John Feldt ERPA CPC QPA

By " on applicable date " for adopting the amendment, what do you mean? Do you think a simultaneous adoption of a fully unreduced early retirement benefit at age 55 handle the multiplier issue? No one terminated and the plan is not integrated.

Back in 2007/2008, the IRS released something that used the word 'deference' which we found out later really meant 'prove it'. A prospect that still has their NRA of 55 in their document now, is concerned that they don't have a study that proves that their normal retirement age is typical for their industry. The plan allows for in-service at Normal Retirement Age. How would you suggest fixing this?

PPA Yes. HEART is due by the end of their 2010 Plan Year, so maybe, depends on their plan year.

Yes. From SunGard's Technical Update: DC Plan Sponsors with an EIN ending in 5 or 0 (cycle E) have until January 31, 2011, to complete their EGTRRA restatement. Therefore, a plan sponsor on cycle E that is using a prototype or volume submitter document can rely on the 5-year cycle deadline if it missed the April 30, 2010, deadline. So, approximately 20% of the plan sponsors who thought they were late are not. They can qualify for the January 31, 2011, restatement deadline. Q-1: If a plan sponsor using a prototype or volume submitter document utilizes the January 31, 2011, deadline (i.e., cycle E) rather than the April 30, 2010, deadline, will the plan sponsor be able to have retroactive reliance (i.e., back to the beginning of the 2002 plan year) on the prototype or volume submitter letter? Yes. By adopting a pre-approved plan by January 31, 2011, the last day of the (cycle E) plan’s remedial amendment period cycle, the plan is entitled to reliance upon the pre-approved plan sponsor’s approval letter (assuming the sponsor only makes elections permitted under the pre-approved plan). Some helpful links: http://www.relius.net/News/TechnicalUpdates.aspx?ID=533 http://www.irs.gov/retirement/article/0,,id=227643,00.html http://www.irs.gov/pub/irs-tege/rne_sum10.pdf

Suppose the plan also has a nonelective component. Suppose the 50-year-old NHCE making $100,000 of pay receives a $44,500 nonelective allocation (brother or girlfriend of the owner, you decide), and defers $6,000 - some of that deferral is catchup deferral. The plan should say something about getting safe harbor match on that deferral. Other example: Someone eligible for 2 plans during the year (switched jobs) who deferred the max in one plan, but that plan allows no catchup deferrals. They defer only catch-up in the SH match plan. SH match should be applied. Note:Edited to make the 1st example not exceed 415.

A loose sister organization? Would that be an anti-nun organization? Maybe I read that wrong...

I think it's required. If you're using a pre-approved document (prototype or volume submitter) it should be spelled out in the basic document or adoption agreement.

Now, if you take this route, be careful that there are not so many SPD's out there that the employer can't keep it straight. Label them clearly on the cover page of the SPD regarding who they are for, and perhaps put "CONFIDENTIAL" on any SPDs that are only for the HCEs and/or owners. There are some DOL penalties for not providing the proper SPD disclosures. In one case, where 6 levels of benefit accruals existed in a plan, we simply provided just 2 SPDs. One for the shareholders of the employer, and one for everyone else. If they have employees that might move around from one class to the other (like NHCE to HCE due to pay changes), it might be best to put that language in just one SPD.

Sure, here's what we looked at: §2520.102-4 Option for different summary plan descriptions. In some cases an employee benefit plan may provide different benefits for various classes of participants and beneficiaries. For example, a plan amendment altering benefits may apply to only those participants who are employees of an employer when the amendment is adopted and to employees who later become participants, but not to participants who no longer are employees when the amendment is adopted. (See §2520.104b-4.) Similarly, a plan may provide for different benefits for participants employed at different plants of the employer, or for different classes of participants in the same plant. In such cases the plan administrator may fulfill the requirement to furnish a summary plan description to participants covered under the plan and beneficiaries receiving benefits under the plan by furnishing to each member of each class of participants and beneficiaries a copy of a summary plan description appropriate to that class. Each summary plan description so prepared shall follow the style and format prescribed in §2520.102-2, and shall contain all information which is required to be contained in the summary plan description under §2520.102-3. It may omit information which is not applicable to the class of participants or beneficiaries to which it is furnished. It should also clearly identify on the first page of the text the class of participants and beneficiaries for which it has been prepared and the plan's coverage of other classes. If the classes which the employee benefit plan covers are too numerous to be listed adequately on the first page of the text of the summary plan description, they may be listed elsewhere in the text so long as the first page of the text contains a reference to the page or pages in the text which contain this information. Thus, we believe it is okay to provide one SPD that describes the benefits to one class (e.g. the owners) as long as it explains, on page 1, that the plan also covers other classes of employees, but that this SPD only describes the benefits for [describe the owner class covered]. Then in the next SPD, we believe it is okay to provide one SPD that describes the benefits to another class (e.g. non-owners) as long as it explains, on page 1, that the plan also covers other classes but this SPD only describes the benefits of [describe the non-owner class covered]. We threw out the idea to say "For details, see your Plan Administrator if this affects you." We don't think that would fly. What do you think?

Yes it would apply also to 457(b) pans, but only government-sponsored 457(b) plans since a tax-exempt (non-profit) sponsored 457(b) plan's distribution is not eligible for rollover. I think it could be possible to amend a plan to lower the age for in-service eligibility (or to remove the age minimum) and limit such in-service "distribution" option such that it only applies to in-plan Roth conversions. Of course I am only speculating.

The 100% owner is the only employee/participant and wants to freeze the DB plan. Because this plan is not subject to ERISA, not 204(h) notice is required. Their advisor thinks it's required for all DB plans. Am I missing something?

Also, be careful of the Top Heavy minimum if the one HCE getting zero is not an officer (not key).

A prospect appears to have been filing a Form 5500 for their 457(b) plan by somehow combining it with their 403(b) plan's Form 5500. It appears that the initial 120-day DOL filing after the plan was executed had not been done for the 457(b), so the 5500 filing is required. I see no reference on the Form 5500 instructions for items to complete or not complete for a 457(b) plan. Any idea what actually would need to be completed for a 457(b) plan Form 5500? Have you ever heard of filing a 5500 where both the 403(b) and the 457(b) plan names are both listed for the plan?

But a pre-approved plan that restated for EGTRRA in June of 2008 would normally have later adopted the final 415 Regs amendment, and then in 2009 adopted the PPA amendment. Anything before 415 must now be considered as "non-amender" (F, Sch 2) problems, but I don't exactly follow how the 415 and PPA would as well - these appear as "late amendment" (F, Sch 1) problems. Please elaborate.

Governmental defined benefit plans will last until the government is bought out by another government. Then they'll have until the end of the next plan year to fix things due to the 410(b)(6)© transition rules... Never mind.

Prospect wants to update their plan for missing 20+ years of documents and amendments. They want to submit under VCP as a nonamender, get approval, then terminate the plan. The do not want to request a Determination Letter. If a plan submits as a non-amender to go back as far as 1986, even if the 3 newly adopted documents are prototypes for TRA'86, GUST, and EGTRRA, doesn't Rev Proc 2008-50 require the plan to also submit for a determination letter?

Yes, we could not find a way to solve that problem. The safe harbor is a 3% nonelective. We looked at 410(b)(6)© which mentions a person ceasing to be a member of a group in (b), ©, (m), or (o) of Code Section 414. 414(o) says that the Secretary shall prescribe regulations to prevent the avoidance of any employee benefit requirement in (m)(4) or (n)(3) through the use of other arrangements. So, even if regulations had been written there, it would also be of no help. Ironically, the former union employees are actually receiving slightly higher benefits in that plan (UEE plan) than the regular company plan. We plan to aggregate to show coverage passes under 410(b), but for nondiscrimination, is there a way to file with the IRS to say, here's the issue, and we think it works if we just do this: Run ADP/ACP testing anyway (combining the plans (it will pass) and run a combined 401(a)(4) test for the non-SH nonelectives (it will pass) and then provide a 3% of pay QNEC to the NHCEs in the formerly union plan?

An employer has two calendar year 401(k) plans, one for the union employees (UEEs), one for everyone else. The union was going to break up. Before they did, the union plan (UEE plan) was amended with an effective date that begins August 1, 2010 - the same date that the union no longer exists. That amendment allowed the same employees, now non-union, to continue to participate in the plan. The other 401(k) plan is a safe harbor 401(k) plan. 1. Can the plans be aggregated for coverage (for periods after 7/31/2010)? 2. Can they be aggregated for non-discrmination? 3. Would the 410(b)(6)C) exception apply? (I don't think so)

Are you saying that a 403(b) plan (but not a church plan) can exclude employees from making deferrals until they have met a plan entry date, and that would not violate the universal availability rule?

And as long as you pass 401(a)(26) in the DB plan. With just 4 employees, you're okay so far by benefitting 2.

Oh, we all want things to be thought through and planned out in advance, sure.

Probably. If they truly never made a 410(d) election, they never had to file (were they paying someone to do all of those filings?). If they did make an election, then they must continue to file. Such an election would have either been made along with a determination letter filing, or as an attachment to one of the earliest Form 5500's. You may need to explain to the client that the IRS/DOL may send a notice saying "your 5500 is late" sometime after they realize the plan is no longer filing a 5500, but you can tell them you have a letter ready to send back to the IRS/DOL to explain that the sponsor is exempt from filing because they are a church and they have not made an election under IRC 410(d) to be covered by ERISA.

Since church plans are not subject to the universal availability rules, then yes, you could have service requirements, including a requirement to reach an entry date.

The choir agrees.

Can a 457(b) plan sponsored by a tax-exempt employer be amended to adopt the "deemed severance" rules from the HEART Act? If it can adopt this, must the plan also apply the 6-month suspension of if a participant takes such a distribution?