Anyone having experience as to how to handle separation/distribution issues involving a non-qualified plan and a qualified domestic relations order? Looking specifically for possible pitfalls.

Situation is a deferred bonus program on a revolving 3-year cliff vesting schedule. First year's bonus to the executive is now vested, however, with "haircut" provisions appearing to be a thing of the past, should the non-qualified account held by a rabbi trust be somehow segregated? Comments of stories or experiences sought.

The guidance regarding the new determination letter program is confusing to me. Assuming I am an employer that has adopted a non-standardized prototype plan, do I have until whenever the IRS finishes reviewing the sponsor's document to submit a determination letter application (thought to be 2008-2009)? What about the 401(b) remedial amendment period?

Curious if anyone has heard whether employees with covered dp's can drop dp mid year for any reason or does employee & dp need to have a Family Status Change to do so.

We have a profit sharing and mp plan that terminated a couple of years ago and all assets were distributed. Just discovered some insurance company stock in the name of the plans as a result of demutualization. The accountant feels that we should file amended ( and late) 5500s back two years and a final showing the payments made once the 5 affected participants are paid out. I would be tempted to execute the payments and call it a day. Note: the final plan year just went through a succesful IRS audit. Any ideas

Would appreciate any guidance on the following scenario:

Indiviually designed 401(k) plan amended and restated for GUST. Discusses desired EGTRRA good faith amendments it wishes to make with counsel in 2001, prepares revised SPD and communications to participants indicating EGTRRA changes have been made and will go into effect in 2002. However, no good faith EGTRRA amendments are actually executed--no board resolutions, company actions, etc, other than file references that they plan to make certain changes. Plan has been administered consistent with the desired EGTRRA changes since 2002. Problem is not discovered until plan tries to amend and restate on a prototype plan document this year. Questions are:

1. Does this plan currently qualify for the 50% reduction in VCP compliance fees under Section 12.03 of Rev. Proc 2003-44 for nonamenders that submit under VCP within a one-year period following expiration of the plan's remedial amendment period. I know the EGTRRA remedial amendment period has not closed but I have seen some guidance which suggest that the extended EGTRRA remedial amendment period only applies to plans that timely adopted good faith EGTRRA amendments. Under such an interpretation, it seems the 50% reduction might arguably only apply if the VCP submission was made prior to December 31, 2003--1 year following the Plan's original deadline for getting good faith amendments in place. Such a definition of the remedial amendment period for these purposes seems circular to me. Anybody had experience with this?

2. As noted above, the Plan intends to shift over to a prototype. Will the IRS allow the Plan to amend and restate on the prototype document and accept the prototype document as satisfying the EGTRRA amendment requirement for VCP purposes or does the IRS require that the current individually designed plan adopt good-faith EGTRRA amendments, go through VCP, and then switch over to the prototype? Seems a waste to require separate amendment but prototype sponsor is nervous about proceeding with the restatement before the existing plan is fixed.

Thanks in advance for your assistance.

I have heard two different answers to this question. 1099R Instructions read as follows: Code 2 - Early distribution, exception applies. "A distribution from a qualified retirement plan after separation from service where the taxpayer has reached age 55"

I have an employee whose position was terminated on 2-28-05, he has not yet made a distribution from the Plan, but is going to cash out. He will turn 55 on 5-2-05.

Does the exception apply only if the employee is 55 at the date of termination or does it apply when the distribution actually occurs? I have had two people read it completely different.

Thanks.

Please furnish me with the Code Section that makes these payments free of federal income tax.

Why would pre 87 after tax and post 86 after tax money be treated differntly - if at all - for tax purposes?

With regard to Non-Deductible Contributions to a DB plan, in going through the ERISA Outline Book, it appears that you can disregard contributions that are not in excess of the old ERISA full funding limit for purposes of calculating the excise tax due on the non-deductible, and then the non-deductible gets carried forward into the following plan year. this references IRC 4972©(7).

Is anyone familiar with this, and if so, did I understand it properly?

Thanks!

Dennis

Simple PSP termination going in for a DL letter following Co. liquidation.

Former employees have requested an immediate distribution. Plan Sponsor wants to hold-back a percentage of balance to the credit until IRS review termination status and issues DL and final trust accounting completed.

What percentage hold-back do you think is reasonable/conventional?

Thanks.

Instructions are to give spouse IRA under IRC 1040, which talks about pecuniary bequest.

Does this mean that the spouse gets the assets now? Or after the IRA owner dies?

This is different from a non-taxable transfer due to divorce -right?

Does anyone have old C3 exams? ASPPA no longer sells them.

Does anyone know of a vendor that has a 125 document with HSA?

Am I doing this right? Have a client failing the ADP. A few HCEs are catchup eligible. The method I'm using to fix the ADP test is:

1) Calc the ADP of the NHCEs (we use prior year).

2) Calc the ADP of the HCEs. Fail.

3) Find highest ADR of an HCE and solve for amount of reduction needed to equal the next highest HCE's ADR.

4) Calc the ADP. Fail.

5) Repeat 3) with both HCE's (now equal) ADRs to the next lower level.

6) Repeat 5) and 6) 'til passing.

7) Calc the total amount of the reductions.

8) Assign a refund amount to the HCEs with the biggest dollar amount of deferral until it equals the next lower dollar amount. Repeat as necessary until Step 7) amount is used up.

Then, and only then, do catch-up considerations come into play. Catch-up eligible HCEs will receive smaller (or no) refunds.

Seems counter-intuitive.

With respect to contributory defined benefit plans, the payment of benefits related to employee contributions are not subject to a suspension of benefits under the ERISA Regs. How is this rule applied as a practical matter? Do you have to commence payments based on the accrued benefit related to the employee contributions while the remainder is withheld? Alternatively, can you provide an actuarial increase for the employee contributions rather than commence benefit payments?

Is there a statutory deadline by which employees much submit claims for reimbursement after the plan year closes? Or is this simply a deadline arbitrarily set by employers? In most instances, it seems as if companies use 90 days, but is this just an industry standard of is this an IRS rule?

Any guidance is greatly appreciated!

Plan is a multiemployer, self-funded ERISA arrangement. Our participant "P" was divorced about 11 months ago. Order provides for a joint custody arrangement and for BOTH parents to provide health coverage on behalf of the children. The ex-spouse "X" has health insurance available through work but has elected not to cover the children.

Under the Plan's COB rules, X's plan should be the primary payor, but since she

has ignored the order, our Plan is paying benefits.

What is the recourse for the Plan? Keep in mind that we are not a party to the divorce decree and P has done nothing wrong. The children satisfy the new IRS definition of dependent and if it weren't for the decree, the Plan would cover them with no questions asked.

The most popular idea to this point is to continue to cover the children, but inform P that he must bring a contempt action against X or face the risk that the plan will begin paying only secondary to the plan that should be in place.

Ideas??

Any ideas on how retroactive payments can be made under this Rev. Proc? Would a lump sum be permissible even if the plan doc does not permit a distribution in that form? Should a lump sum provision be added with the reforming amendment?

Ok, plan started 9-1-02, had a short plan year for 2002, now is a calendar year plan. This was a plan started by a new business that took over the operations of some existing manufacturing company, and credited past service with that employer. Plan document is a simple SungardCorbel-created prototype.

Here's the question: Are the past years to be calculated on the typical calendar year basis, or do I have to count back periods from 9-1 to 8-31, to determine the past years? Someone was hired 8-23-00. Do they get credit for 8-31-01 and 8-31-02 for the prior employer, and then 8-31-03, 12-31-03 (vesting computation change), and 12-31-04 with the new employer? Or should the years before 2002 be looked at on a calendar year basis? This is intriguing, and a bit nebulous, I fear, within the scope of the prototype.

--bri

I've never been asked to change a vesting schedule until now.

My plan currently has a 5-year cliff. They asked what might happen if they changed to a 10-year cliff. I'm not really sure what would happen, although, I'm sure the ramifications are big. Could anyone advise me on this?