Does anyone know where the SEC stands regarding the remedy under 409A to replace discounted options with non-discounted options? It appears that you would be granting a new option that is backdated--is there any SEC exemption for doing this in order to fix a tax problem? Any idea is appreciated.

Employer wants to fully vest all existing participants in the company retirement plan as of the date of sale to a new owner. Then revert back to the existing schedule for all new participants after that. As long as the change applies to everyone equally this should be OK, correct?

Thanks

Need some help. Not sure how this works. In preparing my Qdro it ask. " the alternate payee's award is or is not entitled to earnings( dividens,interest,gain and losses) from the valuation date to the date the award is segregated from the participants account.

We seperated in 10/7/03 and were divorced in January 06. the court papers say that any and all moneys earned after date of seperation 10/7/03 belong to whom ever earned the money.

Our daughter got married in October 2004 and we withdrew about 20K from the plan to pay for her wedding. So the 401K savings plan would be less at the end of 2004.

So where do I go from here? I also started contributing to the plan again in 2005 but have since stopped.

Need help

Employer has three plans; a frozen DB plan, a safe harbor 401(k) Plan only for participants eligible for the DB Plan, and a 401(k) for everyone else. The safe harbor plan has a 3% non-elective contribution, the non-safe harbor has an employer match.

I assume I would do separate coverage tests for each of the 401(k) Plans treating the participants eligible for the other plan as not benefitting under the Plan I am testing. If they fail the ratio percentage test I could do an average benefit test and would need to test all three plans together. If they failed coverage an employee might get both an employer match under the non-safe harbor plan and an employer non-elective under the safe harbor plan. Is this correct? Would it make any difference if the match was a safe harbor match?

Thanks!

The participant has a loan. The plan only allows for one loan. The participant now wishes to take a hardship distribution under the safe-harbor provisions for hardship, for medical bills. The bills have already been turned over to collection.

The client asked several questions, and please let me know if I am wrong with my responses to the client:

Exhausting all other options/loans from the plan is the only requirement? In other words, they do not have to obtain denials from outside of the plan (i.e., banks)? My response...correct

Loan payments will continue to have to be made? My response...correct

Personal review of the medical bills is required? I told the client that would be the prudent thing to do. (although I do not see where it is required) I also suggested copies of the EOB's.

Does the participant need to provide proof that the money was used to pay the medical bills, or is he on his honor to do that? My repsonse...I believe he is on his honor. I have never seen an employer go through proving it was used for its intention.

I would like to know what your thoughts are on this...thx

What if I suspect he may be trying to get the distribution prior to the issuance of a QDRO? My response...the spouse needs to sign off on the hardship distribution, which should eleviate the concern. As well the distribution forms ask the question is a QDRO pending.

I also told the client that the participant may not contribute (deferrals) for 6 months after the hardship.

Please let me know if there is any disagreement to my responses. In particular, the proof of payment of medical bills and the QDRO question.

Thank you so much!

Can my 403(b) tax paid contributions be rolled over to another retirement plan?

Is a defined contribution plan that calls for forfeitures to be used to reduce employer contributions permitted to forfeit unvested amounts in terminated employee accounts before they have had a 5 year break in service? In other words, if the terminated employee does not request/receive a distribution, does the employer have to wait 5 years to access the nonvested amountsi n such terminated employees account? I am aware of the requirement that nonvested amounts be restored if the employee is rehired.

Thanks!

I understand that the HIPAA Portability Regulations, issued Dec. 30, 2004, changed the special enrollment rules so that loss of coverage under Medicare, Medicaid, CHAMPUS/Tricare or other publicly sponsored or subsidized health plan is no longer a loss of coverage that would trigger a special enrollment right. Does anyone know WHY that change was made? I advise an employer who is not satisfied just to know what the rule is; the employer wants to know why the rule was changed. Any thoughts?

$59,000/$74,000.

A 501(c )(3) hospital has a 403(b) tax-sheltered annuity plan and a 457(b) deferred compensation plan.

In 2006, a 50+ year old employee can contribute $20,000 ($15,000 max + $5,000 catch-up) to the 403(b) plan. In addition, the employer could theoretically separately contribute (assuming discrimination reqs can be met which is a big assumption) $29,000 to the 403(b) plan to max out the 415(c ) annual additions limit for 2006 of $44,000.

The 457(b) plan does not need to take into consideration the $44,000 annual additions limit. Thus, the employee could defer $15,000 to the 457(b) plan over and above the 403(b) contributions. (The 414(v) catch-up allowance is not available since this is not a governmental employer, but if it were, the employee could contribute $20,000 each to the 457(b) and 403(b) plans.) Thus, the total amount that can potentially be deferred by the hospital employee is $59,000.

If the employee is in his final three years before retirement (and assume he's a long-term employee who has been eligible but never contributed to the 457 before) he can double his max 457(b) deferral to $30,000, bringing the total potentially deferred in 2006 to $74,000.

Am I missing anything?

The spectre of 'disqualification' haunts many of our plan committee meeting. Sometimes I think it is used too frequently. Anyone have an idea of how many plans actually do get disqualified? And for what reasons?

I have a company that is looking to hire a new VP. The company wants to grant the new hire a 10% of the company's stock after 4 years of service. This is not a stock option, but a stock grant. Is such a grant subject to 409A since it is a direct grant of stock and not an option to purchase. Also, how is such a grant tailored to satisfy 409A (assuming it applies) and/or how is it tailored to circumvent 409A.

Any help is appreciated. Thanks

Does anyone know where the SEC stands regarding the remedy under 409A to replace discounted options with non-discounted options? It appears that you would be granting a new option that is backdated--is there any SEC exemption for doing this in order to fix a tax problem? Any idea is appreciated.

All of the commentators I've read (including the joint committee) have indicated that qualified charitable distributions count towards required minimum distributions. However, the PPA provision doesn't specifically address this issue. In fact, the RMD rules in IRC 401(a)(9) refer to distributions made "to such employee," and the qualified charitable distribution rules are quite careful to require that the distribution be made to the charitable organization and not to the employee. Can someone help me connect the dots here?

Sole shareholder of corporate plan sponsor deposits $75,000 (personal funds) into the pension account. This is immediately followed by a $75,000 investment in a limited partnership, which is held in the name of the plan.

The individual states that the intention was to make a $75,000 personal investment in the partnership - this investment should be held for him personally. It should never have run through the pension plan.

By way of correction, we would like to simply retitle the investment to him personally. Does this seem reasonable? It doesn't seem like the plan was really affected either way.

There are obviously excise taxes due. Is the amount involved the entire $75,000? I can't think of what else it would be.

Any suggestions would be appreciated.

Med

Company X buys Company Y. One year later, Company Y's defined benefit plan is merged into Company X's defined benefit plan. Included in Company Y's DB plan is a frozen voluntary employee contribution account. Go ahead five years. Now the insurer that supported the administration of the frozen voluntary employee contribution account has sold a line of business and will no longer be able to support it after 2006.

What Options Do I have?

Although there is a 401(k) plan, spinning off the voluntary contribution account is not a viable option since the account assets have to be distributed under the defined benefit plan's distribution options. While the DB plan is overfunded, I would hate to have to go to the PBGC with this.

I'm a plan administrator/plan sponsor seeking any info about an issue we've run into. Not entirely sure I even have a problem here.

We changed from semi-montly to biweekly payroll in 2003. The result to employees to shore up the payroll calendar would have involved a short paycheck. An executive decision was made to provide a one-time payroll advance to ease the financial impact to employees. The advance was subject to 401(k) contributions and match.

The advance was to be paid back upon termination of employment - and over 160 people have done so since 2003. A few employees are also making payments without terminating. It has recently come to my attention that 401(k) contributions are also coming out of the earnings before the payroll deduction to pay back the advance. Sounds like maybe that should not be happening, and maybe it results in improper contributions to the plan, like double-dipping or something.

Plan doc: payroll advance is not included or excluded from the definition of compensation or deferral pay.

What do we have here? Is it wrong to take the 401(k) deductions before the repayment of the advance? Am I looking at refunds, forfeiture of match, retesting, refiling, and re-examining my career choice?

My next step is to consult with ERISA counsel, but looking for a preview of what is to come from board members.

Thanks for any comments.

I have a client that owns an aviation company that sponsors a safe harbor 401(k) plan. He's 100% owner. Earlier this year, he acquired an 82% interest in another aviation company that does not sponsor a 401(k) plan. I believe he has a controlled group situation. Am I correct?

Prior to 2006 under the good faith application I determined RMDs based on the account balance method.

The final regs seem to indicate that for a DB plan the account bal method is no longer available, thus requiring that the RMD be an annuity amount essentially equal to the vested accrued benefit.

With that saif, for one of my clients, the RMD goses from about 40k (under account bal method) to 110k (equal to his accd ben).

That's quite an increase to communicate to a client.

Is my general impressions on point and any observations out there to add?

Thanks.

Should've posted here first......

Plan participant has purchased beach property through his directed investment account in PSP. He does not personally use it or otherwise benefit from it. Plan allows for in-kind distributions. Would IRC §4975(d)(9) exempt the distribution of the beach property to him assuming there is an otherwise distributable event (ie, termination of employment, retirement....)? He has been told that to receive the real estate even as part of his distribution would be a prohibited transaction..... Thanks.