J Simmons

Yes, so assumed because going back 12 years (7 pre-break vesting years and a 5 year break) to 1997, and this is a DC plan.

With 7 vesting years, he was completely vested in the pre-break accruals. Thus all were paid out to him. He needs no post-break vesting years to vest further in the pre-break accruals even if the EE repaid them into the plan during the 5 years of rehire. As to post-break accruals, all vesting years--those earned both pre- and post-break--are taken into account. So he already has 7 vesting years and is 100% vested. No vesting years will ever be disregarded in vesting his post-break accruals.

You might want to explore the qualified separate lines of business (QSLOB) rules to get around the impact of being a controlled group.

From the wall street journal today. This seems to apply to my question. But this is contrary to what you say, is it not? Thank you. One other note: If you are age 70½ or older and taking required minimum distributions from a traditional IRA or workplace plan, you can't convert that required withdrawal to a Roth. However, after you take your required minimum distribution for the year, you can convert remaining traditional IRA assets to a Roth. The note quoted from the Wall Street Journal does not contradict Appleby's answer.

If that's the driver for the 2x charge, is it prudent and solely in the best interests of the participants for the plan fiduciaries to use that service?

It is quite often the case that when an employee dating back to that era retires and the DB plan has long since stopped such mandatory contributions, the records are scant and the current benefits personnel unaware of how much and how to handle those benefits.

Thanks, Larry. It appears that the extent of aggregation between a SEP and QRP is just for purposes of applying the 404 deduction limit. Darn. It would be a nice trick to be able to avoid fiduciary duties for asset management issues for staff employees by stuffing the company contributions for them into IRAs. But, apparently not to be.

It is a BRF. I wouldn't be concerned unless later the plan is amended a second time to remove the NRA payout option (as to benefits accruing after that). The two amendments taken together might be a discriminatory series of amendments depending on all the facts and circumstances surrounding the two amendments. Treas Reg 1.401a4-5.

Larry, with a non-model SEP, could the ER also have a cross-tested plan and permissively aggregate, putting the gateway contribution into the SEP IRAs and just the other contributions into the cross-tested plan's trust? If so, then the cross-tested plan fiduciaries would not have investment and management responsibility for the assets in the SEP IRAs (which would be the only benefits for those that do not receive more than the gateway)? I've not dealt with a situation where the employer had both a SEP and a 401a plan (and only been involved in replacing a SEP with a 401a plan on January 1 of the next year).

However, the tax savings might be limited in the near future anyway. That's according the Washington Post's blog, citing the Congressional Quarterly, that claims President Obama explains that savings from controlling the cost increases of medical care will more than offset any losses from tax-savings on employer provided health coverage, and thus the loss of the tax-savings should not be a concern to those affected. The reference is to limiting, not eliminating the tax break for employer provided health coverage. This might be a means-tested issue, limiting the tax-break for employer provided health coverage for those employees that earn over a certain amount.

Austin, I think it applies at the employer/controlled group/affiliated service group level. I have no citation, but vesting is a public policy allowance to ERs as a tool to encourage EE retention. Vesting due to partial termination comes from the notion that if the employment termination is initiated by the ER and beyond the EE's control, the purpose for vesting being allowed in the first place does not apply to the situation. Just because unrelated ERs share the same retirement plan it should not distort these dynamics or reasons for vesting on ER initiated terminations of a proportion within the ER's own EE pool. Otherwise, you may have an ER that is considering closing a plant or location want to merge its retirement plan with a multiple employer plan of other, unrelated ERs before the plant closure in order to skirt the partial termination rules.

Check your plan document as well. It may be more restrictive than the regulations are regarding mid-year changes.

True, but there is generally no tax advantage that way unless the employee will itemize on Schedule A to Form 1040 and have other health expenses that total to at least 7.5% of his or her AGI.

Yes for anyone who had any accrued benefits and was not 100% vested when he or she terminated employment in 2008. Yes.

The required COBRA subsidy notice may be, but is not required to be in the SPD. If you revise the SPD every year, then having it in the 2009 version might make sense, as the subsidy will not apply to employment terminations after that. What are the 2009 new rules? The mastectomy reconstruction requirements under WHCRA have applied since 1998. DoL (not IRS) model notices may be had here for COBRA and, for WHCRA, see the last page of this.

Amounts that the ER has not had to pay to EEs as part of payroll due to pay reductions elected to cover the cost of cafeteria benefits, but then not needed to pay those expenses are cafeteria plan 'experience gains'. The ER may retain them. Prop Treas Reg § 1.125-5(o).

I agree with George. It is astounding how many benefits practitioners, in government and advising private industry, do not understand the tax principle of constructive receipt, or the need of a written cafeteria plan (IRC sec 125(d)(1)) to avoid the application of constructive receipt.

GMK, is there a specific type of software that you think will generate computer files that will have a longer compatibility life with future software developments than others? Or what approach do you take? My legal files are all .pdf scans--now. We did start out with a different type in the 1990s, but purchased a converter that would mass convert large batches to .pdf at night. That took about 2 months to accomplish. Having been through that 'rodeo', I wondered if you know of a better practice to follow.

You ought to first take a look at ERISA sec. 209 and DoL Reg sec. 2520.107-1.

I think you need an amendment.

You'd have to do ACP testing of the match, but not ADP testing of the employee's elective deferrals.

First, in the absence of a designation of death beneficiary, who specifically does the plan say shall be the default death beneficiary? Often, it is surviving spouse. If none, then children. Then estate, or parents and then estate. Second, you should make sure you have documented in your files on the plan what would be a good faith reasonable effort to locate the default beneficiary. I think that given that only $400 is involved, reasonable effort does not require as much as if there were, say, $10,000 in the account. You could consider running a one-time ad in the newspaper of the locale where the individual lived or in the state bar's periodic magazine, trying to locate 'lost heirs'. If yet the default beneficiary cannot be identified--perhaps it is the estate and such has not been filed--then you might next pay the money over to the state's unclaimed funds (i.e., escheat). Keep in mind, the plan is not fully terminated until the last assets titled in the trust/trustees names is paid out, and the final Form 5500 is due 7 months from that date.

Your cafeteria plan could permit, under the regulations, certain changes incident to specified 'changes in family status', but your plan is not required to do so. Your cafeteria plan might be required by HIPAA, if applicable, to allow certain mid-year changes, such as coverage for a newborn. But if a mid-year change is not allowed, either by your plan or the regulations, to active employees, then my understanding is that you would not have to allow mid-year changes to those on COBRA continuation.

...which just goes to show, Austin Powers has more chest hair than I do.

That's what I understand Notice 2009-27 clarifies.