austin3515

Assuming there is not currently a 401k? It was not mentioned, but I thought it an important clarification.

How much is Grandpa looking to loan? If $50,000 or less Grandpa should take a regular participant loan from his account (assuming it allows for participant loans and he is still working). What he does with the money is a moot point. He can then turn around and loan the money to his Grandson's company.

Well that's the best darn observation on this topic I've heard yet.

Because what you are saying is that all previous amendments would be reviewed in the process?

Tom, what part of the notice suggests no other changes are permissible? My opinion is that the IRS agrees with Kevin C and I (and others) wholeheartedly. And that fact alone has prevented them from issuing published guidance banning the amendments. Instead, they took the backdoor, merely inferring that anything other than the above stated changes would not be acceptable.

Can an employer restrict the availability of a payroll deduction IRA to a select group of employees? For example, office employees vs. manufacturing employees? My concern is that they will blow their ERISA exemption through use of discretion regarding eligibility.

Bless you, just what I was looking for. I agree, no average benefits test allowed.

Kevin C, I'm glad to know I am not alone. I have said on numerous other posts that the IRS has not in any written document banned all amendments. They have only deemed certain amendments to be ok, but not to the exclusion of any other. I do believe Sungard however when they say the IRS's position behind closed doors is that they don't want to see any amendments. But they also said "it remains to be seen whether or not they will enforce this interpretation. Kevin C and I both took the same position here: http://benefitslink.com/boards/index.php?/topic/55034-amendment-to-safe-harbor-401k-plan/?hl=%2Bamendment+%2Bsafe+%2Bharbor#entry239595 Here is another one: http://benefitslink.com/boards/index.php?/topic/54837-401k-safe-harbor-and-mid-year-changes/?hl=safe+harbor+amend+%22participant+directed%22 In the latter I gave the following list of amendments which I think should cause no trouble at all:

Business is making an unusual allocation. The allocation looks to an outsider to be more or less arbitrary. We have cautioned them extensively on deemed CODA's so let us leave that aside for purposes of this question. Each employee receiving a unique contribution has a very unique job description. For example, one might be VP Finance and the other is VP Marketing. Another is the receptionist, another a machine operator, and you get the idea. When all is said and done, my coverage ratio is just 62%. I say "we're using reasonable business classifications and therefore I am permitted to run the average benefits test." I know I can for nondiscrimination/rate groups. My question is regarding coverage. Appreciate your thoughts!

If I do the amendment, and the IRS fines them $10,000 because they added auto rollovers mid-year (like my example?), they're going to sue me. I suppose to your point I should tell them in my letter, "the IRS has taken a bizarre position, and solely because you would like to add automatic rollovers (scoundrel!) your plan could be disqualified if you execute this amendment. We suspect the IRS is continuing its crusade against republicans in all walks of life, knowing that small business owners (who this rule overwhelming discriminates against) are most commonly affiliated with the republican party."

Although I tend to think there really is not as much change as Sungard suggests (not including their informal conversations with the IRS). “Except as provided …, a plan will fail to satisfy the requirements of section 401(k)(12) … and this section unless plan provisions that satisfy the rules of this section are adopted before the first day of the plan year and remain in effect for an entire 12-month plan year. In addition, except as provided in [the exiting rules], a plan which includes provisions that satisfy the rules of this section will not satisfy the requirements of §1.401(k)-1(b) if it is amended to change such provisions for that plan year.

That is a fact and not an opinion. http://www.relius.net/News/TechnicalUpdates.aspx?ID=1020

Is there a listing of who the eligible employers are for a SEP? We're looking at a quasi-govt that has a SEP.

"I saw it as part of the IRS effort to locate non-filers. I'm sure they will process the new form with the same efficiency and accuracy they currently use for Form 5558." I was just thinking about this. Am I the only one who sees a flaw in mandating the filing of an obscure tax form such as this as a means of finding people who have not filed a regular normal annual filing??

Hilarious John, and very applicable.: "Suppose you were an idiot, and suppose you were a member of Congress; but I repeat myself."

But can someone explain to mean the purpose of this 8822b form? Why the #$@# can't the IRS just reference who signed the 5500 as plan administrator? http://www.winston.com/en/benefits-blast/deadline-looms-to-file-form-8822-b-to-report-a-change-in-your.html [secretly, I don't think I'm the idiot ]

OK, it's settled. There is such a thing as a Money Purchase 403b plan, so says Derrin Watson. He indicated that the reason they existed was that pre-EGTRRA there were benefits to a MP Plan with respect to that awful maximum exclusion allowance thingamabobber. So to the extent that there was a 403b MP plan out there, if that plan were merged, J&S would apply to those balances (hence my reference to the 205 above in Corbel's 403b Basic plan document). He also mentioned that he has never actually seen one in practice . Finally, he mentioned that in the IRS's plan termination guidelines for 403b plans, they do make reference to "403b Money Purchase Plans." This was all according to a voicemail he left me so I did not get a chance to pepper him with all of the logistics. But that was not necessary because his affirmation of these things was enough for me. No offense intended to the rest of y'all.

The question is "can a 403b be designated as a MP plan" with the same implications as it has in a 401a plan - that is, subjecting it to minimum funding rules, j&s requirements, etc.? I haven't seen the basis for that yet. I have not seen the plan document, I only know if it's existence. But that is ok because it is a conceptual question anyway.

But it's not a designation "in name only" as you suggest. It determines requirements such as J&S and minimum funding. A plan is either statutorily subject to minimum funding rules or it is not. Just because it quacks like a duck, as is the case it here, does not make it a duck. A mandatory contribution does not make a plan subject to the minimum funding rules. At least I don't see how that is possible.

This is brand new to me, I have never heard of this before. I went to look at my basic plan doc from Corbel. It says J&S applies except that it does not apply to exempt participants. Exempt participants is defined as everyone, except for someone who has had a transfer from an ERISA 205 plan. 205(b) says: (b) Applicable plans (1) This section shall apply to— (A) any defined benefit plan, NOT US (B) any individual account plan which is subject to the funding standards of section 1082 of this title, and IS THIS A 403B PLAN? © any participant under any other individual account plan unless— WOULD THIS NOT COVER A 403B PLAN? (i) such plan provides that the participant’s nonforfeitable accrued benefit (reduced by any security interest held by the plan by reason of a loan outstanding to such participant) is payable in full, on the death of the participant, to the participant’s surviving spouse (or, if there is no surviving spouse or the surviving spouse consents in the manner required under subsection ©(2) of this section, to a designated beneficiary), (ii) such participant does not elect the payment of benefits in the form of a life annuity, and (iii) with respect to such participant, such plan is not a direct or indirect transferee (in a transfer after December 31, 1984) of a plan which is described in subparagraph (A) or (B) or to which this clause applied with respect to the participant. Clause (iii) of subparagraph © shall apply only with respect to the transferred assets (and income therefrom) if the plan separately accounts for such assets and any income therefrom. So I guess, a big question is, if you are saying a 403b with mandatory contribtions is really a money purchase plan, then what precisely pulls it into the minimum funding requirements? I went to 1082 (there was a link!) and it refers to defined benefit plans and to "money purchase plans". So I'm chasing my tail here a little bit - how exactly did the 403b plan get pulled into the money purchase world?

That's all well and good, but my cite clarifies how a 401a plan is considered a money purchase plan. How does a 403b plan obtain that distinction?

From 401(a) (underlined/italics added by me): (27) Determinations as to profit-sharing plans.— (A) Contributions need not be based on profits.— The determination of whether the plan under which any contributions are made is a profit-sharing plan shall be made without regard to current or accumulated profits of the employer and without regard to whether the employer is a tax-exempt organization. (B) Plan must designate type.— In the case of a plan which is intended to be a money purchase pension plan or a profit-sharing plan, a trust forming part of such plan shall not constitute a qualified trust under this subsection unless the plan designates such intent at such time and in such manner as the Secretary may prescribe. So if you are either a MP or a profit sharing plan with the sole distinction being made by disclosure, then clearly a 403b plan could not be considered a money purchase plan. What would the legal basis be for allowing a 403b Money Purchase? jpod, I am surprised to hear you say that there is no adequate definition of a profit sharing plan. 401a goes into great detail about what it is and it reads quite a bit different than 403(b). The logical purpose of the above paragraph (which I believe is what you're suggesting is from TRA 86) was so that anyone could look at that plan and know it was drafted correctly. Is there some other section of code providing some other means for a plan to be considered a money purchase plan?

So you're saying that a 403b plan can include a money purchase provision, and therefore be subject to j&s and all the other restrictions?

But for example you cannot merge the "403b Money Purchase" into the 403b plan because of course the Plan is not at all a 403b plan - it is a 401a plan. Horrible name for a document, full of potential misinterpretations. Case in point, I am reviewing a 5500 for a plan using both code 2L and 2C, which I think we all agree is ridiculous. I have not seen the plan documents but it is TIAA - I strongly suspect someone unwary thought their "403b Money Purchase Plan" was a 403b plan and combined them. But we shall see! Now, with respect to the ERISA/Non-ERISA issue, the DOL came out and said that in fact the 403b plan IS subject to ERISA if the deferrals in that 403b plan are matched in a different plan. Just google DOL advisory opinions on the topic and you should find it if you are interested.

I was presented with the same question today...