John Feldt ERPA CPC QPA

I think the regulations are very short and sweet. If I recall, it says "reserved".

Why not just attach a copy to your own agreement?

Rev. Proc. 2007-44 SECTION 8. PLAN TERMINATION The termination of a plan ends the plan’s remedial amendment period, and thus, will generally shorten the remedial amendment cycle for the plan. Accordingly, any retroactive remedial plan amendments or other required plan amendments for a terminating plan must be adopted in connection with the plan termination (that is, plan amendments required to be adopted to reflect qualification requirements that apply as of the date of termination regardless of whether such requirements are included on the most recently published Cumulative List). An application will be deemed to be filed in connection with plan termination if it is filed no later than the later of (i) one year from the effective date of the termination, or (ii) one year from the date on which the action terminating the plan is adopted. However, in no event can the application be filed later than twelve months from the date of distribution of substantially all plan assets in connection with the termination of the plan. See section 14 with respect to the Service’s review of an application for a determination letter with respect to a terminating plan. How do you interpret the bold section above in context with the prior sentence? Would an application done now be rejected, or because the assets were paid out less than 12 months ago, would it be okay to submit?

We had outlined everything in our initial plan termination correspondence, describing the issues that get left open without applying for a determination letter upon plan termination, and we explained the only way to ensure those items aren't open for later scrutiny upon audit is to apply for a determination letter, etc. That never really sunk in for the owner until he recently talked to a retired colleague and found out what had happened with their plan. After that, he had trouble forgetting that conversation and he got worried any time he did anything with his rollover IRA. Thus the call back. Personally, it does not appear that his plan has any terrible issues like the one he described from his colleague, but now I am curious about this "is 12 months later too late to file" question. My recollection is that a 5310 application can be filed no later than one year after the effective date of the plan termination. I'm looking into Rev Proc 2007-44 to see if that changes anything.

The date of plan termination was established for a small qualified plan in May of 2011 and all benefits were officially paid out in July of 2011. It's a DB plan on a prototype but not subject to PBGC coverage. The plan was effective in 1999. The plan sponsor comes back now and says, I know I told you in writing that I don't want to spend the money to submit to the IRS, but could we go ahead and submit now anyway? Would the IRS actually accept a 5310 more than 12 months after the official DOPT?

Ask SunGard, they can explain. Here's what I think the answer is, but I may be wrong. I think the main difference in the PPD basic document is that it requires the fiduciary to give written instructions to the non-discretionary trustee in order for them to take action, but a discretionary trustee does not need such written instruction. If you have a small business where the owner is also the trustee, then naming them as a non-discretionary trustee requires extra paperwork, which may be a burden - they have to write themselves a note permitting their own action. FWIW.

Anything. Yeah. Sit still and don't make a sound. See, it's that kind of thing that makes a colleague in the office ask if we should fear the IRS and have I read 1984. Fear could include reverential awe, so maybe scared is better, but I've not read 1984, so not sure that applies here.

What part of "must remain in place for the entire 12 month safe harbor plan year" is unclear to you soldier? Well, let's see here, uh . . . How about these? The business address is on the safe harbor notice and the plan has the company address right in the adoption agreement. So, if you have a safe harbor plan, don't amend the adoption agreement to change your business address mid-year - you can only move to a new place on the first day of the plan year (hope it's a work day). Plan name too, of course - changing that would certainly blow safe harbor status. If that plan name hadn't changed, I know my deferral elections would have been different. Or this one? A safe harbor plan has discretionary profit sharing and uses forfeitures, if any, to pay reasonable expenses first (if not paid by the employer) and then to offset employer contributions. The plan language explains that the forfeitures are only available for use in the year following the year in which the forfeitures occurred. This plan cannot be amended mid-year to use forfeitures in the current year? No cigar here? Suppose the safe harbor 401(k) plan has been allocating a discretionary profit sharing on a uniform percent of pay basis to all eligible participants each year, and they intend to continue to operate in that fashion. Can the plan be changed from "each in their own class" to "pro-rata" or vice versa (since each of these allow excatly that same uniform allocation option)? Any takers? Earnings? If you're safe harbor, can you change from a balance forward earnings allocation method to an individual-directed plan mid-year (can you move to a platform) - or must the assets transfer on the first day of the plan year (if it's a holiday, you may need to pay overtime). Actually, maybe here they should just stay balance forward to avoid the new/improved 404(a) rules. Another? Oh those pesky top paid group elections - the huge number of deferral changes that occur when the plan is amended to change that provision! Can the trustees be changed mid-year? too risky - keep the old ones in charge of the plan until the end of the year. Source to be used for cash-out forfeiture restoration, changing the legal jurisdiction from one state to another, modifications for top heavy to coordinate with the adoption of a DB plan? There's much more - shall we continue? I think the IRS said they have no plans to provide guidance on this issue, so you'll have to draw your own conclusions here - are some comments merely facetious? Or are they real? I wish I knew!

The EOB is a must, of course. I would suggest to encourage your employees to study for the ASPPA or NIPA exams to help increase their knowledge - the study manuals can be good sources for beginners. In addition, you may consider IntelliConnect, which used to be known as CCH, which was purchased by Wolters Kluwer Law & Business (they also purchased TAG, I think). In this Intelliconnect thing, depending on how much you want to pay, you can have access to ERISA law, committee reports, DOL opinions, EBSA enforcement manual, Internal Revenue Code, Treasury Regulations, pension and welfare court cases, Revenue Rulings, Revenue Procedures, etc., plus you can have access online to all of the pension answer books, some journals, pension plan guide, 5500 preparer's manual, forms and insructions.

A 100% owner of a corporation wants to take out a loan from their 401(k) plan and lists "needed to fund the business to keep operations going". After he receives the loan proceeds, he plans to immediately loan those funds to the business. Isn't this a prohibited transaction, maybe indirectly? Would it make a difference if he and his business partner were 50/50 owners both taking loans from the plan for this purpose? Suppose the loan occurred "a while" ago and now the owner(s) are going to provide loans to the business? Does the lag time change anything?

Joe already has a 401(k) plan for A. What kind of plan document is being used? Let's suppose it's a standardized document (the type of document many of us avoid). If it is a standardized plan, then the employees of all of the entire controlled group and the affiliated service group are eligible for the plan (assuming any entry requirements were met). That brings me back to K2retire's comment, "Your best option is to consult an ERISA attorney." However, if a good TPA firm is contacted and they are given the census data, the ownership and company structure information, plus a copy of the plan documents and plan amendments, plus some time to discuss things with the business owners, they should be able to get the ball rolling along. Just make sure they are consulting for you, not merely trying to make a sale. And then it may become apparent at some point, that if they find a grey area in there that still needs counsel, they would advise you of that. FWIW.

Well, it's that pesky 404(a)(7) thing, that's the deal here.

Mom and Dad own 100% of a corporation and they employ their adult daughter (age 43). The type of business is NOT one of those professional businesses that are automatically exempt from PBGC coverage. No other employees. A DB plan is set up to cover all three employees. The plan is subject to PBGC. Agree? Assuming nothing changes other than the daughter later becomes a 100% owner and Mom and Dad retire from working, 404(a)(7) applies and PBGC coverage ends, right?

Also, the assets of the plan are to be used only for the exclusive benefits of the participants and beneficiaries of the plan and to pay reasonable plan expenses. If this person is not truly entitled to a benefit, wouldn't a payment from the plan violation of this rule? Or is a "payoff" to a bothersome participant considered a reasonable plan expense? IMO, even if the employer just wants the problem to go away, they should be careful to not to issue them a check from the plan without finding sufficient satisfication to support that this person is truly a participant with an unpaid benefit. If they find no evidence to suggest this person is entitled to a plan payment, then if they think the participant would go if any type of payment was made, maybe they could make a payment from their own pocket, not from the plan. But that would not necessarily end anything, since the participant could still argue their claim since no payment was made from the plan. FWIW.

Ah, master is wise to shun statements or declarations that have no merit or support as backup. What does master teach regarding casual comments lightly humored intended to assist in perspective refocus?

"the 412(i) decission is not about bigger tax deductions in exchange for lower yield. It's about safety, predictability, and upside investment potential without downside risk." Oh, of course - what was I thinking - all along I thought the hidden, but real reason for the 412(e)(3) plan, a.k.a. 412(i) plan, was so the insurance salesman could finally buy that yacht. If that's not true, then who knows, maybe Ned Ryerson doesn't even sell these 412(e)(3) plans?

ADP testing.

The criteria for determining “substantial business hardship” includes (but is not limited to): • whether or not the employer is operating at an economic loss; and • there is substantial unemployment or underemployment in the trade or business and industry concerned; and • the sales and profits of the industry concerned are depressed or declining. I know of no other guidance on this and because it is a facts and circumstances determination, in my opinion the Employer must make the final determination as to whether or not this definition is met. Does anyone know of any cases where the IRS has taken this issue to court?

Okay, amen it is. Thanks Tom.

I could be forgetting something here, but I think a safe harbor plan's withdrawal and vesting provisions must be spelled out in the safe harbor notice itself, and not just covered by a cross-reference to a relevant section in the SPD. The section of the regulations regarding this SPD cross-referencing fails to include the withdrawal and vesting provisions as an available cross-reference. In other words, the notice content requirement of 1.401(k)-3(d)(2)(ii)(G) is not listed in 1.401(k)-3(d)(2)(iii). I thought this might have been discussed at an ASPPA annual conference or other conference years ago? Or maybe something was said or done concerning this? Is there a place where we can electronically search the conference Q&As? I see an November 2006 reference to this issue (thanks Tom): http://benefitslink.com/boards/index.php?s...st&p=140633 I understand that a cross-reference must be more specific than just saying to look at the SPD, the regulation states it must reference the "relevant portions" of the SPD. However, it's not allowed at all for withdrawals and vesting. Can I get an amen confirming that still the case?

Funny. When an issue comes up, e.g. the Final NRA Regs interim amendment, the Final 436 Regs interim amendment, or even some individual plan amendmens, we prefer to discuss the issue with the actuary before writing the amendment. Other amendments, such as a plan freeze amendment, would certainly not need such discussion, although the actuary would have already been involved with answwering any impact questions re: funding, effect on financials, etc. If the amendment increases benefits, confirmation of the funded status takes place (if not already determined). FWIW.

Are you saying that the RASD requirement would only have to apply to vested terminees who do not start their payments at NRA (if proper susupension of benefits notices are given to actives)? If the plan gives proper and timely suspension of benefits notices to all participants who do not start their payments at NRA, the plan must still allow a vested terminee who delays past NRA to start their pension retroactively to NRA once they provide their distribution election - if the plan has RASD language - correct? Absent such RASD language, the plan would be required to actuarially increase such benefits for these vested terminees - correct?

Could you put in a fully subsidized early retirement benefit payable at 58 and 10? and change the NRA to 65/5? Will that fit the prototype? Will the actuary be satisfied with that solution?

The auditor talked with their manager they determined the SPD was sufficient and no further action is needed concerning this issue. Here's generally what we said: We understand that 29 CFR 2520.102-3(q) states: "The identity of any funding medium used for the accumulation of assets through which benefits are provided. The summary plan description shall identify any insurance company, trust fund, or any other institution, organization, or entity which maintains a fund on behalf of the plan or through which the plan is funded or benefits are provided." We believe this issue revolves around the interpretation of the above regulation. The plan does not utilize the services of a corporate trustee, nor do they invest solely in insurance products. The plan’s funding medium is a trust. In the opening paragraph of the plan’s document, it states the “Employer establishes a plan and Trust . . . by executing an Adoption Agreement.” Section 1 of the plan defines an account as “the separate Account(s) which the Plan Administrator or the Trustee maintains under the Plan for a Participant.” This means the accounts are maintained not by the mutual fund company, but by the Trustee, who has full control and authority of where such accounts shall be invested (including a plan that allows participant-directed investments - see section 7). Section 4 states that an “adopting Employer's Adoption Agreement and this basic plan document together constitute a single Plan and Trust of the Employer.” Section 8 states “By its signature on the Adoption Agreement, the Trustee or Custodian accepts the Trust created under the Plan and agrees to perform the obligations the Plan imposes on the Trustee or Custodian.” Section 20 explains the investment powers and duties of the trustee of the trust. Thus, the Summary Plan Description has disclosed the named trust, which is the plan itself, and has also identified its trustees, thus satisfying this regulation. We would be happy to discuss this with you and your manager, if possible. A big Thank You to all the replies above here at Benefitslink to help us get this closed out.

shouldn't the IRS know the rules? Yeah, but you have to expect inconsistency sometimes. Note for future: only give the IRS exactly what they asked for. Don't give extra information, like failed versions of tests that occurred before a testing method was found that passed.