IRS Notice 2005-58 (July, 2005) made NO provision for a source of authority for nonqualified deferred compensation (NQDC)plans in Federal Credit Unions AFTER the August 15, 2005 deadline to have in place or authorize a plan under 457, eligible or ineligible. Looks like the IRS project on FCU's is no place close to an answer and won't be until way into 2007, since the interagency committee to review FCU's has not even met yet, if my information is still current.

So, does anyone think that there is a nonqualified deferred compensation plan, DC or DB, that can be safely created for an FCU during this period before the IRS completes its project and establishes a specific authority for FCU's. If so, what does it look like and what is the argument that it will be OK regardless of the unknown outcome of the project on FCU's and NQDC plans, since I don't believe there is any authority for correction if the drafter guesses wrong?

I've seen marketing materials suggesting that it is "conservative" for FCU's to proceed with a 457(f)/409A plan design(no legal support) in the current situation.

Plan's revenue sharing $ have been used to offset monthly admin fees paid by the employer. The admin fees are based on # of participants and total participant assets.

Client changed its mind and has decided to begin charging terminated employees the per participant and asset fee. They choose to only pay admin fees for the active employees. However, revenue sharing $ will continue to offset the employer's charges.

My concern with this arrangement is that the terminated participants will essentially pay inflated admin fees because their assets are being used to fund a portion of the active participant fees (via revenue sharing) and again used to fund the terminated participant admin fees. We are not crediting any portion of the revenue sharing $ back to the terminated participants.

Any problem with this?

We are about to file a VFCP submission for late deposit of elective deferrals. Does anyone have a sense for how long it will take the DOL to get to, and process, the submission under the revised VFCP? Thanks.

A client wants to gift $100,000 to his former university from a qualified retirement plan.

If this is possible, what type of distribution is this from a qualified retirement plan? …rollover or cash?

Cash?

Distribute $125,000 ($25,000 payable to the fed for w/h and $100,000 payable to the participant) and have the participant endorse the check to the university. Or, have the participant deposit the check and have him issue a personal check to the university.

Can this be a rollover?

Thank you.

does anyone know of caselaw discussing trustees' using a "blended rate" to calculate an ER's withdrawal liability?

I have a client that recently had an "awakening" with regards to their insurance broker. The guy had lots of whole life insurance policies inside and outside the db plan. There was also some large stock re-purchasing contracts outside the plan.

Is there anyway the policy holder can find out exactly how much the agent has received in commissions? The "commissions paid" was generally left blank on the previous Schedule As.

Does the policy holder have a right to know this information? If so, will the insurance company provide it if they are contacted directly?

Client withheld money from employee paychecks without completed enrollment forms. Employees email HR department asking them to withhold money. Is an email sufficient? My initial reaction was that these are not 401(k) contributions and the employer should return the money to the employees, have the employees complete enrollment forms and then withhold deferrals from pay. Any thoughts?

I've looked at several similar threads on this, but most are old enough that I wanted to see if there were any new ideas...

4 participants of a plan have returned to Ecuador - a very "in the middle of the night" kind of deal. Three have balances in excess of $5,000, and the other is over $1,000 (which is the plan's new automatic distribution threshold effective 3/27/05), so there's no basis for an immediate distribution anyway.

Can these participants be declared "lost" or "missing"? They have sent certified letters to their last known address (which have all been returned, naturally). They were not in any of the employer's other plans, so there's no information there. Regarding beneficiaries, they either didn't complete it or were each other's beneficiaries, so that's not going to help. And I can't imagine the IRS or SSA letter forwarding service is going to be able to find them - they'll have the 2005 address, and I highly doubt they are going to pay taxes in 2006!

Our plan document (Datair prototype) says that if they don't respond within 3 years of sending a certified letter, "the ultimate disposition of the then undistributed balance of the Distributable Benefit of such Participant or Beneficiary shall be determined in accordance with the then applicable Federal laws, rules, and regulations."

It seems that I just have to tell my client to sit tight until 3 years have passed and then revisit the issue, right? But let's say that three years is now - what would I do with this money?

Thanks.

Is there much of a difference for a non-electing church plan to go with a 401k vs 403b? Does using a 401(k) make it subject to ERISA?

Also, as a TPA, I'm having a tough time seeing what role we would have in adminstering a church plan. If the document has to be individually designed and maintained (which we do not do) and there are no 5500s, discrimination testing, etc. for us to provide service on, then what, if anything, is there for TPAs to do?

Does anyone know whether the value of retiree health coverage provided to a retiree's domestic partner under an employer-sponsored retiree health plan, which is typically imputed income to the employee, is reported on a Form W-2 or, alternatively a Form 1099?

I have looked at the regs, the instructions to the 1099 (specifically the instructions to the 1099-R and 1099-Misc) and the W-2 and Publications 15, 15-A and 15-B and everything seems to point to the following:

1. The employer should treat the value of the DP retiree coverage as imputed income to the employee;

2. The imputed income is wages for purposes of employment taxes and withholding; and

3. The wages should be reported on a Form W-2.

Note: The coverage is being funded through a VEBA.

Does anybody have any thoughts? One additional rub... if the W-2 is the correct form, withholding clearly applies, but there will liikely be nothing to withhold from because the former employee will not have wages in addition to the imputed income. This leads I think to the unpalatable result of either (1) the employer paying the amount needing to be withheld (which is also wages to the employee and subject to tax, etc.) or (2) requiring the employee to make some sort of after-tax payment to the employer equal to the amount to be withheld.

If anybody has any ideas or has looked at these issues, please help!!!!

Individual sold the assets of his single member LLC (assume it was an "asset" sale, since there was no "stock", per se, to sell). Same individual subsequently established a new single member LLC and wants to set up a PS Plan for the new LLC. Some of the employees of the "old" LLC are now employees of the "new" LLC.

Must/may the PS Plan of the "new" single member LLC take into consideration service performed for the "old" LLC for initial eligibility and/or vesting under the new PS Plan?

Thanks!

I got a strange request. The lone participant in a one participant plan asked the following question. Can the plan buy a life insurance policy currently owned by the participant's sister for $X. The insured is the sister's ex-husband. The policy is still in force. I don't know any other details about the policy, premium, cash value etc. Has anyone heard of such a thing? Can it be done? Is there any reason it would be a prohibited transaction?

This one is another step in the "now I've heard everything" direction.

Thanks for any help.

What does it take to get back into the field? Earlier in my career I worked for major companies in the Boston area (Putnam, State Street and Boston Financial) About 5 years ago I had to leave my job to tend to a family business crisis.

During that time I was still working on attaining the CEBS certification. This year I finally sold the family business to return the Defined Contribution field. I received the CEBS designation and have been trying to get a job. I found out that because of not being in the business for 5 years hiring managers don't want hire someone that does not have recent experience. I can't believe that companies don't want to hire an experienced employee with incredable skills.

I am willing to relocate to the North Carolina area. I even looked into Texas. Does anyone have any suggestions? I'm even willing to take a step back to move forward.

Through an acquisition, an otherwise ineligible employer adopted a company's SIMPLE 401(k) plan. Can the new sponsor freeze the SIMPLE 401(k) and continue to maintain that frozen plan beyond the time period permitted under Section 410(b)(6)©? The participants in the SIMPLE 401(k) will become participants in the employer's long standing "regular" 401(k) plan prior to the expiration of the transition period.

I just wanted to vent for a moment here...has anyone else thought about the fact that these safe harbor notices are supposed to be written as such that they can be understood by the "average participant", and yet for many of my plans, we are supposed to add all of this info that I know will only confuse the already confused masses?!?!

As an example, I have a safe harbor multiple employer plan. The plan currently has basically only 401(k) deferrals and safe harbor matching. The plan doc was written to allow for discretionary match and/or profit share, but the chances are slim to none that any of the Employers will ever take advantage of those provisions.

We had a great (one page!) safe harbor notice for 2006, that explained many of the things required in the new notice, but did use the SPD reference for things like the "other employer contributions" and "vesting" that now are required in the notice.

What is the purpose of the SPD if we have to regurgatate all of that info over again for other employer contributions that are not even related in any way to the safe harbor match???

Can anyone make sense of this for me.......?

If an owner of a company that sponsors a DB plan takes a loan to use as a down payment for a personal residence can the interest on such loan be deducted?

It is clear that in non home related matters the interest is not deductible, but in the above case I am not so sure.

Thanks.

A client started a Profit Sharing Plan for his one-person company so that he can quickly and cheaply borrow 50% of the assets. The problem is how to get around the expense of an administrator, since compliance for a one-person company should be about as simple as it gets.

His CPA balked, however, at preparing the loan documentation.

Any suggestions? Any ready-made forms you can recommend?

Thanks!

- Rob

If a participant is on a maternity leave of absence at the end of the plan year, are they entitled to the top heavy contribution.

Published as a proposed reg on 12/02/2005:

http://a257.g.akamaitech.net/7/257/2422/01...pdf/E5-6742.pdf

In the table, two of the columns have superscripts: 7 or 8. No footnote number 7 opr 8. Anyone know if this is a typo, or something omitted?

I'm having trouble understanding a portion of the final 401k regs concerning the use of the ACP safe harbor: If a plan uses an additional match (in addition to the basic safe harbor match), and that additional match has a 1000 hour/last day requirement, is it just the additional match that is subject to the ACP test, or is it that the additional match PLUS the basic safe harbor match is now subject to the ACP test.

Thanks