Does anyone know what the COLA dollar values will be for 2009? or when such will be issued?

First time poster, so please be gentle. Our client's actuary would like to change on assumption on a previously filed Schedule B so that the PBGC will allow for fixed premiums the following year. The SOL has already passed, so I was wondering if it is still possible to amend and if so, will this then re-open the SOL? Thanks for your help.

If the plan's J&50QJSA is 55% of a monthly benefit excluding special supplements or temporary allowances, can the J&75QOSA be based on the same benefit with the same exclusions?

Anyone know, or willing to venture an opinion, whether we will substitute target liability (based on segment rates) for current liability under IRC 412(l)(7) when calculating whether there are restrictions on HCEs lump sum distributions (i.e., the 110% funded test).

I assume this restriction lives on even in the new AFTAP world and thus an 80% AFTAP isn't enough to lift restrictions for HCE lump sums.

The proposed 409A regulations state that "common law doctrines continue to apply to any such election" to change payment dates under Notice 2005-1, Q&A-19©. Notice 2007-86 extends through 2008 a participant's ability to elect a new payment date for payments due after 2008.

Question: If an account balance plan now provides for only one payment option, which is 60 monthly installments after separation, is there a constructive receipt problem with the employer allowing a current employee to elect in November 2008 to receive either a lump sum in 2009 or three annual installments in 2009-2011?

I don't see the constructive receipt issue. I am familiar with the Martin case.

I am getting half of my exhusbands 401(k) via QDRO within the next 2 weeks. Most of that money that I receive I will give to my ex for a buy out of our house. I understand because the distribtuion is via a QDRO, that BOX 7 on the 1099R will be listed with a "2" exception, meaning I am not subject to the 10% early withdrawal penalty. I understand that I will have to pay the taxes though. What happens though if I have a few thousand dollars left over after I pay off my ex, that I want to roll over. Would I be able to roll the "xtra " money over & what about the taxes that were withheld on the entire distribtuion.

ALso, another thought. I am assuming that I only get out of the 10% penalty (exception code "2") if the payment is made in a lump sum to me. In other words, if I transferred my entire portion from ex's 401K to an IRA in my name, then just liquidated the amount that I owe my ex, I am assuming that the distribution code on the 1099-R would be premature distribution, & I would be responsible for the taxes & the 10% early withdrawal penalty, I do not believe once the funds are transferred to my name, that I would be allowed to then distribute to the ex & have it coded as a dsitribution via QDRO.

Please let me know your thoughts

For the required PPA provision of electronic display of annual report information, has the DOL filing requirement been finalized? This client does not have an intranet site, however, has distributed a Summary Annual Report to all participants by mail, along with filing an electronic copy to the DOL. Will this meet the requirements?

A DC Plan has a provision providing that a Participant's entire account balance can be paid out on the occurence of the Participant's "disability of at least six months duration" -- among other occurences (retirement, death, layoff for a period of 30 days).

Client wants to eliminate this provision.

Is this an impermissible cutback?

(Under DB rules, a disability benefit is an "ancillary benefit" -- but its only defined that way in regards to a DB plan. See 1.411(d)-3(g)(2)).

What regulation can I point to to show that a disability benefit may be eliminated from a DC plan without violating 411(d)?

Thanks.

Just took over a Cash Balance plan. The prior actuary, treated it as a DC plan and cross tested it based on benefits by accumulating the contribution credits to NRA and converting them to monthly benefits using 8.5%/8.5% & standard motality. Based on this, the plan passes 401(a)(4) with extreme ease! Is this is how a Cash Balance is tested?

A Cash Balance plan is a DB plan in the first place! So shouldn't the equivalent benefits based on the plan assumptions (5.5%/5.5%...) be used for testing? Based on the Normal Accrual Rates using these equivalent benefits, the plan falls fails the test miserably!!

For the required PPA provision of electronic display of annual report information, has the DOL filing requirement been finalized? This client does not have an intranet site, however, has distributed a Summary Annual Report to all participants by mail, along with filing an electronic copy to the DOL. Will this meet the requirements?

Client allowed 4 ineligible EEs to defer (2007 plan year), and thus we, as the TPA, informed them that they must also allocate the 3% non elective contribution to them as well.

I read that the safe harbor non elective can be deposited as late as 12 months after the end of the plan year.

So, I figure that the additional contribution can be deducted on the 2008 corporate return, and included as a contribution on the 2007 5500???

Suppose a safe harbor 401(k) plan with a 3% Employer SH exists. Also, HCE's do not receive the SH contribution. Now the employer is interested in making an additional profit sharing contribution. The profit sharing contribution will be 10% of compensation for the company owner and 2% to all others.

1) The 3% SH and 2% PS allocation together satisfy the gateway.

2) The 3% SH and 2% PS allocation together satisfy the rate group test when compared to the one HCE.

Question: Must SH, PS, and salary deferrals be considered for the average benefits percentage test?

Participant tells plan administrator that he is separating and planning a divorce. Plan administrator knows nothing about QDRO's. Subsequently, participant comes to plan administrator, explains that pursuant to a separation agreement, he had to make a large payment to his spouse, and has been strapped for cash and needs to tap his 401(k) to avoid eviction. He takes the max loan, comes back with an eviction notice, requests a hardship distribution, gets it. Plan makes and has no communication from or to spouse/AP.

Should the plan have permitted the loan and the hardship distribution? Do they have an obligation to put a stop on loan issue and distribution from the plan in the absence of a proposed DRO, even though they know about the separation and possible divorce? Does the plan have potential liability vis-a-vis the spouse/AP's interest in his account? Everyone involved is in California, a community property state.

Thanks -

JP

We have some conflicting information and was hoping someone might be able to help. We have a plan with a prototype document where the Basic Plan Document language regarding separate deferral election on bonus states "Such an election to defer all or part of a bonus shall be independent of any other salary reduction agreement and shall not constitute a modification to any pre-existing salary reduction agreement".

The plan does not exclude any form of compensation from the definition of compensation. The definition of the plan compensation is total gross compensation.

The document provider states that if a participant makes a separate election for bonus and indicates a "0" than no deferral must be withheld on the bonus amount at all. We believe that the last part of the sentence above in the BPD "......shall not constitute a modification to any pre-existing salary reduction agreement", contradicts that intrepretation. We believe that what ever eligible compensation is for the plan is subjective to the elective deferral. Therefore, by electing "0" on a separate deferral election would mean no additional deferral we be taken on the bonus.

Thanks for any insight!

I have a client that sponsors a profit sharing plan with a 401k feature.

The plan sponsor manages the investments.

2 vested employees with balances between $1,000 and $5,000 recently terminated.

Since the plan does not have individual sub accounts for each participant (but one pooled account) , how would we calculate the amount due the participant? That is, the amount in the plan changes every day, so if we provide a client the portion attributable to the terminated employee based on the account as of say 10/1/08 and the client isn't going to actually make the distribution until a later date, can we lock in the amount based on the value computed as of 10/1?

The plan administrative forms, etc. provide for automatic lump sum payment for amounts less than 5k, but requires consent if the amount is over 1k. What is the purpose of consent when the distribution is automatic lump sum? I suppose they want to hear if it is a rollover or a cash payment, etc.

Finally, say $2,000 is the non vested portion forfeited. In order for such amount to be used to reduce the next year's contribution do we just keep track of the forfeited amount just like any other account balance and then use it as the reduction in contribution? Of course the same dilemma of changing daily values occurs. Perhaps they can create another suspense account for the forfeited amount?

Thanks.

I know that when the Final 401(k) regulations came out a few years ago, they said that GAP earnings needed to be included in ADP/ACP and Excess Deferral refunds.

But what about refunding excess annual additions in excess of the 415 limit? Can those continue to be only plan year earnings?

For example, say you have a 1/1/07 to 12/31/07 limitation year and John has $2000 in excess annual additions. There is no "deadline" for issuing the 415 refund - so say that it's just being done now.

Would the earnings on this $2000 only include plan year earnings (earnings up to 12/31/07)? Or would they include GAP earnings (earnings up to the date of distribution).

I don't think the 415 regulations really say anything about how earnings should be calculated for 415 refunds. Heck, the new 415 regulations don't even say anything about 415 refunds because they should now be handled in the EPCRS.

There is a note in the ERISA Outline Book under the 415 refund section that says "The longer the delay in making the distribution (415 refund), the more earnings will have to be distributed as well." The only way earnings could increase is if GAP was included. If GAP was not included, then the earnings would be the same regardless of when they were distributed.

Thoughts?

401k plan has a matching formula based on compensation. Participants earning up to $40,000 receive 100% match on their salary deferrals, paticipants earning more than $40,000 receive 50% match on their salary deferral. Is there additional testing other than the ACP test on the match since it isn't a uniform formula?? Thanks.

A fully funded DB plan was supposedly terminated last year, but nothing was filed with the PBGC (Form 500). I was told that fully funded plans don't need to file with the PBGC. I've since learned that that's not the case. The filing of Form 500 is required. Since the assets have not been distributed, the plan will be frozen and terminated properly at a later date.

The owner would like to get his life insurance policy out of the plan, but he wants to keep the coverage. I've heard that he can simply swap the policy for it's cash value. That way the policy comes out of the plan and there is no taxable event. Is it really that simple?

Section 205 of Title II of the bailout bill extends Qualified Charitable Distributions from IRAs at age 70 1/2 to 12/31/2009.

That is, if it passes.

Moved to correct forum

Deleted and moved to correct forum