E as in ERISA

Is it an ERISA 404© plans? See the requirements there about providing participants with info.

The goal is not to give the participants additional time to consider all their options. If a participant fails to get spousal consent at the time of the distribution, then the QJSA is the default -- same as it is in this case. Of course, if the participant does not repay, then they end up keeping the lump sum (or other form) that they originally chose. The plan will just restore the spouse's benefit -- typically 5 to 15% of the participant's balance on average.

If that is the position, are you willing to go back and move those contributions to the accounts of the employees who were making deferrals -- and make sure that they got the correct earnings on those amounts -- based on their investment choices. And explain to the other employees why matching contributions and earnings are being taken out of their accounts..... Etc., etc.

The way I've normally seen it done is to say that all new loans after xx-xx-xx must be repaid at termination.

Section 404© is relevant solely as a defense in a lawsuit for losses caused by breach of fiduciary responsibility. Each and every requirement of Section 404© must be complied with in order for it to be a valid defense; if any one requirement is not met, then by its terms Section 404© does not apply. Then Section 404(a) applies and the fiduciary will be legally responsible for the participants' poor investment choices. So anyone who ever plans on using the defense better clearly comply with all the requirements -- to at least some extent. Some of the requirements or parts requirements are very simple and straightforward. If there is no attempt at compliance with them, then the 404© defense will be invalid and should not be offered and/or it should be summarily dismissed prior to going to trial. I would refuse to be a fiduciary of any plan that did not remotely comply with these straightforward requirements. I include within this category the requirement under Reg. Sec. 2550.404c-1(b)(2)(i)(B)(1)(i) to provide an explanation that the plan is a Section 404©) plan, which is the subject of this post. I also include the requirements to provide three investment options, to allow quarterly changes, etc. If its very clear that you have made no attempt to comply with these requirements, then you have no chance with a Section 404© defense. If you lose the 404© defense prior to trial, your chances at a good settlement are probably reduced considerably. In other cases, it is a question of the sufficiency of the attempt to comply. If you put an explanation in writing, was it clear enough to satisfy the requirement? Were the three investment options materially different enough? Etc. These questions should go to the jury. If you're allowed to proceed with the defense, your chances at a favorable settlement (or a favorable jury verdict) are better than they otherwise would be. It all depends on the evidence.

Electronic bulletin board? The regulations on electronic communications apply to SARs. If all employees use and have access to a computer as part of their job duties, then electronic delivery may work. But you can't use a kiosk for that purpose. For employees who don't have a computer and for former employees, you have to meet the notice and consent requirements. And you still have to make paper available upon request.

No. 404© is a legal defense to a claim of liability for loss. If you do not declare 404©, then participants get summary judgment and you can't submit evidence of compliance with 404© at trial. You have to prove you meet 404 standards. If you declare 404©, then you can submit evidence of compliance with 404© at trial. Whether you win depends on whether you actually complied or not.

I think that it is ultimately a document interpretation question. It would be a lot cleaner if there were adoption agreements by the ASG members -- and if they had board resolutions and amendments terminating that participation when they ceased to be ASG members -- and if the document was clearer about how much compensation was taken into account during a year when that occurs. But absent that clarity, it is a matter of document interpretation. And while your document does not clearly state that all compensation should be included in the year of termination of the ASG, it does not necessarily prevent you from taking the position either. One thing I should note, however. You need to remember to distinguish between the physician and his corporation. The corporation may be have earned the fees as of the date of the cessation of the ASG arrangement. But that doesn't mean that the physician has earned it as of that date. He probably has a separate compensation schedule set up for himself -- for various legal and tax reasons. It appears that you are only going to be considering the physician's taxable wages during the year, so you'll probably be alright in the end. But your justification for counting all income should not be based on the fact that the physician had earned those amounts as of the date of termination -- that is probably not true. You're going to have to be comfortable that it is valid to interpret your document as allowing compensation for the full year to be counted.

Income taxes are usually taken out when the compensation is paid. For deferred compensation plans, FICA is taken out when earned, not when paid. However, there is an exception for severance plans -- so some of them would not be subject to that rule and would be taxed when paid.

Yes. If 404© doesn't apply, then the fiduciary is responsible for compliance with the general rules of 404.

I don't know what the answer is. But if you think about it, substitution of a page within an adoption agreement still looks like a restatement. You have one document that is all intact. Compare that to adding a separate page onto the end of an adoption agreement.

But beware that regulation technically only applies to participants who are truly lost.

I think that you would send out a notice. But you could need to consider whether the special timing rules for mergers might apply. And you need to consider what needs to be the subject of the notice -- some restrictions may be permanent and not subject to notice (e.g., the investments in the old plan) and others might be temporary and subject to notice (e.g., the investments in the new plan).

A Form 5330 should also be filed to pay penalties to the IRS (its reported as a loan from the employer to the plan -- and penalties are calculated based on the earnings that the employer adds to the late deposits, not on the late deposits themselves). And the late contribution should be reported on the Form 5500 (which is both a DOL and IRS filing).

The 5500 for the plan that is being eliminated would show a transfer out to the other plan as of the legal date of merger and would show zero assets as of the legal date of merger. The old trustee only has "possession" of the assets as of that date, not legal ownership. Legal ownership and possession very often don't transfer on the same date. The old saying "Possession is nine-tenths of the law" is not applicable in most phrases. In the sale of a home, there is usually a delay between the closing date and the date that possession is transferred. But that doesn't mean that the old home owner has any interest in the house after closing.

Look at the merger rules. In your case, the spin-off is essentially a merger of a portion of a plan into another plan.

My point is...why do we need to regulate everything that businesses do...just because someone is inconvenienced when they find that their initial decision is no longer the best decision. Why not let the market dictate that result?

Whatever the cost, I hope that they only charge it to those who change phones every year.... What next? Credit card companies have to allow portability of account numbers -- so that people who have set up to have all their bills paid automatically by credit card (so they get all the airline miles that they can!) don't have to change numbers every time they see a better rate and change cards?

I thought that the issue was the high cost of the technology that would permit the number switching. (Right now I assume that they are each just allocated certain numbers. If they have to allow switches, then they need better tracking.).

What do you mean by FICA plan?

Did you first make certain that they are in fact ineligibles. Depending on the terms of the plan, Company B could still be a participating employer after the change in ownership. The plan would then be a multiple employer plan.

A plan is not required to make distributions available at termination of employment. Although most plans do that, the legal requirement under 401(a)(14) is that distributions begin at age 65. There are a number of DB plans that don't allow distribution until 65. You need to look at the Summary Plan Description -- or ask for a copy of the plan document.

I also think that it would be good practice for the estimated paycheck on the 5th to include deductions for the estimated 401(k), health insurance premiums, etc. I have seen that done before.

This article says that Puerto Rico residents are US citizens and are not excludable: http://www.millimanglobal.com/publications...G_EB_9-2001.pdf They have their own tax code, so some of the tax rules are different.

The 11-K is an SEC filing that includes an audit report and financial statements of the plan. It is due to the SEC 180 days after year end. The Form 5500 is not required to be attached to it. But apparently you can substitute the Form 5500 for the financial statements that would otherwise be attached, so that you don't have to prepare both. (I believe that substitution of the 5500 is a very rare practice; I have heard of it but I have never seen it). Use of the Form 5500 for that purpose would not satisfy your IRS/DOL filing requirements for the Form. You would have to make a separate filing with the IRS/DOL within the 7 month period.