Randy Watson

Would being subject to 409A be the only consequence or would there be a 409A violation as well?

What are the consequences of failing to make a distribution of pre-409A deferred compensation? It appears that the distribution should have been made in 2007. Would this failure be considered to be a subsequent deferral and thus a material modification which would then subject the benefit to 409A?

If a gov't plan waits for Cycle E do they need to adopt their EGTRRA restatement by 12/31/08?

Assume a plan has a June 30 PYE. An employee made an election to defer compensation earned between July 1, 2008 and June 30, 2009. Employer wants to switch to calendar year plan year beginning with January 1, 2009. Can the employee make a new deferral election by the end of 2008 with regard to compensation to be earned in 2009 or does their initial election to defer until June 30, 2009 need to run its course?

Can you retroactively change the Plan's definition of compensation to the beginning of the plan year for a plan using safe harbor match? Doesn't seem right since participants should know by January 1 what compensation will be used for purposes of the cap on the match.

I'm curious what others think about the impact, if any, of an employer getting a creditor to agree not to pursue "assets" in a rabbi trust in the event of the employer's insolvency. Would this separate agreement somehow make this a funded trust in the eyes of the IRS since the trust assets would no longer be subject to the employer's creditors?

Alexa, did you ever figure out what needed to do?

I posted this topic yesterday but for whatever reason it has disappeared. An employer has a non-ERISA 403(b) plan. All they do is forward deferrals to various providers. We have a plan document ready, but can't get the existing providers to cooperate. They won't even respond to our attempts to contact them. I believe we can (or actually must) tell employees that we will not forward deferrals to any provider that does not agree to comply with the terms of the plan document. Can the employer seek out one provider to that agrees to comply with the plan without creating an ERISA plan? This appears to be permissible under FAB 2007-2 as long as the employees can transfer the existing contracts. Of course, we would permit the employees to locate new providers and would gladly forward deferrals as long as they agree to the terms of the document. Any input or advice would be greatly appreciated.

I've heard someone talk about "dissolving" a Roth IRA. Any idea what they might be refering to? If it's all after tax money what affect, if any, would a dissolution have if no further contributions were going to be made?

So how would these pre-2005 contracts come into play with regard to a plan termination? Are these contracts not considered to be part of the plan for purposes of plan termination?

If some contracts were issued prior to 2005 by a former provider and those providers ceased to receive contributions prior to 2005, do those contracts have to be included as part of the plan under the final regs? Do we still need to make a "good faith" effort to include them or can they be ignored?

The final regs permit a service recipient to terminate and liquidate a 409A plan for any reason as long as certain requirements are met (1.409A-3(j)(4)(ix)©). One of those requirements prohibits the service recipient from terminating and liquidating if the termination is "proximate to a downturn in the financial health of the service recipient". Does anyone know of any guidance on what that phrase means? Just about every company is experiencing some financial downturn right now. I suspect that as long as the service recipient is able to meet its obligations under its other plans (e.g., adequately funding their defined benefit plan) that they can terminate and liquidate their NQDC, but I'd love to see some commentary supporting this. Thanks.

Why would the exchange be treated as a prohibited transaction if we have an exchange between a Traditional IRA and Roth IRA? Aren't we still missing a "disqualified person" under the prohibited transaction rules? Thanks, Masteff.

Assume an entity is wholly owned by a taxpayer's IRA. Would the sale of that entity to another IRA of the taxpayer be treated as a prohibited transaction? If the sale is between the two IRAs it doesn't seem like there is a disqualified person involved. Any thoughts (other than why on earth would we do this)?

Plan has been in existence for years. We are missing some very old, but very important employee data (date of hire, compensation, etc....) for a handful of employees. Any suggestions on how to deal with this? Employer clearly misplaced the information, but should we request that the employees somehow prove they were employed and what compensation they earned during those years before we give them credit under the Plan?

Can a participant take an in-service distribution and roll that distribution back into the same plan within 60 days? This doesn't appear to be prohibited by the Code or Regs, but I'm sure it would appear to be a little fishy to the IRS. Any comments?

If union employees cease to be union employees during a plan year is there any kind of transition rule that allows the employer to keep the union plan (and the employees) separate from its other plan for the remainder of the year purposes of coverage/discrim testing?

Is it possible for a participant in a 403(b) to move their money to a CD? This doesn't seem possible with a plan that has annuity contracts or custodial accounts. Perhaps with a retirement income account, but this isn't a church sponsor. Please help.

QDROphile, based on your knowledge of 403(b)s and your name I think you might be able to help me out with a question. Can a non-ERISA, 403(b) plan allow a division of benefits pursuant to a QDRO under Code Section 414(p) without subjecting itself to ERISA if the determination of qualified status is pushed onto the vendor? I'm inclined to not include any QDRO provisions in the plan to avoid the possibility of crossing that invisible line in the sand. What do you think?

It's fairly common for a self directed plan to have an "open brokerage" feature that allows participants to direct investments into literally hundreds of different investments. The truth is that it's impossible for plan fiduciaries to review all of these investments to make sure that they are appropriate, but I never hear talk about maintaining 404© compliance with an open brokerage feature. Does 404© protection extend to an open brokerage feature?

We want to terminate a 403(b) plan that has an existing plan document. The final regs allow for a termination and distribution prior to 1/1/09 as long as all contracts have been updated in conformance with the final regulations. The contract provider has updated the contracts. My question is whether the plan document must be brought into compliance with the final regulations or may we simply adopt a termination amendment.

Thank you Tom and Laura!

Can you confirm that if you are not aggregating plans that you don't need to worry about 401(a)(4)? For example, what if you don't aggregate and one plan offers an optional form of benefit that the other plan within the controlled group does not?

As you can tell I don't get involved with testing so I apologize if I was not clear with my prior post. I wasn't really talking about aggregation in order to pass 410(b). I thought that as part of the 410(b) test you were required to start with the total workforce of the entire controlled group. From there, you would reduce for those who do not satisfy age and service etc....to get to to the coverage testing group and then look at the number benefitting. The number benefitting would not include the employees of other members of the controlled group. Assuming what I wrote is correct, if you pass 410(b) you run ADP and ACP independently without regard to other employees within the controlled group. My question is whether this also extends to 401(a)(4) benefits, rights and features.

Assume you have a controlled group of corporations with each corporation sponsoring their own 401(k) plan. From what I understand, if each of those 401(k) plans passes 410(b) using the entire controlled group population you can run ADP/ACP tests for each plan separately without taking the other plans into account. Is that exception limited to ADP/ACP? What about 401(a)(4) benefits, rights and features? Do you need to review the benefits, rights and features being offered under the different plans if they each pass 410(b)?