Hypothetical: It is after January 1, 2009. Employment agreement with specified employee of public company provides for $1 million payment if the executive terminates employment for any reason at any time following a change in control. The agreement does not provide for a six month hold-out (oops).

Executive/Company realize this before a change in control occurs or is even contemplated (i.e., when there is a SRF) and want the agreement to be 409A compliant. Is there anything that can be done to fix this?

Does anyone have a copy of the 2007-1099-r Instructions?

The IRS has already uploaded the 2008 version at the url http://www.irs.gov/pub/irs-pdf/i1099r.pdf. And, where the instructions are listed http://www.irs.gov/formspubs/lists/0,,id=97817,00.html , it has 2006 and 2008, but not 2007. Same for the general instructions.

An HCE received a refund for failed ADP for 2007 within the 2 1/2 months. It is taxable for 2007 but the plan is not issuing a 1099-R since they've already filed those by 1/31. The problem is how to report on the individual's 1040. Without a 1099-R, does it go on lines 16a and 16b or should they report on Line 7. According to the 1040 instructions, it should be included on line 7, not on line 16a. Unfortunately, I don't think that the client can electronically file to get his refund sooner since we don't have a 1099-R.

Any thoughts?

I thought I read somewhere that under PPA a cash balance plan can have a low (as compared to normal required of age 62) retirement age. I have a plan that needs to amend the retirement age (change it from age 55 retirement to age 62).

Can we convert it to a cash balance plan and have a low retirement age? The owner (only participant) wants to start collecting as soon as possible; hence the low retirement age requirement.

Is there any easy way out? Any suggestions?

Basically, I asked the question in the Topic Description.

Assuming your 1/1/07 valuation has been long since been signed, sealed and delivered to the plan administrator, and also assuming that the AFTAP can be determined from the data in the valuation, can the valuation be used as the AFTAP?

Of course, most 1/1/07 valuations would not have used the "AFTAP" terminology. However, some that took longer to do may have it. I guess I will split my question into 3 scenarios, and ask whether there is a difference if:

1. The valuation report has a number that is specifically identified as the AFTAP.

2. The valuation report does not specifically refer to the AFTAP, but contains a number that is the AFTAP, that is labeled specifically enough or is accompanied by sufficient decsription so that it can be inferred to be the AFTAP.

3. The valuation report does not contain the number which is the AFTAP, but has sufficient information in order to calculate the AFTAP. (e.g. assets and current liability)

General test initially fails and the cheapest solution is to do an -11(g) amendment to bring in a new hire who otherwise is not eligible. My opinion question is this: let's say the amendment simply grants employee X as eligible. Who are now the non-excludable people for testing, keeping in mind that when you have two separate eligibility requirements, the lowest rules?

A. Is eligibility immediate and everyone is in the test?

B. Is eligibility whatever minimum would let employee X in and those who were hired before in the test?

C. Does the test just include everyone in the original test and now employee X?

D. Other

What if the amendment were crafted differently and granted a year of service to employee X? Would that change your answer?

I'm advising a multiple employer plan (MEP) in which unrelated ERs participate. One person works for two of these unrelated ERs. As to one such ER she is an HCE by virtue of ownership interest. She is not an owner in the other ER and does not earn enough from that other ER to be an HCE.

In testing these two ERs separately, is she considered an HCE for both ERs or just the ER in which she has the ownership interest that renders her an HCE? I'm thinking that she'd be an HCE only with respect to the owner in which she has an ownership interest, as that is consistent with the notion of separate testing in the first place. However, I'm wondering if anyone knows of a rule/ruling where consistency did not win out?

I am being told that the specific provisions in my document may be ignored and give one division an ancilliary benefit that is only provided to another division. The documents are written by division and provide different formulas and retirement provisions. One division intended to match another's benefit, but failed to modify their document. Now we have people saying it's o.k. to use that other divisions benefits under "the one plan rule". Is this even a real concept? Is there a code citation that backs up using another benefit structure simply because the two divisions have the same parent company?

Company maintains a 401(k) for its employees. To prevent deferrals from severance pay, Company's systems automatically shut off all deferrals once employee's status was changed to Terminated. The final 415 regs amended the definition of compensation to provide that certain post-employment compensation that would have been paid had the employee continued in employment must be taken into account as long it is paid by the later of 2 1/2 months after termination of employment or the end of the limitation year. The regs also amended the 401(k) regs to make it a requirement that the compensation satisfy the 415 definition including the post-termination compensation revisions of the 415 regs.

Here is my question: while it is my understanding that it is mandatory that the definition of compensation include compensation which would otherwise have been paid to the employee while active (e.g., base salary payments) but which happens to be paid after termination of employment but within the specified timeframe, can the plan choose not to include such post termination payments?

401K Plan has a Last Day requirement to receive Company Match Contribution.

I am doing 2007 ADP / ACP testing

My question is do I exclude partcipants who terminated in 2007 from the ACP Test?

I know they are included in the ADP test, but was not sure about the ACP Test.

Any guidance is greatly appreciated.

ALEX

Question has come up regarding insurance in a defined benefit plan.

Product being sold is whole life with renewable term rider.

Based on the insurance formula, the policies for the rank and file do not qualify for the RTR rider, but face amounts for the owners obviously do qualify.

Would this be construed as discriminatory?

For a long time, I have always applied for an EIN for every Plan I administer. THis is easy, but it does take some time.

When using one of the 401(k) Platforms such as John Hancock, ING or Hartford, they do the 1099's , 1096's and 945's using their EIN. Does anyone see any reason to apply for a plan EIN under these circumstances?

I'd like to be able to set up a plan now, and make a profit-sharing contribution for the prior year (a NEC). Can this be done? Since IRA's can be set up after year-end, I thought there may be such an option for 401ks as well.

I asked an administrator this question (who's been in the business for years), and I didn't like the answer. : )

I've done a small amount of research to find this:

<b>Income Tax Regulation section 1.401-1(a)(2) requires that a plan must be a definite written program that is communicated to employees.

Effective date of plan:

The plan may not be made effective earlier than the first day of the employer’s tax year in which the plan was adopted. In other words, an employer may adopt the plan document on the last day of its tax year, with an effective date retroactive to the first day of that tax year, but not any earlier.</b>

That seems pretty definitive, but I'm hoping there's some provision to allow NEC's for the prior year.

Thanks in advance for your reply(s).

I will soon be receiving a yearly bonus from my employer, and I'd like to have a decent portion contributed to my 401k plan pre-tax. When I asked our payroll department about that, though, they said they wouldn't do it.

This is a sizable bonus that I was hoping to contribute pre-tax to my 401k so I could borrow against it for a down payment on a new house. Is there any way that I can force my employer to contribute part of it pre-tax?

Thanks in advance

1) Does the new rule that allows a participant to diversify employer stock only apply to publicly traded stock?

2) Does this apply to an ESOP with only employer contributions?

3) Do the same rules apply to a 401k with employer stock?

4) Does anyone have a link to the final regulation as it relates to this issue?

Thank you very much for any help.

The pension plan has failed to provide notices to particpants in the past. A VCP is being pondered to correct the defect. When correcting this type of defect, is there a limit (or IRS rule of thumb) on how many years back we need to go find people impacted? The plan has been around for decades and some records no longer exist.

If a new plan in 2007 has an EOY valuation date, how is its 2007 AFTAP determined? Obviously 12/31/06 numbers are non-existent and my understanding is that means 0%, not 100%. I feel I am missing something.

Someone please refresh my memory on current thinking about what should happen if a participant has made an election but nothing was withheld. Is this covered under SCP?

Have a possible new client that installed an AFLAC pop plan. The owner is furious with the AFLAC rep for misrepresenting the products and wants to cancel the POP plan and start a new one. The AFLAC rep said he couldn't cancel the plan without incurring a severe penalty from the IRS..is this true?

Thanks,

Wisln

Our office is converting many EOY valuations to BOY effective for the 2007 plan year in order to calculate the AFTAP in a (semi) timely manner. For most plans, the 12/31/06 accrued benefit will be the same as the 1/1/07 accrued benefit and the RPA 94 current liability can simply be calculated based on those accrued benefits.

If a plan has an amendment which would impact the 2007 valuation, does the amended formula have to be used when calculating the AFTAP?

My feeling were it would since it would affect the 1/1/07 accrued benefit however I don't know if there is some exception buried somewhere.

A colleague also posed the situation where the 2007 benefit formula may be amended within two and one-half months after the end of the plan year and the certification was prepared based on a different formula. What then?

Thank you for your thoughts.