If you were considering starting an investment advice program for plan participants now, would you make sure that the program met the PPA requirements, or would you be okay with using pre-PPA, i.e. SunAmerica, guidelines? I think that having the DOL say that SunAmerica continues to be okay is nice, and if I already had a program that met SunAmerica, I would say this is a great outcome. If I'm implementing a new program, I can't think of a good reason to go with a program that only meets SunAmerica because it seems like the stakes have been raised. Thoughts?

Would anyone care to offer an opinion of what "issued or delivered" means in an insurance contract context?

I often run into state insurance laws that purport to affect any policies "issued or delivered" in that state. It appears that one state could dictate the contents of another state's insurance policy.

For example, State A requires coverage of domestic partners in all group health insurance policies issued or delivered in State A.

An employer in State B purchases a group insurance policy in State B from a carrier licensed in State B. The contract happens to cover some employees who live in State A.

In this situation, must the State B employer make domestic partner coverage available for all employee that reside in State A?

I am looking at a situation where the IRS is considering disqualifying a client's defined benefit pension plan for the plan's failure to meet Code Section 401(a)(26) and 410(b) requirements. In effect, the plasn covered only the two owner-employees.

Due to relatively high compensation amounts and plan contributions in the first few plan years, the client's accrued benefit exceeds the amount of plan assets.

I am very familiar with Code Section 402(b)(4). In this situation, the client will have to take into income approximately $1,000,000, even though the client only contributed $500,000 to the plan.

Does anyone have any experience in dealing with the IRS on this issue. Are there any creative arguments that can be made that would lessen the impact of the application of Code Section 402(B)(4).

Thanks in advance for your comments.

Ed

NQDC plan provides that the plan must terminate within 30 days of a change in control and provides for a benefit to otherwise ineligible employees, upon a change in control.

Employer negotiates stock sale of entire company; seller will not exist after sale and buyer will not assume seller's obligations under plan. Plan terminates and benefits are distributed.

Change in control transaction falls through.

Is this a 409A violation?

If so, is it something that foreseeably could be corrected through the proposed 409A voluntary compliance program?

Plan also allows for discretionary termination but 409A prevents distribution of benefitsfor 12 months unless benefits would have been distributed had plan not terminated, and in this scenario benefits are already distributed.

I have a new client whose plan excludes collective bargained employees. One employee works for a union (collective bargained), but is laid off from that employer. He is working for my new client, but not as a unioned (collective bargained) employee. Is he eligible for this plan?

Thank you so much!

Has anyone thought about how to best use the IRS transition guidance to deal with nonqualified stock options to purchase preferred stock (that are subject to 409A)?

401k wants to terminate 12/31/07 and start a simple ira starting 2008. Can assets be rolled from the K to the simple? Can a plan liquidate the entire k plan, complete testing and filing for the final year and be done with it or do they have to go thru a termination process with the IRS? I get different responses from different TPA's.

Thank you in advance for any advice.

I've got an in-the-money option that is about to expire. Would like to extend it but can't do it under regular 409A rules (for example, extension would go beyond 10 years). Question: any problem with changing the option during the transitional period (ending 12/31/2008) to allow exercise at a 409A date, such as change of control or separation from service? By taking out the employee's discretion as to the time of payment, the revised option would be compliant with 409A. We're changing the payment date, but that's allowed during the transition.

I think it works - but will call on the megabenefitsmind out there in cyberworld to see if it disagrees.

Is anyone familiar with a "Rainmaker" 401(k) Plan that is designed by a potential business owner to invest in a new C Corporation? Company that proposes this program is Benetrends.

Does a SIMPLE 401k that is being terminated need to be amended for PPA?

I am with a small TPA in Colorado and we reserve the right to charge SPECIAL service fees for services that fall outside of our standard service agreement. These special services include things such as fixing payroll problems based upon incorrect data, calculations of lost earnings on late contributions and various other types of special services. These services are charged on an hourly rate due to the nature of the variability/complexity of the project or service. We currently charge $100.00 per hour to the client for these services and we have been using this rate for almost 10 years. I am interested in obtaining feedback as to whether this fee is out of date compared to the marketplace.

Thanks in advanace for your responses.

Please verify that the 5 year period for which an employer can make contributions for a former employee is the 5 taxable years following the year in which separation occurs.

Example: EE retires 6/30/2006. Employer could contribute, up to the 415 limit, in the year of retirement (2006) and for an additional 5 years (2007 - 2011).

Suppose a couple were married 20 years and the wife didn't work. They get a divorce after 20 years and the man continues to work another 10 years. Per majuska/majuska she is entitled to a percentage of his retirement during the years of marriage.

Now because pensions increase most during the last few years of service is she only entitled to the "earlier" value of the pension and not the portion that increased towards the end?

Just to pick a number the first 20 years it might have been worth lets say $200,000 if I had left the company at that time.

But if I work 10 more years the total worth might be $500,000.

If the her percentage is 50% does she get $200,000 times .50 = $100,000? ....... and I get $400,000?

Can someone tell me if the max. hardship amount is mandated by the actual amount needed to satisfy the Hardship? I though this was true, but being Friday, I am second quessing myself. A participant needs 2525 to bring her house loan current but she wants to take 13,000. Is this possible?

Can anyone point me to a good article or some commentary on the order of withholding with regard to benefits? For example, what comes out of a participant's compensation first: (1) 401(k) deferral; (2) Section 125; (3) income tax; (4) nonqualified deferrals etc.... Thanks.

So I'm scrambling to get up speed on various aspects of PPA 06 but don't get the sense that with only 2 months until "liftoff" there is much "angst" out there at least on these discussion boards. That leads me to believe that either (a) I'm the only idiot that doesn't have thie stuff down yet, or (b) people have inside knowledge that leads them to believe this will get post-poned a year.

I'm comfortable with being the idot that doesn't get it fast, but if there is a collective unspoken feeling that this is getting post-poned another year I'd appreciate anyone sharing those thoughts, guesses, or insider tips (I promise I won't use the insider knowledge for unlawful gain in timing Benefitslink's stock price fluctuations).

We recently reviewed a 401(k) safe harbor match plan for possible takeover. The plan sponsor was disenchanted with her current TPA for being unresponsive and unwilling to "hold her hand". They employ about 400 employees, have about 120 eligibles and about 30 participating. The first thing we noted was that the plan was very close to an audit....a very big surprise to the client as an audit will likely add $5,000 - $7,500 to their annual costs.....a lot for a little tiny plan with only $300,000 and 30 active participants.

She found that her payroll provider could offer her a very flexible plan with a pretty good investment lineup for reasonable TPA fees that INCLUDED the audit!

Anyone have an experience with this type of bundled competition? Can clients really get basically a free audit by using a payroll provider plan?

I just took over a governmental DC plan that only has after-tax EE contributions and an ER match on those contributions. The plan allows inservice withdrawals of the EE contributions, but not the ER portion. What account balance should be considered when calculating the taxable/nontaxable portions of the distribution if someone is just withdrawing money from the EE portion of the account balance? In other words, should the nontaxable portion be Contribution Basis / EE Account Balance X Distribution or Contribution Basis / (EE Account Balance + ER Account Balance) X Distribution? Does it matter as long as you are consistent in the calculations?

I would appreciate pointing me in the direction of official guidance/code/regualtions along with any answers you provide.

TIA

I have a 5-percent owner who has to start taking RMDs. The plan & plan sponsor file for extension every year and the contributions are often made in August of the following year. Are the participant's accrued contributions included in his 12/31 balance for RMD purposes? This is a profit sharing plan.

A 401(k) plan provides for salary deferral and matching contributions. There are 10 investment options, one of which is employer stock. Currently, less than 30 percent of all plan assets are in employer stock. In order to get a tax deduction for the dividends, it was suggested by an advisior to amend the plan to be an ESOP. The proposal is to treat the employer stock fund as the ESOP portion of the plan. The amendment would have the necessary restrictions and requirements to be an ESOP, but the plan design did not change. Participants can still elect to have deferrals and matching contributions invested in any investment, inlcuding employer stock.

How does this plan design meet the "primarilly invested" in employer stock requirement? Would the plan have to require at least that the matching contribution be make in the form of employer stock for it to be an ESOP? Any other issues?