Lame Duck

5. Rear Window 11. The Thin man

An HCE electing not to participate in the plan should not cause a 410(b) issue since that relates to the percentage of NHCEs covered by the plan. It would generally help the testing. However, if the plan is to be non-discriminatory, I believe it would also have to permit NHCEs to opt out of the plan if it allows HCEs to do so. This could, potentially, result in a sufficient number of NHCEs opting out of the plan to fail 410(b). It may also raise a 401(a)(26) problem if enough opt out of the plan. Excluding the HCE from participation by classification is probably the better method of accomplishing your goals.

The answer is 3. See IRC Section 404(n).

What does the plan document say regarding the aggregation of controlled or affiliated service group members?

I've been tempted to toss a few smokers out the window when they insist on stopping by my desk after just finishing that cigarette. For a non-smoker, there is nothing worse than the smell of stale smoke clinging to a smoker's clothes.

He should be able to contribute to any type of qualified plan as long as he is working and has earned income to support the contributions. He would be subject to immediate MRDs and, depending on the type of plan and amount contributed, this could negate most of the tax benefit of the contribution. Provided he has not sponsored a qualified plan that has terminated in the past 5 years, your client may be able to start vesting accrual from the effective date of the plan. This would delay the MRDs for up to 3 years if a 3-year cliff vesting schedule is elected.

Kirk, Least meritorious case ever filed? I think that's stretching it a bit. There is no length to how low some of my fellow attorneys will stoop in the pursuit of "justice". Especially when the justice fills their wallets.

Lori, I don't write it, I just cite it.

I don't believe so. 1.411(a)-5(b)3(v)(B)(1) specifies that a qualified plan is one within the meaning of section 7476(d) of the code. 7476(d) defines a qualified plan as: For purposes of this section, the term "retirement plan" means - (1) a pension, profit sharing, or stock bonus plan described in section 401(a) or a trust which is part of such a plan, or (2) an anuity plan described in section 403(b). Since a SEP is governed by section 408(k), it is not covered under the definition set forth in 7476(d).

You can only exclude prior service for vesting purposes if there has been no other qualified plan that has been terminated in the five year period immediately preceding or following the adoption of this plan. See 1.411(a)-5(b)(3)(v). Generally, if they have had a prior qualified plan, we count all service.

The date we have always used for this type of amendment is the date set forth in 412©(8)(A). The amendment must be adopted not later than two and one-half months after the end of the plan year in order to be deemed to have been made on the last day of the plan year. For a claendar plan, this would be march 15, 2006.

It takes time and a very warped sense of humor.

I knew the Red Sox faithful wouldn't let me down. It's almost March and this is the first reference since the end of the 2005 season. Have you all been hibernating?

Andy, I have to agree with you, but how many people out there still remember EF Hutton and its tag line?

Very cute, Tom. It reminds me of something I did years ago as a take off on The Night Before Christmas where I worked in all of the people in the office.

Political correctness could really propel this into the stratosphere as a hot topic. By the way, Tom. I remember that photo. I hthught you looked a little green.

I do not like SARs! I do not like them Sam I Am! Would you like them with more RAM? Would you like them with less spam?

415(b)(4) provides the rules for the de minimus benefit. 415(b)(4)(B) states "the employer has not at any time maintained a defined contribution plan in which the participant participated." This would seem to preclude the adoption of an individual 401(k) plan. Even if the plan provides for salary deferrals, only, it is still a plan sponsored by the employer.

What are the requirements for membership in DENSA. Whatever they are, I'm sure I can meet them.

These jokes take me back to my childhood, and a warped one it was. However, if we are going to be politically incorrect, we might as well take it all the way. In follow-up to Kirk's question: What is the most common name of the one legged women who work at the Tokyo IHOP? Irene

It hasn't generated much enthusiasm so far.

Also see Rev-Rul. 81-114.

One thing to think about on the company stock is that you may be entitled to special tax treatment if the stock is distributed to you in kind from the plan of your former employer. You may be able to treat any gains over the contribution amount as a long term capital gain and you may be able to receive a distribution of the stock without being subject to the 20% mandatory withholding on distributions from a qualified plan, depending on what else is distributed with the stock. You may lose the capital gains treatment for the stock distribution if it is rolled over into another plan since the distribution would no longer be "employer securities". You should consult with your CPA before you make any decision about rolling over the prior 401(k) to your new 401(k).

See 408(d)(3)(A)(ii) as amended by EGTRRA.

Foreign correspondent Pace back and forth?