austin3515

I had a prospective client ask if excluding everyone but HCE's from a 403b plan would automatically subject the plan to Title I of ERISA (the NHCE's are covered by the 401(k) Plan). I'm assuming the answer is no, it does not subject them to Title I, because a 403b plan can have lots of exclusions (students, people w/ < 20 hours, etc). Simply allowing only eligible people to participate should not effect coverage. Has this been addressed anywhere? To be honest, limiting eligiblity to people who work "less than 20 hours a week" would clearly involve more discretion than the completely objective HCE test.

I have a client telling me that they have been assured by a vendor that even though ALL of the vendor's funds are available (hundreds of them) the employer does not have any fiduciary liability related to these funds, because it is not up to the employer which funds are offered. So even though fund ABC might be a dog, the employer/fiduciary does NOT have the ability to pull the fund. Are there any articles on point about this? I tried to explain that it is a fiduciary train wreck, but need something to back me up.

I certainly wouldn't give the advice unless someone gave a compelling reason why it would work.

We've been down that road. Basically it involves lawyers coming up with documentation to transfer and assign the note to the new plan. This is a complication a "hiring" company might be willing to do, but the issue is that the "termianted" company has less incentive to accomodate the person who was either fired or quit. My opinion is that is only viable in a related party situation, or perhaps a merger/acquisition when the acquired plan is terminating, and they want to move the loans over to the acquiring company;s plan.

But do I get to use any tracing rules to support that this IS a primary residence loan?

Participant leaves job A for job B. She has a loan from Plan A payable over 10 years as a primary residence loan. She rolls her account over to Plan B and takes a loan from Plan B on day 1 to make a contribution to an IRA to "repay" the loan, so that there is no taxable distribution. We are not transferring the loan. Question: Are there any tracing rules that would allow her to continue the 10 year repayment period in the new plan?

Good call, but the goal is to get him a 30 year term. Also, it doesn't souind like waiting until 12 months after the date of the original loan makes any big difference, correect? In my case the original loan was taken in April 2012. Waiting until May 2013 is not going to make a dramatic difference because the higest outstanding balance will only be a couple hundred less. Put another way, the loan balance needs to be ZERO for 12 months before you get a new $50,000 limit. Is that a fair statement? I've never seen anyone put it that way before...

How do you handle the SPD and Safe Harbor Notices? I assume you DO have to get into that level of detail?

Can this be done? So all HCE's are excluded from SH Match, with the exception of Owner Employees? I would think so. Sounds like an amazing design in the correct situation (i.e., lots of non-owner HCE's).

plan allows for just one loan... Thanks for confirming.

Participant balance is over 200K. Participant took a $15,000 loan in March 2012. The loan balance is currently $12,000. 1) Am I correct that even if the 12,000 loan is fully repaid, the max loan available will still be just $35,000? 2) Further, if the participant did NOT repay the $12,000, they could still get the $35,000 loan. So what that means is there is actually a disadvantage to repaying the loan (in terms of how much money they would net). Is that correct?

I'm not crazy about that suggestion, this person's name being permanently etched into the Plan. And would I not lose prototype status?

Can I waive elgiblity for anyone hired on a specific date (i.e., 11/15/2012). There 3 other employees not eligible who would not benefit from this amendment (because they were hired on some other date), though the benefiting employee would NOT be an HCE (salary is $50,000). Is this OK?

Anyone done this with the Corbel Prototype 401(k)? Is this covered somewhere in the plan document? Does it need to be? Is there a write-up out there by someone going over how to do this?

What is everyone doing for the notice? Attaching a separate fund sheet for each target date fund? I know some providers have one sheet that cover all the target date funds, but not all do so.

And here's another one. Any law suits over stable value funds? The silence has been deafening http://www.erisa-lawyers.com/documents/Bid...llments_000.PDF

I thought the only implication of this was aggregation of the plans for an audit requirement? Also, You don't need a Master Trust. The two plans can be commingled in a single account. See the instructions for the Schedule H where it talks about the plans reporting their pro rata share of any balances held in an account in which more than one plan has an interest. My understandng is that although this is a bit of a dinosaur today, it was quite common with paired MP/PSP. So as an example, we have a few plans where the money is all included in a single recordkeeping contract. We track the separate plans by division. And we watch out for the audit requirement.

So my CBA actually defines eligible members as employees who work 20 hours per week. Do we think it violates 410(a) to say the plan covers only collectively bargained employees?

If there is a loss, how is this taxced? Do they get a loss to offset their regular ordinary taxable income (i.e., the direct opposite effect of positive income on their taxes?) Any web-sites that discuss would be very much appreciated.

Oh yes, because all of our clients put the extension acceptance letter in a safe place that is at the tip of the fingers...

Pathetic. Really.

I got it from TAG. But would you not agree in light of this opinion, one should think twice before not sending the SAR? I mean, what's one more SAR?

Long story short - an SAR is required in the final year. I was a toddler when this was released DOL Advisory Opinion 79-64A (July 19, 1979) ERISA Sec. 502(a)(5) Mr. L. A. Jarasz The Wyatt Company 200 First National Building Detroit, Michigan 48226 Re: Newspaper Drivers and Handlers’ Local 372 and Detroit Free Press, Inc. Welfare Trust Fund Dear Mr. Jarasz: 　This is in response to your inquiry whether section 104(b)(3) of the Employee Retirement Income Security Act of 1974 (ERISA) requires distribution of a summary annual report (SAR) for a terminated welfare plan. You ask whether failure to distribute an SAR for calendar year 1978 for the above-named plan (the Plan) would result in "non compliance" with ERISA. You also ask whether financial penalties could be levied against the Plan or its former trustees. Finally, you request information regarding an exemption under section 104(a)(3) in conjunction with the distribution of the SAR for calendar year 1978 for the Plan. 　In this regard, you represent the following: 1. The Plan terminated effective May 31, 1978. 　2. The only remaining asset of the Plan at that time was cash in the amount of $13,110.61, which was anticipated to be disbursed shortly in payment for auditor’s and administrative fees. Any excess funds were to go directly to Blue Cross/Blue Shield of Michigan in payment for insurance premiums for former participants of the Plan. 　3. A supplement to the summary plan description (SPD) has been distributed advising participants of the termination and related information. 　4. As of June 1, 1978, there were no participants or beneficiaries of the Plan. 　Section 104(b)(3) ERISA provides in part that, each year, plan administrators must furnish to participants and beneficiaries receiving benefits under a plan materials that fairly summarize the plan’s annual report for that year. Assuming that all assets of the Plan were distributed prior to the close of calendar year 1978, the Plan administrator would be required to file a "Final Return" for calendar year 1978 with the appropriate Internal Revenue Service Center (see General Instructions D and I of the 1978 Instructions to Forms 5500 and 5500-C). Accordingly, it is the view of the Department of Labor (the Department) that section 104(b)(3) requires the preparation and distribution of a summary of such "Final Return", in accordance with the requirements of 29 CFR S2520.104b-10. 　You suggest that no SAR should be required for the final Plan year because the Plan would not have any participants and beneficiaries after the date of termination the Plan. We believe, however, that the relevant provisions of ERISA and regulations thereunder (see 29 CFR S2510.3-3(d)(2)(i)) should not be interpreted to provide automatic relief to a terminating plan from the requirement to furnish an SAR for the year in which the plan terminates. On the contrary, it is our view that furnishing an SAR, in the context of a terminating plan, serves a legitimate and important disclosure function, and, specifically, is consistent with the purpose of the SAR. 　The SAR is intended to fairly summarize the latest full annual report in order to protect the interests of plan participants and beneficiaries by providing them financial information with respect to the plan (see section 2(b) of ERISA). The SAR provides basic financial information about the plan and advises participants and beneficiaries of the specific types of information contained in the full annual report and their rights to examine or receive a copy of the full annual report (see 29 CFR S2520.104b-10©). We believe the foregoing provisions of ERISA and the regulations require SARs to be distributed in order to provide affected participants and beneficiaries financial information with respect to the distribution of the residual assets of the Plan. 　In order to grant an exemption or simplified disclosure method under section 104(a)(3) of ERISA, the Department must find that the disclosure method required by Title I is inappropriate as applied to the requesting welfare plan. Based on the foregoing, we are unable to conclude that the requirement to distribute copies of the SAR to participants and beneficiaries under the Plan is inappropriate. Distributing a supplemental SPD statement to participants and beneficiaries advising them that the Plan has terminated does not afford the same type or full form of disclosure as distributing to each participant and beneficiary receiving benefits a copy of the SAR containing the information specified by S2520.104b-10. 　Section 501 of ERISA states that any person who willfully violates any provision of Part 1, Subtitle 3, of Title I of ERISA, or any regulation or order issued under any such provision, shall upon conviction be fined not more than $5,000 or imprisoned not more than one year, or both; except that in the case of such violation by a person not an individual, the fine imposed upon such person shall be a fine not exceeding $100,000. Thus, willful failure to distribute the SAR for a plan for any year in violation of the provisions of section 104(b)(3) of ERISA and section 2520.104b-10 of the regulations, would be subject to the provisions of section 501. Moreover, under section 502(a)(3) and (5), plan participants and beneficiaries, as well as the Department, may bring a civil action to enforce compliance with any provision of Title I of ERISA, including those related to the SAR. 　We are enclosing, for your information, a copy of 29 CFR S2520.104b-10, as revised (44 FR 19400, April 3, 1979). The revised regulation simplifies the preparation of the SAR by prescribing a form to be used as the SAR. Plan administrators complete the form by inserting information in the appropriate blank spaces. Following the regulation is an appendix cross-referencing the SAR items to the line items of the annual report for 1978 (Forms 5500, 5500-C, 5500-K). Complete copies of the statements of assets and liabilities and of income and expenses and accompanying notes do not have to be attached to the SAR. 　We sincerely regret the delay in replying to your inquiry. If we may be of any further assistance, please contact us. 　Sincerely, 　 Ian D. Lanoff Administrator of Pension and Welfare Benefit Programs

OMG, that's them!!!

OK then that makes point three all the more valid - each employer should have discretion here. I'm a little iffy on how all of a sudden a single plan is split into multiple plans as the result of a corporate transaction. I'd like to see some formal guidance on this. It might be treated as separate plans, but IS IT REALLY separate plans? Beats me. This is all very new so I suspect it might be among the things not yet settled...