does anyone know where i can obtain regulations that allowed employers to use 120% pbgc rates for distributions over 25k?

i need to research 411d6 cutback issues. i.e. i imagine there is a point in time when the pvab of accruals must be maintained at 100% rates. i suppose, the plain wear-away approach can always be used.

gary

My husband took out a loan on his 401k...am I considered legally responsible for that loan? I don't remember ever signing anything to do with this loan.

We have a situation where a wholly owned subsidiary who maintains their own separate medical, dental, life and disability plans is being told by the parent company that they cannot implement a POP because the parent company offers a section 105 although the section 105 is not available to the subsidiary's employees. Is there any reason, under these circumstances, the subsidiary should refrain from implementing the POP?

I believe this is true- but looking for confirmation.

Plan B spins off of Plan A effective 2/1/2002 (assets and liabilities). Plan A is a calendar plan year and Plan B will have a short plan year from 2/1/02 through 12/31/2002 and 1/1 thereafter.

The spin off is not de-minimus.

I believe that both plans have to pay 2002 premiums. Plan A based on census as of 12/31/01. Plan B as a new plan and based on 2/1/2002 census. Hence, there are unavoidable overlapping premiums for 2002 and proration is not available.

Any comments??

An employer wants to give ER contributions to all employees. He further wants to give the higher paid "supervisors" an ER contribution based as a percentage of their salary. Therefore, the higher their salary, the higher the ER contribution. Is this allowed? He isn't planning on doing the same for the other classification of employees, they would all get one smaller lump sum.

Further details: there are no premiums in this cafeteria plan, only Dependent care and Med FSA.

Thanks for your help.

Carolynn

401(k) plan is a multiple employer plan. (It is NOT a multiemployer plan). Plan already has a GUST determination letter and has been amended for EGTRRA.

One participating employer wants to cease its participation in the plan and have its employees' accounts distributed to them. The employer has no expectation of establishing another plan, at least not within 12 months of when the final distribution might be made to its employees. This employer is not a 414(B), ©, (m) or (o) member with any other participating employer.

Questions:

1. Does the employer's cessation of participation constitute a "termination" permitting distributions? I think it does, because of the mandatory disaggregation rules in the 401(k) regs. If so, can I get a determination letter via Form 5310?

2. If not, then what can/should I do? Will a spin-off followed by an immediate termination work? Seems kind of silly that I could do this, but I could not do alternative 1.

My company is going to institute an option whereby employees can elect to take unpaid time off. The way this will work is that the employee will elect to take between 4 hours and 1 week as time off above and beyond our vacation policy allowance. We calculate the cost of this additional time off and reduce their gross wages by this amount so that the cost of the elected time off is prorated over the calendar year (our legal counsel determined that this is not a Section 125 program). The main purpose of this is to save the company money but also respond to employee requests for more time off.

I'm looking for some advise on how to administer and communicate this type of program. Any words of advice?

In using the flip-flop method to get around the deduction limits of 404(a)(7), specifically in the years that 2 years of DB contributions are deducted, how is one able to get around the last sentence of Announcement 98-1 1.2.1.1(2) as follows:

"A special rule provides if amounts required under IRC 412 were paid for the preceding year but were not deducted solely because they were not timely paid for IRC 404, they are "includible contributions" and are deductible under the IRC 404(a)(1)(A)(i) rule for the current year. Note, however, that total deductions under IRC 404(a)(1)(A)(i) are subject to the applicable full funding limit."

I have never seen the last sentence addressed in any examples of using the flip-flop method, so what am I missing?

A client maintains a money purchase plan (with no employee contributions) the prior version of which states that an eligible employee (who satisfies the Plan's age and service requirements) must complete an enrollment form in order to become a participant in the Plan. The plan does not have a determination letter. The plan was amended effective 1/1/01 to remove such language (and now the plan is applying for a determination letter). For the years prior to 1/1/01, there were several employees who met the age and service requirements of the Plan but who failed to file an enrollment form and, therefore, did not receive Plan contributions.

I have seen plans with "opt out" or waiver of participation requirements. However, I have not seen a plan like this which requires employees to "opt in" (and states that the failure to do so is deemed a waiver of participation). Does anyone have any experience with the legality of such an "opt in" provision?

Thanks.

Code Section 420© provides that assets transferred to a health benefits account cannot be used to pay health liabilities of "key employees" for the taxable year of the transfer. Section 420(e)(1)(D) provides that "key employee" has the same meaning as under Section 416(i).

Prior to EGTRRA, "key employee" was defined as an employee who satisfied certain requirements at any time during the plan year or the 4 preceding plan years. After EGTRRA, "key employee" means an employee who satisfies certain requirements at any time during the plan year (the 4-year lookback is removed).

Am I correct in interpreting this to mean that, for purposes of Section 420, an employer must exclude only those who are key employees during the plan year of the transfer, rather than anyone who was a key employee during such plan year or the preceding 4 years?

I’m trying to determine if I need to complete a full Form 5500 for an ERISA 403(B) plan. In addition to 403(B) contributions, this plan also has Employer contributions (matching and additional Employer contribution based on a percentage of compensation). The 5500 instructions for question #8 seem to say that I do not use code 2K (even though there is a match) and I should use code 2M. By using code 2M, the Limited Pension Plan Reporting applies, therefore I only need to complete Part I and lines 1 through 5 , and 8 of the 5500. Also, no attachments are required. Am I reading this correctly?

It has come to our attention that we have been filing a 401 (k)client's Schedule P of their Form5500 with the incorrect Trustee for the past 4 years.

Any thoughts as to whether we need to send amended Schdule Ps for these years?

I've tried this question on the cafeteria plan board and didn't get any responses so I thought I'd try here.

Any thoughts on how the nondiscrimination rules for 125 plans apply to government employees where the lines between entites are often gray?

For example, could a plan be put in a one state agency but not another if they are on the same payroll and use the same EIN?

Thanks,

Johnny

Seeking "yeas" or "nays" on the following:

California recently enacted SB 1661, which mandates up to 6 weeks of paid leave (subsidized by employee payroll taxes paid to the state disability fund) in order for an employee to recover from a non-work related illness or injury, or in order to care for a sick family member, or bond with a new born or newly adopted child.

Some opponents to SB 1661 have argued that ERISA preempts California’s paid leave law. ERISA's definition of “welfare plans” does indeed include plans providing benefits in the event of sickness, accident, disability, death or unemployment. However, ERISA excludes “payroll practices” from the definition of “benefit plan.”

Usually this refers to “benefits” such as overtime pay, shift premiums, holiday premiums, and the like. Arguably, the family leave benefit, though funded through payroll deductions, does operate more like a “welfare plan” under ERISA, because it involves more administrative functions, such as a determination of who is eligible for paid leave, than the other types of plan.

To illustrate, an employer can tell an employee is entitled to receive overtime pay if it can document that the employee’s work hours exceeded eight in one workday, or 40 in one workweek. However, an employer cannot be sure if an employee is eligible for paid family care leave unless the employer knows (a) that the iemployee or the family member has a “serious health condition” as defined by the law; (B) in the case of family care, that the sick individual is a “family member” as defined by the law; © that no other member of the employee’s family is available to care for the sick family member; and (d) that the employee is not receiving any unemployment or disability benefits. Whether or not California's Employment Development Dept. shoulders some of these administrative tasks, an employer could make a good argument that the paid leave program is more than a mere “payroll practice” for purposes of ERISA preemption.

What do you think?

A couple of threads have concluded (or at least expressed a concern) that an additional employer contribution destroys the top heavy free ride under the EGTRRA provision that a top heavy plan does not include a plan that consists solely of safe harbor 401(k) and safe harbor matching contributions.

Here is an interesting twist. I have a multiple employer ps plan that allows each employer to elect (1) a fixed percentage of compensation profit sharing contribution (3% minimum) for its employees and (2) whether its employees may make 401(k) elective deferrals. If the employer elects 401(k) elective deferrals for its employees, the employer contribution is made as a safe harbor contribution to avoid ADP testing. Top heavy has not been practical issue for this plan since an employer must elect a 3% minimum employer contribution in any case and all other top heavy requirements are met as a matter of plan design.

A provision may be added to permit an individual employer to elect 401(k) elective deferrals and safe harbor match for its employees (but no other contributions). This would generally have top heavy consequences since a 3% top heavy contribution would not be made as a matter of plan design.

Existing top heavy regulations (circa 1982) apply the top heavy requirements to a multiple employer plan, "but only with respect to each individual employer." (G-2 of Regs.) I read this (and T-2 and T-8 of Regs.) as requiring that each employer be separately tested for top heavy using only its own employees. Also, if one employer is top heavy, the top heavy contribution requirements apply only to that employer's employees. Thus, a multiple employer plan can be top heavy for one employer, but not for the others. Essentially then, each employer is treated as having a separate plan for top-heavy purposes.

The question is: Does the fact that one employer under a multiple employer plan can or does elect an additional employer contribution destroy the EGTRRA free ride for the employer electing only a 401(k) elective deferrals and safe harbor matching?

I think the answer should be "no" (i.e., free ride applies) because the top heavy requirements apply to a multiple employer plan on an employer by employer basis.

Obviously, there is no definitive answer. But if you have an opinion (or heard this issue discussed somewhere), I would like to hear it. Too bad I just can't write the appropriate amendment and get a determination letter. You gotta love this good faith reasonable determination stuff.

Daughter (53 years old) inherits ($14,000) IRA from father.

Would converting to a Roth IRA eliminate the need to begin mandatory distributions? If not, would it still make sense, or should she just open a new Roth IRA, take the distributions and contribute them to the Roth?

Thanks

We are currently in the process of implementing the Relius Preferrd Administration system, but are having difficulty deciding on the appropriate Trading Partner. The Partners we are currently reveiwing are:

1. SunGard Transactional Network

2. First Trust, i.e., TrustLynx

3. Security Trust

4. Fidelity

5. Schwab

Our question is which one of these Trading Partners, or other Partners you are aware of, provides the best overall service and efficiency at the most reasonable cost?

Thanks,

Richard

I was dropped off my husbands health insurnace...we live apart but are not divorced. His employer told him I had to be taken off because we were not living together. I did not find this out until I went to Kaiser to refill a high blood pressure medication and was turned away. Consequently, I had a heart attack caused by not having the medication. I am still trying to get the employer to reinstate my health insurance. Is there any FED agency or someone that can order them to do so? HELP!:mad:

Anyone see any problem with the following. Employer with a calendar year ESOP has decided to terminate it. They anticipate that distributions will be made in late Nov. but no later than Dec. 31. Plan document provides (in a manner that I believe is consistent with Sec 409(h)(4)) for two put option periods: one 60 day period beginning following the date of distribution and the other 60 day period beginning on the first day of the plan year following the plan year in which the distribution occurs. In this case, this will result in overlapping put option periods. I believe this is okay but I wonder whether anyone else has dealt with this issue. Thanks in advance.

If a participant begins receiving benefits as a jsa and then divorces his wife, may he get a QDRO terminating his ex-wife's right to a survivor anuuity? Ex-wife waived all interest in the pension in the divorce decree. I understand that if the participant dies now that his ex-wife will be entitled to the survivor annuity even though they are not presently married because they were married when he started his benefits. 1.401(a)-20 Q&A 25(B)(3) seems to suggest that a QDRO could provide otherwise. "If a participant dies after the annuity starting date, the spouse to whom the participant was married on the annuity starting date is entitled to the QJSA protection under the plan. The spouse is entitled to this protection (unless waived and consented to by such spouse) even if the participant and spouse are not married on the date of the participant's death, except as provided in a QDRO." I feel like I am missing something. QDROs clearly create, recognize, assign rights. Can a QDRO be used to divest an alternate payee of her interest in the survivor benefits if she agrees to that? (Participant understands he can't change his form of payment but just doesn't want ex-wife to get anything.) Thanks.