When a participant request an after-tax withdrawal are investment earnings included in amount distributed? If so, am I correct that the Investment earnings withdrawn from the plan are subject to federal (and possibly state) income tax?

Company A ceased operations in 2010. No bankrupcty, just an assignment for the benefit of creditors. Assets liquidated, secured creditors paid. Nothing left over for unsecured creditors.

Company A had a defined benefit pension plan. After Company A ceased operations, no provision was made for terminating the pension plan or continuing its minimum funding . . . because Company A had no assets and no staff.

PBGC placed Company A's pension plan into PBGC trusteeship in late 2012. And, per same, used the date in 2010 of the Company's WARN Act notice to employees as the date of the plan's termination.

Companies B, C and D were in Company A's controlled group as of the date of the plan's termination. Some of their assets were disposed of in the normal course of operations between 2010 and 2012.

PBGC has assessed B, C and D, as controlled group members, with joint and several liability under ERISA section 4062 for the pension plan's underfunding, minimum contributions and PBGC premiusm.

So far, so good in the sense of the typical PBGC process.

The PBGC has also asserted a claim that, per ERISA section 4068, the federal tax priority rules of 31 U.S.C. section 3713 apply and that B, C and D must pay the PBGC first with the proceeds of any liquidation or similar action with regard to their assets . . . and that company officers or other fiduciaries of B, C and D may be personally liable to PBGC for same. And, the PBGC also asserts that this liability extends all the way back to the 2010 date of the pension plan's deemed termination (and not just for the period on and after the 2012 date on which the PBGC placed the pension plan into trusteeship).

Has anyone come across a similar PBGC tactic using ERISA section 4068's incorporation of 31 U.S.C. section 3713 to go after controlled group member companies and, more importantly, officers, shareholders, and fiduciaries of such members re the disposition of their assets and the assertion of personal liability for a pension plan's funding?

I have found nothing of note in the usual commentary and case law sources.

Thanks.

How long must a company wait following the termination of a 457(b) plan and distribution of all assets before starting a new 457(b) plan?

For 401(k) plans, you have to wait at least 12 months following termination and distribution of assets. 409A says for nonqualified plans you must wait at least 3 years following termination and distribution of assets to start a similar plan. But 409A doesn't apply to 457(b) plans.

I can't find a definitive answer as to what time period would apply to the termination of a 457(b) plan.

In the present situation, a new non-profit client terminated its 457(b) plan and distributed all assets when it became frustrated with the operation of the plan (and, in part, due to a lack of understanding of the rules applicable to the plan) -- without realizing that it might still be the best option for the company's higher ups who want to defer more than permitted in their qualified plan. The termination was already accomplished before we became involved.

It seems that a minimum of at least a year would be required. I worry that the IRS will assume that the distribution was an effort to accelerate access to the plan assets even though that was not the motivation here.

Does anyone have any experience with this? Thoughts? Cites?

Thank you in advance for any insight you can provide.

I'm looking at a bunch of welfare benefit plans for which it appears that SAR's have not been done.

I'm not aware of any guidance that says you don't have to do a SAR for these plans. Is there something I'm missing?

Who is responsible for ensuring compliance with a QMCSO? The employer? The health insurance company? Employer keeps sending me back to the insurance company....

Plan is self-insured. According to QMCSO, reimbursement payments are to be made payable to alternate recipient.; however, checks go to non-custodial parent.

DOL states I must file my own lawsuit.

This question pertains to a DC Plan only.

Assuming service with the same employer, does service prior to meeting the plan's eligibility criteria count towards eligibility? vesting? Is it optional or required to count service prior to eligibility?

For example, If the plan's age and service requirement is Age 18 and 1 year of service and a participant is age 17 and has been working for the company for 1 year. When the participant is Age 18, will the 1 year of service that the participant had prior to meeting the plan's eligibility criteria count towards eligibility? and vesting?

Can someone provide me with the cite or regulations that is associated with the answer? Thanks.

Any 2012 form that has been published to webclient our clients have been reporting back to us that when they go in to efile their UserID is saved but not their PIN, as they have elected to save their credentials for future years. This is not the case for 2011 forms that we have recently published. Is anyone else encountering this problem? Relius has not been of much help. And of course I would hate to see some of our less tech savy clients have to go to the DOL website to retrieve their PIN as it was a tough job in itself to have to obtain them initially!

This question pertains to a DC Plan only.

Assuming service with the same employer, does service prior to meeting the plan's eligibility criteria count towards eligibility? vesting?

Is it optional or required to count service prior to eligibility?

For example, If the plan's age and service requirement is Age 18 and 1 year of service and a participant is age 17 and has been working for the company for 1 year. When the participant is Age 18, will the 1 year of service that the participant had prior to meeting the plan's eligibility criteria count towards eligibility? and vesting?

Can someone provide me with the regulations that is associated with the answer? Thanks.

Non-spouse beneficiaries (2) inherit Individual Retirement Annuity from person past 70 1/2 and receiving minimum distributions. Annuity was long term, and was crediting 4% interest currently. Not a lot of money, about $50,000 split to two beneficiaries, both in high tax brackets unlikely to change soon. Beneficiaries in late 40's.

Options presented by insurance company seem to be:

Immediate payment and taxation

Five year deferral of total but annual Minimum distributions required

Transfer to another Individual Retirement Annuity

Some type of conversion to an annuity over beneficiary's lifetime with the existing insurer

The distribution paperwork is of course full of sales nonsense and legaleze, and is very unclear.

Questions:

1. Transfer to a non-annuity IRA does not appear to be an option. Is this true, and if so why?

2. If converted to an annuity over the lifetime of the beneficiary, is this like an individual fixed immediate annuity where the insurer prices the annuity however it chooses, including interest, mortality, expense assumptions of it's choosing?

3. What other considerations are important to minimize taxes, commissions, and maximize return?

We have been using the DOL calculator without filing VFCP.

If you do not file VFCP it seems to be unclear what performance should be used. Does highest performing fund need to be used or can the overall plan return be used? It seems like there are stories of DOL auditors upon auditing using highest performing fund? If you use plan return is there the possibility upon audit that would be changed to highest fund return? In 2012 a health care funds for example returned over 30%. This year returns are very good too.

Has anyone had any bad experiences with the DOL doing a VFCP? It seems fairly straightforward. Do you prepare for you clients? Time commitment does not seem that bad although a few of the narrative questions (#4 & #5) seem a bit too much.

Is everyone in agreement that if you self-correct, the DOL calculator can be used as the basis for the 5330 excise tax?

Thanks!

Can we exclude a class of employees from participant in a plan based on salary range? For instance, exclude from participation all NHCEs with compensation exceeding $45,000.

Can anyone advise when the salary reduction contribution is due for 2012 for a self employed individual who is on extension until Oct 15th ?

For SIMPLE 's in this situation I am under the impression that the salary deferral is due January 31st, 2013.

If this guy has a 401K plan I am under the impression that he has until Oct 15 to fund his salary deferral and company contribution.

But I am not sure about salary reduction SEP plans however which is what my main question above is.

Any comments on anything in the posting are appreciated !

Thank you.

I have a plan that would be safe harbor if not for a different definition of compensation for sales people (their pay is capped at $100K). Can I test as two component plans as follows:

1) Component Plan A is all non-sales people; this plan is safe-harbor and therefore satisfies 401(a)(4) and 410(b). (Can a component plan be considered safe harbor when the main plan is not? I know there are rules against using service as the component since employees could grow into the next service bucket, but for this purpose I'm wondering if it's okay).

2) Component Plan B would have to satisfy 410(b) and 401(a)(4) on its own, which presumably would be no problem since NHCE's will generally receive a benefit on their full pay while the HCEs will not (since their benefit is limited to pensionable pay of $100K).

Note that the main plan passes 410(b) and 401(a)(26) on its own.

As a side question, if instead of restructuring the plans I instead went the route of proving the main plan's defintion of pay was nondiscriminatory by running the compensation test under 414(s), would I still have to run the general test to satisfy 401(a)(4)? I.e., if the only thing keeping the plan from being safe harbor is the definition of pay, and I prove that pay is nondiscriminatory under 414(s), do I in essence treat the plan as safe harbor for 401(a)(4) purposes?

The client has 9 operating companies set up as C Corps. Five are owned by one principal owner and four by the other. They also have an administrative company that is a S Corp. jointly owned by both principal owners.

Trying to figure out if all of the operating companies and the administrative company can all be covered under one plan.

Non-ERISA 403b plan wants to terminate plan by prohibiting new participants but allowing existing participants to continue to contribute, thus letting the plan slowly phase out through attrition. Employer will instead participate in the State's 401k/457 Defined Contribution plans and direct any new participants there.

Will this violate Universal Availability because the 403(b) plan must still must exist for those old participants but is not available to any new participants?

Is there a requirement to notify a participant of an ACP corrective distribution? This is an over-deposit of employer contributions to the participant's account.

I'm striking out with Google, LindedIn, Facebook, so turning to this group for any help, thanks

Sorry, it's been so long since i've had to do adp/acp refunds, but are gap earnings still required?

Plan owns a $30,000 face amount life insurance policy with a cash value of $10,000 immediately prior to death

Trustee receives $30,000 proceeds and distributes to plan death beneficiary (decedent's children)

Is the taxable amount $10,000, does the Trustee issue a 1099-R and if so what code applies?

Thanks

I just noticed that the formatting didn't come out right right! I've corrected it below.

Just want to see if people agree. The "old" 404© had most of the participant disclosure stuff rolled into the 404a-5 regs.

So, under the "old" 404©, there was a laundry list of items that follows, among other requirements. It is my understanding that of these items below, the only ones still required are 4a and 4g. All of the others are now subsumed into the 404a-5 regs. (There are still some requirements not listed below, such as the availability of the "broad range" of core investments for example, etc., right?)

Thanks.

4. Participants will be provided with the following information in order to make informed decisions regarding their investments. Information which is to be given to all participants:

a. An explanation that the Plan is intended to comply with ERISA Section 404© and Title 29 of the Code of Federal Regulations Section 2550.404c-1 and that Plan fiduciaries may be relieved of responsibility for losses resulting from participant investment direction.

b. Description of investment options – objectives, risk and return characteristics, type and diversification of assets within each option, historical returns.

c. Identification of any “designated investment managers.”

d. Explanation of how participants may give investment instructions, any restrictions on transfers between funds.

e. Description of any fees associated with investment option purchases, sales, or transfers.

f. Name, address, and phone number of the Plan fiduciary (or assigned person) responsible for providing the information which is to be provided upon request (see (5) below).

g. For plans which include employer stock as an investment option, a description of procedures for maintaining confidential information.

h. Prospectuses for investment options which are subject to registration under the Securities Act of 1933.

i. A description of voting and tender rights, if any.

5 The following information will be made available to participants upon their request to:

Name:

Address:

Telephone #:

a. A description of each investment option’s operating expenses and management fees of the underlying investment media, expressed as a percentage or average net assets of the designated investment alternative.

b. Any investment materials which are made available to the Plan, such as prospectuses, financial statements, and reports of underlying investment media for investment options which are not subject to the Securities Act of 1933.

c. The latest information available regarding a list of asset holdings, value of assets, GIC provider, term and rate of return of the contract, and the like.

d. Unit values or net asset values, historical returns (net of expenses).

e. Information of the value of an individual’s interest in the investment.