John Feldt ERPA CPC QPA

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?

And the plan document probably provides for the Plan Administrator (PA) to make interpretations regarding the terms of the document. So if the word "calendar" is not connected to the word "month", then it seems to follow that the PA has the authority to interpret the plan month to start on the 7th, just like the "plan year" does.

I know of no official reliance for that. Could a plan submit for a D letter which also asks for the IRS to rule on the 401(a)(26) testing methodology?

I think Mr. Deutsch calls it an "Indexed Benefit" plan.

I think we have a plan that was set up with 5%. Otherwise, all of our other plans use one of the variable rates that are automatically considered okay. For 401(a)(26), we project the credit (excluding the interest credit) that is being made to the account for the year to the retirement age by accumulating it at the interest crediting rate. That projected credit is converted to an annuity, then divided by compensation to see if it exceeds 0.50% of pay. If so, then it's meaningful to Paul Schultz and his memo from June 6, 2002.

Usually these government plans have extended deadlines for adopting plan language that complies with any new law changes. So until the plan restates, they need to comply with the adoption of any required language (interim amendments) based on such deadlines as they apply to government employer plan sponsors. Then for the restatement, you have to adopt whatever is required from the cycle E cumulative list in order to submit in cycle E, but that probably can exclude any items that are not yet required to be adopted for a government plan sponsor.

What was this, the Bret Favre version of a TPA? If you resign and you get another request to do work, send another copy of your resignation letter!

Yes, of course, change the age of participant! So, forever only lasts until the participant's age reaches 59 1/2.

They are now forever tainted as far I can tell.

A plan with many Life and CC options (some are Life and below 10 years CC and some are Life and over 10 years CC) would like to simplify things. They want to eliminate as many options as possible, without running afoul of 411(d)(6). The plan also has a lump sum option (which almost all particpants take when there's no restriction otherwise stopping them). Under 1.411(d)(3)©(4), all of the Life and 10 or less is grouped separately from Life and more than 10 forms. Does this mean the plan must keep at least two Life and CC options, such as Life&10 and Life&15?

So, as long as the -11(g) deadline has not passed, you may make changes to a safe harbor plan and use -11(g) as your basis for doing so. Does -11(g) require that a failure exist in order to utilize it?

And making this change would not violate the safe harbor requirement that the provisions must be in place before the beginning of the plan year?

"The 414(s) failure causes the safe harbor 401(k) plan to not satisfy ADP/ACP, which is the sole means of satisfying 401(a)(4). That should make it eligible for correction via an -11(g) amendment." Sorry, I'm not seeing how ADP/ACP testing can be part of this. The ADP/ACP test is not applicable to a safe harbor contribution portion of a 401(k) plan. The plan gave a SH 3% notice or some kind of a SH match notice. The provisions adopted by the plan provide for safe harbor allocations that are not dependent upon ADP or ACP testing. So I am not seeing any ADP/ACP failure to fix because ADP/ACP testing is not applicable for a safe harbor plan. Do I misunderstand?

That's the thing, maybe I am wrong about -11(g), but I don't see that a 414(s) compensation failure for a safe harbor plan can be allowed to fall under that section. If it was not a safe harbor plan, I see no problem of doing a -11(g) amendment (if it's even needed) when 414(s) fails. The allocations must adhere to the terms of the plan. Safe Harbor provisions must be in place and remain unchanged for the plan year. Wouldn't a -11(g) amendment (as a fix) be making a change to the safe harbor allocations after the plan year started, and thus not allowable for a safe harbor plan?

It can be dangerous to have these kinds of exclusions in a safe harbor 401(k) plan unless additional language in the document exists to automatically limit the HCE compensation. Because 414(s) has failed, the plan is now disqualified and no correction with reliance exists (that I know of) outside of a VCP application under EPCRS (Rev Proc 2008-50). I would recommend filing a VCP application. For new and takeover plans, I recommend to try pointing these issues out during the design process so either language can be included to automatically limit the compensation for the HCEs such that a 414(s) failure could never occur, or just leave out the exclusion entirely.

Does the plan document have any specific language that addresses this? I've seen a few that favor the written election as long as it was within the 180-day election period that ends on the annuity starting date, even though the death occurred before the actual annuity starting date.

I think Rollover Solutions might do something like this, but I think they rely on you to provide the initial sets of accurate payout forms when it gets set up. After that, they use those forms until you send modified forms to them. I'm gueesing from memory of a conversation we had with one of their folks.

I have an example where it was not a coverage failure, but it was an inability to contribute a top heavy minimum issue. The plan sponsor was bankrupt, not the kind where they are reorganizing, but the kind where they will no longer do business anymore. There were no plan sponsor assets available to fund the top heavy minimum for the prior year nor for the current year (up to the date of plan termination). The owner had deferrals in both years, so top heavy minimums applied. Under a Form 5310 filing, the IRS was told tha the top heavy contribution was to be funded by having the HCE-owner forfeit a portion of their account. This is also what the bankruptcy court had suggested (actually it was a court order). That forfeited amount then was allocated to the NHCEs for their top heavy contribution allocations. We had some doubts going in, and we certainly wouldn't have suggested that the client try it without submitting to the IRS. Bankruptcy must move your application to the top. Only 19 days after the application was sent certified mail, the IRS replied with a request for additional information. The D letter was issued only 70 days after the application was submitted to the IRS.

And as always, the plan document should spell out what must happen. If the plan document provides actuarial increases, then that must occur. If the plan document has the employer providing suspension of benefits notice, then that must occur instead.

A prospect wants to their SPD for their cash balance formula to state something like the text below (instead of naming the individuals or the specific officer titles with their specific accrual formulas like the plan document does): "Group A will consist of senior executive officers. For each Participant of Group A, the cash balance credit will vary by officer. For details, see your Plan Administrator if this affects you." We're thinking that this may not satisfy the disclosure requirements for a summary plan description. Could the SPD be this vague and be alright? If not, what methods are others out there using to disclose accrual formulas in a not-so-revealing fashion?