J Simmons

If you do, calmly downplay those bad things when listing them out. Otherwise they might mistake you to be Chicken Little (aka Hank Paulson)

Respectfully, rcline46--Yikes! Unless you know the exact right person at those agencies to give them the phone number for, I would hesitate on that suggestion. I've experienced more than one situation where the person talked to at the government agency either left the participant more confused or more misled re the rules than the adviser did.

They are a controlled group Off the top, I would think the account balances stay put, in the plan. The employees of Company B are yet employees included for testing purposes because of the controlled group. Logically, they have not had a termination of employment from the control-group employer. But logic is a pied piper for much of ERISA.

Are Company A and Company B a control group or an affiliated service group?

Masteff, To be an employer-imposed limit does it have to be specified in the plan documents and thus become a plan-imposed limit?

EE and spouse divorce. QDRO was signed by divorce judge and presented to PA. PA is processing the determination re the order for its status as a QDRO, when the ex-spouse informs the PA that she and the EE are going to get back together in a couple of months. I vaguely recall something several years ago about some airline pilots having gone through phony divorces to get QDRO payouts of benefits. Is there a case citation or DoL ruling/announcement anyone is aware of about that situation?

Don't know enough facts to know if attorney is making this up, but there is no 403p for benefits other than health benefits for spouses of former CIA employees, and that is part of Title 50, not Title 26, of the U.S. Code.

Yes.

I assisted an ER facing a DoL audit. The GUST II plan language provided that the trustee would payout benefits when and as instructed by the PA. The plan also provided that a distribution of vested benefits totaling more than $5,000 could not be made before age 62 or if later NRA, without the consent of the former EE. There was a March 2005 amendment reducting that $5,000 threshold to $1,000. There was no 'shall pay out' language. The trustee waited for PA to instruct when to make payout, and the plan did not specify when the PA must give such instruction or when such a payout from the plan should occur--just not before NRA or 62 without the former EE's consent. Nevertheless, the DoL raised and persisted that such was a problem, despite our pointing out that the language of the plan did not require payout. "Failed to ensure mandatory distributions were made in a timely manner as required the by the plan documents".

EPCRS (Rev Proc 2008-50) does not mention QOSA. Given that, your suggestion for QJSA fix, by analogy, seems appropriate. Look at section 6.04 and Appendix A.07 of Rev Proc 2008-50.

EBIA has a seminar on topic set for a week from today: An EBIA Web Seminar Date: Tuesday, February 24, 2009 Time: 1:00-2:30 p.m. ET (12:00 p.m. CT; 11:00 a.m. MT; 10:00 a.m. PT) Level: Intermediate http://www.ebia.com/Seminars/WebSeminar/19667

Sal's method can help if (a) more than 1 EE wants a part of the same in-kind asset, (b) an in-kind asset is too large to be absorbed and distributed as part of just one EE's benefits, and © to sell the in-kind asset later, only a single trustee or general partner's signature is needed.

To be pre-tax or Roth, post-2008 contributions to a 403b contract requires that such contract be part of a plan. mjb has pointed out ERs set up plans, not EEs. See Treas Reg § 1.403(b)-3(b)(3). As part of an ER's 403b plan, it will likely require a 403b vendor to agree to perform certain functions. Treas Reg § 1.403(b)-3(b)(3)(ii). Such an agreement is not an info sharing agreement per se. For an exchange after 9/24/2007 of a 403b contract with one vendor into a 403b contract with another vendor not to trigger taxation of the benefits, the receiving 403b vendor must have an info sharing agreement in place with the employer at the time of the exchange. Treas Reg § 1.403(b)-10(b)(2). For the HCE that has attempted to do his own thing with a different vendor, depending on all the facts and circumstances there might be a remedy available until 6/30/2009. See Rev Proc 2007-71, Section 8.03.

I owe you one!

Thanks, Kevin. Do you understand that Notice 2007-69 would allow for an interim amendment (still timely for the calendar year plan I'm facing) to raise the NRA to 65/5 rather than to just the lower end of the safe harbor, i.e. 62?

Is the ER involved in any litigation with a former EE? In my experience, the DoL usually does not do these type of document requests without responding to a complaint from a former employee--or upset current employee. The DoL is usually so requesting to see if a claim denial is consistent with or contrary to the plan documents.

I've found state agency help usually brings quicker results, such as consumer affairs division of a state's attorney general's office or the state's department of finance.

The 415c limit on benefit accruals is $49,000 for plan years ending in or with 2009. The limit on an employee's elective deferrals (402g) is $16,500 for calendar year 2009, regardless of the fiscal plan year. The catch-up is $5,500 for calendar year 2009. The 401a17 limit on compensation is $245,000 for plan years beginning in or with 2009. It is $230,000 for plan years beginning in or with 2008. For purposes of determining which EEs are HCEs, you use the dollar amount in effect at the beginning of the look-back year. So, if the determination year is the 2008-09 fiscal year that just ended for this plan, the look-back year would be that fiscal 2007-08 year. That look-back year began in or with 2007. So if an EE was paid more than $100,000 from 2/1/07-1/31/08, then that EE is an HCE for the PY 2/1/08-1/31/09.

I provide services, including document drafting, to a pre-ERISA MPPP with a 401k feature that has been grandfathered passed the prohibition of a 401k feature being in a MPPP. The employer is a local governmental entity. So this plan is grandfathered in the additional aspect that a governmental employer has a plan with a 401k feature. In the past, I've prepared documents for this plan by preparing an MPP (NS) adoption agreement to a DC prototype, then adding the 401k feature provisions by way of a contemporaneous amendment--making the plan individually designed. We applied for and received a GUST II d-letter. For EGTRRA, I dropped the MPP prototype and now have just a 401k PS prototype (NS). Rather than draft an individually designed plan document, I am considering adopting the plan preparing an adoption agreement to the EGTRRA 401k PS prototype (NS) that preserves the QJSA/QPSA as the default form of payout and not allowing hardships or any other in-service distributions. In the SPD, I'd also specify the fixed contribution obligation that has been part of the MPPP, despite the new governing plan documents reserving annual discretion to the employer as to what contributions to make. My prototype was approved with language about governmental plans using it not being subject to the minimum coverage requirement provisions or the nondiscriminatory allocation provisions, and being subject to the minimum vesting provisions only to the extent not varied by an addendum to the adoption agreement. My question is whether changing the type of plan from MPP to PS would jeopardize the grandfathering of the governmental employer having a plan with a 401k feature? Any other concerns?

A new client brings in a money purchase pension plan. The old document provider is going out of business. The current adoption agreement specifies NRA to be 65/5. The SPD explains NRA to be 55/5. In preparing new EGTRRA restatement documents, I think I've got to go with 55/5 to avoid a prohibited cutback. That will take the NRA out of the 62 and above safe harbor, but at least the plan would yet have the presumption that it is an appropriate NRA since it is not below 55. Any thoughts or suggestions? One other glitch. An SMM that properly described a change made by an amendment signed by the employer also includes curious language about elective deferral catch-ups, although this is not a pre-ERISA, grandfathered MPP w 401k feature. There have never been any elective deferrals allowed or made to this MPPP. Are there any steps that need to be taken by reason of this misinformation having been included in the SMM?

Another interesting point from the 7th Circuit's decision in Hecker v Deere is how the court dealt with the claim that Deere had misled employees that Deere was paying the cost of plan administration. Over a 16 year period, Deere and Fidelity amended their agreement 27 times, gradually shifting payment for the services provided by Fidelity from payments up front by Deere to where Fidelity was recovering its costs from the employees through assessing asset-based fees. The employee plaintiffs claimed that "the SPD supplements left them with the impression that Deere was paying the administrative costs of the Plans, even though in reality the participants were paying through the revenue sharing system". The 7th Circuit explained that those same SPD supplements referred employees to the fund prospectuses for detailed information on fund-level expenses, which the prospectuses were provided by the funds. "The fact that there were no additional fees borne by Deere is immaterial. While Deere may not have been behaving admirably by creating the impression that it was generously subsidizing its employees' investments ... when it was doing no such thing, the Complaint does not allege any particular dollar amount that was fraudulently stated." So, since the SPD supplements did not specify an amount that Deere was claiming to be paying toward plan administration, no foul to the employees that Deere was paying nothing although its SPD supplements suggested it was bearing some administrative costs.

Perhaps 'qualifying' was not the right term. There are many for whom the income tax/FICA tax free benefit of running the dollars through a day care flex will far exceed the IRC 21 credit. For example, the credit for those earning $45,000 or more is 20% of the day care paid. If run through a day care flex, the person gets 15% federal tax, 7.65% employee's share of FICA, and whatever his or her state income tax rate is combined. For those in higher marginal brackets, the tax savings from the day care flex vis-a-vis the IRC 21 credit is more profound. Why would you want to deny someone this extra savings by pro rating the $5k for a short plan year?

I don't think so. Hogan v Petitpren Inc Employees Profit Sharing, 92 FSupp2d 612 (ED Mich 2000)

K2retire, true enough that regulators live in a different world than the rest of us. But at least one 3-judge panel of the 7th Circuit lives in the reality we do. The court decided the appeal of Hecker v Deere in a 33-page decision handed down on February 12, 2009. You will recall that Deere's plan offered EEs the choice of 26 funds and BrokerageLink (a look-through investment vehicle) to 2,500+ investment options. The asset based fees ranged from 0.07% to 1%. "Importantly, all of these funds were also offered to investors in the general public, and so the expense ratios necessarily were set against the backdrop of market competition." The court basically found that the range of investment options that Deere (in agreement with Fidelity) offered to its EEs for directing the investment of their 401k benefits was sufficiently broad that control over the risk of loss was shifted to the EEs. "If particular participants lost money or did not earn as much as they would have liked, that disappointing outcome was attributable to their individual choices. Given the numerous investment options, varied in type and fee, neither Deere nor Fidelity (assuming for the sake of argument that it somehow had fiduciary duties in this respect) can be held responsible for those choices." Earlier in the opinion, Judge Wood wrote that "[e]ven if § 1104© [ERISA § 404©] does not always shield a fiduciary from an imprudent selection of funds under every circumstance that can be imagined, it does protect a fiduciary that satisfies the criteria of § 1104© and includes a sufficient range of options so that the participants have control over the risk of loss." The 7th Circuit rejected the notion that under existing ERISA law that revenue sharing had to be disclosed. That is "not information the participants needed to know to keep from acting to their detriment." The info provided about total fund-level fees of each investment option, by referring EEs in the SPD to read and glean that fee information from the prospectus for each fund, was all the information that the EEs need to 'keep from acting to their detriment'. The court also rejected the notion that Fidelity was a functional fiduciary for merely playing a part in Deere's fund selection, since Deere retained the final authority to decide which funds would, and which would not, be offered under the plan to the EEs. In whole or in part, the 7th Circuit rejected the three main positions taken by the DoL in its amicus briefing, set forth in post #5.

I wouldn't place a plan's qualification in jeopardy on a hope that the IRS is loosening its hardship definitions, not before there's an actual pronouncement anyway. I would also suggest that the plan documents be reviewed carefully. It sounds as though you have a plan with the safe harbor 'immediate and heavy financial need' categories. Treas Reg § 1.401(k)-1(d)(3)(iii)(B). Plan fiduciaries need to follow the plan as written. If the plan document incorporates those safe harbor categories and you want to make this hardship, first amend the plan so that it does not use those safe harbor categories. But then be careful in making general definition determinations, and following the precedence set by earlier determinations when making later ones. All that being said, if you go the general definition route, the situation you describe about the EE needing a security deposit seems like a hardship to me. However, the 1st months rent? I don't think I could go that far.