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Based on the preamble, most split dollar (at least death benefit) is not subject to 409A, but I have heard people use it to justify ignoring 409A for the overall salary continuation agreements that are funded by split dollar. They are really separate concepts, right? The split dollar is really a type of funding mechanism (not funded for ERISA of course) with its own tax features that has to be run through the 409A gauntlet. I also think any salary continuation agreement or other deferred compensation agreement that may be associated with the split dollar is separate and has to be analyzed independently? Is that right? In light of this, is it smart to just try and get what you need from a split dollar policy without a stand alone salary continuation agreement to avoid 409A?

Partner's can't participate in a premium only plan, but don't they get to exclude the premiums on their returns? If so, that sounds like a wash. What am I missing?

Narrowly, as we do with all other 401(k) distribution limitations. The lending / PR purchase example is the only one I can think of and I would just want something from the mortgage company that additional loans could affect interest rate/creditworthyness.

Corporate sponsor liquidates and individual trustees want to properly document orphan plan status. Do the individual trustees now sponsor the plan as individuals? We are used ot sole proprietor plans, but this really is not the same (and the trustees don't have businesses running as sole proprietors). They essentially want to continue the plan as frozen (and an orhpan) for a while before terminating it eventually.

It definitely could work. This BIG issue I'll bet is whether they are geting additional compensation in return (that would be a CODA, wouldn't it?). Practically, isn't that the only reason someone would do it?

If the window was in the original amendment, it wouldn't be a take away, but your amendment is totally discriminatory if an HCE is involved. Don't do this.

There are too may no-nos to list specifically. I would go to one of the custodian's websites (Pensco, Sterling, etc.) and use some of the general disclaimers there about party in interest transactions. It will be more general, but that probably better illustrates the breadth of the statues.

Thanks! Since both HRAs and "MERPs" are ERISA, is there any significance to the distinction outside of the 2002 IRS guidance for HRAs (i.e., why not just use an HRA w/o rollover for arrangement to reimburse deductible)?

Does an arrangement where the employer reimburses employees for their deductible need a plan document. It is essentially an HRA, correct? Or is it ok to just have an arrangement to do this without a more detailed HRA document?

Ah, yes. Thanks! I overlooked the 2010 effective date (as did the news article I read). Much ado about nothing, then - right?

The AGI limit on IRA to Roth IRA conversions will be repealed this week for a 5 year period. Aside from the fiscal wisdom of Congress (for adopting it) or particiipants (for converting to Roth), does anyone see any issues with amending our profit sharing and matching contribution provisions to allow in service distributions for participants with 5 years of service and for contributions made at least 2 years ago. The idea would be to allow participants to take an in-service distribution of non-401(k) funds and roll to a traditional IRAs that they could then convert to Roth IRAs. Is the 5 year/2 year rule that easy? Is there some discrimination issue if only HCEs somehow are the only ones taking the distributions?

I agree with Locust. The (k) is not in parts name. It would be a PT or maybe even an assignment or pledge. No can do.

I don't think that the IRS will rule on a zero assets trust because the issue is moot. I think it is treated like a PLR and can't be hypothetical/academic.

What about the "signed or adopted" statement?

I thought that ADP had a MEP that allowed different elections. I don't get the securities law issue either, unless your original e-mail was misread to involve company stock.

Also check the loan documents (note) in addition to plan / policy. How terminated? If you are making final distribution you should offset the loans against distributions, but I am assuming that you are just declaring a proposed date of termination and that dists won't happen for a while. Then you have to continue to administer the loans to prevent them from defaulting, don't you?

Sweet!

No. Because it is not required by the Internal Revenue Code.

Yes. It depends on how the document reads. The term frozen plan really doesn't mean anything except that no contributions of any kind are being made. If you discontinued one type of contributions but allowed rollovers, it is not totally frozen, but would be frozen from the 401(k) perspective. I would worry about the substantial and recurring contribution requirement, but if the plan has been in effect for a while, there is no problem.

125 plan, right? It still is not a good idea for several reasons. "Flex" (FSA) = NO.

You are on the right track. Spousal consent is required. You are going to be bound by the plan and form language on the spouse's designation though. It probably only wipes out the non-spouse 50% though. You should also consider whether state law "redesignation" statutes apply after the divorce (state law issues and preemption).

Can't buy it from, sell it to, or rent to related parties - there is no exception for arm's length transactions. Expenses have to come from IRA (or annual contributions). Tell him he should buy a REIT instead if he wants RE diversification.

Why are you so concerned with the need for specific authority in the plan to transfer the note since the IRS considers the loan note to be part of the eligible rollover distribution and the Plan Administrator has discretion to interpret plan terms and can allow all partaicpants to rollover loans.

I would guess that you are not technically eligible for VCP because you don't even have a plan - it is not just a non-amender. The worst case correction is to treat plan as nonqualified. Tax participants in all prior years on vested percentage, amend corporate tax returns to remove deduction for unvested contributions, and file trust tax returns for all prior years to pay tax on earnings (or add earnings to corporate tax return if no legal trust established). Anything better than that is gravy, so give it a try by going anonymous VCP. It is not that much more difficult than a formal VCP and is the only way to go in my mind, but again, you are probably not even technically eligible to do this if you don't have a plan.

I respectfully disagree. PAs can't have discretion about form of payment. A note is a non-cash property distribution. The plan probably says all distributions are in cash lump sum, so that would end the discussion imho. However, if the plan is silent on form of distribution and none of the 402(f) notices, election forms, etc. mention property distribution, it would not be permissable for the PA to allow this participant to take non-cash property when no one else got the chance.