upon changing TPAs, under ERISA does a client have a right to receive its data in the format it is created in or can the prior TPA give the data to the client or new TPA in a reasonable but different format.

Are split dollar life insurance plans generally subect to ERISA? There does not seem to be much guidance on this issue. I came across a D.C. district court case from earlier this year that says that they are not subject to ERISA if there is no ongoing administrative scheme. Is it that simple?

Is there anything that has to be done to terminate a SEP plan?

None of the brokers seem to know what a 4204 purchaser's bond is - even the ones that know about the 412 fidelity bond. Please let me know if you have some contacts. I am over in Hawaii - Mahalo.

Will Lee

will_lee_esq@sbcglobal.net

In a moment of delerium our client elected to drop the 401k feature from his profit sharing plan. This was in Nov 2004. All accounts stayed in plan. Now seeing the error of his ways he asks that the provision be added to the plan effective Nov 2005 so he can defer some money this year, ADP tests permitting.

As the 401k piece was effectively terminated, then I assume the 1 year restriction is in play. But as the money was not distributed did the clock ever start? Can he ever re-add the feature? Or am I having a late Friday moment? Thanks for any thoughts.

Can someone please explain how the final 401(k) regs effect the safe harbor notice? do you need to include information about specific plan provisions?

Is there any point at which a transaction between the employer and a party in interest could indirectly be a prohibited transaction for purposes of an ESOP? (the answer may be "no," but I'm thinking of where an owner may also be a fiduciary of the ESOP, and where the employer may have transactions with that fiduciary/owner or another entity held by him.

Can you roll a Simple IRA and 403(b) into a regular 401(k) Plan?

I'd appreciate confirmation if I've got this right.

Suppose you have a plan year 7-1-04 to 6-30-05. You have a highly compensated employee (not eligible for catchup) who deferred 13,000 from 7-1-04 to 12-31-04, then deferred 14,000 from 1-1-05 to 6-30-05.

While this is permissible for 402(g) limits, as you might expect, it failed the ADP test, and some amount must be refunded - let's say 10,000.

All set with tax issues, etc. The question posed was - since this 10,000 is being distributed, can the employee defer another 10,000 between now and the end of 2005? In other words, does a refund of deferrals due to ADP failure "reduce" the deferrals counted towards the 402(g) limit?

I believe the answer is no. The deferral stands, and this person cannot defer anything more in 2005. Possible I missed it, but I didn't see anything in the regs to allow otherwise in this situation.

Thanks!

Client has had an FSA for a long time and has amended it to take advantage of the newly-available 2.5-month extension of coverage. Client is also adding an HDHP/HSA combo beginning 1/1/06. Client has been told that anyone who contributed to the FSA in 2005 will be ineligible to contribute to the FSA until 4/1/06 (first day of first month following expiriation of extended coverage period) because of "exclusivity" requirement attached to the HDHP/HSA combo. Client must answer the following questions in the next 2 hours (I know, I know):

1. I have some memory of the IRS issuing transition relief on this very issue, but can't find it and might be imagining it.

2. Assuming that those who contributed to the FSA in 2005 aren't eligible to contribute to the HSA until 4/1/06, can they "backload" their contributions for the remainder of 2006 and thereby still contribute the annual maximum? I assume they can't.

3. Same assumption as #2--what about expenses incurred between 1/1/06 and 3/31/06? Can HSA participants who were 2005 FSA contributors use $ in the HSA to to pay for expenses incurred before they started contrbuting? I'd be surprised if the answer is "yes."

Thanks for any help.

Did anyone else take the C-4 yesterday?

I didn't have time to answer all the questions, but I gave good in-depth answers. I wondered if it was normal or expected that all the questions wouldn't be answered.

Anyone have an experience like mine and still pass the test? The wait for the results is going to kill me!

TIA!

I have a client who says although a employee is eligible to be in the plan has opted not to. Her husband says since she has not put any money into the plan box 13 on the W-2 should NOT be checked. The employer says they have to check the box. What is the answer to this question concerning active employee. The cpa husband says this will interfere with his IRA contributions?

HELP!

Lisa

IRA beneficiary (age 58) is taking substantially equal periodic payments. Is it possible for the beneficiary to request a non-trusteed rollover of some of the funds in his account without affecting the tax benefits of the SEPP? In other words, IRA beneficiary wants to structure this as a short-term loan, where he will roll the funds back into the IRA within the 60-day time limit. Is there an argument that, provided he gets the money back into the same or another IRA within 60 days, this isn't a "distribution" and that the SEPP isn't affected?

Would you consider a failure to make ADP refunds by the regulated date a significant or insignificant failure under EPCRS? This is for one single year and not multiple years but it is outside of the prescribed two year period for significant errors under SCP.

Our firm would like to provide tuition assistance to one of our employees. He is currently in an MBA program, and we are willing to reimburse his tuition up to $5,250/year:

1. Do we need a formal tuition reimbursement policy/procedure?

2. Can we just accomodate this one individual or do we have to offer this benefit to all employees? Can we discriminate based on what or where an individual is studying? For example, none of our other staff is in an MBA program.

Thanks in advance for any insight...

My DB plan was frozen years ago. The plan sponsor (G) decided they wanted to sell a major chunk of the company to raise cash. But the buyer (B) didn't want the pension liability on his books. So agreement was reached that B would remain an Employer under the plan but G would be too and G would fund the plan and B would have no liability.

Fast forward to September of this year when B decides they want to withdraw as an Employer/sponsor as allowed specifically under the plan and passes a corporate resolution and informs G that they are withdrawing from the plan.

I worked for G and continue to work for B.

I no longer work as an Employee of the Employer under the plan due to the withdrawal of B. I have achieved the age when early distributions are allowed and have the required combination of age and service. No dispute.

I applied for distribution. G said no.

Under the new rule of "Separation from Employment" (as opposed to the "same desk" rule), may I be treated for purposes of eligibility for distribution the same as if I worked for a third company (whose employees under the same eligibility criteria are entitled to receive distributions without dispute)?

In an article, I read that the definition of when distributions can be made is now "when the common law employment relationship with the "employer maintaining the plan" has been severed." Nothing about me having to be the one to sever the relationship as in this case my company B did it when it withdrew from the plan.

Needless to say, company G resists this notion citing vague IRS regulations though without any specifics.

Advice? References?

An active participant was born on 10/15/16 and is now asking to begin receiving his minimum required distributions. Is it correct that he was grandfathered out of receiving MRD’s and therefore his benefit would simply be calculated starting now? I have a feeling there is more to this that I’m not aware of. The benefit formula is FAE(5) within the past 120 months. There is no late retirement adjustment in the plan.

A plan has the following eligibility requirement:

500 hours in a six month period. Entry date is 1/1.

A participant is hired on 8/22/04 and worked 550 hours by 12/31/04. Entry date should be 1/1/05, correct? A takeover plan I have either missed this or their system missed it because the participant has been flagged as eligible 1/1/06!

I have a client whose executives typically enter into consulting arrangements after retiring from the company in order to provide additional services. The company has a non-grandfathered deferred compensation plan. Because of the consulting arrangements and the amount of service and compensation that is often associated with these arrangements, we have been struggling through understanding the Separation from Service/Termination of Employment guidance provided in the proposed 409A regs (specifically Prop. Reg. § 1.409A-1(h)(1)). My question has to do with the 20% and 50% tests. I am reading these as meaning that the services provided AFTER the purported termination of employment must, on an ANNUALIZED basis meet the thresholds. However, given the meager amount of guidance available and the lack of an example, would really appreciate someone else's thoughts on my reading of this provision.

Under the new IRS plan document determination letter process, does a newly established customized Plan still file (if they elect to exercise their option to file) for a DL with the IRS at the time the Plan is adopted (within the customary deadlines), or do they wait until the year that correlates to the last digit of their EIN?