Kevin C

An irrevocable election is out because he was already a participant in a plan of the employer. see 1.401(k)-1(a)(3)(v). You should consult an ERISA attorney before letting the employee opt out of the plan. Rational people don't give up free money without getting something of value in exchange. That sounds a lot like a CODA. The participant's election would not satisfy the one-time irrevocable election exemption in 1.401(k)-1(a)(3)(v) since he is currently in the PS plan.

Janet, You should still be able to forfeit nonvested participants when they terminate employment. We are using ASC documents for the EGTRRA restatements. It has that provision in the base document. The entire account must be nonvested, not just the employer provided portion.

Isn't there still a definitely determinable benefits requirement for DB plans? If so, I think you would have to include the accrual restrictions in the plan document. Also, if you look at pg 28, Cessation of benefit Accruals, in the PPA Technical Explanation, it starts with "A Plan must provide that ...". At the time, 3.5 years seemed an eternity to this Texan, too. Now when I look back at my college years, they went way too fast.

The deferral limit is an individual limit, not a plan limit. It is based on the participant's taxable year which is almost always the calendar year, not the plan year. If the participant is an HCE, you better be safe harbor.

Andy, I'll try, but I'll warn you I only spent 3.5 years in Missourah and that was a long time ago. PPA 1107 that says we are deemed to have followed the terms of the plan if we operate in accordance with the law changes when they are effective and retroactively amend at some point in the future. To me, that says the PPA rules are a part of the terms of the plan now. You have a 2009 amendment that adds benefit accrual and another plan provision that cancels that additional accrual before anyone actually accrues it. The net result is no additional accrual for anyone. To me, that means the plan provides no benefit accrual for any participant for 2009. It was frozen from 2004-2008, so there was no accrual for anyone for the entire period from 9/1/2005 - 12/31/2009 and the exemption applies. If one person got additional accrual at any point from 9/1/2005-12/31/2009, then you would be subject to the distribution restrictions.

I don't read it that way. The terms of the plan also include the PPA benefit accrual restrictions, via a retroactive amendment at some point. If under the terms of the plan no one gets additional accrual from 9/1/2005 - 12/31/2009, then the benefit restrictions do not apply in 2009. Now, if you could amend so that at least one person actually gets some additional accrual, the benefit restrictions would apply. Maybe an amendment effective late in 2008? Sieve, I ain't no actuary either, but I think the 411(d)(6) exemption is in PPA section 1107

Andy, For the amendment effective 1/1/2009, are the new benefits based on compensation? If so, wouldn't your 2009 AFTAP have to be at least 80% both before and after the amendment before the amendment could be effective 1/1/09? It looks like the idea is to have no benefit accrual for 2009 even though the amendment is effective 1/1/09. With the plan frozen prior to 9/1/2005 and no benefit accruals for any participant from 9/1/2005 through 12/31/09, it looks to me that the plan would be exempt from the distribution restrictions for 2009. I do find it interesting that the prohibition on amendments increasing benefits while the AFTAP is <80% does not apply to benefit increases using a formula that is not based on compensation if the rate of increase does not exceed the contemporaneous increase in average wages of the participants covered by the amendment.

This may seem like a silly question, but are you sure the prior administrator and the document provider are the same company? We are a TPA and use prototypes and VS documents for our clients. The prototypes we use are re-registered under our name. For GUST, you could not re-register VS documents. I think that was something new for the EGTRRA documents. I just did a search on the Word files of GUST VS documents from two different document providers and the document provider's name does not appear in the document. If it is the same with your 2001 document, there may still be hope of getting a copy of the approval letter if you can figure out who the document provider was.

If you are talking about a basic safe harbor match or an enhanced safe harbor match, yes they would have to be 100% vested. If you are talking about a discretionary match (limited to 4% of comp, etc.) along with an ACP safe harbor contribution, the discretionary piece can be subject to a vesting schedule. It's the same rules that apply to the ACP safe harbor for 401(k) plans. Here is the first part of 1.401(m)-3 1.401(k)-3© refers to the "qualifed matching contribution" that must be made to satisfy the requirements. A QMAC is 100% vested. ERISAnut, all I can say is I don't agree with you.

Even for the plan document and amendments? No one works for free. If they are providing services, they are getting paid. You may have no out-of-pocket expenses for the plan, but that just means they are getting paid from the assets. It wouldn't hurt to ask what level of indirect compensation they are getting from the assets in your plan so you can compare it to IRA fees. We are waiting on final DOL regulations that will force plan providers to disclose indirect payments they and their affiliates receive, but they are not out yet.

If your wife plans to stay retired, why continue her 401(k)? I would seriously consider terminating the 410(k) and rolling to an IRA. Why pay for maintenance on a plan you are not using? Even if you are not paying administration fees, there are still interim amendments and periodic restatements needed for the document.

Thanks, I found it in the preambles to the proposed and final regs. The new regs did remove the correction methods under 1.415-6(b)(6) of the 1981 regs. I looked at our EGTRRA approved VS plan again. There is a small paragraph in the interim 415 regulation amendment that removes the correction methods listed in the plan effective for limitation years beginning on or after July 1, 2007.

It's a fairly common plan design to refund deferrals to avoid exceeding the 415 limit. Maybe I'm missing something, but I thought EPCRS was for correcting plan document, demographic and operational failures. If they are following the terms of the plan and not exceeding 415 after applying the plan provisions, what failure is there to correct?

We have a client with a money purchase plan where the only contribution is a match on deferrals into their 403(b). Before anyone comments on the plan design, the plans were already in place before they became our client. We had Corbel's service bureau modify their MP volume submitter document to add the match and ACP language we needed and submitted for a letter. We received a favorable determination letter on the plan. Why don't you want to have the match inside the 403(b)? That would be my choice.

I doubt a government seizure of 401(k) accounts would happen because of the public reaction. I doubt those who had their hard earned savings taken would vote to re-elect those who were responsible. The nutcase's proposal is probably getting more publicity because of what is happening now in Argentina. Argentina article MJB, as you mention, the government decides what the fair market value is, subject to review by the courts. If the court making the decision is dominated by activist judges, do you really think they would have a problem with saying that promised future benefits are a fair market value payment?

That nutcase was appointed to the PBGC Advisory Committee by a certain ex-president named Bill. I saw an article the other day that claimed she is under consideration to be the new head of either the SEC or the PBGC. GBurns, you can add Texas to your list. We had a local city use emminent domain a few years ago to force people out of their homes so the local shopping mall could expand.

Take a look at the 12/19/2003 IRS Memorandum that addresses EGTRRA amendments adopted before the GUST restatement. There are circumstances where you were required to adopt a good faith EGTRRA amendment before the end of the 2002 plan year in order to use certain EGTRRA provisions. The EGTRRA 401(a)(17) comp limit is mentioned as one of those provisions.

We don't have target date funds in any of our 403(b)'s. All of our 403(b) clients use custodial accounts, so they are limited to mutual funds for investments. Our target date funds are collective investment funds (fund of funds), so they are not allowed as investments in 403(b) custodial accounts.

The supplemental notice I use is the same as the regular 3% SH notice except 1) it is labeled as a supplemental notice and 2) the paragraph explaining the SH non-elective contribution starts with the sentence "For the 2008 plan year, the Company amended the Plan to provide a safe harbor non-elective contribution."

Target date funds are not the only acceptable QDIA's. You can also use a balanced fund with an appropriate risk level for participants in the plan as a whole or a managed account option that meets certain criteria.

The 9/30/2003 GUST restatement deadline for pre-approved plans is in Rev. Proc. 2002-73. The good faith EGTRRA amendment was due by the end of the plan year starting in 2002. Which amendment are they saying is late?

That was my point. The majority interpretation creates a situation where it is impossible to follow a fairly common set of plan provisions. Either the IRS messed up, or there is something wrong with the majority interpretation. I don't think your solution of considering them required if paid before death works either. RMD's relate to a "distribution calendar year". Unless I am missing something, part of the majority interpretation is that the first distributon calendar year in this situation is determined either under the life expectancy rule or the 5 year rule. That would make the first distribution calendar year no earlier than the calendar year following the year of death. That means the distributions while alive can't be RMD's because they occur in a year prior to the first distribution calendar year. As interesting as a discussion of the regulations can be, the only opinion that really matters is the IRS's. Since there doesn't seem to be any official guidance clearly addressing this situation, does anyone know if this has been discussed in an IRS Q&A session? If not, maybe someone could get this on the list?

It depends on the type of plan. If you are referring to a 401(k), it must be amended before the acquired employees can defer. If it is a profit sharing or DB, then by the end of the 2007 plan year. Take a look at Rev. Proc. 2008-50. If you qualify for the correction programs, inclusion of ineligible employees is one of the operational errors mentioned. The correction method includes a retroactive amendment. If this is the only operational error for the time period, you may be able to use the self correction program, SCP.

MJB, Your statement leads me to a question. A still employed 5+% owner turns age 70.5 in 2008. The 401(k) plan does not allow in-service distributions, except for required minimum distributions. He takes his 2008 RMD on 12/30/2008 and his 2009 RMD on 1/15/2009, then dies on 3/15/2009. Your statement is that his death means there are no RMD's for 2008 or 2009. So, he was not eligible for either distribution. What should the plan do about the retroactive operational failure caused by his death?

Basically, the plan designates an amount or percentage of the distribution that is the maximum amount available as a housing allowance. The minister has to determine what portion of that amount qualifies as a housing allowance. Here is a previous thread: http://benefitslink.com/boards/index.php?showtopic=24672 The first link appears dead. The publication does not say it is copyrighted, but the file appears to be too large to attach. It's 3,424K. I can e-mail it to you if you want it.