Randy Watson

Has anyone seen information on an extension beyond June 1, 2010?

Sole proprietor has a tax qualified plan. The State has seized all assets, including the assets of the one-man retirement plan. We don't have the protections of ERISA's anti-alientation rules...would 401(a)(13) protect the benefits from State seizure of assets?

I've got a series of small "loans" to a disqualified person that add up to a fairly significant amount. I need more space on Schedule C in order to include all of these PTs. Can I supplement the table in Schedule C to reflect all the PTs? Another thought is to treat these disbursements made throughout the year as one big PT and calculate the "amount involved" and excise tax on the total amount, from the date of the first distribution. I don't think anyone is going to like that idea.

The special catch up appears to increase the contribution limit for the last 3 years prior to normal retirement age. Is this an employee based catch up like the age 50 catch up? In other words, can the amounts that relate to the special catch up be non-elective contributions or must they be salary deferrals? I don't have a lot of experience with 457(b)s, so please don't bash me!

Can a tax exempt 457(b) plan forfeit a participant's benefit if they are terminated for cause? We are talking about employer contributions (not sure if that makes a difference). It's an odd situation. The plan provides for full and immediate vesting, but allows a forfeiture for termination for cause.

We have handled this by having split eligibility conditions. For example eligibility is 3 months of service for anyone except part-timers and One Year of Service for part-timers. And test under 401(a)(4)?

There's a Quality Assurance Bulletin from 2006 which allows employers to categorically exclude part time employees as long as any part time employee who reaches 1,000 hours of service be eligible to participate in the plan. The plan must include this failsafe language. This doesn't seem to work well with a 401(k) plan that has a service condition more favorable to employees, such as 30 days, or immediate entry. I'm thinking that this concept was designed for plans that had a year of service eligibility condition. For example, a part timer can't make deferrals until they reach 1000 hours, but everyone else can begin making deferrals upon completing 30 days of service. My question is whether this failsafe approach is permissible in a plan that has a service period shorter than a year of service. If so, I assume we would have to test the different eligiblity provisions under 401(a)(4). By the way, the plans in every example have a year of service condition. Help!

Any thoughts on whether the cost of an RFP for a new TPA could be paid from the plan? Seems like a settlor function, but the RFP does relate to the adminsitration of the plan, the selection and monitoring of a service provider is certainly a fiduciary function and the participants could benefit from reduced administrative costs with the new TPA.

Wasn't sure where to post this question. Does anyone know of any good articles on the pros and cons and adopting Employee Stock Purchase Plans? Not finding all that much on the web.

Assume an employer adopted a plan and received a letter on its GUST document. The employer subsequently adopted an EGTRRA volume submitter document and then in late 2009 adopted an EGTRRA prototype document. The employer plans on submitting the Plan for an individual letter by the April 30, 2010 deadline. As part of the 5307 submission we need to include all documents since the last determination letter, which includes that EGTRRA volume submitter document. Are we required to submit a list of modifications for that EGTRRA volume submitter document when we apply for the individual letter?

If we are a "nonamender" and have an operational failure are we to submit an Appendix D and an Appendix F? Doesn't seem very streamlined. Also, would the nonamender fee cover the operational failure?

Could the controlled group and affiliated service group rules be combined to create a group of related entities? For example, would a subsidiary in a parent/subsidiary controlled group be part the affiliated service group to which the parent company belongs (even if the subsidiary does not perform or receive any services from the ASG?)

We have a plan that contains a timing distribution provision which according to the sponsor was never intended. In a nutshell, the plan delays actual distribution for 1 year after a distribution event. An executive is now thinking about terminating and was shocked to see that they would have to wait a full year for their money. I don't believe there is anything that can be done to correct this problem. This doesn't appear to qualify for the IRS correction "programs". Is there anything we can do to fix this? I assume the IRS wouldn't be very receptive to a self correction through a retroactive amendment. Another problem is that there is little to no evidence that would support the sponsor's position that they never wanted a 1 year delay. We will be amending the plan to remove the 1 year delay on the distribution of future contributions (2011 and beyond).

Plan states that if participant dies with no spouse then distribution will be made to participant's children, per stirpes. What specifically should a plan fiduciary do to identify the participant's children? Participant's personnel files are of no help.

An employer had what they thought was a non-ERISA 403(b) arrangement where they made employer contributions to individual 403(b) annuities on behalf of each employee. There is no plan document and no contract or agreement between the employer and the various 403(b) providers. This was really operated like a non-ERISA salary deferral 403(b) (other than the fact that they made employer contributions). So an employee passed away and the annuity was paid out to the beneficiary. The employer attempted to make its contribution, but was too late as the annuity contract was paid out. The insurer will not provide the employer with the beneficiary information so now the employer has this money ear marked for the employee, but has its hands tied. Since there is no plan document there are no plan provisions that require the employer to make the contribution. I don't see anything wrong with simply paying the amount ear marked for the contribution out to to the employee's spouse. Any thoughts?

If an employer makes a corrective contribution in compliance with EPCRS do they get to deduct that contribution? If so, for what year?

Would a wholly owned subsidiary of an entity in an affiliated service group be considered to be part of that affiliated service group even if it performs no services whatsoever for the group? For example, assume Company A and Company B are joint owners in Company C and the three entities consisitute an affiliated service group. Company D is a wholly owned subsidiary of B, but performs no services in connection with the group. Company D is not part of the affiliated service group. If an employee leaves Company C to work for Company D would they be eligible for a distribution from Company C's 401(k)? They are no longer working for an entity in the affiliated service group, but they are working for an entity that is part of a controlled group that has a member in the affilated service group. HELP!

The amounts went directly from a QP to a traditional IRA, then to the Roth. The transaction was years ago and outside the window of opportunity to recharacterize it, but not so long ago that it is protected by the SOL. The retiree is well over 59-1/2.

IRS determined that there was a failed Roth conversion. The IRA provider is seeking guidance from the retiree on how to proceed. Shouldn't they know how to proceed in this case? It seems like the IRA provider would simply recharacterize (retroactively) the Roth as a personal brokerage account with no favorable tax status. What else do they have to do?

Company A and Company B are within the same affiliated service group and each sponsors its own 401(k) plan. About half the employees of Company A terminated employment with Company A and now work for Company B. Company A would like to get those participant accounts out of Company A's plan. There's clearly no distribution event. However, can Company A transfer the accounts of their former employees to Company B's plan without the participants' consent (assuming Company B is on board with it)? Also, should we be concerned about a partial termination of Company A's plan even though the employees are employed within the same affilaited service group?

An exception to the anti-acceleration rule exists for "limited cashouts". My question is whether this permitted acceleration applies only to the form of payment (i.e., paying a lump sum when the plan provides for installments) or can it also apply to the timing. For example, if a plan states that distribution will be made exactly 1 year from the date of termination could we use this Section of the Regulations to pay a lump sum within 90 days of termination (assuming it is less than the 402(g) limit and otherwise meets the exception)? Would it make a difference if the normal form of payment is a lump sum 1 year from termination and we pay out the lump sum within 90 days of termination?

In 2008, a 403(b) plan was terminated and all participants received a distribution. Can a former participant who now has a paid up annuity roll that to a 401(k)? In other words, is their paid up annuity still considered a 403(b) and eligible for rollover?

Can someone please confirm for me that a matching contribution must be 100% vested in order to borrow it for purposes of the ADP test?

Would the assets in a secular trust be subject to the creditors of the participant? We're talking about an ERISA plan...obviously one that is not tax qualified.

I didn't think about the tax credit. However, the plan was qualified when it was adopted, so I'm not really concerned about any tax credit. At this point it seems like qualification only matters for purposes of plan assets.