-a group has an FSA

-group is changing the plan year via short plan year

-group has a 2 month grace period

-how long can the grace period be for the short plan year?

The regs do not have anything about this so my current interpretation is that the grace period can be up to 2.5 months.

Is there any litigation or further commentary on this?

A client funded a whopping amount for their 2007 calendar year plan year to get the 2008 AFTAP to 80%. Hooray, they can distristribute lump sums to NHCEs through March 31, 2009. Of course, like all good Americans, their portfolio has decreased about 30% since January 1, 2008. Common story.

Now, unbeknownst to a long-term employee, they are terminating the employee this December. (Merry Christmas!) This employee is nearly 60 and eligible for early retirement and entitled to elect a lump sum under the terms of the plan. It is possible the employee may choose to defer receipt. I recommended that they should at least provide an election package. Further, they should tell the employee that lump sum payment may be restricted after March 31, 2009 and perhaps later as well. Finally, I advised they should consult their legal counsel regarding my non-legal-but-practical advice.

This begs the larger question. While not required by PPA, it is making more and more sense to provide annual communication to participants of even healthy plans that restrictions might apply at some later date -- even years down the road. This goes beyond simply burrying the potentially unpleasant news in the SPD, which in many instances will end up unread.

Has anyone taken the "preventive medicine" approach? If so, it would be appreciated if you could share the experience along with identification of the various poisons you have considered ingesting.

If a plan is properly Safe Harbor in 2008 and goes out of business in 2009 before the SH is funded where does the liability go?

Stays with owners? Officers?

Any idea on where to find any regs on this eventuality?

Thank you

This is probably an easy question, but I haven't run into the issue till now:

A doctor makes $250,000 at his primary job and gets a $46,000 NEC.

He also makes money as an author.

Can he start a solo k and defer another $46,000?

Is the 415 limitation based on the employer? I see there are aggregation rules for multiple plans under a single employer, but what about multiple employers?

Could 3 separate employers - not affiliated with each other at all - each give the guy a $46,000 NEC?

This is probably an easy question for someone, or perhaps everyone but me. : )

Thanks in advance for your feedback!

I know there has been added a bicycle commuter benefit - $20/ month

Are these still...

Transit and Van pooling $115

Parking $215

...the same?

Say a participant has an accrued benefit under the plan terms of 50,000.

Say the 415 limit is 30,000.

Now say that the 415 limit has increased to 45,000 as of next plan year.

If the plan amends plan where participant's AB next year is 40,000, is this a violation of anti cutback?

That is, the qualified benefit increased from 30k to 40k, but the Ab of 50k from the prior plan year which would be limited to 45k in the current plan year is not preserved.

Long story short, is the 30k preserved or the 50k (subject to 415) preserved?

Thanks.

Money Purchase Plan term'd in 2003. It was thought that all assets were distributed and final Form 5500 was filed for 2003. It has just come to our attention that one insurance policy still exists in the plan name. A 1099 was issued for the rollover of this policy, but the insurance company never re-styled assets to an IRA for the participant.

Since the assets were not distributed, what do I need to do to bring plan into compliance?

prepare for interim amendments

file 5500's using Delinquent Filer VCP

Anything else?

Thanks!

We use documents from a major provider. As most of you know the differences between prototypes and the check the box volume submitter documetns have diminished signficiantly now that a) PT's can use cross-testing, and b) VS documents can have TPA initiated regulatory amendments.

So if a) prototype has less flexibility than the vs (i.e., limitations on # of allocation groups), b) the pricincing is essentially the same, then why would anyone opt to use the prototype (other than branding). Or is branding the primary reason? Is there anything a prototype can do that a VS cannot?

Hi All, first post in this forum. I work for a firm that does turnkey 401(k) plans where we handle both the TPA work and the investment side. We are currently trustee directed and manage our 401(k) accounts in separate pooled accounts (made up of individual stocks and bonds) for each of our separate plans. We are trying to set up a system in which we pool all of our pension plans together, invest in the same stocks and bonds across the board, and allow individual particpants to choose their allocation. That is, everyone would have the same underlying investments, but could choose whether they wanted to be 80% stocks/20% bonds, 60/40, 50/50, etc.

Would allowing the employees to make an allocation choice (but not have any choice as to the underlying stocks and bonds in the investment vehicle) convert our plans into de facto participant directed plans? I've read the DOL/ERISA regs, but am fairly new at this and can't seem to find a definitive answer. Thanks in advance for any help/direction you can provide.

Would appreciate thoughts on 409A legality of the following. Company has established deferred comp plan that is intended to operate as a true defined benefit type supplemental retirement plan. Benefits equate to payment of a percentage of final compensation for a period of 10 years following separation from service. There are no elective deferrals, etc. under the plan. Document has always provided that benefits will basically only be paid if employee remains continuously employed with employer through age 65. (There are benefits in the case of in-service death or disability prior to age 65.) Notwithstanding the age 65 retirement date requirement, however, the plan provides that if a participant "retires" between ages 60 and 65 the Company may, in its sole discretion, provide the participant a reduced benefit. The plan then goes on to spell out the reduced benefits that will be provided upon early retirement (i.e., basically reduced percentage of final year's compensation compared to the larger percentage paid for retirement at or after 65). The time and form of early retirement payments (if approved) by the company are the same as for regular retirement. Company owners generally anticipate honoring early retirement provisions if situations arise but very much which to retain ability to decide that on a case by case basis.

Question is whether it is possible to be 409A compliant and retain company's sole discretion to pay out upon early retirement. My initial thought was that such discretion could raise concerns over having established a fixed time and form of payment under the arrangement; however, it seems to me that arguably should not be the result. In this case, a participant separating prior to age 65 should have no legally binding right to any benefits unless and until the company has decided that the individual should receive some early retirement benefit. In essence, it is as if the company simply provides a brand new benefit upon the early retiree and so long as the terms of the benefit are fixed in a 409A compliant way at the time the company chooses to bestow such a benefit, the fact that the company exercised discretion should not be a problem.

Seems like this is a fairly typical arrangement for deferred comp purposes but I have not previously had to address. All thoughts appreciated.

Can anyone please confirm what the new PPA deduction limits are for PBGC covered plans for 2008?

If you have a DB/DC combination plans, is the new deduction limit:

(1) 25% of compensation to the DC plan + the 430 minimum to the DB Plan

or

(2) 25% of compensation to the DC plan + the 404 maximum to the DB Plan

I have a DB plan with $0 minimum 430 funding for 2008, but a significant maximum 404 contribution. If the client elects to make a 25% contribution to the DC plan, can they made a deductible DB contribution?

Any input is appreciated.

Does anyone know where that table of permitted disparity factors can be found in an official format (i.e., for imputing disparity on an allocation rate)? I'm tlaking about the one that gives a disparity factor depending on the combination of the Plan;s NRA and the participan's SS Retirement Age.

Sole proprietor and spouse participate in 401(k) (no other participants) and wants to use plan assets to finance daughter's primary residence, which will be used as collateral.

Permitted? PT issues, limit on loan amount, loss of interest deduction for daughter, and/or ERISA fiduciary issues? (or anything else?)

Thanks in advance.

If the plan has segregated accounts and a participant invests his/her money in an annuity what are the requirements regarding the death benefit? If that participant dies does the death benefit just simply go to the beneficiary? Does the beneficiary have to be the Trust?

I've never dealt with this and want to make sure I understand the nuances and any possible problems.

Currently, this 403(b) only has Employee Deferrals. However, in the past, it did have an Employer Nonelective. Assuming that in all other respects this plan would qualify as exempt (no control by employer, etc...), does this plan need a full 5500 in 2009 given one deposit of Employer Nonelective several years ago.

My initial response is yes, it must file a full 5500. In fact, I believe that ever year including and after that year of deposit of the employer contribution needed a 5500 (limited). Does this sound right?

how does plan sponsor show they have made effort to find person;and what do they do with monies?

man dies;he had named his children as beneficiaries;but he was married(legally separated and living apart for 4 years)

who gets monies?

Owner has a pooled profit sharing plan. In mid-2008, she transfers all the money from the plan account into her personal IRA (which already had $300K in it) under the mistaken belief that she is the only participant remaining in the plan (why she believed this, I don't know). She presumably completed forms from the brokerage house, but nothing plan-specific. She moved ~$250K out which is now worth ~$200K.

Clearly, this is all wrong and needs to be fixed. But why and how?

I think the best-case scenario is to treat this as a loan that juuuuust slightly violates 72(p). So I'd have her return the amount taken to the plan (which means the company would have to find $50K) and also some reasonable rate of interest for the six months it was out of the plan. But this is a client who will need things airtight and in writing (and in excruciating detail), so I want to make sure I'm using the right methods to correct this. Are there any other alternatives? Thanks.

A new hire has COBRA coverage through his old employer, which he is maintaining until he is eligible to enroll in his new employer's health & benefits plan. The new employer has agreed to pay his COBRA premiums pending his eligibility to participate in the current employer's plans. Must the new employer treat the COBRA payments as taxable wages? Is there any authority to exclude the COBRA payments from the employee's compensation under the established exclusion rubric for employee benefits coverage?

I have a 4-tier integration for contribution, in addition to a 3% 401(k) safe harbor. I understand that the 3% safe harbor cannot be part of the 1st tier 3% for integration. The 1st, 2nd, and 3rd tiers are the standard integration.

The standard 4th tier is usually pro-rata to compensation (that is, uniform percentage). Then the entire contribution passes 401(a)(4).

But, we have a provision that the 4th tier is cross-tested (Groups A, B, etc). If we do the 4th tier with different percentages to different groups, do we do the 401(a)(4) test on the 4th tier allocation only, or the entire contribution.

We're looking at this since the demographics in some years may not allow a standard cross-test to pass 401(a)(4) at all, and the 4-tier integration will at least give some separation between the principals and the staff (given their respective compensation), even if the 4th tier is limited to a straight pro-rata (same percentage to all groups).