Company changed its name. What must/should be done regarding the company's PS Plan?

I assume that the plan does not be need to be amended to simply reflect a name change. Would a board of directors' resolution indicating something like: "in conjunction with the company's name change the name of the ABC PS Plan shall as of xx/xx/2006 hereafter be referred to as the XYZ PS Plan" - with possibly a SMM to the same effect - be sufficient?

Thanks for any and all replies!

What is the corrective procedure when a 401k plan sponsor erroneously contributes after-tax employee contributions on behalf of a participant when the plan document does not permit such contributions?

I'm assuming we have to refund the contributions plus gains/losses. Would the participant be taxed on the earnings? Any excise taxes apply?

I have a DB plan that only allows benefit payments to start at termination for those who continued working beyond NRD. They got the greater of AE and additional accruals. Now the accruals are frozen and the sponsor wants to amend to say the participants must start payments at NRD even if they are still working. I know they can amend to allow participant to begin payments at NRD while still working, but I'm not sure they can take away the option to defer payments (with AE increases) until actual retirement. Would that be a protected benefit that can't be removed?

Thanks for any thoughts/guidance.

Can a survivng spouse roll over the 401(k) assets to an inherited IRA? The reason for doing so would be to allow the surviving spouse to take distributions on account of death without incurring the 10% penalty. (If the survivng spouse rolled over the assets to his/her own IRA, the survivng spouse would have no exception to the 10% early withdrawal penalty)

My 56 year old client has some highly appreciated stock from her 56 year old ex-husbands qualified plan, divided via a QDRO. He is still employed by the company. We were told by their benefit distribution expert that since the ex-husband is still employed by the company, the wife cannot utilize favorable NUA treatment on the highly appreciated company stock. The company is forcing her to rollover or withdraw all assets in her portion of the plan within 60 days. Since we live in a "Hurricane Wilma" zone, any taxable distributions the wife receives in 2006 is exempt from the 10% premature withdrawal penalty, but we need to know if NUA rules apply to her. Please advise. Thank you.

I have been contacted by a business owner who put in a SARSEP at the last possible minute in 1996. She was assisted in this process by a large, national brokerage firm. Since that time, it is quite likely that the plan has not operated in compliance. She was unaware of the 50% participation rule, the non-discrimination testing and the top-heavy rules.

She wants to know if there is a statute of limitations as to how far back she is subject to penalties, in the event her non-compliance was discovered.

She also wants us to give her an idea of how much fixing it all would cost. Based on the number of years involved and the multitude of issues, I'm not even sure where to begin. Is there any correction program open to her that would make sense for her to use?

There are only 3 people participating in her plan, herself included.

Thank you.

Just received this via e-mail.

Issue Number: IR-2006-136

Inside This Issue

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Delay in Effective Date for Regulations Under Section 403(b)

WASHINGTON —The Internal Revenue Service announced today that the general effective date for the regulations regarding section 403(b) arrangements that were proposed in 2004 (including the related controlled group regulations under section 414©) will be extended.

In order to provide employers, employees, insurance carriers, and mutual funds involved in section 403(b) arrangements a reasonable advance period before the regulations go into effect, the final regulations generally will not be effective earlier than January 1, 2008.

Here is the actual link

PPA 06 grants 5-yr amortization extensions for some multiemployers:

Automatic extension of amortization period. The amortization extension procedure is changed for plan years beginning after 2007. The sponsor of a multiemployer plan can apply to the IRS for an automatic extension of the period required to amortize any unfunded past service liability, investment loss, or experience loss. The IRS must extend the amortization period for a period of up to five years. The plan's actuary must certify that: (1) absent the extension, the plan would have an accumulated funding deficiency in the current plan year or any of the nine succeeding plan years, (2) the plan sponsor has adopted a plan to improve the plan's funding status, (3) taking into account the extension, the plan is projected to have sufficient assets to pay its expected benefit liabilities and other anticipated expenditures in a timely manner, and (4) required advance notice has been provided to affected parties. The automatic extension will not apply with respect to applications submitted after December 31, 2014 (Code Sec. 431(d)(1) and ERISA Sec. 304(d)(1), as added by the Pension Act).

However, this doesn't take effect until Plan Years beginning after 2007. Previously, 412(e) was an option, but PPA appears to remove this option retroactively to 6/30/05.

Grandfather rule for benefits funded under an agreement. The changes discussed here do not apply to benefit increases funded under an agreement to which a multiemployer plan is a party if certain conditions are met. The agreement must have been approved by the PBGC prior to June 30, 2005. The agreement must provide for benefit increases, and provide special withdrawal liability rules similar to those available in the entertainment and construction industries (ERISA Sec. 4203(f)). A firm in either of these fields is allowed to withdraw from a plan without incurring any liability, unless it continues to perform work in the covered area of the sort performed by the covered employees (ERISA Sec. 4203(b), ©). In addition, the benefit increases must occur under a plan amendment adopted prior to June 30, 2005, and the plan must be funded in compliance with the agreement and any amendments to it (Act Sec. 206 of the Pension Act).

Does anyone know of any options available to a plan that will have a deficiency prior to 2007, but didn't submit a 412(e) filing prior to 6/30/05?

This may be an unusual question but I want to explore all avenues. Underfunded PBGC covered DB plan has lump sump provision "subject to consent of the administrator" and has only paid out lump sums under 5k although there is no cap on the lump sump option per se (just the subject to consent of administrator language). Recent terminee has 40k lump sum benefit he's requesting. Plan Administrator (employer) is balking at paying the lump sum given severe under funding of plan and fears adverse impact on remaining participants (about 6-7 participants including 1 owner). Plan does not qualify for distress termination and not sufficiently funded for a standard termination (majority owner not willing to limit personal distribution at this point to allow plan to terminate in standard termination). Employer will continue to fund plan as able but is struggling so immediate funding not likely to help a lot. Terminee engaged attorney to pursue lump sum, stand-off has occurred between participant's attorney and employer over interpretation of language in plan regarding lump sum availability. Unsure if lawsuit will be filed or not. This is all background info for the question of "is there any ability to pro-actively solicit the DOL's help (from the employer's side) to act as a mediator in this process ? I assume the DOL normally just responds to participant's complaints but do they ever act on an Employer's request for help ? None of this will preclude legal action I realize, but assuming it moves to the DOL's court first, client is wondering if a pro-active request from help from the employer to the DOL might be helpful and if such an avenue is even available. I've never heard of this approach but wondered if anyone else knows if the DOL would respond to an employer's request for help in a situation like this.

If a participant's total account includes 1,000 of employee after tax contributions, 1,000 of Employer PS contributions and a loss of 200.00 how is the cost basis of the 1800.00 determined? I'm trying to find authority for allocating the loss to the after tax amount and reporting nontaxable amount on the 1099R as 900.00 versus the 1000.00. Any thoughts?

I have a plan that is written to have a special vesting provision. It's a school (tribal) and the document indicates that anyone who loses their job due to a loss of funding for their program will accelerate to 100% vesting, assuming they are currently not 100% vested. The plan has a 3-year cliff vesting schedule. The employer is talking about eliminating this special vesting provision (eliminate the immediate 100% vesting due to program loss of funding). They have never encountered this situation where the vesting accelerates and an employee is terminated, so I don't believe we're actually changing the vesting to any participant's detriment. However, we also don't know if over the next 2 years or so some program might lose funding and an employee (perhaps newly hired?) might have been eligible for that accelerated vesting. Thoughts? Thank you.

Employee Bob's spouse became eligible for benefits under her employer's plan. Bob would like to decrease his health care flexible spending account election. He has not used any dollars yet from his FSA account. Can he do this?

re-phrasing part 2 of my prior question : If you change to market for the 1/1/06 valuation, are you locked in until 2011 or with the 2008 valuation do you have the options of continuing with market or changing to average market with a max on the averaging period of two years ?

A few questions : (1) what does averaging market values over at most 2 years mean ? Is it the averaging methodology described in the 412 regs ? and (2) If you change to say market value for a 1/1/06 valuation, are you locked in until 1/1/2011 or do you have to conform to 2 years in 2008 & stay with it ?

And I'm assuming the 2 year averaging methodology isn't required until 2008 ?

We just changed TPA's and were reviewing the plan document.

We are a self-funded plan, with a 12/15 spec.

We have a 2 month filling deadline after the end of the year. Our new TPA is telling us that we need to change our filing deadline to 1 year from date of service.

I question them asking why. They said it was a ERISA regulation. I searched all over and cannot find anything that states this.

I then asked where in the regs. does it state this. They are now saying if I don't change the filing deadline, we are asking for a lawsuit if we don't change.

Can anyone tell me if there is a ERISA regulation?

Also any input as to why we should extend the filing dealine would be appreciated.

Plan allows for distributions when a participant hits Normal Retirement Age (65). Does this require spouses consent for the distribution?

A client did not deposit their 2004 discretionary contribution, they have amended their 2004 corp return to reflect no pension deduction for that year. Can they take the deduction in 2005 even though the allocation is based on 2004 compensation?

Could anyone suggest resources to research buying or selling a TPA book of business?

Profit Sharing plan is established 1/1/05 and 401(k) deferrals commence 3/1/05. Does the 3% nonelective fully vested contribution have to be based on 12 months compensation or can it be limited to the 10 months the salary deferral features of the plan were in effect?

Has anyone received a request by a third party for a copy of an individual's COBRA election packet? For example, a charity foundation or a medical facility will call and request that the election paperwork be mailed to their address rather then the employee. If so, how have you handled that request?

Thank you.