A large new DB plan is in the process of being established. The plan sponsor does not wish to offer lump sums, other than the $5,000 cashouts.

In addition, because the company already provides life insurance outside the plan, the plan sponsor has decided to only provide the minimum spousal death benefit in the plan.

Thus, an unmarried participant has no death benefit payable from the plan unless they have retired and elected an option that provides for payments after death, such as life with 10 years certain.

The surviving spouse of a participant will only be eligible for the 50% survivor annuity payable no earlier than the date the participant would have reached their earliest retirement age (age 55).

As part of this process, the sponsor wants to know if their QDRO policy could be written to allow "shared-payment" QDROs only (rejecting any separate interest QDROs).

Can the plan adopt a QDRO policy that does not allow any payments to an alternate payee until the date payments begin to the participant? Thus, if the participant dies before retiring, the alternate payee gets nothing? This seems to be allowable, please comment.

"technically" you pay the premiums for the coverage year at the beginning of the year. If a plan terminates in the middle of the coverage year, would the sponsor be able to receive a refund? if so how do you request this refund? is there a form or just a letter?

Treasury has announced they will not enforce QA 9 of 2007-28 and rather will follow proposed tech correction

Attached is an email ASPPA is sending to members

ASPPA Members:

Treasury officials informed Congress yesterday that they will enforce the new PPA combined plan deduction limits under Internal Revenue Code §404(a)(7) in accordance with the language in the proposed PPA technical corrections legislation (H.R. 3361/S. 1974). Thus, Q&A 9 of Notice 2007-28 will not be enforced and, in a defined benefit/defined contribution plan combination situation, if the DC contribution was not greater than 6%, Code §404(a)(7) does not apply to the defined benefit plan.

This is effective for the 2006 plan year and has two primary IMMEDIATE effects:

· Employers who contributed in excess of 25% of compensation to their defined benefit plan (and in excess of Unfunded Current Liability) in 2006 based on an interpretation in conflict with Q&A 9 of Notice 2007-28 need not pay an excise tax; and

· Employers who move fast for 2006 (who were previously limited by Notice 2007-28), have until tomorrow to increase their 2006 deductible contribution.

Link to Sept. 13 Treasury Letter (http://www.asppa.org/government/gov_reg.htm)

ASPPA was instrumental in securing inclusion of this solution in the PPA technical corrections legislation. We also addressed this issue with the Treasury and IRS in a May 14, 2007 comment letter (http://www.asppa.org/pdf_files/0514_2007-27NoticeFIN.pdf).

Two questions:

1. A client wants to give its salaried ees $1,000 cash (taxable) if they do not choose the er's health care plan, but does not want to do the same for its hourly ees. Is there a potential nondiscrimination issue?

2. A client wants to amend its 125 plan to give lower paid ees higher paid benefits than its higher paid ees. Any issues?

Thanks.

We are having an audit ( CPA for Form 5500 Schedule H ) on a plan that is governed by two separate documents but the assets are combined in one brokerage account. The accountants are having trouble verify unit information for the 5500 using a percentage based computation on mutual fund units.

They also indicated that they have never seen this before. Assets being combined. I have seen other circumstances where this is the case.

Anyone have any thoughts or suggestions. They now want to do an audit on the entire plan.

Thanks in advance.

Can someone tell me if a 403(b) plan has to be reported on a Form 990 as a pension plan contribution?

1. Under Section 1107(a)(2) and (b)(1) of PPA, there is an extended amendment period for governmental plans to adopt PPA-required amendments, which is the last day of the first plan year beginning on or after Jan. 1, 2011, and these amendments will be given retroactive effect. For an individually designed governmental DB plan qualified under 401(a) can you wait until the end of the applicable remedial amendment cycle, which is January 31, 2009, to adopt all other interim amendments required for that cycle, with retroactive effect to the date when the interim amendment was required?

2. Is there model language anywhere for the interim amendments required, or a good summary of what amendments are required, to be adopted for the current remedial amendment cycle for governmental plans which will expire Jan 31, 2009?

Company sponsoring cafeteria plan covering welfare benefit plan components is closing the business.

If the plans have been exempt from filing (less than 100 participants and NO trust):

Do I need to file a final? OR If the plan was exempt from filing then a final is not necessary?

If I must file, can you tell me where it states this in the 5500 instructions or regulations so I can pass this on to the client?

thank You

I have a cafeteria plan covering several welfare benefit plans. Filing was never required since the number of participants in the component plans were less than 100 and a "Trust" was never established.

The plan sponsor is now closing the company so the plans will now be terminated. I read somewhere that even if fiing was never required, a final return must be filed for the cafeteria plan covering the welfare benefit plans.

Can anyone tell me if this is correct and if so, where can I find this information so I may show the client that we must file a final?

TPA decided to take responsibility for corrective contributions due to mishandling ADP tests. TPA deposited corrective contributions directly to the trust.

It's my understanding that corrective contributions are normally deductible contributions unless the correction is a "restorative" payment such as restoring investment losses.

Can someone help me sort through the implications of the TPA making this nonrestorative correction on behalf of the employer?

An owner (>5%) who is over age 70.5 had been taking RMD’s from his 401(k) Plan. During 2006 the owner took his RMD, the plan terminated, he rolled over his remaining balance to an IRA and everybody else took their money out of the plan. Everybody showed a $0 balance in the plan as of 12/31/06.

Lo and behold, during 2007 the plan received some litigation proceeds from one of the plan investments and the broker transferred the >5% owner’s share of the proceeds to his IRA. The question is whether this participant should have had a portion of that rollover distributed as an RMD for 2007? If so, how would you calculate it since he did not have a balance in the plan as of 12/31/06?

Anybody ever run across this situation before? Since 401(a)(9) is a qualification requirement I am concerned about jeopardizing all of the plan distributions.

A company terminated a DB plan a few years ago and filed with both the IRS and PBGC. The plan received a favorable determination letter and did not receive a notice of noncompliance from the PBGC. The plan had an asset that could not be liquidated at the time the final distributions were made, so the company loaned the plan an amount equal to the estimated market value of the asset, allowing the plan to distribute the benefits to participants. Whenever the asset can be liquidated, the plan will repay the company. The plan's trust continues to hold the asset but has a liability equal to the value of the asset, so the net value of the trust is zero.

I understand that if a terminated plan does not distribute all of its assets in a reasonable period of time (generally within a year), it is considered a frozen plan and must continue to be amended to comply with 401(a). Would that be the case here? Distributions have been made, but technically the plan continues to hold assets, although the net asset value is zero.

Question:

Executive has an employment agreement that states that he shall be entitled to continuation of welfare benefits for a period of 3 years following a termination of employment for any reason. Such welfare benefits include taxable welfare benefits (e.g., group-term life over $50k).

Since Executive is entitled to continued taxable welfare benefits following a termination for any reason, such right is not subject to a substantial risk of forfeiture and is considered deferred compensation. Accordingly, the six month delay rule applies (assume Executive is a specified employee).

If Employer does not pay Executive cash in lieu of the taxable welfare benefits, but continues to pay the premiums on the taxable welfare benefits post-employment for 3 years, does the Employer have to wait 6 months before paying such premiums under the six-month delay rule?

Thanks.

Should these be with held in such deposits to a plan? My thinking is absolutely.

If a Defined Benefit Plan was established pursuant to good-faith collective bargaining and covers solely union employees, can non-union employees who were not considered during the collective bargaining process be added to the Plan and the Plan still satisfy the minimum participation requirements of 401(a)(26)? If so, can anyone direct me to authority on this issue. I would really appreciate it...thank you.

Is anyone out there opening "Missing Particpant IRA's" for particpants whose paperwork comes back return to sender and for whom "efforts to locate them" have come up dry?

We want to start doing this, but I'm concerned because none of our documents provide for automatic rollovers in the first place.

What are others doing about lost participants? We want to relieve ourselves of the issue as easily possible!

Kind of a 2 part question here ----

I know there has been a lot of discussion on this board on how to test employees with no compensation. I think the general consensus is that you would not include them on ADP/ACP because they were not able to defer due to no compensation.

What are your thoughts on how you test an employee with no compensation in coverage / Ratio Percentage? They're an active employee who can't be excluded in minimum age/service, bargaining employee, etc. My thoughts are that they'd have to be considered not benefiting on the Ratio Percentage K test. They can't be deemed to benefit because with no compensation, there is no way they'd be able to benefit.

Going a step further, what if the employee with no compensation is on military leave. I thought USERRA indicated that they couldn't be considered not benefiting for coverage - but for the life of me I can't find any reference to that.

Any thoughts?

The Pension Protection Act authorizes plans to allow the withdrawal of automatic contributions without an early withdrawal or other penalty provided certain requirements are met. Those requirements are not the subject of my question. Assuming all the requirements are met and a participant elects to treat the contributions made within the first 90 days after the date of the 1st elective contribution as an erroneous contribution, my questions are:

1. The Joint Tax Committee Report states that such amounts are generally treated as a payment of compensation, rather than as a contribution to and then a distribution from the plan. Does this mean that we pull the amount back into the W-2? If yes, what about earnings - do they get reported as compensation, too? Losses, do they reduce the compensation?

2. Can we take fees on the contributions that were made? Again, if reported on a W-2, do fees reduce the compensation that otherwise would have been reported had the deferral never occurred?

401(K) Plan allows for loans. Participant has rolled over his IRA into the company 401(K) Plan. Are these IRA $$ now a part of the total plan and therefore eligible for loan or must they be segregated to keep their provisions as IRA $$ (thereby, not being eligible for loans).

Thanks!

Plan definition for comp is 3401(a) - Does anyone know if 3rd party sick pay is to be included in compensation for plan allocation purposes? Insurance carrier is making us include the 3rd party sick pay in gross wages on our W-2s. Questionning this because 3rd party sick pay is not a payment for services.