Does anyone whether an employer that has established a plan requiring a one-time irrevocable election as a condition of employment may establish another plan providing for elective deferrals?

If not, I don't understand the point of treating such an election as an election that isn't an elective deferral for 402(g) purposes (at least, in the case of public employers that can't establish 401(k)s).

OTOH, if such a second plan can be established, then why not permit the elective deferrals under the mandatory plan?

Or is that permissible?

TIA,

John

I have a terminated plan that wants to distribute all assets by 12/31/06. We have two terminated participants that are missing that we need to setup IRA accounts for. This was a pooled account with a provider that will not set up the IRAs.

I can not find anywhere that will set up the IRA accounts due to NASD compliance requirements.

Has anyone dealt with a company that will set them up?

As plan sponsor we use a prototype document sponsored by our TPA. They recently sent us the amendment that will need to be executed for final 401k regs. They also included IRS Form 8905, which they said will enable us to not have to restate our plan for 6 years? But, doesn't this only apply to them as the sponsor of the prototype document? It seems a little odd to me and I've never encountered this before. Please correct me if I'm wrong though.

We're actually in the process of transferring to a new provider effective 1/1/07 and they sent us a similar amendment, but no form 8905. So, who is correct in this situation?

Is the $95,000 compensation threshold during the look back year the only stipulation in determining an HCE for a TSA plan?

thanks and Merry Christmas

This client adopted a new cash balance plan 1-1-2003. Their EIN ends in 6.

Is January 31, 2007 the deadline for signing an EGTRRA restated document (I presume yes).

Is the Deadline for submitting the EGTRRA restated document for a determination letter also January 31, 2007 (I presume yes).

What is the retroactive effective date supposed to be for this restatement?

Employer of an existing 401(k) plan wants amend to the plan to provide for a 3% safe harbor for 2007 even though it is now late December, 2006. The answer is usually (always?) "No", but does the answer change to "Yes" if the plan currently uses a current year ADP testing method, in which case they would have until 12/31 to amend the plan?

Thanks

Co. X and Co. Y each maintain a 401(k) plan with exactly the same provisions -- eligibility/vesting/dist. options, etc. Co. X is to be merged into Co. Y as of 1/1/2007. There are 40+ participants in Co. Y's 401k and 6 participants in Co. X's 401k. Was considering at a minimum to have a short amendment to be signed off by both Co. X and Co. Y as well as trustees of each 401k reciting the merger of the two Co.'s and authorizing the merger of the Co. X 401k into the Co. Y 401k and the transfer of Co. X 401k assets into Co. Y 401k. Any additional issues? I have reviewed the protoype adoption agreements and they are mirror images of each other.

Some were educating, some were interesting, some were intense, some were funny.

What are your nominees: post the "Topic Title" of the best threads of 2006.

Are voluntary employee contributions to a 401k plan (made by both KEs and nonKEs) treated as employer contributions for both KEs and nonKEs, in calculating the maximum Top Heavy contribution under IRC 416©(2)(B)? Or, are they treated as employer contributions for only KEs and not for nonKEs? Or, are the ignored in the calculation?

Thank you for your help.

Here is the deal:

Owner Company #1 Company #2

AA 100% 50%

BB 0% 25%

CC 0% 25%

BB and CC are siblings (if that matters). AA is not related to anyone. Do I have a controlled group? Company #1 already has a retirement plan. Company #2 would like to set up their own retirement plan - is that possible? Is there anything else I should be aware of?

These rules are so complicated. I would appreciate any help!

I have a Top Heavy plan in which all the HCEs are over 50. The company does not want to make a minimum Top Heavy contribution to the plan, but the HCEs would like to make catch-up contributions to the plan.

I am looking for a nondiscriminatory plan provision, that would be considered a "Plan Imposed Limitation" on voluntary contributions under Reg. 1.414(v), that would allow the HCEs to make the full $5,000 contribution to the plan as catch-up contributions (which as catch-up contributions would be excluded from the minimum Top Heavy contribution calculation).

A provision that would work would be: "In any plan year in which there are NHCEs in the plan, HCEs are precluded from making and voluntary contributions to the plan." Since the HCEs are precluded from making voluntary contributions to the plan, any contribution they make (up to the limit) would be a catch-up contribution because it exceed a plan imposed limit.

Does this seem reasonable? Do you have a better "Plan Imposed Limitation" provision?

Thank you for your help.

We are terminating a defined benefit pension plan via a standard termination. On the plan termination date plan liabilities are in excess of plan assets. The plan sponsor will fund the plan as necessary by the distribution date in order to purchase annuities. For the purpose of the 6088 is this plan an underfunded plan requiring that information on distributable benefits be provided for all individuals (not just the top 25) or can the Form 5310 include a receivable contribution as part of plan assets, such receiveable being equal to the difference between plan liabilities and plan assets?

I know there have been previous discussions about how the MVAR is calculated on the message board. I don't want to rehash those discussions. I do, however, have a few more general follow-up questions.

First, the IRS is apparently about to release a TAM on this very issue:

Posted by: Mike Preston Oct 30 2006, 12:47 PM

Yes, the TAM was issued. It is being redacted and will be posted on the COPA website soon, if all

goes according to plan.

Does anyone have the address for "the COPA website" or know whether the TAM has been released (or what it says)?

Second, I don't understand why there are so many different opinions on this issue. For a plan that permits lump sum payments, some actuaries say that the MVAR is based on the 417(e) lump sum. Others say (as recently as yesterday I had a discussion with an actuary who falls into this category) that the 417(e) lump sum is irrelevant to this determination and instead the MVAR is based on the normalized lump sum (i.e., the lump sum calculated using a "standard interest rate" and a "standard mortality table" as those terms are defined in Treas. Reg. Sec. 1.401(a)(4)-12).

When I review Treas. Reg. Sec. 1.401(a)(4)-3(d)(1)(ii) in order to find out what the IRS thinks the term means, it appears clear that "[t]he employee's most valuable optional form of payment of the accured benefit is determined by calculating for the employee the normalized QJSA associated with the accrued benefit that is potentially payable in the current or any future plan year at any age under the plan and selecting the largest (per year of testing service)." I cannot find any language in the definition of MVAR as set out in Treas. Reg. Sec. 1.401(a)(4)-3(d)(1)(ii) to suggest that if the plan provides for a lump sum distribution, then the MVAR is something other than "the normalized QJSA". What is going on here? Why are there so many different opinions on this issue? The language in the Treasury Regulations seems clear enough. Why do some actuaries ignore it or contend that it has been amended in some way. If amended, where and how?

Any thoughts are greatly appreciated. Thanks so much.

I am having a bit of a brain cramp on this. Can anyone point me to the correction method for when the plan document does not match the sponsor's original intent, and the sponsor has been operating the plan all along in violation of the plan doc? I know it involves a retro-amend & vcp submission but I am having trouble finding it in either of the rev procs (2003-44 & 2006-27). Thanks in advance.

If a participant took out a loan in 2004 and now wants to refinance that loan and take additional money out, can the term of the loan be for a new 5 year period? No loan limits are being exceeded dollar wise.

So for example if the the loan taken in 2004 was taken for a five year period - so the loan would be paid off in 2009, has a current balance of $4,000.00.

Now December, 2006 the participant wants to refinance the existing loan and take out an additional $5,000.00. Can the loan be amortized over a new five year period - loan being for $9,000.00 paid off in 2011?

Thank you.

Is the addition of the two new hardship reasons under the final 401(k) regulations optional or mandatory? I should know this, but I'm blocking tonight.

A company with stock publicly traded can make the safe harbor contribution in company stock correct?

The buyer is the successor employer and hired all of seller employees except two who will be working for buyer as independent contractors. Buyer is assuming COBRA obligation (buyer has a health plan, seller has terminated their plan). Buyer's plan excludes independent contractors. Under 54.4980B-9 Q&A 6, an asset sale is a qualifying event with respect to covered employees unless the buyer is a successor employer (it is) and the employee is "employed by the buying group." Are the independent contractors treated as "employed by the buying group" thus there is no qualifying event or must they be offered COBRA?

Thanks for any help.

I just completed my analysis of the proposed amendment to 415 under PPA.

The language has a critical error and should be corrected before it is approved by clients who

wish to terminate their plan.

A plan terminates 12/31/06 and the one HCE is at the 415 accrued benefit limit at 12/31/06, but distributions are obviously not made until 2007, does anyone think that the 2007 415 limit would then apply to that persons benefit?

Personally, I do not think so because the plan is terminated and all benefit accruals have ceased, but, I would like to be wrong.