I find that payments, to beat the extra 72(t) tax, must begin after separation from service.

I have a partnership that will be disolving. So there is separation but the sponsor will go away so the plan needs to go away also.

One partner wants to start a distribution stream. If he sets up a plan as a Sole Prop and rolls his account to that plan, I think he loses the "separation" qualifier.

(He has non-standard assets so he doesn't want to go to an IRA.)

Any ideas on how this can be accomplished?

Thanks -

I am reviewing the work of another firm. I am unable to contact them for clarification and the client does not know a reason.

A son of an owner is included as an HCE. That is fine. The plan has a Match based on 1000 hours worked/last day. The son worked 705 hours and was active at the end of the year. He did not receive a match because he had no 401(k). However, he was included in testing as eligible/benefiting. No other active with greater than 500 hours was marked eligible. Is this simply a mistake? Or perhaps he is eligible, for lack of thinking of any other possibility, due to family attribution?

Thank you.

Typically I understand that the plan adminsitrator picks the TPA, but that sometimes is bundled with the investment funds. Shouldn't trustees be the ones ultimately signing off on the investment fund arrangement or am I overthinking things?

The specific question is who needs to actually sign off on a change in the investment arrangement, the plan administrator or trustees?

The document has pretty "typical" language about trustees being responsible for investments.

We terminated a 2-person DB plan and filed a Form 5310 with the IRS in September. (The plan is not subject to Title IV.) On the termination date, the plan was not overfunded. However, distributions won't be made until the IRS issues the determination letter. What happens if, by that time, the plan has become overfunded? Can we avoid a reversion (and excise tax) by distributing increased benefits to participants? The plan provides that, in the event of termination, excess funds can be allocated pro-rata among participants.

New ERISA 101(m), as added by PPA, is generally effective for plan years beginning after 2006. but has a transition rule that is confusing me. The transition rule provides that, if notice would otherwise be required before the 90th day after enactment of PPA, then the notice need not be provided before the 90th day.

For a calendar year plan, does the transition rule override the general effective date and require notice to be given by 12/2/2006?

Does anyone know why or if it is true that no qualified plans or IRAs are allowed to rollover into a Simple IRA? I understand the 2 year rule in the reverse direction, but what is the rationale for not allowing say, a traditional IRA to be rolled over to a Simple IRA? Obvisouly for account consolidation purposes. I can't seem to find an answer

May be taking over Plan that uses Individual Aggregate Funding Method, which has a credit balance of $750,000. Looks like 404 Normal Cost was ignored in past as contributions were simply put in as long as they did not exceed the FFL (resulting in the noted credit balance). By looking at past Schedule Bs, there appears to be about $1,000,000 in contribution that would be nondeductible. With this in mind, ...

1) Should prior valuations be redone? If so, must original actuarial assumptions be used? (It appears that a lower interest rate could eliminate the nondeductible contributions.)

2) Should past be "ignored" with future valuations simply reflecting the massive credit balance?

3) Should this Plan be reported to any agency?

Thoughts on this problem will be greatly appreciated.

I just want to make sure that I'm not missing something here. Isn't it true that in order to be an Adopting Employer, a sponsor must have some type of relationship with the original plan sponsor -- i.e., control group, affiliated service group, etc. A TPA is tellling me that unrelated employers can adopt a prototype document now because of GUST.

I'm thinking the only way that non-related employers can be an Adopting Employer is under a Multiple-Employer Plan.

I have a one man profit sharing plan with salary of $210,000. 25% of salary is $52,500. However, 415 limit is $44,000. Can client make $52,500 Employer Profit Sharing contribution and deduct $52,500, but only allocate the maximum of $44,000 and put remainder in suspense for future allocation without incurring any penalties? If penalties, what are they? Thank you.

We are considering extending health plan coverage to those "former" employees on LTD. Fully-insured plan. It will require keeping them on the books as a special category or part-time/consulting status, but apparently the insurance co is on board.

Does anyone do this? We are beginning to think it is unwise for several reasons, but one of which is that it is so far outside the box.

Can someone clearify Section 72(d) for me?

Specifically, I have an employee in a db plan with pvab of 200,000 and after tax employee contributions of 50,000 (interest not included). Plan does not allow lump sums. Do I have to offer the after tax contributions as separate annuity forms? or just have 50,000/200,000 (annuity form) be tax free?

Thank you,

Andrew

I have a client, S-Corp (husband and wife, no employees) who currently have a profit sharing plan which also has merged money purchase plan assets. The client's CPA is recommending that they terminate the plan and transfer the assets to a SEP since the contributions would be the same with no TPA administration cost. The current assets consist of a checking account, which the client runs their contributions through, various brokerage accounts and various annuities. The client does not wish to liguidate any of the current assets. What pitfalls does the client face in trying to do this? Any help would be appreciated.

DB Plan that offers Life Annuity, 50% J&S Anniuty and lump sum benefit options is being terminated. Do participants have to receive the option to receive their benefits at both deferred to NRA and immediate or can Plan just offer immediate.

For example accrued benefit at NRA is 1000/month and paid today is 350/month. Does the benefit election form need to include both or just the 350/month option.

Bank is directed trustee on 401(k) plan w/ 3% safe harbor/NEC and deferrals. There are no psp contributions in the plan. IN other words, everything is 100% vested. Bank is advising client to merge instead of terminate the 401(k). Looks like to me a way to hold onto the assets and trsutee fees....??? Generally, from the e/er perspective the main benefit of merging vs. termination is that the participants do not become 100% vested in a merger, but that is not applicable in this situation. Anyone see any other benefits to merging vs. terminating? Thanks.

some lively discussion on the Q and As in regards to 'otherwise excludables'. we still have no clear guidance on this one, but there was sort of a promise that something would get done in this area. in the past the informal guidance was that you could use maximum exclusion and not worry about the plan's entry dates.

this time there was insistence from the IRS that the plan's entry dates had to be considered. probably the more important issue was whether one could be penalized retroactively for following a procedure that was imformally given an ok. I'm sure we will see more on this one.

........

had a chance to actually meet and talk (if only for a few minutes) Sal 'Mr. ERISA Outline Book' personally.

from time to time I have tripped across a few typos in his book. because of the nature of these typos, the e-mails have been rather interesting - one involved the knights of Ne (or however that is spelled) from Monty Python, and another I had signed the correction from Jethro Bodine and he responded with a thanks from Jed Clampett.

......

It was especially meaningful to me to sit and talk to someone who found one of the custom Relius reports I posted on Benefits Link as being very useful- maybe not in the format I had, but as something they could easily modify for their purposes. one never knows if it is worth the hassle of posting such things.

......

the talk went well, but I almost gagged for a portion of it due to a tickle in the throat. ugh. as for the 'pension' song, well, of course on has to remember humor is individuallistic. it seemed to go well. always great to hear some chuckles during parts of the song.

Cats in the Cradle not by Harry Chapin.

The plan arrived just the other day

The company added a 401(k)

They put in a match, and what can I say

I deferred in the usual way

The cash was growin’ ‘fore I knew it, as I put away

I’d say, “I’ll have a lot some day, yeah

You know I’ll have a lot some day.”

refrain:

And the cat’s in the cradle and the silver spoon,

Little boy blue and the man in the moon.

“When will I retire?, well I don’t know when,

But I’ll have a good time then

You know I’ll have a good time then.

The plan turned 10, just the other day

I said “Thanks for it all, I’m doing okay”

I invested low, now its high today

I’m glad I deferred 10% of pay

As I saved away, my wife her smile never dimmed

Said she “I admire him, yeah,

You know I admire him.”

Refrain

The plan was tested just the other day

It failed ADP in a big time way

They put in a QNEC once in a while

Good news for me I said with a smile

The deferrals were too high for the HCEs

See you later, can I thank them please?

Refrain

I retired just the other day

I was sick of work and the rate of pay

But I said “The 401(k) was such a good find

The money is there and it grew over time”

Well the job it was a hassle, but now I’m free

I recommend you save like me

Recommend you save like me.

Refrain

Looking at new Code Section 401(a)(36), it appears that the new rules allowing in-service distributions at age 62 will also apply to money purchase and target benefit plans. Many of the PPA summaries only refer to DB plans as being impacted by these new rules. Am I missing something?

Has anyone heard Dan Hogans or anyone else from Treasury/IRS comment on the following issue?

One of the exceptions in the proposed regulations permits payment upon termination of an arrangement (and all substantially similar arrangements) pursuant to "the service recipient's discretion under the terms of the arrangement" within 30 days preceding or 12 months following a change in control.

If the written terms of the arrangement do not reserve this discretion to the service recipient, can you still take advantage of the exception if all of the participants and the service-recipeitn agree to terminate and pay out the money within the permitted time period surrounding a change in control? If not, can you achieve the same objective by first having all the participants and the service-recipient agree to amend the arrangement to give the service-recipient the necessary discretion, and thereafter have the service-recipient exercise that discretion? Seems kind of silly that you can do it through the 2-step approach but not the 1-step approach, which makes me think that maybe you can't do the 2-step approach either.

Do affiliated service group rules apply to VEBA's, as it would pertain to 410(b) coverage rules under a DC plan?

I'm a DC plan consultant. I've got doctor who owns his own medical practice. He is also 1 of 30 owners for a emergeny physicians clinic, in which he provides services to. This is an affiliated service group.

The clinic maintains a 401(k) Safe Harbor plan. The doctor opted out of that plan. He'd like to establish a VEBA but I'm not sure if he can because of the affiliated service group rules.

Another one I have is a doctor w/4 partners within his corp. One of the new partners wants to set up his own S Corp or PA and enter into a VEBA. His CPA says that if he sets up his own corp he cannot participate in their 401(k) - which is contritictory to other cases I've worked on.

Any words of wisdom is appreciated. Sites are even better!

I have a client who has a small Defined Benefit plan. Recently, he discovered that an employee had embezzled funds. He wants to know how he can get the embezzled fund out of the pension plan. I have already told him that the pension assets cannot to “attached” but that he will need to payout the money and hope the employee pays he back. Does anyone else have a suggestion?

When testing benefits, rights and features, must the benefit, right or feature being tested satisfy the ratio percentage test or can the lower threshholds of the nondiscriminatory classification test be used?