Fact scenario: Parties were divorced in 1997 and the settlement agreement provided that the parties would divide pursuant to a QDRO the husband's Optional Retirement Plan. The ORP is NOT DIVISIBLE by QDRO and the Participant cannot withdraw any amounts from it until retirement (or death, of course). In the intervening years the parties attempted through their original divorce attorneys to agree to a settlement of this problem. Now in 2007, I have been asked to attempt to remedy this problem and my proposed solution is to require husband at the time of retirement to rollover to an IRA in his own name (a permitted transfer under the plan) the amount due his ex-wife and then to change the name on the IRA account to her name.

My question is whether the agreement the parties sign to effectuate this transfer will be "a written instrument incident to a divorce decree" for purposes of section 71(b)(2)(A) and 408(d)(6).

I suppose that I could draft the agreement as an amendment to the settlement agreement but because I generally deal only with QDROs I was not certain of the best way to handle the form of the agreement.

Finally, I think that the transfer would be tax-free under 1041 as the fact scenario likely satisfies the requirements to rebut the presumption in regs.

Any thoughts would be appreciated.

does the 401(a)(26) Minimum benefit have to pass in the cb alone or does the aggregate allocation of the nc and cb have to pass it if we always test together?

This is a stupid question, but I have searched high and low and cannot find anything that directly answers this question: Were SEPs required to be amended for GUST? If so, please provide me with a cite to specific materials. Thanks!

A 401(k) plan permits designated Roth contributions. If a participant terminates employment and takes his/her entire account balance and then is rehired, does the 5-year Roth period start over?

I know that HRA's are subject to ERISA. But, are HRA's sponsored by a government subject to ERISA? I'd appreciate any help.

Our employers, with balance forward accounts, currently send in their 401k contributions in various formats such as spreadsheets, handwritten ledgers or whatever way they choose. Needless to say we feel like we are swimming in paperwork because they continuously come in weekly, semimonthly and monthly. Once the contributions are received we then manually input the figures into Relius.

Is there a way to have the employers send in a standard formatted contribution report via electronically so that the information can be imported into Relius? Manually inputting contributions is very time consuming, results in data entry errors, and the paperwork must be filed into file folders which becomes rather bulky.

I would like to streamline this process with the start of the New Year, and any help from the forum is greatly appreciated.

Thank you,

Denise Dupuy

We currently have a "one-man" PS Plan that we are filing a Form 5500EZ for. Now the participant has reached 72yrs old and will be taking out more money from the Plan than his normal deductions. If the Plan assets drop below the $250,000 required minimum do we still need to continue to file the 5500EZ or can we stop filing once the assets fall below the $250,000?

Thanks in advance for your help!

-Rachael

Greetings

Is there a legal mechanism to move an existing Whole Life policy from individual ownership into a new Defined Benefit plan?

It's more of an insurability issue than trying to do something fancy.

I would presume that the Plan buys the Policy from the Employee and that there are tax consequences of some sort for the selling Employee.

Any body know the answer off the top of my head or know where to send me for guidance?

Thanks

Christopher

If a company changes their payroll frequency will participants with existing 401(k) plan loans be required to complete new loan paperwork (i.e. promissory note, truth & lending, payroll deduction authorization etc..) or is a letter from the plan trustee sufficient to make the changes?

they just released the CPI value for Sept, so I calculate the limits as follows:

catch up - 5,288 round to 5,000 no change

deferral 15,866 round to 15,500 no change (last year was 15,501 so just got the increase last year)

comp limit 234,280 round to 230,000

415 DC limit 46,856 round to 46,000

DB limit 187,424 round to 185,000

key ee 152,282 round to 150,000

HCE 105,856 round to 105,000

twb is calculated differentely, but I expect that to be 102,300

and now, just released (I was off a little):

nope, must have just missed. the wage base will be 102,000.

In a recent conversation I was informed that there is a DOL "ruling" (more likely an advisory opinion) that states that if a 401(k) plan uses plan assets to pay for investment advice the registered investment advisor may not provide advice for outside or non-plan assets of participants. Does anyone know of the DOL piece referenced? Thanks in advance for any help you may lend.

Plan A was able to terminate the lump sum benefit provided to its participants (possibly due to the financial conditions of the plan). Plan A is now seeking to merge with Plan B. Since Plan A participants are no longer entitled to a LS benefit, if the two plans were to merge, do you think the merged plan would once again have to offer the LS benefit to the Plan A participants. I say no, because there is no LS benefit offered immediately prior to the merger.

The plan document allows for no minimum age requirement and therefore an employee is deemed to satisfy the age requirement upon hire.

However, is there any issue at a state level that could affect this participant's eligibility due the contractual nature of an enrollment form.

For example, say that a state has a contracts rule where a valid contract requires all parties to be age of majority (i.e. age 18). Is it possible that an employee age 16 entering into a salary deferral agreement with the employer could be creating an invalid or unenforceable contract?

I understand that ERISA rules have supremacy over state rules. It appears to me somewhat that ERISA may not have a specific rule regarding a deferral agreement (as a contract) and in the absence of a federal rule (such as ERISA) the state rule would hold.

Any thoughts?

A doctor and his wife are the only participants in a defined benefit plan. The plan is underfunded. The doctor has reached normal retirement age but rather than commencing benefits, he wants to make a $100,000 withdrawal which is more than the annual payment under a straight life annuity.

Does anybody think that we get an exemption from the restrictions on payments to HCE's because this is a two person plan with just the doctor and his wife.

Doctor N is getting a Hypothetical Employer Contribution from cash balance Plan S. Does he get credit for a year of participation for 415(b) purposes?

If not, is there some minimum that would start the clock?

Thanks for any help.

A 409A plan requires participants to elect future payments in the form of a lump sum or installment (over 5 or 10 years). The plan contains a reservation of amendment clause permitting the employer (the so-called "service recipient") to amend the plan.

Can the employer unilaterally require payment in the form of a lump sum, even with respect to amounts already deferred to the plan, without violating 409A?

Does it matter whether any of the benefits are so-called "grandfathered benefits", i.e., pre-409A benefits?

Thanks so much for your help.

In a Profit Sharing Plan, if a participant elected out of plan participation at the date they became eligible to participate (meaning that they elect not to receive an allocation of any employer contribution), can they at some point in the future, reverse the election, and elect to participate?

I really don't know how to propose this question... but for 2008, will cb have to test based on the segment rates?

Prior to the final 403(b) regulations a church could simply permit employees to request that a portion of their compensation be deferred into a 403(b) vehicle of their choice; no plan was created.

Initially I read the final 403(b) regs as preserving that rule for annuity contracts and 403(b)(7) accounts for church employees, notwithstanding the material requiring a plan document for retirement income accounts in Treas. Reg. 1.403(b)-9. Treas. Reg. 1.403(b)-3(b)(3)(iii) subjects church 403(b) contributions to the "plan in form and operation" rules only if they are retirement income accounts.

Treas. Reg. 1.403(b)-9 requires a plan document that states the intent to constitute a retirement income account. I assumed that a church's failure to have a plan document meant that no retirement income accounts were created, but so long as the accounts are annuity contracts or 403(b)(7) accounts, that is no problem.

But now it has occurred to me that another interpretation of the new regulations is possible -- church 403(b) accounts MUST be retirement income accounts, and the failure to have a plan document identifying them as such means that they don't qualify as 403(b) accounts at all.

That interpretation doesn't seem reasonable to me, and Treas. Reg. 1.403(b)-3(b)(3)(iii) argues against it. But, having seen that possibility, I'd like to know how others have interpreted these provisions.

Thank you.

Employee is a "specified employee" and also serves as a member of the board of directors of the same company. The employee participates in various arrangements as an employee but also participates in a otherwise 409A-compliant plan in which he can defer his directors fees until he ends his service as a director, which is the distribution event. Is the director's fee deferral distribution subject to the six-month hold out requirement?