Facts: DC Plan participant, age 72, still actively employed, not an owner, balance ~$200,000.

Participant would like to take a $50,000 loan (no prior or existing loans) and roll over her balance to an IRA as an in-service distribution.

Question #1: Will she need to keep $50,000 in her Plan account as collateral for the loan? Or, by virtue of the fact that her account balance was sufficient to support the $50,000 loan at the time the loan was made allow her to subsequently roll over her entire account balance (except the loan) to an IRA?

Question #2: Unlike her Plan account, the rollover IRA would be subject to required minimum distributions. However, since there was no balance in the rollover IRA as of 12/31/07, would 2009 be the first year she would be subject to RMD from her IRA?

Thanks for any and all input!

I have a new client that is a Local of the IBEW. The Local sponsors a defined benefit plan for its employees. There are basically two groups of employees: Administrative Assistants, and Officers/Executive Board Members. The AAs have no connection with the other than as employees of the Local. The OEBMs work for any company the bargains for benefits with the IBEW (in this instance they all come from Verizon), then are elected to the Local's Exective Board. Many of the OEBMs are HCEs or former HCEs.

The Local's plan is not collectively bargained, but is patterned after the IBEW plan. Benefits are based on the Pension Bands written into the CBA. The IBEW bands are based on the individual's "craft", eg, a draftsman might be in band 113 which currently provides for a benefit of $52.62/month/year of service. When the draftsman gets elected as an OEBM his benefit under the Local plan is figured on the highest band 124, which currently is 68.85/ mo/yos. Further, the OEBM's benfits are subject to a multiplier, which can range from 1.25 to 1.75. All years of service with the Local and Verizon are counted, and the Local benefit is offset by the Verizon benefit. The AAs have no multiplier, and since they are not from Verizon, they have no offset. So the plan does not meet the safe harbor for offset plans,and must pass the general test for the active employees.

The problem I have is with the former employees. If an OEBM is voted out of office, he goes back to work for Verizon, where he continues to accrue service credit for purposes of his benefit with the Local. Also, if the dollar amount of his pay band increases, he gets that increase as well. It's almost as if the OBEM never left. Needless to say, this arrangement does no apply to any terminated AAs. So I now have to test the former employees. There are currently 7 vested terminees, 5 of whom were HCEs when they were OEBMs. Since they are benefiting and the other simplt 2 are not, does this part of the plan fail simply "by inspection"? Or does the continuation if the service credit violate the rules on imputing service? I'm sure this fails somewhere, but the practice is so entrenched that anyone who say it's no good is probably going to be named in a suit. So I need backup, especialy since the prior actuary never mentioned any of this stuff to them.

Or can someone see some way that it's OK?

It's my understanding that PPA changed the maximum for bonding for plans holding employer securities to $1,000,000; is that right? If so, how does the new upper limit apply? Is the rule still that the bond must be the greater of $1,000 or 10% of plan assets not to exceed $1 million?

I would like to hear from other companies as to how they reimburse their drivers for mileage.

How many drivers do you reimburse?

Just took over a dual elligibility 401k plan.

401k ellig was 1 year

PS ellig was 2 years with 100% vesting. No problems there

SH ellig was 2 years with 100% vesting

Can you really have a 2 year wait to get SH or is prior TPA all wet?

thanks

An employer wants to consider a benefit formula that is 1 1/2 % of average compensation per year of service, maximum 50%. Further, he wants employees who have completed 15 years of service at age 65 to get a 50% normal retirement benefit. This appears to satisfy the 3% accrual rule of 411(b)(1)(A).

However, this means an employee hired at age 50 has accrued a 21% benefit at age 64 and then his benefit increases to 50% at 65. This smells worse than last weeks fish.

Assume there are no HCEs.

Can anyone explain why this dog don't hunt?

What exactly is meant by an "association of churches"? Can you have the employees of a number of different parishes participate in the same qualified plan without creating some sort of multiple employer plan? As you can probably tell, I don't deal with church plans...at all. Please help!

Employee A has elected coverage for herself and her husband, B. Employee A then has a baby, C. A's husband has health insurance through his employer. A seeks to drop her coverage and enroll in her B's health insurance. Can employee A drop her current coverage or does she have to continue to maintain coverage for herself with C and B going on to B's insurance. Thanks!

Plan has failed the ADP test and the participant who is supposed to get the corrective distribution has rolled the money over to his IRA. So, in this case who is the reporting agency? Do we report the taxable distribution or does the IRA institution distribute the corrective distribution and report a 1099R?

If the IRA institution distributes the money to the participant, is the plan sponsor liable for the 10% excise tax (distribution is past the 2 ½ months deadline) even though the distribution will be done from the IRA?

Jim has a Roth IRA that he moves to another brokerage firm. Two years go by before he discovers that the brokerage firm put the money in a traditional IRA. Now what?

Hello - Can an EE drop their Medical coverage under a 125 plan without a life changing event? My company switched insurance providers 4/1/08, the coverage we now have pays for nearly nothing at a 33% increase. I have found outside coverage for a lesser premium which will pay for the doctors and medications I need.

When I asked the HR department this was their response: (I did ask if they would reimburse the EE if no coverage was elected)

Unfortunately, we cannot reimburse you if you find coverage on your own. Since our plan is a section 125 plan, you will not be able to drop out of our plan until open enrollment next year (April 2009). You can only drop out if it’s a qualified life event (marriage/divorce, birth/adoption of child, change in job status (termination)).

I thought a voluntary deduction could be stopped at any time without reason. I tried to look up this answer in The Payroll Source however I became more confused the more I read.

Thank you for your time in answering this question.

Susan

Does anyone have thoughts on whether buying out an ex's share of a house meets the safe harbor definition for purchasing a principal residence?

I think it does but figured it was worth a post.

Could anyone point me in the right direction regarding researching the following?

Is there anything in ERISA which precludes a son (not actively employed by father's company) to perform the investment advisory duties of father's company 401(k) plan?

Hi,

This may be out of topic, if so please let me know and I will post in the appropriate section.

I am an officer in a company that was acquired. My current employment contract specifies my current title, salary, and a special acquisition provision: If I am terminated without cause within one year of an acquisition, I will receive 1 year's salary. The acquisition has occurred.

Here is my question:

- The acquiring company is asking me to take a pay cut and have me sign a new contract. If I do not sign a new contract and they reduce my salary never the less, does this constitute a termination? My current contract does not include wording that allows the company to change the terms of the contract - other than employment is at will.

Thanks in Advance

Can anyone confirm whether a governmental plan is required to send out a Sarbanes Oxley Notice? If they are not required, where is a place I can reference the ruling?

I am working with a client whose husband set up a defined benefit plan 8 years ago. He died earlier this year. Plan document says she is to be beneficiary of all his assets. However, he mistakenly made a son beneficiary on some past annuity policies used to fund the plan. Insurance companies involved say they must make payment to son regardless of plan document. What to do?

Is a death benefit provided by a defined contribution plan protected against elimination as an optional form of benefit? Specifically, if an option for the beneficiary to elect a life expectancy (or any other) form of payout is eliminated and replaced with a five-year payout period (with no other options), is the life expectancy option protected as to (i) a potential beneficiary, when the participant remains alive and has not begun taking a benefit, or (ii) a beneficiary already receiving a life expectancy payout?

Reg. Section 1.411(d)-4, Q&A-2(a)(4) prevents the elimination of a protected benefit based simply on the fact that it is payable to a beneficiary. Yet, a death benefit is not mentioned in any of the examples in Reg. Section 1.411(d)-4, Q&A-1(b)(2). The mention of J&S options in Example 1 is, I believe, because the participant's amount of benefit is impacted by the continuation factor, and not because it's a death benefit. Reg. Section 1.411(d)-3(g)(6)(ii)(B)--which is referenced by Reg. Section 1.411(d)-4, Q&A-1(b)--considers death benefits paid AFTER the annuity starting date to be an optional form of benefit that must be protected in certain circumstances, but it does not address death benefits payable BEFORE the annuity starting date. It is interesting, however, that Reg. Section 1.411(d)-3(g)(6)(ii)(B) considers a death benefit as "provided to a participant". Nevertheless, it seems to me that a potential death benefit payable to a potential beneficiary is not protected, at least while the beneficiary is still alive and not receiving benefits, because it is not an optional form of benefit, but a death benefit is protected in the hands of the beneficiary as an accrued benefit following the participant's death.

Thoughts? Comments?

Can anyone tell me if Enrolled Actuaries are retiring from their current companies? We are looking to fill Enrolled Actuary positions, but it seems that the experienced actuaries are not making changes and will retire from their current companies. I also notice that actuaries that are new to pension are not wanting to stay in that field. We (MetLife) have a couple of positions open to be located in either Chicago, Boston or Atlanta. I am wondering if anyone can share any more on these concerns? All thoughts would be appreciated.

I have a VEBA setup for retiree medical. The VEBA is self insured and has 300+ participants. The only thing going through the trust are retiree contributions and sponsor contributions, there are no active employees in the VEBA. I know the "letter of the law" would require an audit but a colleague of mine recently told me about some DOL guidance that suggests a VEBA with retiree medical contributions only would not require an audit. Is this true? Does anyone have authoritative guidance to that effect. Any help is much appreciated.

Doesit ever make sense to buy an immediate annuity in a roth?