Lori H

would you just pick a date and use the value of the contracts on that date as the amount distributed?

an ERISA 403(b) plan is term in 2010. If the participants own the contracts, then how do you report distributions paid on the Schedule I of Form 5500?

A company maintains a deferral only 403(b) and a SEP that is solely funded by the employer. Are there any issues this employer needs to consider with the new 403(b) regs?

Thank you. I do not necessarily know what you mean by subordinate. I know what the word means, but would they formally have to amend the contract to be in line with the plan doc?

The original indivudual annuity contract has a withdrawal provision that states "during the accumulation peroid, the contract owner may, upon written request, make a total or partial withdrawal of the value" The plan document states that "the Vendor may make Plan distributions on any administratively practicable date during the Plan Year, consistent with the Employer's elections in its Adoption Agreement OR in the Funding Vehicle Documentation." However, the document then states under IN Service Dist. "The Employer in its AA must elect the distribution election rights, if any, a Participant has prior to his Severance from Employment". Well, if you have Indiviudal accounts, you can not make elections in the AA re: in service. I am of the opinion the contract governs here if the provisions are in the contract. Am I thinking straight?

Can someone explain the reasoning why employee deferrals are considered "restricted accounts" and in service distributions can occur from employer contributions at any time?

An active participant in a 403b is wanting to take out the full value of his account. He is not terminated or 59.5. The current plan document became effective 1.1.09. The plans SPD states that distributions of elective deferrals can occur at age 59.5, hardship or disability and that employer contribution accounts invested in annuity contracts can occur at any stated age, hardship or disability or other stated event, however it has the wording "you should consult with the Administrator to see if the plan actually permits all of these distributions and what conditions may apply to the distributions". The participant was told that in service distributions can not occur. The participant then provided a provision from the original annuity mass mutual annuity contract that stated the "contract owner may, upon written request, make a total or partial withdrawal of the contract value". Question is, would the plan doc now prevail over the provisions of the old annuity contract? Would they have to amend the plan to allow for inservice dist at any time to mirror the original contract?

Is it no earlier than 90 days and no later than 30 days before the beginning of the plan year on an annual basis? If a plan has QDIA's, the notice MUST be sent to the participants, similar to safe harbor notice, yes? And if the plan does not have QDIA then they do not have to issue a notice of something like "the plan does not have a QDIA"?

a two trustee plan has violated the annual addition limits as one participant, who happens to be one of the trustees, received in excess of his 2009 earnings. He refuses to sign off on a refund. Can the other trustee request the refund without the others signature?

If the 403b contract is one that depends on an employer's plan for its tax exemption (per the 2007 final 403b regs, depends on the contribution history), then the plan limits in-service, pre-age 59 1/2 distributions in accordance with the final 403b regs. So in the past, a participant could receive an in service distribution at any time irregardless of hardship, age, etc. The contract was theirs. They could dist the money while still employed. Now, they have to have provisions in the plan due to final 403(b) regs that state when a participant can have their funds, i.e. hardship, loan, early retirement, etc. A participant could not just take a distr. whenever they feel like it as in the past?

a 58 year old part in a ps plan received a $30,000 distribution from his 3 participant plan. He is not terminated and the plan does not allow for loans or in service distribuitons or have early retirement provisions. Suggestions?

I still have an issue with the nature of this plan. There have never been any HCE's, however something seems fishy when one employee receives a employer contribution while others do not. There was never a document in place outlining the benefits, rights and features of the plan, the company just arbitrarily contributed money set aside for health insurance into their TSA if the employee did not need health insurance. This seems discriminatory in nature or is it? The employees could not opt to take the money in cash, therefore it was never subject to W-2.

Thank you for your responses. The plan has never had an HCE, the director who is the highest paid, made $72K last year. The employees never had an option to take as earnings the $150 that was designated as either employee health coverage or as a TSA contribution. It went into one or the other, therefore I don't think the constructive receipt issue comes into play nor discrimination issues with some employees getting employer contributions while others do not. They may wish to double check the constructive receipt issue with tax counsel, but it appears as if they only have delinquent filing issues.

That is correct, I am under the impression that the plan never had HCE's, but if you have some participants receiving employer funds who are NOT deferring and others who are deferring but not receiving employer funds, would you not have an issue where the plan was not benefiting all eligible participants? For example, if an employee has been working for 90 days and does not need the insurance coverage, so the employer starts putting money set aside for the insurance into the TSA for that participant and the TSA does not state how or eligibility for employer money, would that not be an issue if some employees were receiving employer money and others were not? The employer contributions to the TSA were not included in the employees income.

They have had a 403(b) since about 1992. Its an Alzheimers Day Care center with less than 60 employees. Initially the plan was set up as NonERISA deferral only. Well, around 1995, the center started giving the employees the option of taking a $150 monthly payment towards health insurance. Alternatively, if they did not need the insurance, the employer just put the $150 in a TSA contract for them. At this time the plan would have become an ERISA plan and should have started filing 5500's. They didn't. I know how to go back and fix the missing 5500 situation, DFVC, pay the $1500 sanction and file the 5500's. That's no problem. My issue is with the employer contribution. Obviously there are some discrimination issues....or are there. Just for argument sakes, if the participant was given the option of having the funds go towards the cost of health insurance or towards the TSA, would it really be a discrimination issue? My thinking is yes and that you can not have a stipulation as such associated with a plan. If so, then how is the employer contribution defined within the confines of the plan? How does the employer go back 14 years or so and determine who should have received a contribution and who should not have. Currently, the employer only contributes on behalf of one employee, the director of the center, and the $150 a month is now $250 monthly. There are about another half dozen or so employees deferring into the plan and not receiving an employer contrbution. The agent on this plan is VERY worried that he may get sued and/or have an E&O situation here. I guess if they did NOT want to follow the government procedures for correcting the plan defects, they could just shut the plan down and hope the statute of limitations runs it course. Obviously I would never formally advise them of that course of action, but it would seem that the government would not even be aware of the existence of the plan at this point in time. I suspect with the new document regulations and the more extensive reporting requirements, there are a slew of TSA's that are now finding themselves in similar situations.

Non discrimination for employer contributions to non profit 403b plans became effective in 1989 but only prohibits discrimination in favor of HCEs, i.e., in 2009 employees who earned over $110k in 2008. If the plan had no HCEs beginning in 1993 there is no discrimination. There is no ADP testing for employee contributions to the 403b plan. Since a 403b plan is not subject to IRS filing requirements the 5500s for prior years can be submitted under a DOL remedial program that used to cost only $1500 regardless of the number of years missed. I once had a client file 5500s back to 1975 and pay only $1500. You cant reverse the contributions for 09 if they are 100% vested and it doesnt change the plans ERISA status for prior years. The client needs to find a good lawyer. This is a small plan. There is only one participant currently receiving employer contributions. The discrimination issue is not so cut n dry. Participants who defer are not receiving employer contributions. They only receive employer contributions if they do not need insurance, that money goes into the plan. They give all employees the option to take a set amount as funds towards insurance premiums, should they not need it, it goes into the TSA. As far as I know the plan has never had any HCE's.

An alzheimer's service group established a TSA plan in 1993. In 1995 they started to offer employees $150 per month for either group health insurance or if they did not need the ins coverage, the company would put it in an annuity in the plan. The $150 is now $250. In addition the employees are allowed to defer funds. There has never been a 5500 prepared since they started employer funding nor non-discrimination testing. Certainly the plan has serious issues. The director is wanting to reverse 2009 employer funding back to the company and make the plan Non-ERISA for 2009. I suspect that is possible, but what about plan years 1995-2008?

if a participant owns the contract, what's the difference in taking the money prior to termination and after termination?

Thanks, what sort of ramifications do you think could arise if a plan administrator had the "pay as soon as administratively feasible after the close of the plan year" provision in the plan but went ahead and paid the participant shortly after termination? it seems as if this provision would be strictly for the benefit of the plan sponsor meaning they would have a more definite idea of when distributions would occur (after the plan year) as opposed to paying terms out throughout the course of the year.

we are having an office dilemma. For restatements distributions to terminated participants have several options, one being the distro can occur as soon as administratively feasible after the participant terminates. Another option is the distro may occur as soon as administratively feasible after the close of the plan year in which the participant terminates. The latter option allows for possible miscalculated matching funds to be deposited into the terminated part account and results in only one distro to the part rather than multiple under the former option. However, some of the plan administrators are going ahead and paying them out prior to the close of the plan year and not in accordance with the terms of the plan, which says "as soon as administratively feasible after the close of the plan year in which they terminate". For EGTRRA we are thinking of switching to as soon as administratively feasible after the participant terminates. That may allow the sponsor more flexibility. THOUGHTS?

a calendar year 403(b) has a QNEC rescinded during 2009 plan year. i assume they will have to do full Form 5500. My question is if they remain deferral only in 2010 and on, will they be exempt from 5500 filing?

Do the new extensive reporting requirements come into play with the 2009 5500? I am thinking yes, for both ERISA and non ERISA plans.

thanks. the plan is not eliminating any provisions, so i just leave the blank....blank?

Thank you Jenny. So they should/could have just done the 5330 at the time of the made up earnings and bypassed the VFCP? It took the DOL a year or so to issue the VFCP and of course it was a result of them answering "yes" to late deposits on the Schedule I, but they are now doing a VFCP AND a 5330.

a 401(k) is in the process of being restated for EGTRRA and one question the AA has is regarding to protected benefits. It asks...."The following are Code Sec 411(d)(6) protected benefits that are preserved under this plan:____________(specify the protected benefits and the accrued benefits that are subject to the protected benefits). Well it would seem the plan would retain all the protected benefits that were in the plan prior to restatement. I am a bit confused as to what should be in that space. There has been nothing that reduces accrued benefits (i.e. vesting, etc) You could possibly put a too much in that space (or perhaps not enough). The plan does not have early retirement or optional forms of benefit. Would someone give an example of what could be specified in that space.