J Simmons

It might be if there are kickbacks to the brokers. About the only people that I know that do anything for free are family members and close friends for one another. Brokers for clients? Doubtful. But the motive for performing these extra services might be to keep the client from looking around and finding more competitive fees from other brokers. In a given situation, a broker may not be receiving any rebating. However, since there is this 'smoke', it behooves the employer to look deeper to see if there's 'fire'.

Any suggestions as to what provisions of this document might raise any red flags, either as a matter of compliance with 457b and regulations, or practical aspects of plan operations?

Read: Pay Corbel more and you get it.

If you are counting pre-acquisition service toward eligibility, then it seems you'd have to use the original hire dates.

IPS, does the provision of your plan documents that address the discretionary match specify how that match would be allocated? That would be the place I would start, and then look back to definition of any defined terms used i the match allocation provision.

Larry, I thought that there would yet be an obligation to repay (which would after the deemed distribution and taxation) would be treated like after-tax contributions as to which the employee would acquire basis against otherwise future taxation. I also though a trustee would have a fiduciary duty to try to collect on the defaulted loan.

That's because John posts before thinking.

What does the plan's provisions about matching specify about whether compensation for the full year or just while a participant for mid-year entrants say? It's probably a matter addressed in your plan. If no special definition of compensation for matching is provided, then it is probably the plan's general definition of compensation.

Interim EGTRRA good-faith amendments may be made at the prototype sponsor level, not requiring amendment signed by the adopting employer, unless the prototype sponsor level requires each adopting employer specify an option--as many EGTRRA good-faith amendments did. EGTRRA restatements require signatures by the adopting employer. GUST restatements have been required for quite some time. There would need to be adopting employer signatures. . If the prototype sponsor amendment allowed for each adopting employer to specify a new design option, and did not specify a default in the absence of the employer so specifying, then adopting employer signatures would be required.

Just a bit of clarification here. The DC graded vesting schedule must vest at least 20% once the EE has earned 2 vesting years of service. "In" the third year of service, the EE would only have at most 2 vesting years and thus 20% would be fine. Once the EE has earned the 3rd vesting year, then the EE would have to be at least 40% vested.

It doesn't fit the hardship safe harbor categories. If your not using the hardship safe harbor categories, is refinancing a house where mortgage foreclosure is not at issue a hardship? I doubt it.

That would be the preferred method of correction under Rev Proc 2008-50, provided that the amendment itself is nondiscriminatory.

The closest I recall to discussing something like this would be whether mid-year a SH match can be reduced to the minimum needed to keep the SH. A literal reading of the regulation suggested that it would blow the SH for the year and ADP would rear its ugly head. I think that was noted by Kevin C. I think you make a very logical argument. Basically, the SH NEC for the HCEs was extra, above and beyond what is needed to be SH, so its elimination mid-year ought not disqualify the plan from SH for the year. As the IRS is silent in the regs on stopping SH NEC mid-year though having addressed how SH Match may be, you'd be taking a risk, albeit using logic.

As Seive pointed out with the quote from the proposed regs, the uniform coverage rule means that at any point during the period of coverage--from first day of plan year until the day employment terminates, from the description of the plan implicitly in the OP--the entire amount elected for the FSA (less prior reimbursements by reason of that FSA) must be available at all times during the period of coverage. Suppose it's a calendar year cafeteria plan and EE elected $1200 for a 2009 health flex. $100 per month is being withheld. If terminated on 3/6/2009, when only $200 has been withheld (January and February), one might colloquially think the FSA to be "overspent" if he's already been reimbursed more than $200--say $350. The other $850 may be applied if he submits a claim by 4/5/2009 (30 days) for expenses for medical services provided on or before 3/6/2009. It matters not that he's "overspent" already. No.

But if no NHCE ever hits 1,000 hours in any season and becomes eligible (as posited in post #8), then what's the coverage problem? Does the 1,000 hours for eligibility year of service have to be relaxed to let at least some NHCEs into the plan?

Sieve, is there a problem? Sieve, should those hours thresholds be reduced? Sieve, aren't all year end employment requirements and hour threshold requirements designed and intended to exclude and prevent accruals and vesting--and typically impacting NHCEs disproportionately? Since the DoL has repealed its attempt to do some of these notions (and not yet replaced the repealed regs), what compunction is there for an ER to observe them?

Not necessarily. If those EEs have, since the improper exclusion was discovered, been enrolled and now made their investment directives, we have some indication of which investment options might need to be used to measure the investment gain (loss) adjustment. While this would not be the EE's investment choice for the period of the failure, it is at least some indication. Since the improper exclusion was the result of the ER's error, it does not seem all that inequitable if the investment gain (loss) adjustment is based on the highest performing of the investment options.

With no NHCEs because none have become eligible because they do not have the 1 eligibity year of service, though some have been re-hired to work consecutive seasons?

Larry, last I looked that DoL guidance on seasonals had (as you noted) been repealed and not replaced. I've actually been looking for further guidance to be issued since I last looked, and am not aware of any. Suppose that the owner is yet employed and receiving a paycheck on the last day of the plan year, when the business is otherwise closed and no one else is on payroll. A company contribution is made, and he is the only plan-eligible employee and thus receives allocation of all of it into his plan account. How do you see the coverage issue in that situation?

If they have and can articulate as part of the VCP application an undue burden, or impossibility, due to difficulties with records about the earnings rates, I would certainly suggest the correction specified in that application be plan-wide rate if that is readily known. I would think that would be one of the 'rare situations' (post #2) because it would also be conceding in that application that perhaps the plan has not kept adequate records for the 2000-2008 period. Trying to back out of one problem perhaps bumping into another.

What blog is that on?

Cynchbeast, Some plan documents will have tucked the designation of beneficiary, and default beneficiary, rules into sections entitled something like 'Participant Administrative Provisions'.

To sum up this thread, I would say that the Carmona case protects the surviving spouse annuity rights of spouse 2. As for the benefits being paid until the retiree dies, you need to make a laches argument in opposition to the divorce judge now entering a QDRO as requested by spouse 1. By the way, do you really think any of us here light into anyone else?

I assume you are kidding us. Yes, I am (because the obligation that is relieved would have been one that generated a tax deduction if paid by the ER).

Tom, you have quite the wardrobe! BTW, was January 1, 2001 recognized and celebrated as a square root day?