Randy Watson

Right, we have another plan with the NHCEs.

I'm really asking whether HCE status can be an eligibility requirement in addition to age and service if you somehow pass testing (which we would...believe it or not). I'd rather not get into the details of how we pass.

Is a plan permitted to limit participation to salaried employees who are HCEs? I'd like to focus on the eligibility rules, so please assume that the plan has no testing problems.

200213032 was very helpful. Thanks.

I understand, but if the employee is entitled to receive the death benefit prior to 12/31/04 and still entitled to receive that benefit after 12/31/04 then what additional amounts have been deferred after the deadline?

Terminated 401(k) plan paid out all benefits, but overlooked an exisiting QDRO that assigned 1/2 of a participant's benefit to an alternate payee. The alternate payee recently inquired about receiving his benefit and that he plans on rolling the benefit to an IRA. Since the plan and trust are long gone, the employer will pay the benefit out of their general assets. Please tell me if I'm wrong, but I don't think there is anything that the employer can do to create any kind payment that could be rolled to an IRA or another employer's qualified plan. I don't even think this is a benefit at this point...it's really a settlement payment.

Assume for a moment that you have a split dollar arrangement is NQDC. If that agreement was not materially modified, but premiums were paid on that policy prior to and after the issuance of 409A, would the whole agreement be grandfathered?

MJB, I really appreciate your help and I'm hoping you could bear with me a little longer. With regard to your first paragraph, why would the s/l commence upon distribution? I thought it commenced upon repudiation? Are you saying that it commences upon distribution if they never file a claim (and therefore no repudiation)? It seems like the s/l would be moot at that point because a participant has to exhaust administrative remedies before filing in federal court. No? With regard to your second paragraph, if the plan doesn't specifically limit when an initial claim must be filed then when must it be filed?

Okay, assume that a participant fills out the forms necessary to receive a distribution and then receives a lump sum payment shortly thereafter. Would filling out those forms be considered a claim for benefits? If so, what if the participant receives a lump sum that was calculated "incorrectly" under the whipsaw calculation and they don't discover the mistake until years later. If they don't appeal the claim within the time frames set forth in the claims procedures they would be prohibited from filing in federal court since they never exhausted administrative remedies. MJB, I think you are saying that that is a likely result, even if this is a whipsaw claim. On the flip side, what if the submission of the distribution forms is not considered to be an initial claim for benefits? Is that possible? If so, how long would they have to file the initial claim under the claims procedures?

To an extent I think that it is different. I think that a member of protected class is more tuned in to discrimination than a rank and file employee is tuned into complicated cash balance calculations. That's probably less true than it was a few years ago, but I think it's still true. Not sure what good this argument will do me. Anyway, I see your point about the breach of fiduciary duty and making good on losses.

When would the limitation period start for a breach of fiduciary duty in a whipsaw action? At the time of the distribution? How on earth would a participant know that they were wronged with such a complex matter like whipsaw calculations?

Thanks, JanetM. What about whipsaw based claims? Do they present any special issues? I would imagine that there would be a breach of fiduciary duty claim thrown in there when other claims have a less favorable state SOL.

I really don't know much about litigation, which is the reason for this post. I'm trying to get a grasp of how the statute of limitations works in context of ERISA claims. I know that much depends on the basis of the claim as ERISA has a 6 year SOL for fiduciary breaches. But what about nonfiduciary claims? I think courts generally go with state SOLs. Is that right? Would they use a SOL for breach of contract in the case of this kind of claim? In general, how long is that....3 years, more?

Nevermind.

ERISA Section 101(i)(2)(E) requires Notice to be given to the issuers of employer securities subject to the blackout period. What form of notice is typically given when it's the plan sponsor's stock that will be subject to the b/out? A letter from the plan committee to the board?

Parent.

Yes, everything else is okay (controlled group, coverage etc.) and we recognize the fiduciary duties with offering this as a plan investment. I just don't want to get hit with something out of left field. Thanks.

Are there any unique issues that arise when a subsidiary offers parent company stock as an investment option in its 401(k)? I don't see anything inherently wrong with doing that. Thanks.

What about the fact that the employer is agreeing to pay premiums in future years? Isn't that a deferral of income?

There's no other arrangement. So an old (prior to 2003) endorsement split dollar is not subject to 409A?

Endorsement split dollar arrangement has been in place for at least 5 years. Is it possible that a portion of the policy is grandfathered? If so, how would you figure out how much of the benefit is grandfathered?

I agree, but that's not what the statute says.

WDIK, this is classic... I agree, that was very good. Austin, 416(g)(2) defines the aggregation group as each plan that contains a KE and every other plan that enables that first plan with the KE to pass 401(a)(4) and 410. Assume that the second plan does not enable the first plan to pass 401(a)(4) or 410 (since it has HCEs only). It's actually the first plan that would help the second plan pass discrim testing. Is there something out there that I'm missing that would prohibit aggregation for coverage purposes in this case? Thanks.

That's correct.

The safe harbor is only required to be given to NHCEs. Actually, we might be able to get around this (prospectively) by creating a second plan for individuals like this. Check out Code Section 416(g)(2)