PSP provides for cross-testing and has various defined groups of participants, e.g., Group A = "Employees who work in location x", Group B = "Employees who work in location y", etc. An employee who works in location x has been relocated mid-year and now works in location y. Question raised as to which allocation group employee will be in. Plan doc has "a year of service and employment on last day of the plan year" requirement for sharing in allocations of contributions. Allocations are to be made as of the anniversary date, ie, last day of the plan year. Plan year is Dec 31. It would seem that determination of which group an employee is in would be made as of last day of the plan year (Dec 31, 2013) given that is the date for making allocations. Thus, the employee who relocated mid-year from location x to location y would be in Group B as the determination would be made as of last day of the plan year. Appreciate any thoughts regarding the above. Thanks.

My question is in regards to a plan that has a safe harbor match using the per payroll period formula.

An employer is in transition to change payroll providers, and adopts the new payroll provider's plan.

They will continue the per payroll safe harbor match in the new plan.

What if there is a two month gap between the last payroll of the prior plan, and the beginning payroll of the successor plan?

Is there a safe harbor obligation for the gap period, or is the obligation only there for those payroll periods actually made in the prior plan and successor plan?

Does a DC plan need to have language for the additional gateway 5.5% - 7.5% needed when aggregating and testing a DB/DC combo that is not primarily in nature?

I am looking at adding a DB plan for a client, they have a 401(k)/PS with a bundled provider that is on a volume document with individual groups. They would like to leave that plan as is for now. The plan provisions work, but there is nothing about the additional gateway in this document, just the DC 3:1 and 5% rules.

The volume documents I'm familiar with (Datair and Relius) do have this additional langauge.

Simplified, exaggerated version of my question:

Participant starting collecting a pension in-service at age 62 for $150,000 per year which was his high 3 comp limit. Assume it equaled his 415 dollar limit and the high 3 comp never increased. Still working. Participant is now 99 years old, so he has collected $5.55 million. Plan is being terminated and is being amended to allow for a lump sum upon plan termination. How is the maximum lump sum that such participant may receive determined, i.e. how are the prior distributions "taken into account" in the calculation?

Current opinions appreciated since I'm not sure there is an official answer, or equally welcome are comments on how the IRS views this currently.

I have read David MacLennan's 2006 article on this subject, but I believe it pre-dated the final 415 regulation.

Hello,

Here are the facts surrounding this question:

1. An ex-employee was denied a lump sum distribution by his ex-company.

2. This ex-employee filed a “Claim for Benefit Request”.

3. The company responded and denied his lump sum distribution request.

4. The company stated that the reason for the denial solely as “Reason #1”.

5. This ex-employee filed an Appeal and clearly showed that “Reason #1” is not a valid reason.

QUESTIONS:

Can the company deny this appeal and state a new reason (“Reason #2”) for the denial?

Or must the company only use the initial reason (“Reason #1”) for all matters now relating to the claim?

Are there any regulations applicable to this?

Thank you for your time.

Lisa

Let's say someone who was a sole proprietor, selling ice to Eskimos, had a DB plan and terminated the plan in 1990 when he was 35 years old. Accrued benefit of 100/month payable at age 65, received lump sum of $40,000. (obviously I'm making up numbers here)

Now in 2013, he starts a new sole proprietorship, selling hazing instructions to NFL teams.

He wants to set up a DB plan for his new hazing sales business. Does he have to take into account, for 415 purposes, the benefit he accrued and received under his formerly terminated plan?

Can a township sponsor more than one 457 plan? They currently have one with MetLife that one participant contributes too. They would like to open another 457 plan with Nationwide. is that allowed?

I have a sole proprietor client who is age 60 and wants to start a 401(k) Plan with the initial contribution being designated as a Roth contribution. His thinking is that he wants to make an investment that he feels will increase in value substantially within the next year or two. He would than like to terminate the plan and receive this money tax free. Assuming he closes down his sole proprietorship and is at least age 60, would this meet the "separation from service" exemption for Roth distributions so that he wouldn't have to wait 5 years before he could take the money without taxes and/or penalties.?

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I think that I found out my answer. There is really no way around the 5 year waiting period short of maybe taking substantially equal periodic payments. So if my client wants to do this, he needs to be prepared to take out periodic payments for a while.

A takeover plan is a unit credit accumulation plan formula, where the benefit is the prior year AB plus the current year's accrual based on current year pay times 1.25%. No lump sum option only life and QJSAs. 1,000 hours required to accrue each year.

When participants reach NRA, the plan begins to pay the participant's monthly benefit, even if the participant does not retire.

So if a participant attains NRA in 2013 and begins receiving his monthly benefit, and then accrues an additional benefit in 2014, when does the payment increase?

a. First of month after completing 1,000 hours (except that the amount of the benefit is not yet known because 2014 total wages aren't known);

b. First day of the next plan year?

c. as soon as administratively feasible in the next plan year with a catch up back to when the benefit accrued?

d. Other?

The plan document has no language addressing this, the prior plan documents that we have obtained do not address it either.

Thanks.

Assume the Plan Document only allows for lump sum distributions of the entire benefit. it does not allow partial lump sums. A participant is subject to an RMD. Do they then have to take their entire benefit out of the Plan? Or is there an exception for RMDs that would allow them essentially to take a partial distribution?

Help! I feel like I am missing something here. Have a VS adopter which received a favorable determination letter on September 14, 2010 (and was submitted February 1, 2010),

The favorable DL reads:

"This letter expires on the earlier of the date of the employer's next determination letter or the end of the subsequent two-year period announced by the Service and which comprises part of the next six-year remedial amendment/approval cycle applicable to adopting employers of pre-approved defined contribution plans."

We submitted our VS for the second cycle submission on 2/1/11. We have not received our ne Advisory Opinion but reviewing agent anticipated issuing by month's end.

I can't find where the service announced the date for the end of the subsequent two-year period? Did I miss it? If not, is my current favorable DL still good, valid and not expired?

Thanks in advance for your awesome, steer me in the right direction answers.

a large plans SPD states "provided you are an eligible employee, you are eligible to participate in the Plan once you satisfy the Plan's eligiblity conditions"

if you are a member of a class of employees identified below, you are not an ELIGIBLE employee for all plan purposes. The employees who are excluded are:

-----employees who normally work less than 20 hours per week

It then states "Provided you are an ELIGIBLE employee, you will be able to make elective deferrals beginning on your date of hire"

First question....Well it states above, if you are not working more than 20 hours a week, you are ineligible. This statement contradicts the Universal Availability rules, yes?

The SPD then states, provided you are an eligible employee, you will be eligible to participate in Employer contributions once you satisyf the applicable age and service requirements. They are
Matching contributions when you attain age 21 and when you complete 24 months of service. You will have completed the required number of months if you are employed by us at any time after you completed the number of months measured from your initial employment commencement date. Then it goes on to state that the entry date for employer contributions is first day of the month immediately preceding the date you satisy the eligibility requirements.

Second question....once an employee meets 24 months of employment and works 20 hours a week, they are eligible for the match. If they start working less than 20 hours a week after meeting eligibility they still get the match, yes?

Third question...If they terminate after meeting match eligibility, they are rehired they enter the plan immediately and will still get a match if they defer, correct?

An owner wants to terminate his solo 401k and roll it over to an IRA because he has closed that business.

He has another business that is about a year old with a different EIN and wants to start a solo 401k under that one.

Is there any weird rules that would prevent this from being that simple after properly terminating the first plan?

Does a board resolution need to be adopted to declare the amount/percentage of p/s contribution the plan sponsor will make for the year? (IF they make one?) I have heard "yes" and I have heard "no".

Situation of first impression for me. Employer maintains a 457(f) plan that vests on the basis of class year vesting; that is, amounts deferred in year 1 vest in year 5, amounts deferred in year 2 vest in year 6, and so on. The plan provides for a distribution while the participant is working but only for the amount of tax withholding necessary as amounts vest. Under the terms of the plan, distribution of the remaining benefit occurs in a lump sum on the Jan 1 or as soon as possible thereafter following a separation from service. Because of a change of control of a subsidiary of the employer (sale of substantially all of the assets of the sub), the employer wants to accelerate the vesting for an individual who will separate from service because of the change in control. This appears to me to be permissible under the 409A regs as long as we are not changing the payment event (separation from service). Reg. Sec. 1.409A-3(j)(1). Thus, we would accelerate the vesting for this individual because of the change of control and separation from service that occurs this year and then distribute his remaining benefit on or about Jan 1 of next year. Anyone see any problems or concerns?

Company A maintains a salary deferral plan with a 3% non elective and 11.5% fixed profit sharing contribution.

Effective 11/2013 Board Resoluitno to terminate Plan. The next day the company A was sold to Company B. Employees will continue to receive paycheck from Company A. Starting 1/1/2014 paid from Company B.

1. Company A told no participant notice is required for the termination - informal termation

2. Company A told the safe harbor and employer contribution will be based on wages from 1/1/ - 11/8/2013

3. Company A told the participants can continue to defer through 12/31/2013

Question:

Doesn't Company A need to notify the particiapnts 30 days in advance the Safe Harbor will be eliminated?

If the resolution was to terminate the plan 11/8 - can the employees continue to defer?

If the employees can defer on wages from Nov to December - is it ok to base the sh and employer fixed on wages from 1/1/ - 11/8?

thanks for your assistance

Dividends paid on unallocated shares which are not used to repay an associated exempt loan may be allocated as provided in the plan, subect to other qualification rules. Rev. Rul 80-155 would appear to indicate that such earnings would need to be allocated to participant accounts if not used to repay the loan or passed through to participants. Has anyone had this issue come up and, if so, did you arrive at the same conclusion?

A related question is whether the dividend paid on unallocated shares that's allocated to participant accounts (however the plan provides) is considered an employer contribution and annual addition for purposes of 415, or an allocation of trust investment earnings that does not result in an annual addition.

we have a regular 401(k) plan that terminated as of 11/15/2013. passed out notices, stopped deferrals, signed the amendment, etc. Most participants have already returned their distribution forms.

We anticipated distributions to start shortly, with assets out by 12/31/2013 and 2013 being the final year.

The plan sponsor now has changed their mind about terminating the plan. Other than the participants being 100% vested,I don't see an issue. I think the plan sponsor would need to get new deferral elections because the notice given indicated that all salary deferrals were going to cease as of 11/15/2013.

What I don't know is about distributions. We are after 11/15/2013 and participants have accrued a distributable event. The fact that no one has actually been paid out doesn't change the fact that participants have a right to take a distribution, and undoing the termination would presumably take away that right.

I seem to think there were several threads on this topic already, but I can't seem to find them.

What if they terminate the plan and then start another? I would think the successor plan rules would dictate that the participants didn't really have a distributable event, yes? or would the new plan just be disqualified?

If anyone can point me in the right direction I would appreciate it.

Can anyone help me understand Notice 2011-86 and §7528(b)(2)? I don't want the client to have to pay the $2,500 user fee if it isn't necessary.

I am trying to prepare a Cash Balance plan determination letter request. It is a Cycle C filer that is due Jan 1, 2014. There was previously an issue that caused the plan to do a VCP submission and off-cycle DL filing two years ago, which did result in a favorable DL.

The plan was first in existance 1/1/2003.

Most things seem to reference a 5 year period for the fee exemption, but Part III provides

"the Service will treat an application as having been filed by the last day of the remedial amendment period with respect tot he plan beginning within the first five plan years if both the following conditions are met: (1) the application is filed with the Service by the last day of the submission period for the plan's current remediate amendment cycle, and (2) the plan is first in existence no earlier than January 1 of the tenth calendar year immediately preceding the year in which the submission period for the plan's current remedial amendment cycle begins."

Since the plan was effective 1/1/2003, and that the cycle ends 1/31/2014, it seems to be that the exemption applies, and no user fee is due.

Is there something I'm missing? I can't seem to find anything that indicates it has to be the initial DL submission for a plan. Does the fact that this plan has had previous DLs affect the fee exemption?

Thoughts?

Has anyone heard about this?

Employee Plans News Issue 2013-8, from the new section today:

Use Form 8822 B to Report Change in Identity of Responsible Party for Your Retirement Plan

Beginning January 1, 2014, any entity with an EIN, such as a plan sponsor, must report a change in the identity of their plan’s responsible party on

Form 8822-B, Change of Address or Responsible Party - Business, within 60 days of the change. If the change is made before 2014, and the sponsor has not previously reported the change, the sponsor should file Form 8822-B prior to March 1, 2014.

For retirement plans, "responsible party" is the person who has a level of control, directly or indirectly, over the funds or assets in the retirement plan. See the instructions to Form 8822-B, page 2, for a detailed definition of "responsible party" and an explanation of who must sign the form.

Here is the Form:

http://www.irs.gov/pub/irs-tege/epn_2013_8.pdf