lexi

i'll take 9 years and 9 months!!! but WDIK? (thanks, WDIK!)

ok. so let's just assume that an ER (mistakenly) relied on the 15 days following the month... as a safe harbor for remitting 401(k) contributions for the past TEN years. how far back do you have to correct it????

The DOL regs say that 401(k) contributions have to be remitted as soon as is administratively feasible but not later than 15 days of the month following the month in which contributions were made. i understand that the DOL reg is not a safe harbor. could you pls confirm the following: 1) assume that an employer COULD HAVE remitted the contributions earlier but did not until the 15th of the following month. that would be a "prohibited" transaction under the code and the employer would be assessed excise taxes after filing form 5500, even though the ER is still withing the DOL's 15 days timeframe. 2) suspend your disbelief and assume that an ER could NOT have remitted the contributions anytime earlier than the 15th day of the following month, the ER would NOT be considered to have been engaged in a prohibited trnxn and would not be assessed the excise tax. yes? no? thanks.

Does anyone know if it is possible to do the following w/ a Taft-Hartley multi-employer DB plan: can the trustees of a multi-employer plan "wind down" the plan w/o terminating it, so that the contributing employers are making contributions for unfunded vested (past) accruals, no future accruals are occurring, there is no plan termination and the employers are receiving Davis-Bacon credits for the contributions made to the past unfunded vested benefits? or is this scenario too good to be true??

Is it permissible to do the following things to a multiemployer plan: 1) Can a a Taft Hartley multiemployer plan be frozen, so that there are no accruals, while contributions due under the plan are used to decrease the plan's underfunding; and 2) If the plan is frozen, and amounts contributed are used to fund previously accrued benefits, does that still count as "fringes" under Davis Bacon? are there any provisions in the code or regs that speak on these issues? thanks in advance for any help you might be able to lend me.

what do you think about the following: there is a CBA in effect that expires 12.31.2007. the CBA covers EE that were employed by a company that, subsequently, has merged with a new company. the new company does not want to participate in the CBA, as it is currently drafted. the acquiring corp would prefer to integrate all NEW EE entering the union into an already-existing profit sharing plan, which it has been administering for several years, to minimize book-keeping headaches. so, in effect, you would have a union that has "grandfathered" EE under the old 12.31.2007 CBA and new employees hired subsequent to the corporate restructuring in a profit sharing plan. can we "bifurcate" members of a single union? is there a famous case out there involving Central States Pension Plan? thanks in advance for any insight you might be able to provide.

does anyone know of caselaw discussing trustees' using a "blended rate" to calculate an ER's withdrawal liability?

What do you think about the following: In the past, a multiemployer pension plan has always used an (actuarial) assumption of 8% in calculating withdrawal liability. Is there any reason to believe that the trustees, who have reserved the right in the trust agrmn't to calculate employers' withdrawal liability w/o reference to a specific % number, could not change how they calculate it for 2006? For example, if an ER withdrew in January 2006 and was assessed a liability based on an 8% assumption, is the trustee potentially estopped from changing the rate for employers who withdraw in November 2006? Also, is the trustee required to use an actuarial value? (Can they never use a higher value?) Thanks in advance for your help.

Hi everyone: I have two related questions about an ER that acquired a company and found out that: 1) former employees, some of whom have not been on the payroll for years, were never taken off the acquired company's health plan, and, consequently, are continuing to be covered as "self-pay" insureds under the Company's health care plan despite no longer being an "employee;" and 2) The acquired and acquiring corporations do not have any retiree health care plans. There are a couple of retired EE who have Medigap w/ the insurance provider, which is a remnant of when they were still active EE of the acquired corporation. The EE no longer work with either corporation. Do any of these two groups of people (terminated and retired EE) need COBRA coverage where the qualifying event, and the COBRA coverage period they would have been entitled to had they elected COBRA coverage, have expired, assuming they had they been given proper notice upon the qualifying event? What do you all think? thanks in advance for any help you might be able to provide. Lexi.

an ER has a fringe benefit plan that provides for an $8K relocation reimbursement to be used within 12 months of the date of transfer. the client wants to hire an EE who potentially would not use the relocation reimbursement for 5 years (spousal job and house issues). so, ER proposes to make an exception for this potential EE whereby he can get $7K (notice, it's $7K; not $8K as specified under the SPD) to be used at his discretion over a 5-year period. 1) can a side letter accomplish the ER's goal of, what is in effect a modification of the fringe benefit plan, changing the relocation policy just for this one EE; 2) what about the constructive receipt of the $7K? it would be much simpler if the EE knew he would be using the $7K relocation reimbursement provision w/in this or next year, but to have a 5-year window in which to exercise the right? thanks for any help you can provide.

a client and his brother own several companies with one of the brother's daughters. the brothers want to split up the companies so, at the end of the day, the two brothers own four of the companies and the daughter owns three of the companies on her own. currently, all 7 companies have a single 401(k) plan. as part of the exchange, all of the contracts have to be bifurcated, including the 401(k) plan. i am thinking that the best option is a termination of the 401(k) plan. i have looked at the controlled employer regs and affiliated service group regs, which i don't think apply. the daughter found an investor who is going to run the companies with her, so that she and the investor will be 50-50 owners. the brothers are going to own their own companies 50-50, so none of the 80%/50% controlled employer requirements will be satisfied and the companies are not performing services for each other, so the affiliated service group regs are not implicated. does anyone have any thoughts? am i overlooking anything? thanks to anyone who can help.

we have a client who has a US ESOP and a candian subsidiary. the canadian EE do NOT participate in the US ESOP as of yet. could someone pls tell me: 1) are there any specific changes that have to be made to the ESOP's plan document to reflect the canadians' inclusion (whose income is not pegged to a W-2)? 2) can the ER currently deduct contributions made on the canadian EEs' behalf; and 3) is there anything i am missing (i read the US-Canadian treaty and don't feel like there is any impediment in that to make us shy away from including the Canadian EE)? i am desperate for guidance on plan drafting.

I have an ER who is party to a CBA. I have learned that the Fund Administrator is going to audit the plan for years 1999 to 2005. 1) can an audit span this far back? i know a plan must be allowed to make annual audits but is there a "statute of limitations" for past years; and 2) in 2002, the ER was audited from 2000 through 2002, at which point we were informed that there was a deficit for 2002. we offered to settle and they declined to pursue it. is there a laches argument to be made or must we pay? can anyone get me pointed in the general direction of the appropriate Code and/or Act sections? thanks in advance.

Here are the facts: i have a 70.5 year-old man who is a 5% owner and is already receiving RMD from the employer's 401(k) plan. He wants to take advantage of the charitable IRA contribution under the PPA of 2006. Obviously, as his retirement plans are arranged now, he can't at all take advantage of the new giving provision because he isn't yet in an IRA or Roth IRA. Question: how do we move him into an IRA/Roth IRA while he is currently receiving RMD under the 401(k) plan. The code and regs make clear that you can't rollover an RMD. However, what if we included this year's RMD in GI while simultaneously rolling the 401(k) plan assets into an IRA, at which point we could make a $100K contribution in 2007? Also, from my understanding, assets rolled into an IRA from a qualified plan retain their creditor-exempt status under ERISA. What am i missing or just plain not thinking about?

do you guys know of any good resources out there that gives answers to highly technical compliance questions? i haven't found any good resources out there when it comes to trying to figure out how to correct a plan mistake. what do y'all think?

yes, you guys are right: it is an employER matching contribution issue. The ER should have been matching w/ a 2% contribution and instead, has been undermatching (by .5%) for the past six months. We need to make it up and the ER prefers doing it over a couple fo payrolls. does anyone disagree w/ that?

Pls advise re the follwoing two scenarios: 1) An ER, because of a computer coding error, has been making contributions for a CBA EE into the wrong plan. CBA EE should be in a money pension plan and instead, contributions are being made for him to company's other 401(k) plan. How do we get the money to him in the plan he should have been in to begin with? 2) ER has miscalculated the amount it should have been deferring on 18 of its EEs' behalf for the past 6 months (e.g., ER should have been contributing 2% of EEs' wages but instead has contributed only 1.5%). Is there a way to fix this w/o asking the ER to cough up the amount owing in a lump sum (e.g., could we increase ER contributions to the plan for the next 8 payperiods of the year?) does anyone have any thoughts? Thanks in advance.

we are doing a hybrid DC conversion. would we be offering a "right or feature" under ERISA 401(a), and hence subject to discrimination testing, if we allowed EE 65 and older to opt out of moving into the new plan and staying in the old DB plan?

I have an ER who contributed a promissory note to its retirement plan. The promissory note is now in default. The ER wants to terminate the plan and distribute to the participants a pro rata share of the (defaulted) promissory note. 1) Can an employer distribute, pro rata, a defualted note (let's assume the note qualifes as a "qualifying employer security" although I doubt it does); and 2) Could the participants roll that pro rata share into an IRA? Thanks to anyone who can help in this matter. The porposed distribution of a defaulted note seems crazy. Any thoughts?

Thank you so much; your answer was extremely helpful. I appreciate your taking time out of your day to help me out.

Actually, I do have my facts "right" but there are many more facets of the conversion than what I outlined; it is actually 4 tiered and involves a lot of moving parts; i tried to boil it down to its essence. Thank you for your help. (I guess.) quote name='AndyH' date='Jul 11 2006, 05:11 PM' post='135103'] lexi, you have some facts incorrect and some concepts messed up. No you do not. It sounds like the old plan is being kept but only some participants are going to earn benefits. A "conversion" is not permitted. The closest thing is the termination of a DB and replacement with a DC but that is not what you are describing. If you have a DB plan, you don't know what their "contributions" are because it is not a defined "contribution" plan. If it happens to be of the cash balance variety then it might be more quantifiable but you still don't know the value of ancillary benefits and benefit options and features. Sorry, but your question #1 makes no sense to me and your #2 is not valid because you do not have a "conversion". You may have a situation where some people are no longer earning benefits under a DB plan but instead may earn benefits in the future under a DC plan and that is a permitted change provided that an ERISA 204(h) notice is properly issued and the plans as redesigned meet the coverage and nondiscrimination requirements of the law. My suggestion is to go back and use this to learn more of the correct facts. You do not have them.

I am desperate for some help regarding the following scenario: We have a DB plan that is converting into a DC plan. However, there are some EE working under a CBA and some EE who are over 65 years-old who are going to stay in the "old" DB plan without being moved over into the new DC TSA plan. So, in effect, a 64 year-old EE will be moved over while his/her 65 year-old colleague WILL not. In addition, under the new TSA plan, the participants will receive 18% more in contributions than under the old DB plan. So, in effect, the 65 year-old EE will not receive as much as their younger counterparts under the TSA because of their age. Now, here are my questions: 1) Does this differential in contributions for 64 year-old EE and 65 year-old+ EE violate the ADEA since the 65+ EE technically are receiving exactly what they are entitled to under the old plan even though they do not have the same level of benefits under the new plan? They are going to be in the new TSA DC plan, but they are not going to be grandfathered in at the same 18% rate. However, they are going to receive everything they were promised under the old DB plan--there is no cutback or discrimination under the old plan. They will continue to accrue service credits under both the old and new plans but the level of benefits isn't going to change from what they were promised under the old DB plan. 2) Has anyone read any articles about converting DB plans to DC plans in any notable magazines like the ASPA or Journal Of Pension Compliance that might be helpful in this matter? Anything that deals w/ converting a DB plan to a DC plan would be helpful at this point. Thank you in advance to anyone who can help me w/ this issue.

I am desperate for some help regarding the following scenario: We have a DB plan that is converting into a DC plan. However, there are some EE working under a CBA and some EE who are over 65 years-old who are going to stay in the "old" DB plan without being moved over into the new DC TSA plan. So, in effect, a 64 year-old EE will be moved over while his/her 65 year-old colleague WILL not. In addition, under the new TSA plan, the participants will receive 18% more in contributions than under the old DB plan. So, in effect, the 65 year-old EE will not receive as much as their younger counterparts under the TSA because of their age. Now, here are my questions: 1) Does this differential in contributions for 64 year-old EE and 65 year-old+ EE violate the ADEA since the 65+ EE technically are receiving exactly what they are entitled to under the old plan even though they do not have the same level of benefits under the new plan? They are going to be in the new TSA DC plan, but they are not going to be grandfathered in at the same 18% rate. However, they are going to receive everything they were promised under the old DB plan--there is no cutback or discrimination under the old plan. They will continue to accrue service credits under both the old and new plans but the level of benefits isn't going to change from what they were promised under the old DB plan. 2) Has anyone read any articles about converting DB plans to DC plans in any notable magazines like the ASPA or Journal Of Pension Compliance that might be helpful in this matter? Anything that deals w/ converting a DB plan to a DC plan would be helpful at this point. Thank you in advance to anyone who can help me w/ this issue.

I have an employer that used qualifying employer security (a promissory note) to fund its DC plan. The ER now wants to terminate the plan and: 1) Distribute to each participant a pro rata share of the promissory note; and 2) Advise the employees to roll it over into an IRA. Can both (or either) be done? If so, is there caselaw and/or Code/reg guidance on the issue? Thank you in advance to anyone who may be of assistance!

We have a plan that is converting from a DB plan to a DC plan. The 403(b) TSA is going to be controlled by the employer. IRC section 415(k)(4) says that the 415 limitation applies with respect to plans controlled by the employee, which is NOT the case here. Does that mean we can avoid the 415(k)(4) limitation or is that an overly cute reading of the Code?