/1/08 - 12/31/08. Pro-rated 415 limit is $11,500. Safe Harbor Match is 100% on first 4% deferred per payroll. An employee deferred a total of $13,000 on compensation of $130,000, or 10% of comp. The match on this should be $5,200, which would make the total contributions/annual addition $18,200 which exceeds the pro-rated 415 limit. One opinion is that the full match should be allocated in accordance with the plan's provisions, and the 415 excess returned from salary deferrals per EPCRS (since after refund of $6700 deferrals the remaining deferrals would exceed 4% of compensation and are entitled to the match) (this seems to agree with the provisions of the document). The other opinion is that all of the deferrals should be allocated, and only the portion of the match that would not exceed 415, with the remainder of the match being credited to forfeitures.

The plan document provides that " . . . if as a result of the allocation of Forfeitures, a reasonable error in estimating a Participant's annual 415 Compensation, a reasonable error in determing the amount of elective deferrals . . . that may be made with respect to any Participant under the limits of Section 4.4, or other facts and circumstances to which Regulation Section 1.415-6(b)(6) shall be applicable, the "annual additions" under this Plan would cause the maximum provided in Section 4.4 to be exceeded, the "excess amount" will be disposed of in one of the following manners . . . © to the extent necessary, matched Elective Deferrals and "employer" matching contributions will be proportionately reduced from the Participant's Account. The Elective Deferrals, and any gains attributable to such Elective Deferrals, will be distributed to the Participant and the "employer" matching contributions, and any gains attributable to such matching contributions, will be used to reduce the "employer's" contributions in the next Limitation Year; . . . "

Thoughts and opinions appreciated. If the match was a quarterly rather than per payroll match, would your opinion change? Thanks!

J

Taking into account both the proposed cafeteria plan regulations and ERISA, can an employer use health FSA forfeitures for one plan year to offset medical plan premium increases in the next plan year?

An owner retired and sold his shares in 2008. His son works at the firm and continues to do so after his father's retirement. Both the former owner and his son are HCEs for the 2008 nondiscrimination testing. Will the son be an HCE for the 2009 testing due to his father's 2008 ownership? Assume the son's pay will be below the HCE comp threshold.