katieinny

A 401(k) plan is being merged into another 401(k) plan due to a merger and acquisition. A 75 yr old NHCE participant is being told by the TPA that his RMD cannot be transferred. Our position is that he doesn't have an RMD because he hasn't retired. The entire account balance should transfer. His RMDs won't start until he retires from the new company, assuming their plan also allows him to hold off until he retires. Am I missing something?

I know that a controlled group of businesses must comply with coverage and participation rules for retirement plans. Is there a similar rule for health and welfare plans?

Can a participant elect to contribute 3% of his regular paycheck, but then elect to contribute 100% of his bonus into the SIMPLE IRA (as long as he doesn't exceed the limit)? I've seen that often in 401(k) plans, but wondered if there's a reason it couldn't be done in a SIMPLE IRA.

The owner of a PEO (Co. A) started a multiple employer plan several years ago. 5500s were never filed. He also owns one of the companies (Co. B) participating in the plan. He is in the process of selling Co. B. However, the buyer is withholding a substantial sum of money until the 5500s are filed. The owner would like to pull Co. B out of the group and file 5500s just for that plan. He knows he is obligated to take care of the 5500 filings for the multiple employer group, but says he needs to get his other company (Co. B) taken care of first because of all the money that's being withheld from the sale. This sounds unethical to me, but not illegal. I'm hoping to get some thoughts from other practitioners.

That's good news -- I think. The next hurdle will be getting several year's worth of information from 25 employers!

It's our understanding that the health problems were the cause of his downward spiral.

A participant in a 409(A) plan is seeking distribution from the plan under the unforeseeable emergency definition. He's bankrupt, has tax liens and numerous health problems. He's still collecting his pay check. It seems to us that the bankruptcy and tax liens satisfies the definition, but I would like to get some input from others who deal with this on a regular basis.

We've been told that we can contact our County Attorney, who, in turn, can instruct our local Medicaid office to accept the IRS table. Let's see if that works.

A 57 year old is trying to qualify for Medicaid. In order to do that, she must begin taking life expectancy distributions from her IRA. Otherwise the IRA is considered an asset that would preclude her from receiving Medicaid benefits. The problem we're running into is that Medicaid says the distributions must be calculated using their table, which is not one of the tables that can be used under 72(t) to avoid the 10% early distribution penalty. So it's looking like the 10% penalty can't be avoided. Has anyone run into a similar situation, and was there a way to resolve it (short of applying for a private letter ruling)?

A company sets up a multiple employer retirement plan as a leasing organization. It gets a favorable determination letter for the plan. 25 adoption agreements are signed by 25 separate employers under the master plan. How many 5500s are due? One for the master plan, including information for all 25 employers? Or should each of the 25 employers be filing its own 5500?

The details about this plan are trickling in. I think the MEWA issue just went away. The plan is funded by the prevailing wage portion of an employee's pay. The employee's remaining pay is subject to payroll taxes and worker's compensation insurance. I'm a bit fuzzy about this next part, but I think the portion that was paid to the trust is reimbursed to the employee, or is used toward a fringe benefit. It was set up to comply with New York's Department of Labor laws relating to prevailing wage jobs. So, I'm thinking that since the plan is funded with prevailing wage money, it is not a MEWA. Does that seem like a logical conclusion?

Multiple employers contribute to a single trust established and maintained by an outside third party. Each employer determines which health and welfare benefits it needs for its employees. The individual employers have access to, but might not chose all the same benefits for their employees. This master trust has been filing 5500s as a DFE, and the participating employers have been filing their own 5500s as well. Now someone has asked if it's a MEWA. Apparently, if it's a MEWA, it can't be a DFE. How do we determine if it's a MEWA or a DFE? And if it is a MEWA, what is the significance (other than it needs to file Form M-1)?

It's likely that a plan offering health and welfare benefits to multiple employers is a MEWA. I see that they must file a Form M-1 annually. It's an ERISA plan and files 5500s, as do the underlying employers. My boss just asked me what the significance of being a MEWA is, and I realized that I don't know the answer. Help!

Yes, I understand what you're saying. Thanks.

So the general concensus is that the TPA is taking the 404c confidentiality issue, and concern that the employer could bring undue influence on participants, out of context.

QDROphile -- my thoughts exactly. Getting that through to the TPA is the next hurdle.

The employer is named as the plan administrator and a bank is the trustee.

Participants in this plan get ER stock under the ESOP part of the plan and they can also buy ER stock with their EE deferrals under the 401(k) part of the plan. The employer is trying to make sure that there is enough cash on hand when employees terminate and want to cash in their stock. The employer asked the TPA to provide a list of participants holding stock so they could determine how many retirements or other terminations might be coming up so that they could make an educated guess about their liquidity needs. The TPA is reluctant to provide that information. Apparently, the TPA is concerned about the 404c regs relating to confidentiality and the potential for undue employer influence on participants. Is the employer not entitled to know which participants in the employer sponsored retirement plan own ER stock?

I'm wondering how some of you deal with providing a prospectus in a timely fashion when participants have the ability to change their investments on-line, and neither the Plan Administrator nor the Investment Advisor knows when a participant has made such a change. Large plans that offer a multitude of investment options to hundreds of people couldn't provide a prospectus for every investment to every participant. I know that some investment managers simply say that all prospectuses are available on-line. Has the DOL ever differentiated between the requirement to "provide" a prospectus vs. "making one available?"

I know this has come up before, but there seems to be disagreement about whether an employer can go after a participant to recover a money that was overpaid from the DB plan. In this case, the participant received a lump sum distribution. Several months later, the participant was notified that he received several thousand too much and the plan wants it back. In a perfect world, the participant would say "Oh, sure. Here you go." But nothing is that simple. I've heard that it depends on if the money can be tracked to a specific account where it is still being held. Is that true? Is there somewhere I can look to find out what the employer's, the plan's, and the participant's legal rights and obligations are?

I was looking at it the same way mjb was. Why are the other trustees in trouble over something one guy did with his own account. He's the only who was harmed by the investment. He did it to himself.

An officer of Company A, and a plan trustee, uses his self directed account to make an improper investment in a limited partnership in which he has ownership. (He is no longer employed by Company A.) The investment has been carried at cost on Company A's 5500 for several years. The most recent K-1 is blank where there should be a dollar amount, but the LLC went bankrupt a couple of years ago, so the investment is probably worth little or nothing. The participant has attempted to roll the asset into an IRA without success. Can the employer force a distribution, issue a 1099R (once they get the K-1 preparer to provide a dollar amount) and get rid of this thing?

I traced the notices back to the Interim VFC program back in 2000 and found the participant notice requirement there, but then it doesn't appear in the 2002 or the 2005 versions. We'll take the high road and assume that if anyone asks for information (if they even notice the small increase in the account balance), the employer must provide it. Thank you for your reply.

An employer is submitting under the VFCP to correct the late deposit of employee deferrals. A small amount of money will be deposited to employee accounts as part of the correction process. Is there a requirement that employees be notified of the submission? I know that some employers have sent e-mails or included a note with paystubs, but I'm not finding anything that says an employer MUST notify employees.

An existing 401(k) plan is being amended to add the automatic enrollment feature. Rev. Ruling 2000-8 says that employees must be given reasonable notice prior to the effective date of the amendment. I'm thinking 30 days is fine, but maybe I shouldn't be so cavalier. So, I'm asking for other opinions.