Can the beneficiary (spouse) waive the QPSA after the death of the participant (Before RBD)? If so, how long does the spouse have to waive?

If a plan subject to Davis Bacon Prevailing wage contributions fails 404a testing, how can the 10% excise tax on nondeductible contributions be applicable if the employer is not taking a corporate deduction for the contributions? I have spoken with several experts in this area and would appreciate feedback and comments.

Thanks!

This question may be way off.....

If forfeitures are not utilized to reduce matching contributions in the year the forfeiture occured as required by the Plan document, can the Defined Contribution Plan become disqualified? If so, can anyone point me to the literature that may explain this?

Thanks for the help!

Distribution is made from a key employee's account to his spouse (not a participant in the plan) pursuant to a QDRO. Is that distribution counted for the key employee for the 1 year period for adding back in distributions?

A participant terminates 12/31/01 and the plan eventually terminates 12/31/03. He was 20% vested upon termination and his vested benefit was only worth a few hundred dollars. He didn't respond to attempts to pay him out (in hindsight it appears the client may have had a bad address), so he was cashed out. However, the check came back for a bad address and he was never paid out. The plan termination came and he is suddenly 100% vested.

Does anyone know of a precedent in this situation that would allow for the client to argue he still should only be paid his 20% vested amount?

Divorce decree states W gets 50% of H's profit sharing upon retirement from, or termination of employment from plan. H's company is acquired by another company in 2004 thereby "terminating" his employment under the plan.

The marital share for calculating the 50% of pension is from 1987 to 1999 (they divorced in 1999).

What issues if a QDRO is now drafted asking for 50% of profit sharing plan as of 1999 plus any losses or gains since then?

Are there any special rules reguarding a military call up? For example, an employee is contributing dep care money every pay. He is called up and has an excess amount in his account that will not be used due to his change in status. I realize that this may be a loss for him given the risk factor of the Flex Spending Accounts, but just wondering if there are other alternatives.

MissChele

I administer a DB plan that is being audited by the IRS. The agent is asking for information as to when the sponsor last had financial activity reflected on their 1120. He seems to be headed toward taking the position that if the sponsor is financially inactive, it is not a bonafide sponsor.

Now I know this to be untrue. However, does anyone have any suggestions as to how I can get this agent to see the light? In a loving and gentle way, of course. I can't justify spending the client's money to defend this point that should, I think, be a no brainer.

P.S. There were no contributions made or deductions taken during the period under audit.

A prospective client is telling us their ERISA counsel advised them to "undo" the deferrals for key employees, so that top heavy minimums would not be required. I've told the plan sponsor there are very limited circumstances for money to revert back to an employer. In my opinion, this is a mistake in law, not a mistake in fact, and the deferrals should have stayed in the plan, provided the plan document did not specifically exclude them from deferring. I have not however, had a lot of guidance to back me up. Anyone have anything more specific?

Here is a goofy question:

Once in a while, I get appointed as a Trustee of an orphan plan. The DOL is usually very involved in these plans.

As part of a settlelement with the DOL, the old ("bad") Trustee has agreed to forfeit his a/c balance and have it shared with the other particpants. This is occurring in conjunction with a plan termination.

Question: Is this forfeiture/re-allocation treated as a "taxable distribution" to the old Trustee, subject to 1099 reporting?

Why it is a distribution:

- this is really several transactions wrapped up in one, and it alleviates the need for him to take a taxable payout from the plan and to then reimburse the plan from it.

Why it is not:

- it is not really a "distribution"

- the money is already being taxed when it is distributed to the others.

Any ideas??

Thank you in advance!!

Typically with a FIFO requirement on the ADP refund calculation on a 12/31 PYE plan, the participant with the refund would have to add that into his tax return he is currently preparing for the tax year in which the deferrals took place.

However, when the plan has a 6/30 PYE and the FIFO refund goes back to the prior tax year, does that participant really have to amend that prior year return or is the refund taxable in the current year?

I seem to remember the IRS providing some guidance on these circumstances but don't have a reference to look up.

I have a medical practice that consists of 6 docs and 43 staff. They started having financial problems this year and four docs quit. Two part-time employees (who were participants) quit this month since they were given an ultimatum of going full-time or quitting. I heard today that 1/2 of the staff will be laid off in November.

I'm aware this would result in a partial plan termination, but what about the two part-time employees who quit in August? Would they become 100% vested due to the partial termination?

Thanks.

What exactly does the phrase "end in the current plan year" mean in the definition of average annual compensation?

I am trying to figure out whether we can base a participant's benefit by the compensation she has earned separately for pre break and post break service. In other words, we would like to amend our current definition of average compensation to accomodate the following situation:

Suppose an employee worked for us for 10 years then left. At the time she left, her average compensation was $40K. Formula at this time would have been 40 x Y% x 10 years.

The employee is gone for about 6 or so years (not sure that it matters how long she is gone) then returns.

The employee works for a while longer (3 years) and retires. At retirement, her average compensation is $50K. If this were it, formula would be 50K x Y% x 3 years.

We would like to amend the plan to apply the average compensation in two pieces.. 40K x Y% x 10 years + 50K x Y% x 3 years. Instead of applying the 50K to the entire 13 years of service.

Is this possible without violating any of the nondiscrimation rules? Any guidance/direction would be greatly appreciated!

Thanks!!

I have run into a number of 501© (3) enitities that sponsor two 401(b) programs -- one that provides for salary deferrals only for which all employees are eliglible, and another which includes salary deferrals and matching employer contributions. Age and service requirements usually apply to the second plan. For purposes of satisfying the universal availability requirement in 403(b)(12), can the two plans be considered a single program? Or is the second plan in trouble because it provides for age and service reqirements?

I am reading about the PBGC's Voluntary Correction Program for the Participant Notices required by Section 4011 of ERISA. Are small plans (less than 100 participants) exempted from the requirement to file these Notices?

We have a situation where we acquired an organization and maintained the DB formula for those employees at that particiular entity. We therefore have two formulas in our DB plan. It is feasible that an employee could transfer from the other entity to our entity. Upon final termination, I assume that I am OK calculating the employee's retirement benefit by taking into account the benefit accrued at the other entity and adding it to the benefit accrued at our entity? Does anybody have any guidance on this, though? Do the restructuring rules get us there? Essentially since we are permitted to test as two plans, we treat the benefit as coming from two plans? Any input will be greatly appreciated!

What are the guidelines for loans on a 401k? Is there a minimum amount that must be in the account? Does the administrator have to honor the loan?

Have a client who has funds invested in 2 separate 403(b) custodial accounts: one is in a "frozen" state (no ongoing contributions), the other is being funded through salary deferral. If client takes a hardship distribution from the frozen account, does the 6-month wait on deferrals apply to the "active" account. Didn't know if the rules can be applied separately to each custodian or if both accounts are treated as one since they were funded through the same employer.

I know the IRS just issued model amendments for governmental 457s. What about tax-exempts? Why are they different/what (very basic I am sure) point am I missing?

I've never seen this one -

Client had a document - non top heavy plan - that called for 7 year vesting. I haven't seen one of these in a long time! Anyway, prior TPA evidently did admin based upon 6 year graded. So, some terminated participants have received overpayments in the past, and some remaining participants received smaller forfeitures than they would have been entitled to under the terms of the plan.

I don't know the scope of this yet - # or % of participants, dollar amounts, etc. - assuming for the moment that this could be self-corrected under Rev. Proc. 2003-44, how would you correct it? Appendix B, .03 gives specific corrections for vesting failure situations where a participant receives too SMALL a distribution, but not the reverse. So, should this not be considered a vesting failure, but simply an overpayment, and be handled accordingly according to .05 of Appendix B (which in this case refers you to 2.04(2)(a)(iii)?) That's how I'd be inclined to handle, but thought I'd see if anyone has run into this before. Thanks.