Money purchase pension plan. Employer flat-out doesn't make contributions required by Code Section 412, but years later agrees to put funds back into plan, with interest, and file for correction under VCP. Is this also a prohibited transaction, subject to Code Section 4975 excise taxes? And, I assume Code Section 4971 excise taxes apply, as well (for failure to fund pursuant to Section 412). And, of course, neither of those excise taxes is potentiallly waivable under VCP. A nightmare, ehh?

Suppose you have a small DB plan with an NRA of 62 and an Early Retirement Age of 60.

The plan also provides that a participant's early retirement benefit shall be unreduced for early commencement.

If a participant retires early at age 60 and elects a lump sum distribution, his lump sum benefit would be the present value of his accrued benefit payable at age 62 correct?

Or would it be the present value of his age 60 accrued benefit?

Situation: A single-employer QRP is sponsored/participated in by several ERs part of one ASG. (But it is not an affiliated group under IRC sec 1504.)

One of the ERs has one EE, who earns $100,000. That EE would like to accrue $46,000 in benefits, and given the overall demographics, the plan will pass x-testing doing so. However, $46,000 is greater than 25% of $100,000.

If the IRC sec 404(a)(3) deduction limit applies ASG-wide, then this ER could make the $46,000 contribution for its only EE and deduct it because other ERs in the ASG are not making less than 25% of the aggregate compensation of just their EEs.

On the other hand, if IRC sec 404(a)(3) is separately applied per ER, then this specific ER could contribute no more than $25,000 for its sole EE.

Does IRC sec 404(a)(3) apply separately to each ER in an ASG or is it applied plan-wide, allowing disproportionate use of the deduction limitation by different ERs in the ASG?

An employer sponsors a rich DB plan (2% average compensation per year of service, max 60%) and non-safe-harbor 401(k) plan with 100% matching of first 3%. DB Plan covers 300 employees of which 270 contribute to 401(k) plan. 9 of 300 are HCE. Most new hires anticipated to be employed as NHCEs but a few may ultimately work their way up. Some present NHCEs will ultimately become HCEs.

Employer is considering:

(1) Present employess stay in DB and 401(k) plan.

(2) Future hires not in DB plan but in 401(k) plan.

(3) Future hires get 3% profit sharing contribution, a feature to be added to 401(k) plan.

Apparent coverage issues:

(1) Eventually DB plan will waste away to fewer than 50 employees so 401(a)(26) test will fail.

(2) At some point -- but not for awhile -- DB plan may fail 410(b)

(3) No problem with DC until DC plan covers HCE. At that time, would be concerned about 410(b). Might (if can't pass ratio test) have to aggregate with richer DB for average benefit testing. It would seem if 3% benefit is in 401(k) plan, might have to give gateway to others (i.e., to current employees) but if 3% in separate ps plan, no gateway issues, since all employees under the plan get the same %.

WOULD APPRECIATE COMMENTS ON THE ABOVE AND IF I'VE MISREAD THE SITUATION AND THERE ARE OTHER ISSUES THAT NEED TO BE CONSIDERED.

Does anyone have a good list f state taxation of NQ plans?

I have a DC SERP account balance excess match plan

I know PA doesn't tax as money is being deposited but when distributed

But I'm not real familair with other states.

thanks

Lexy

For fellow pension and pension trivia geeks (and anyone else interested):

Does anyone have - and would be willing to share - an historical list of the various and sundry pension-related pieces of legislation enacted since ERISA? Alternatively, does anyone have knowledge of a resource that might have such information and/or a link to same?

It would also be helpful if such list would include a summary or bullet points of the pension aspects addressed, added or changed by each such piece of legislation.

Thanks!

An employer deposited $15,000 more in ER PS contribution into a plan in 2007 than they should have. It was never allocated but is currently in a pooled account. Can they remove this, paid back to the ER, as a mistake of fact contribution and....thats it? Any penalities, fees, disclosures, etc.?

Thanks

Thought many of you would get a kick out of this--especially BG5150 . . .

http://community.livejournal.com/pearlswine/2008/06/07/

Corporation #1 wants to incentivize Employee #1 by offering him a non-qualified deferred comp (NQDC) plan which will be funded solely by the Corporation - there will be no employee deferrals.

Corporation #1 is a part of a brother-sister controlled group with Corporation #2.

Employee #1 is employed by Corporation #1 and is not an employee of Corporation #2.

Is it possible for Corporation #2 to be the sponsor of a NQDC plan for Employee #1 which Corporation #2 would also fund?

When determining HCE(s) in a plan which had a merger using the top-paid group election they would have to consider both prior subgroups in this determination? These plans were both sponsored by the same company in the past.

Thank you!

The part. died a few months ago and there are some additional monies owed to him for compensation. The CPA is asking if deferrals can be taken on this amount. My first thought is "no" since the money will be paid to the estate and the estate is not a participant.

If a plan sponsor deposited, tax deducted and filed its corporate tax return for the 2007 plan/calendar year, then TPA learns that final 401(a)(4) test fails and requires Group B to get additional contribution, i.e. 5% to Group B now must be 5.25%, can the plan sponsor deposit the additional contribution money in 2008 and deduct that additional money on its 2008 corporate tax return (assuming that in 2008 that the total contribution including the 2007 additional monies is still under the 25% threshhold)? Would appreciate comments. Thank you.

A government agency is considering entering into an agreement with one of its unions to establish a medical reimbursement plan. The plan would provide for employer and employee contributions to individual reimbursement accounts, which would carry over from year-to-year and be available for reimbursement of expenses incurred by retirees. The employees' contributions would be characterized as mandatory contributions made as a condition of employment and would be made from pre-tax income.

Obviously, the "mandatory contribution" feature is designed to avoid having the cafeteria plan rules apply to this plan, since if they did, the plan couldn't cover retirees.

Has anyone encountered this design? Does it work? It seems iffy to me.

I have an active participant who has previously had a rollover into the Plan. She doesn't want to take a loan and the plan does not allow for in-service distributions. I don't see anything specific in the document, but would she be allowed to take a distribution out of her rollover account balance?

Thanks for everyone's help.

First I have zero experience in the Multiple Employer Plan area so if this is a dumb question sorry.

We took over a multiple employer plan in May 2008 and broke the plan up into 4 individual plans. At the beginning of the year they had over 120 participants, but broken up each plan has <120 participants. Do I need to audit all 4 plans seperately for 2008?

Thanks

Are plans allowed to rollover tax-sheltered annuities

An not-for-profit employer has a Non-ERISA 403(b) and an MP plan for ER contributions. They've decided to go the 401(k) route going forward. It's a church plan, so they can avoid the nondiscrimination rules, etc. Rather than terminating the 403(b) plan, it seems to me that it makes more sense to stop contributing to the 403(b) and let it die a natural death.

Does anyone think that plan termination is the better way to go?

Other than employee elective deferrals which are treated as employer contributions to a 401(k) plan, can employee contributions that are not elective deferrals be deemed employer contributions under the 401(k) plan? For instance, if a 401(k) plan document allows taxable disability payments made to a claimant under LTD plan sponsored by the employer to be contributed to the 401(k) plan, can such employee contributions be treated as Employer contributions? Received an RFP recently that inquired as to wheher this type of plan design could be accomodated. Intuitively, this does not make sense to me. Any comments would be greattly appreciated.

We have an employee who has not met the plan's eligibility requirements, but made a rollover contribution / transfer into the plan during the year (rollovers are permitted in the plan document by anyone, whether or not they have met the plan's eligibility requirements). Since his rollover account is now a plan asset, do I count him as an active participant at year-end or do I exclude him from the 5500 counts?

Thanks!

Most of our plans are Calendar Year. When should we have the amendment signed by? We thought we had until September 2009 but we were going to have them signed by the 12/31/08. Now we are getting nervous that we should have had them signed by now? I'm interested to know how many TPA's have done them already? Is anyone out there in the same situation?