Hi does anyone see a drawback to naming your revocable trust as the beneficiary or your IRA or retirement plan? I seem to recall hearing negative things about doing so, but if the trust is the beneficiary, the trust will then direct the distributions. Unless the drawback here is that you're paying a trustee potentially to do the distribution for you instead of e.g. naming both kids as the beneficiaries.

Hi can someone clarify this for me please...if I roll an IRA into a 401K, does the administrator account for those rollover dollars separately in case I want to roll those IRA dollars (and accumulated earnings) back out to an IRA?

1.410(b)-7©(3) (on testing otherwise excludables separately)

If an employer applies section 410(b) separately to the portion of a plan that benefits only employees who satisfy age and service conditions under the plan that are lower than the greatest minimum age and service conditions permissible under section 410(a),

I have a client who has no good way of knowing how many hours someone worked. Everything is done using elapsed time. Therefore, they have no idea who has and who has no satisfied the "greatest minimum age and service conditions permissible under 410(a). Therefore, if I simply assume everyone is full-time, it is possible that I will be including OE's in my "main test."

Example: Susan works "about" 10 hours a week and contributes her entire paycheck to the Plan. She should not be in the main test. In other words, one cannot assume that the testing would always be hurt by this assumption. We're talking about hundreds of employees, so please don't say "I thought they didn't track hours"

Is there anything that says I can use some alternative method of determining who has not met "the maximum age and service conditions under section 410(a)?"

If a client has a SEP, or a SIMPLE-IRA, and they freeze/"terminate" it and set up a new 401(k). do you:

a. Assign plan #001 to the 401(k), or

b. Consider the prior SEP or SIMPLE-IRA as plan #001, and assign the 401(k) plan #002?

I do actually have a reason for asking this: in the VCP procedure for correcting a SIMPLE-IRA, the Appendix asks for the plan #, and I would normally have used option #1 above.

Rather than having client adopt late PPA, HEART and WRERA interim amendments I decided to have them adopt their PPA restatement which incorporates the interims.

VCP application appears to require that I identify where in the PPA restated document the "interims" are reflected which I suspect will be a royal pain.

Anybody know if I can get away with just submitting the PPA restated document since IRS "knows" the interims are incorporated (at least through the 2010 Cumulative List)?

To what extent would you want to caveat the MEP2014 requirement, "Actuarial Certification – The plan actuary certifies that the plan is projected to avoid insolvency indefinitely if the suspension of benefits occurs."

Hello All,

I have a question regarding a Safe Harbor Plan that also happens to have a last day requirment.

The plan also has crosstesting thus everyone is in their own rate group.

I have a participant that has termed before the year end, and was a participant in the plan throughout the year entitling him to SH.

The plan is also maximizing the owners and needs to satisfy gateway requirement. Since the participant is technically not eleigible for the additional 2 % that he needs to satisfy gateway (because he was not employed on the last day), do we have to amend the plan so that he is eligible for PS for the year or is it understood that a participant that has recieved SH can also receive profit sharing to recieve gateway?

Please advise.

I have a governmental entity (housing authority) with a pre-ERISA money purchase plan - established in 1968. The plan has Mandatory contributions, employer contributions, and provisions for matching and voluntary contributions.

The client would like to add elective (401(k)) deferrals to the plan. I see two options for them:

1. add elective deferrals to the plan since it is a pre-ERISA plan; or

2. Convert to a profit sharing plan and then add the 401(k).

Any thoughts or preferences?

Are we all in agreement that it is a prohibited transaction for a disqualified person to purchase, for cash, real estate held by the company's profit sharing plan (the real estate is not qualifying employer real property)? Seems clear that ERISA's basic prohibited transaction provisions control here (i.e., Section 406(a)(1)(A)).

Is the result any different if the disqualified person, instead of paying cash, exchanges his company stock for the real estate (assuming meticulous valuations of both the company stock and the real estate and assuming no commission is charged)? Or does the exemption under ERISA Section 408(e) trump the underlying prohibited transaction. The exemption under Section 408(e) provides that Section 406 does not apply where the plan's acquisition is for adequate consideration and no commission is charged.

If the exemption (Section 408(e)) trumps the underlying prohibited transaction (Section 406(a)), what is the policy that would allow a disqualified person to buy, for stock, something that he/she could not buy for cash?

We are looking for a plan to help our pastor with deductibles, copays, and other out-of-pocket medical, dental, and vision costs that are not covered under a group plan (family coverage) that his wife has with her employer. We need to do this on a tax-free basis. He is the only employee of the church. We are a very small congregation and money is very tight.

The Health FSA limit of $2500 would probably be sufficient, but the main problem is having to make a dollar commitment each year in advance and not knowing how much will really be needed.The HRA would be more flexible, but the real problem with either plan is admin cost if we go through a TPA. Is there an inexpensive option for us?

Art

I received an executed DRO that assigns a flat $ amount (I will just say for sake of discussion $15,000) of a participant's Roth basis to the alternate payee. It gave me pause as to whether a DRO can award basis only to the AP?

My first thought was from an award perspective it might be fine, but from the ultimate distribution perspective to the AP would it violate 1.402A-1 QA-9 (b) as that regulation clearly calls for a pro rata distribution of basis and earnings for a nonqualified distribution? [This would be a non qualified distribution as both participant and AP are not 59 1/2]

How do these two rules play together, ie ERISA vs the tax code? or maybe I am just overthinking.....

thanks for any suggestions.

Can a person sell their Whole Life Policy, and avoid immediate taxable event by 1035, and purchase an immediate annuity?

The Academy had written to the PBGC because the PBGC, in a couple post-termination audits, had indicated that there were issues in those plans. Those plans had specified a pre-retirement mortality assumption in the definition of actuarial equivalent. The Academy, pointing out that there are three components of an actuarial increase for deferral beyond NRA. Simplified, they are (a) accrual of interest on the value of the benefit as of NRA, (b) the fact that annuity factors at NRA are higher than those at the deferred retirement date, and © the results of forfeitures due to mortality between NRA and the deferred retirement date. The Academy letter asserted that even if there is an assumed pre-retirement mortality assumption, it would not be appropriate to require plans to factor the mortality component in if there is no possibility of forfeiture. The PBGC response says that they do not actually require that unless the plan provisions actually call for it. No details were provided in the PBGC response as to what plan provisions came into play for those plans.

Consider a plan (with a pre-retirement mortality equivalence assumption) whose pre-retirement death benefit is fully subsidized. The plan may even contain language making that assertion. If so, should the "cost" of the post-NRA pre-retirement death benefit, if no forfeiture is possible, be passed along to the participant through diminished actuarial adjustment factors? Suppose a plan's pre-retirement death benefit is a distribution equal to the full value of the accrued benefit for married participants and $0 for unmarried participants. Would it be correct to apply higher actuarial increase factors to the unmarried participants than to the married participants if the plan asserts that the pre-retirement benefit is fully subsidized?

I am elevating a new 401(k) that’s offering hardship withdrawals. The prior recordkeeper never maintained a hardship bucket on their system because the plan was previously a 401(a) that did not permit hardship withdrawals

Questions: Now that I am elevating hardship withdrawals for the new 401(k) plan do I need to ask the prior recordkeeper for inception year to date contribution amounts so that I can load to the hardship bucket. Or does the hardship bucket starts from now, since I am adding hardship withdrawals to the plan effective 01/01/2015?

We have a plan that used elapsed time for vesting, however effective 1/1/2015 the plan was amended to change vesting to counting hours. The vesting schedule was also amended from a 6 year graded to 25% a year effective 1/1/2015.

If we have a participant that was hired 6/13/2011 for example (this is a calendar yr. plan) what would there vesting be as of 1/1/2015.

Based on elapsed time the vesting prior to 1/1/2015 was:

6/13/2011-6/13/2012 - 1 year

6/13/2012-6/13/2013- 2 years

6/13/2013-6/13/2014 - 3 years

Prior to the amendment this person would be 40% vested.

Does this person become 75% vested on 1/1/2015 (based on 3 years) OR is this person now 100% vested since it's counting hours. In other words since we changed it to hours do we now look at the fact that this person would have 4 years of service as of 1/1/2015 (2011,2012,2013,2014 - lets assume this person is full time and would have completed 1,000 hours in all years).

For the specific case of a spouse who is the sole beneficiary,

if the participant died prior to the participant's RBD,

for beneficiary distributions from a qualified plan,

does the spouse beneficiary have the option to use the longer of the life expectancies of the beneficiary and participant?

These articles seem to say the spouse beneficiary has that option:

http://www.mhco.com/BreakingNews/ABene_Spouse_041014.html

http://www.mhco.com/BreakingNews/A_SpouseBenef_011008.html

but I have generally read that that option is available when the participant dies on or after (not prior to) the RBD. But maybe the spouse who is the sole beneficiary gets this option no matter when the participant died.

And is this different for IRA's and qualified plans?

Thanks for any clarification.

Physician client has investments in a surgery center, C-Class Shares. Client does use the surgery center to conduct surgery for his patients, as do other physicians.

Is this a prohibited transaction issue?

Does it matter that the retirement plan owns non-voting C-Class Shares?

First - a disclosure - I don't know nuthin 'bout 403(b) plans.

Our firm provides custodial and record keeping services for a 403(b) plan.

This plan is leaving us to go to a new vendor. There are 4 individuals in the plan who have separated service and the TPA is stating the new vendor will not accept the funds for these individuals as they won't have "applications" for them.

It is my understanding that a 403(b) cannot do a force out (as in 401(k)-land) - and keeping the funds of these four individuals here would keep the contract we have with the plan sponsor in force - and that's not what they want. I see nothing in our contract that allows us to force the sponsor to take all the accounts to a new vendor.

Suggestions please - what can be done with the account balances of these 4 terminated participants?

Suppose you have a DB plan that institutes a hard freeze - no further accruals after, say, 1/1/2015.

Does this negate required late retirement "adjustments" to the benefit accrued on 1/1/2015? In other words, your Normal Retirement Benefit as of 1/1/2015 (frozen) is $1,000 per month, beginning at age 65. No further accruals. But there is (or was) an actuarial adjustment of (pick a number, I have no idea - say 0.5% per month) for every month you continue to work past NRD.

Does the hard freeze also negate that adjustment, or is the adjustment still required, even though there are no additional "accruals" for anyone?

Thanks!

Has anyone taken a look at the changes to the annual funding notice under MPRA? For a calendar year plan, are those changes applicable to this year's notice? The notice looks at the funded status of the plan for the 2014 plan year, but the effective date for the changes to the notice is "the date of the enactment of this Act." The MPRA was "enacted" in 2014, so are the changes effective now? Other sections of the MPRA are effective for the 2014 plan year. Will the DOL be publishing a new model notice?

For the notice of critical status, it did not look like there were any changes to this section of ERISA, even though some different terminology is now being utlilized (i.e., critical and declining status). Am i missing something here? Were there any changes in the critical status notice requirements I missed?