John Feldt ERPA CPC QPA

When a participant terminates with a balance under $1000 and over $200, and they do not respond to the paperwork it is my understanding that we are to force out their benefit in a cash payment. Correct, assuming your plan has force out (or cashout) provisions. If the benefit is over $1000 we are to force out their benefit using a direct rollover into an IRA Correct, assuming the overall cashout threshold was not lowered to $1000 when the plan adopted the 401(a)(31)(B) mandatory distribution amendment in 2005 or shortly thereafter. Of course, we can only do this if we have sent out the proper paperwork notifying them of this. If the plan requires involuntary cashouts, then the plan sponsor is required to send out the paperwork and is then required to force the payment. It is not a plan provision that can sometimes be followed, that would be an operational error (albeit a minor one). It is not clear to me what to do with amounts over $200 and under $1000...can't rollover...so what??? Force out? Yes, force out. Establish an administrative policy where, after a certain amount of time expires following the date when the initial paperwork is sent, a check is cut and sent out (be sure to withhold properly). In the participant's initial paperowrk you could explain the procedure a little to avoid participant surprise. Make sure the check gets cashed. If you need, make a procedure for handling uncashed checks that go stale.

Statements.

I checked with our document sponsor. It turns out that the document sponsor's volume submitter document from 2002 was approved by the IRS without the gateway language. The document sponsor was allowed to change their vol sub document in 2003 to include the gateway language, but only prospectively. Any use of gateway under that document for the 2002 year had to be adopted within 9.5 months after year-end. The other practitioner did not know about this (they used the same document sponsor as ourselves).

If the participant would be eligible for a lump sum amount today and the order itself is in effect today, then I see no problem with allowing the Alternate payee the same payment option available to the participant. Calculate the portion of that accrued benefit was earned as of the divorce date and divide according to the order, determine the lump sum based on the participant's age as of the payout date.

I think this is it, attached.

IMHO, saying "X% equities" and/or "Y% fixed income" does not satisfy the requirement to disclose "the value of each investment to which assets have been allocated". The word "each" is the stumbling block to me. Guidance is needed.

Notice 2007-69: http://www.irs.gov/irb/2007-35_IRB/ar16.html I don't see anywhere in the above notice that distiguishes a different application toward a traditional plan than for a cash balance plan. Have you looked into an early retirement option?

Thanks Tom. Then we'll 'probably' continue pay the greater of each until we have the PPA amendment adopted later (this spring), just to stay of the conservative side.

Which reminds me to ask, how many providers that have used prototypes in the past will now just switch (during the EGTRRA restatement) to use mostly volume submitter documents?

Yes. The plan document should spell out what is required in order to defer the date under which constructive receipt occurs. You may want to look at Treasury Regulation 1.457-7©.

I agree and I think it's fun to say "zimbo"

Thanks, Tom. That was exactly my concern when reading 2007-67. At every corner, it talked about an amendment to adopt the PPA rates. Since we are preparing to send out the Final 415 regs amendment with the PFEA amendment, I think we'll go ahead and include the PPA lump sum amendment as well.

http://benefitslink.com/boards/index.php?s...971&hl=GATT The above discussion ended before the year-end new plan document setup rush, so I am wondering if any new insight is out there...? Recap: Ongoing DB plan defines the plan's interest rate and mortality as the GATT applicable rate and mortality. Assume the plan is not restricted (it's not under the 80% threshold). The plan requires the Section 417 interest rates for the minimum and the applicable mortality (commissioner's standard table). The applicable interest rate is the 30-year Treasury securities as specified by the Commissioner. In the 2008 plan year, if the plan is not yet amended for the 417 change from PPA, must the plan compare the lump sum determined by using the old GATT mortality and full 30-year treasury interest rates (the existing terms of the plan), to the lump sum determined from the new required 417(e) blended rates and its new mortality? Or can we just switch immediately in the 2008 plan year to just use the new blended rates and mortality with any 411(d)(6) worry, even if no amendment is in place describing these new rates and mortality? I'd like to just start using the new stuff since the PPA required no amendment until 2009, but...

Our volume submitter cross-tested DC plans have a resolution and a Gateway amendment (signed as late as 10-14-2003). We have been placing that same language (it has been cut and pasted) at the end of the vol sub basic document ever since. We just talked to another practitioner who used the (same provider for their vol sub doc). They do not have any gateway amendments in place for plans that were setup before 2005 (and many of them are cross-tested plans). What's the story regarding these gateway amendments for these vol sub documents?

okay, thanks for the clarification.

Okay, for dummies like me: 404(o) DEDUCTION LIMIT FOR SINGLE-EMPLOYER PLANS. ... 404(o)(5) SPECIAL RULE FOR TERMINATING PLANS. --In the case of a plan which, subject to section 4041 of the Employee Retirement Income Security Act of 1974, terminates during the plan year, the amount determined under paragraph (2) shall in no event be less than the amount required to make the plan sufficient for benefit liabilities (within the meaning of section 4041(d) of such Act). 1. Does this mean a plan subject to the PBGC gets an immediate deduction of the amount that is contributed to make the plan sufficient? (not required to deducted over 10 years) 2. If the plan is not subject to the PBGC, then the normal required contribution under 412 (or 430) applies up until the last plan year (the one with a plan term date), and any additional contribution made can only be deducted as fast as 10 years? I've been thinking that 1 is Yes and 2 is Yes... When I read Mike's comment that made me think the plan loses any immediate full deduction options for its last plan year for any amount that is above the 412 minimum...

A profit sharing 401(k) plan has an option for participants to defer under 401(k) - based on all taxable W-2 wages. The plan also has a CODA option, which allows participants to take some or all of the company "profit sharing" as cash instead. I must have been working on DB plans and the why's and what's of a CODA plan slipped by me. What is the advantage of having a true CODA vs normal 401(k) deferrals - or are they considered to be the same thing? Are there any differences, like FICA taxation, what amounts count for testing, etc?

The plan pays a flat $375 fee in their submission under EPCRS. In the original version of Revenue Procedure 2006-27 it stated "for each year of the failure", but in the final published (and official) version, that clause was removed. Go to page 51 of the pdf file: http://www.irs.gov/pub/irs-drop/rp-06-27.pdf You'll see that the last sentence of 12.03 no longer has the clause "for each year of the failure". Hope that helps!

That's very good advice. The plan discloses in it's SPD that expenses for QDRO reviews will be charged directly to the affected participant's account.

It's an actual divorce. I don't think it's a problem either, but since we had never come across exactly this scenario over the last few hundred QDROs that we've seen, well, asking extra experts is best. A local ERISA attorney agrees that this is probably not an issue as long as both parties have agreed to the terms of the order anyhow...

The 100% owner of a corporation (50 employees) is also the Plan Administrator and the only Trustee of the plan. They are also the only officer of the company. A DRO is served regarding this owner's benefits in the 401(k) plan (account is about $60,000). The QDRO procedure would have the Plan Administrator review the order to determine if it is qualified. The Plan administrator is the Employer. Thus, the detemination of the qualified status of the order would be done by the participant to whom the order concerns. Any problems with that? or guidance you may want to provide? -Thanks!

I agree with FAPInJax. The questions you pose: if you believe these groupings work in a DC plan, then the same rules apply for the DB plan in that regard. Instead of allocation groups, think of them as benefit accrual rate groups. So, for example, if you are comfortable using shoe size to determine allocation groups in a DC plan, then by all means, use the same criteria to create differing benefit accrual rate groups in the DB plan!

We plan to submit one later this year. On all others we've use one of the "safe harbor" Notice 98-6 indexed rates so far. Perhaps I'm not sure what is meant by "I am unaware of any present guidance on how allocations or allocation groups are allowed to be designed in a CB plan other than by using a vanilla approach". Nearly all of our cash balance plans have separate benefit accrual rate groups (which match up with the DC plan rate groups) and the plan is tested under 401(a)(4) with the DC. I don't think that's too unusual either, is it? We've use the Corbel language, but heck, it's individually designed, so we change the items that are needed to be changed within the body of the document. Of course we'll always submit for a D-letter on these individually drafted plans.

I luv ya man!

okay, I admit it!