To be grandfathered there must not be a substantial risk of forfeiture under Section 83 concepts. The Section 83 regs seem to state that there is a presumption that a non-compete does not create a substantial risk of forfeiture, but that presumption can be rebutted based on certain facts or circumstances (Compared to a substantial risk of forfeiture under 409A in general which can never be created by a non-compete)

Has anyone given any thought on whether the IRS would ever try and rebut the regulatory presumption and argue that a non-compete does create a substantial risk under Section 83 for purposes of saying that amounts deferred under a NQ plan are not grandfathered? I would think that they would be hesitant to make such an argument since it could come back to haunt them in "normal" Seciton 83 disputes.

Plan allows two classes of employees to make one-time elections to defer specified percentages into the Plan. These amounts are made on a salary-reduction basis. Does the Plan have to offer this to all participants? Is this election a BRF and must pass coverage to be nondiscriminatory?

Hi, all,

I'm not a QDRO expert, and am confused:

A family member of mine divorced (in Indiana) shortly AFTER her spouse's DB plan entered payment, due to the spouse's retirement. A form of annuity was selected and commenced (in the form of a joint and 50% survivor annuity). My family member was named, at the time of the annuity selection, as the recipient of the future 50% interest. The divorce was relatively friendly, and both ex-spouses (both still living) agree that my relative should receive the future 50% interest.

At the time of the divorce, attorneys told her that no QDRO was needed, because the annuity was already in payment status. This advice strikes me as possibly wrong.

Were the divorce attorneys correct? Or does anyone recommend getting a QDRO, anyway, to clarify that my relative maintains this future 50% interest, despite the divorce.

Perhaps it also depends on whether the divorce judgement so specifies. I also need to look at that.

Thank you for your insights.

1. Attempting to satisfy meaningful benefit requirement in cash balance plan. Do I project contribution at accumulation rate and divide by factor using plan assumptions or can I divide by standard discrimination testing assumptions factor?

2. If we need 50 participants to have meaningful benefits can we count participants who terminate during the year that accrual a benefit? Or because it has to be satisfied each day of the year we can't count them during the period after they terminate?

Prior to 409A, beneficiaries could typically petition plan committees to accelerate payment of deferred compensation. Often this was necessary to raise money for estate taxes. Beneficiaries who did not do this were never found (to my knowledge) to be in constructive receipt of lump sum equivalents because of this right to petition.

Under 409A, does a Committee violate the no acceleration rules if it grants such a petition? 2005-1 does not list such an acceleration as a permitted exception. However, death is an event that always permits payments under 409A.

I'd like to think that beneficiaries still may petition for acceleration without risking 409A penalties.

Your thoughts?

Assume a cross-tested 401(k) with profit share eligibility requirements of 1 Yr, 1,000 Hours and 1/1 and 7/1 entry dates. For the participant entering 7/1, only comp earned in the second half is eligible for an allocation. The Plan, however, allows for participation in the 401(k) upon commencement of employment.

The Average Benefit Percentage Test is needed to pass the cross-test. For the Participant who becomes eligible for a PS allocation on 7/1, only the 2nd half comp is used for calculating the PS contibution. However, do I use this participant's full year comp and full year deferrals when calculating the EBAR for the Average Benefit Percentage Test?

If you think I should use full year comp and full year deferrals, would your answer be different if the Plan did not allow for immediate participation in the 401(k), but a participant could only defer starting the 1/1 or 7/1 after having met the 1 Yr, 1,000 Hours requirements?

Thanks.

An employee made elective deferrals into a SIMPLE IRA plan during the year. She received a statement from the financial institution and noticed that no deposits were being made. The employer was unresponsive. Finally after several months of putting her off, the employer issued a check to her refunding her elective deferrals. She has since terminated employment.

Can she report this situation, and to whom - the IRS? The DOL?

She has check stubs showing the deduction for the SIMPLE IRA contribution, but has not yet received her W-2 for 2004.

Thanks!

I have a client who has a 401(k) Plan with a discretionary match in a Corbel volume submitter. Over the past year, they have incurred a large amount of forfeitures from the match source. They wanted to know if they could use the match forfeitures to reduce a possible match contribution or a possible profit sharing contribution. Is the forfeiture limited to the source from which it occurred? The document states (Section 4.4©) that the forfeiture is (among other things) used to reduce Employer contributions. It does not specify matching or profit sharing.

Any help would be greatly appreciated.

Since Code section 411(a)(11) doesn't apply, a church plan can provide for cashouts of benefits up to a ceiling higher than $5000. Notice 2005-5 confirms that the automatic rollover requirements apply to church plans. Though it is not very clearly written, section 401(a)(31)(B) seems to apply the direct rollover requirement only to cashouts up to $5000 -- meaning that church plan cashouts in excess of $5000 could continue to default to a cash distribution.

Has anyone else considered this question?

We have a company that allows loans in their plan and regularly lay off some employees in the winter for 3-4 months. Obviously then they cannot deduct the loan payments out of the employees payroll. And trying to get loan payments from them while laid off is proving to be very difficult! Does anyone know if there is a way these guys could be set up on an 8 month payoff - with bigger amounts during the time they are working and then no payments during the time they are laid off? I think it would be easier on both the participant and the employer. Any suggestions on how to handle this? Thanks!

I was wondering who else out there in pension world is concerned/confused regarding the DOL forcing plans into VFCP who reported late deposits on a 2001 5500. Wasn't VFCP effective in 2003? What guidance did we have back in 2001? The 401k/loan payments were deposited, so the principal would be considered restored, but no gain was allocated. Thanks.

Linda Michals

I had a broker ask me...does a SIMPLE IRA offer any protection from bankrupcy or lawsuits as other Qualified Plans do?

I can't believe that I have done every kind of search possible and cannot find a UP84 table anywhere online. Can anyone point me to an online resource for mortality tables?

Thanks.

I am an owner of an S Corporation and I am looking for the best pension plan available for myself. I typically have 2 to 4 employees and the SEP contricutions I would have to make for the employees does not seem to make the plan a good idea for me personally. Does anyone have any recommendation on any plan available where I can maximixe my contributions but would minimize fund outlays for employees. Any help is appreciated.

For 1099R purposes, what is the most approporiate code for a death distribution that was donated to an Endownment Fund? Would we consider this a regualr death distribution (4) or does some special code apply?

Thanks

If an employer provides several different benefits, i.e. a self-funded dental benefit, insured group health and disability benefits, can they all be considered one health and welfare benefit plan and a consolidated 5500 filed for the "plan"?

It would be helpful to have resource material cited if possible.

The consolidation issue does not seem to be addressed in the 5500 instructions.

(I posted this in Welfare Benefit Plans and did not get a response so I am trying here.)

What kind of documentation is needed in order to exclude "Otherwise Excludable" employees from a Safe Harbor contribution? Should it be in the document or Safe Harbor Notice? Plan calls for immediate deferral eligibility and 1 YOS, age 21 for PS and Match.

Thanks!

I am looking for clarification on HSA contributions for people over the age of 55. In this case, the wife (employee) is 52 and the spouse is 63. They are enrolled in an HDHP through the wife's employer and have a family HSA account.

My question is: Can they contribute the additional catch-up monies for the spouse even though the account is through the wife's employer and she is only 52? Their family maximum deductible is $2,000 - can they contribute catch-up funds since the spouse is 63? In this case, since they have an active HSA account effective January 1, 2005, if I am understanding what I am reading, they could contribute $2,000 (for the deductible) plus another $600 for catch-up on the spouse?!?

If they were both 55 or older, would that mean they could contribute an additional $600 for the wife as well, so a total of $1,200 in catch-up and $2,000 for the deductible?

Let me know your thoughts!

Thanks!

In the IRS Announcement for the pension plan limitations for 2005, the 415(b) limit is stated as follows:

"Effective January 1, 2005, the limitation on the annual benefit under a defined benefit plan under section 415(b)(1)(A) is increased from $165,000 to $170,000. For participants who separated from service before January 1, 2005, the limitation for defined benefit plans under section 415(b)(1)(B) is computed by multiplying the participant's compensation limitation, as adjusted through 2004, by 1.0273."

Can someone clarify the limitation as defined under 415(b)(1)(B) or point me to any published guidance. Does this mean that someone who separated service, say, in 1995 but retires in 2005 cannot be tested under the $170,000 dollar limitation for 2005? Rather, his limitation is the dollar limitation as of 1995 increased by the adjustment factors over a 10-year period?

We administer a 5 participant calender year DB. The company owner, his wife and three unrelated employees participate in the plan. The plan is covered by PBGC.

As of December 31, 2004 the plan was frozen and the plan will terminate 2/25/2005. All notifications (204(h) notices etc.) have been prepared and signed although nothing has been sent yet to PBGC or IRS.

Question: would it be possible to unfreeze the plan and withdraw the termination?

They wish to instead terminate the plan next year.

Thanks.