erisageek1978

So even if I pass the ratio percentage test, if i'm only passing because I count the short service lower paid NHCEs and short service let's say have less than 1 yr of service, then this is problematic. But if the less than 20K guys are long term, then I'm ok?

Client has a plan that excludes the following from eligibility: highly compensated non-key employees, key employees making less than $100K and non-shareholders making more than $28,000. Everyone else is eligible and gets a 4% match. Is this discriminatory on its face? seems like anyone in the middle wouldn't get the match

Client filed for bankruptcy, has an underfunded plan, so PBGC is assuming administration/becoming trustee of the plan. A final IRS Form will need to be filed. Who files this? Is it the bankruptcy trustee? PBGC says they would not file, although they would file the final 5500. Thanks

Plan was proposed to be terminated in a standard termination but company since filed for a bankruptcy. Per applicable regs, lump sums of more than $7,000 are no longer permitted, but plan can pay out lump sum benefits of less than $7,000. If a participant has more than $7,000 in their benefit account, but requests a lump sum payment and is willing to forfeit anything in excess of $7,000, can the plan sponsor pay out that lesser amount?

Lou S. The plan trustee "froze" the assets so there would be no withdrawals during this interim period but he did so not on grounds of any legal advice, he just thought that was "best." The interim administrator (ADP) says they were told not to make distributions so they refuse to. Legally, I'm torn between the fiduciary obligation to administer the plan and the issue of fees having to be paid and how distributions now will shift the burden of those fees to any remaining participants (some of whom we told they could not withdraw at the moment). Then, there is the person's particular circumstance with this person's wife being terminally ill. And of course, we're waiting to get the QTA appointed.

justanotheradmin thanks. That was precisely my concern, that this person will withdraw and the other participants will bear the costs of the fees (QTA, legal etc) disproportionately. Unfortunately, this gentleman advised that his wife is terminally ill and he needs the money, and since the plan termination has not been initiated, is there a duty to continue to administer the plan and allow him to do the rollover?

I just had a participant call and ask for a full rollover to an IRA. Since we're pending appointment of a QTA and no termination has been initiated, can this rollover be done?

Hi Peter. It's chapter 7

Can distributions be made out of a 401(k) plan when the employer is in bankruptcy? QTA has not yet been appointed yet (hearing next week). All funds have been frozen pending appointment of the QTA.

@Patricia. Thank you. Yes, this is a pre-approved plan, and yes currently the allocation is 1000 hours of service in a plan year for the employer non-elective. So yes, I agree I believe they can do "last day of the plan year" but not what they're trying to do -- which is a requirement that the e/e be employed on date of contribution.

yes i meant defined benefit plan.

If I have an executive making $500 a year, and he participates in a 403b plan, isn’t the employer nonelective contribution (assume 5% of base) limited to the $340,000 401(a)(17) limit? In other words, he contributes $23K in employee contributions, plus $7500 catch-up, and the company does a quarterly nonelective of 5%. Currently, they’re contributing 5% of $500,000, but shouldn’t it be 5% of the $340,000 max?

Client initiated a standard termination of a 403b then filed for bankruptcy last week. NOPBs were sent out earlier and many participants chose lump sum payments. Some were paid out before the filing, others made requests (8 requests) but no payouts have been made on those yet prior to the bankruptcy filing. Do the lump sum payouts have to end on bankruptcy filing? or can the lump sum payouts still be made if over 80% funded?

If a bankruptcy trustee is involved in the abandoned plan termination (at the initial stage, until a QTA is chosen), can those fees be added to reasonable expenses to be paid out of the pension assets (under the abandoned plan regs) or does the trustee only get paid as "trustee time" paid through the bankruptcy proceeding (where comp is statutorily determined by a formula based upon money disbursed)?

Employer wants to limit contributions to situations only if employee is employed on date of contribution. Currently, employee vests in a contribution and then the contribution is made let's say 1 month after the vesting date. Employer wants to amend plan so that if the employee is not employed on date of contribution, then they don't get the contribution. Is that even permissible ?