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Does anyone know if the PPA technical corrections bill was passed?

If you have a calendar year 401(k) plan that opted to include match contributions for the first time in April, do you only include the eligible compensation from April – December for the ACP test?

Regarding fees from the final QDIA regs: Section ©(5)(ii)(A) shall not apply to fees and expenses that are charged on an ongoing basis for the operation of the investment itself such as investment management fees, distribution and/or service fees, ‘‘12b–1’’ fees, or legal, accounting, transfer agent and similar administrative expenses), and are not imposed, or do not vary, based on a participant’s or beneficiary’s decision to withdraw, sell or transfer assets out of the qualified default investment alternative; Does this mean if the plan charges a $50 processing fee against a participant's account for the distribution of the QDIA within the first 90 days after the initial investment that is okay even if it wipes out the entire account value? If the answer seems obvious, I apolgize.

Since an EACA is required to have a QDIA and part of the final QDIA regs state the participant must have had the opportunity to direct investments in his or her account, but failed to do so. I would think you cannot have an EACA without participant direction.

What is the difference between a Automatic Contribution Arrangement (ACA) and an Eligible Automatic Contribution Arrangement (EACA)?

The 415 compensation definition is also the basis for determining nondiscriminatory (414(s)) compensation to test a plan under the ADP/ACP tests, and under 401(a)(4). Did the final regulations clarified whether or not the definition of compensation would be an "alternative definition" if it excludes any or all of the optional post-severance compensation. If it is considered an "alternative definition," then each plan using the "alternative definition" would be required to pass the compensation ratio test every year.

If you freeze a 401(k) plan, can you allow loan repayments to continue.

Need to revised my question: Is it possible to terminate a 403(b) plan in the same year you start a 401(k) plan (i.e. would the 401(k) plan be considered a successor plan)? Also, it is my understanding you cannot directly transfer the assests from a 401(k) plan into a 403(b) plan. Does that hold true for a direct transfer of 403(b) assests to a 403(b) plan?

Is it possible to terminate a 403(b) plan in the same year you start a 401(k) plan (i.e. would the 401(k) plan be considered a successor plan)? Also, it is my understanding you cannot directly transfer the assests from a 401(k) plan into a 403(b) plan. Does that hold true for a direct transfer of 403(b) assests to a 403(b) plan?

This is from the 2007 Fall Edition of Employee Plan News: Update: Taxpayer Delinquency Investigation Notices for Forms 5500 and 5500-EZ In February 2007, the IRS began mailing Taxpayer Delinquency Investigation (TDI) Notices to employers that failed to timely file Forms 5500 and 5500-EZ for the plan year ending December 31, 2004. The first delinquency notice, CP 403, is normally sent 15 months after an employee plan return was due. The second delinquency notice, CP 406, is sent 15 weeks after the issuance of the CP 403 if the filer did not respond with a completed return or an acceptable explanation as to why it did not need to file a return. For several years prior to 2007, the IRS had suspended mailing TDI notices. The reinstatement of these notices is allowing us to obtain missing returns and allowing nonfilers to become compliant. In addition, the responses received to the notices have helped identify and correct EIN, plan number, and return posting discrepancies, and update records. We recognize that some of these notices will be received by employers that fully complied with their Form 5500 or Form 5500-EZ filing obligations and we ask that these employers allow us to correct our records by responding to the notice as requested.

Does anyone have any more information or reference to what constitutes immediate heavy financial need? In our office there a co-worker thinks he saw something written which states 90 days. I understand the defininition is not spelled out in the regs but we are looking for some sort of official interpretation.

I have a non-profit home health 501©3 organization that currently has a 401(k) plan and wants to terminate their 401(k) plan and establish a 403(b) plan. The reasoning behind the change is mainly because a salesperson told them they never should have been set up with a 401(k) plan and they could save o money by switching to a 403(b) plan. It is my understanding the 403(b) plan would not be considered a successor plan so this could be accomplished in the same year. The plan has no HCE and is a deferral only plan which is currently invested in Nationwide product. My knowledge about 403(b) plans is limited and more limited with regard to the differences of an ERSIA versus a Non-ERSIA 403(b) plan. In light of the new final 403(b) regulations, could someone help explain to me why or why not this organization would be better off with either a Non-ERISA or an ERSIA 403(b) plan. Any help would be very much appreciated.

We are considering taking over a multiple-employer plan. The 5500 which was prepared by the current TPA was coded as a single emplyer plan. The plan covers a group of unrelated business entities that share a common trust. The current TPA stated that for 5500 purposes it is possible for a multiple-employer plan to file as a single employer. Is anyone aware of any exceptions that allow a multiple- employer plan to file as a single employer for the 5500 filing?

We got a new notice from our document provider. ASPPA had one on their website as well as Mckay Hochman.

Your thoughts would be appreciated regarding the following scenario: A participant requested a hardship of $1,000. The plan allows hardships from the deferral source only, distribution fees are $50 (deducted from the participant's account) and the participant's eligible hardship amount is $1,000. I have used round numbers to simplify (assume he lost money on his investments and has no residual earnings on his original deferral contributions). Can you give the participant $1,000 as a hardship withdrawal and take the $50 distribution fee from another source or is the participant limited to $950 as a hardship assuming the $50 distribution needs to be paid out of the eligible hardship amount.

See the technical update from Relius http://www.relius.net/news/technicalupdate...?ID=333&T=P Plan Design. The QAB indicates that a plan may exclude part-time employees as long as the employer designs the provision in such a way that there is no possibility of indirectly imposing an hour of service requirement in excess of the Code §410(a)(1) statutory maximum. The QAB gives examples of which plan provisions are permissible and impermissible clauses. The first example suggests a plan with a one year eligibility provision could exclude part-time employees as long as the plan defined part-time employees as anyone who actually works less than 1,000 hours of service. This exclusion serves no purpose because the usual statutory one year eligibility provisions would prevent any part-time employee who actually works less than 1,000 hours (determined at the end of the computation period) from entering the plan. However, another example does provide useful guidance on how an employer might design a part-time employee exclusion. Generally, a plan provision that excludes an employee who “is scheduled” to work less than 1,000 hours of service is impermissible because the employee could work more than 1,000 hours but still be excluded. However, the IRS indicates that the employer could salvage the provision by including fail-safe language for the situation where the employer works more than 1,000 hours of service during a computation period. Such a provision could operate as a prospective exclusion (subject to the fail-safe). In effect, in a plan with immediate eligibility, this creates 2 sets of eligibility conditions, one for full-time employees (immediate entry) and one for part-time employees (one year of service). Consider the following example: Example. Corporation X maintains a calendar year 401(k) plan. The plan is top-heavy, provides for immediate eligibility for deferrals and provides for matching contributions (either after completion of one year of service or immediately). The plan also excludes part-time employees. The plan defines a part-time employee as any employee who is scheduled to work less than 1,000 hours of service. If a part-time employee actually works more than 1,000 hours of service during a computation period (despite not being “scheduled” to do so), the employee will become a participant on the first semi-annual plan entry date following the computation period. X hires two part-time employees on November 1, 2006 (A and B). Their job description indicates they normally will work 15 hours/week or less, thus they are “part-time” and excluded under the plan’s definition. However, the plan admits all remaining employees who are not part-time immediately. During their initial computation period, A works 550 hours and does not become a participant. B, on the other hand, ends up working 1,100 hours during the computation period and will become a participant on January 1, 2008. Neither A nor B will be able to defer or receive a top-heavy minimum during the 2006 and 2007 plan years or otherwise be considered a plan participant. B will be eligible to defer in 2008, and therefore is eligible to receive a top-heavy minimum contribution for that year. The employer can eat its cake and have it, too. So long as the appropriate fail-safe language is in the plan, to assure that the plan will always satisfy 410(a), the plan can exclude part-time employees as a classification until they meet the year of service requirement, even though full-time employees enter immediately.

Read the Sunguard Technical Update - Quarterly Benefit Statements issued March 1, 2007 (www.relius.net/news/technicalupdates.asp?ID=35&T=P) What you are proposing appears to be in line with the examples they have outlined as to the deadline for the supplemental notice (May 15, 2007). They do, however, they state the "one-time" notice explaining multiple documents must be provided in advance of May 15, 2007.

Has anyone started sending out the participant distribution notices? We just received a revised version of the Sungard's distribution notice (it is even longer than the first version). Sungard stated, the Treasury officials have disclosed, in informal discussions, they intended greater emphasis on: (1) fees and expenses associated with leaving a participant's account in the plan; and (2) any special fee arrangements available to participants in the plan that might be advantageous to the participant. Our website includes a link to morningstar. Morningstar already lists the fees associated with each fund. Has anyone thought of incorporating into the notice language that would direct them to the website were the fees can be found instead of attaching the list of funds and fees? If you feel like sharing, it would be interesting to see how others are handling this notice requirement.

Thanks for all of your responses.

Since I did not get a response, I will try asking the question differently: To determine otherwise excludable employees (min. age of 21 and min. service of 12 months), do you have to use the entry dates in the plan (i.e. monthly, quarterly, semi-annual) or can you use 410(a)(4), earlier of next plan year begin or 6 months after eligibility satisfied. Any help would be greatly appreciated.

I noticed in the winter 2007 ERISA Outline Book Quarterly Update there was a memorandum discussing the IRS' review position on the disagrregation of otherwise excludable employees for ADP testing. We do not get the quarterly updates. Does anyone know where I can get a copy of the IRS review on this subject (other than the quarterly update)?

If you have an participant who is actively employed and started taking 70 1/2 minimum distributions, can they decide to stop if they remain employed?

Can you have an increasing tiered match in a prototype document?

If a participant files for bankruptcy can they continue to defer.

I just want to make sure I am thinking correctly. The plan I am working on does not currently have a match feature in the document. Can we distribute a SMM and start the match contribution a week later or is there a waiting period?? Also, if the plan has prior year testing can we rely on the 3% for NHCE ACP discrimination testing or do we have to change to current year testing?