J Simmons

The owner could give this employee 5% of the ownership to get out of making the 3% top heavy minimum contribution. Seriously, I don't know. I don't think a waiver by the HCE non-key will do the trick of getting out of the employer having to contribute the 3% TH min in for him or her.

all 6 ee's with the same salary Employer can manipulate by giving one of them $1 more. If there is any difference in the rate of benefiting among the 6, perhaps choose to give that extra $1 of pay to the one with the lowest rate of benefiting. It might make testing easier to pass.

In my opinion, the BRF is the opportunity to choose elective deferrals--not the difference of what happens if the employee does not make an affirmative election. So I do not think you would have a BRF issue.

Taxable? Agreed, since the 1996 law change. Reportable on Form 1099-R? Agreed. Potentially subject to withholding? Don't know of what would require that. I'm curious about what leads you to this thought?

If I understand correctly, the life insurance policies would not be used to fund any death benefit or other post-death obligation of the VEBA on the life insured. Rather, the life insurance would just be an investment for the VEBA, with the death benefit viewed as a return to the VEBA on its investment (i.e., premium payments by the VEBA). Of course, the VEBA trustees would have to weigh the impact on the VEBA's cash flow needs to pay benefits, as well as the expected rate of return, in deciding if such is a prudent investment. The VEBA document could perhaps direct that such investments be made, giving the VEBA trustees some cover against imprudence claims down the road. If there is no post-death obligation of the VEBA to correlate to some degree with what the insurer will pay to the VEBA in death benefits under the life insurance policy, does the VEBA have an insurable interest in the life even if it is that of a VEBA member? I don't know, just asking.

The employees working for PLC will continue to participate in the plan despite the withdrawal of the one attorney and his/her no longer owning any part of the PLC. They are yet employees of the PLC, provided it is the PLC and not the withdrawing attorney who then has primary control over them. The leaving attorney may also continue to participate in the plan, depending on how the plan documents read. For example, the plan documents might continue that participation if his/her C corporation is yet listed in the plan documents as a sponsoring/participating employer. The attorney's C corp no longer being part of the control group of the PLC and other C corp's means that the 'single employer' plan would now be a multiple employer plan governed by 413c. If the withdrawing attorney doesn't want to participate any longer, then the plan can be amended (if necessary) to de-list his/her C corp as a sponsoring/participating employer. Since that attorney would no longer be working for an employer that sponsors the plan, it ought to be a distributable event.

I don't use Corbel's Prototype but notice that under Article VIII, Participant Administrative Provisions, of one of the DC Prototype Plans there are default death beneficiary designations.

90%? It may be that TPA is guiding its clients to do so. What I've noticed is more like 40-50% passing the cost along.

I don't think that the retirement (non-actuary) consultant either is a fiduciary or needs bonding just by reason of or for the role you describe. The bank is the issuer of the check, not the consultant. The assets are at the bank; the check is a mere draft against them that has not yet been presented. The consultant could only obtain the assets through forging the check, presenting it and the bank acting on the forgery. Possession of a check made payable to the retiree does not, in my opinion, give the consultant sufficient discretion or possession to render him a fiduciary. If not a fiduciary, no need to be bonded. That being said, Crosseyetester, why does the bank route the first benefits check through the consultant?

I think the plan trustees have a duty to try to retrieve the $$ back into a brokerage account titled in the name of the plan trust, back under control of the plan trustees. The brokerage window vendor probably violated the terms of the agreement between it and the plan trustees when it permitted the $$ to leave a plan trust-titled acocunt and be transferred to the IRA. So the onus for fixing this ought to be on the brokerage window vendor, and working with the mutual fund custodian of the IRA and employee to do so. The mutual fund custodian of the IRA where the $$ now is likely has an agreement with the employee, as IRA 'owner', not to transfer $$ out of that IRA without the employee's consent. So the employee is likely going to have to sign something for the mutual fund custodian of the IRA before it will transfer the $$ back into the plan trust-titled account. Failure to keep control over the assets of the plan is a breach of fiduciary duty, and so the DoL's voluntary fiduciary correction program should be looked into to see if any notification or filing with the DoL may be necessary or advisable.

Can you transfer for 401k $ into your new governmental employer's 457b? Yes, if the 457b is willing to accept and will keep a separate accounting of the 401k $ rolled into the 457b. http://www.irs.gov/pub/irs-tege/rollover_chart.pdf Can you leave the 401k $ where they are? If you have more than $5,000 in vested benefits in the 401k, you should have the right to leave it where it is until you reach the later of that 401k's normal retirement age (or age 62, if later). If you have more than $1,000 but not more than $5,000 in vested benefits in the 401k, then whether you can leave it there depends on what the 401k provides. $1,000 or under in vested benefits, the 401k can pay it out to you even if you do not want it. If you roll the 401k $ into the 457b, your ability to access the 401k $ might be subject to restrictions, even if nothing more than procedural ones, that apply to payouts from the 457b. The IRS chart shows what other plans or accounts you might be able to roll over benefits from the 457b. Tax penalties? If you withdraw (i.e., don't rollover) before age 59 1/2, in addition to any income taxes due, you will have a 10% early distribution penalty. If the 401k benefits are Roth, then you would likely face taxation on the earnings since the account hasn't been around for 5 years yet.

Terry, After preparing the initial loan amortization schedule, we determine the interest on the loan based on the exact date of each payment in the history of the loan in three situations. You mentioned one, when the loan goes into default since you have to know the entire balance of unpaid principlan and accrued, but unpaid interest to report as a deemed distribution. We also determine the interest in that way when the loan is to be paid off, either early at the borrowing participant's request or when it comes down to the final payment. The third situation we do so is when determining benefits in the plan for annual reporting (Form 5500) purposes, per the plan's year-end valuation date. (We also use such valuation for the purposes of providing individual benefit statements--now that those are required quarterly if the plan permits participant direction of investment, it's not entirely clear if we can just use the most recent annual valuation date value or must re-determine once each calendar quarter.)

To date, I've never had to resort to joining the IRA custodian as a party to the divorce proceeding. Explaining the consequences to the IRA custodian of its persistence, as detailed in my prior post, has in my experience brought each IRA custodian around to the conclusion of asking nothing more than what Appleby suggested.

See answer posted on http://benefitslink.com/boards/index.php?s...c=35627&hl=

I've responded by sending the IRA custodian a letter explaining that QDROs are a concept only applicable to ERISA plans and IRC sec 401a trusted plans, and that since it's insisting on a QDRO for an IRA governed by 408 rather than 401a, the custodian's insistence of a QDRO indicates that the custodian thinks that ERISA applies to the IRA. So then I also include with the letter an acknowledgment for the IRA custodian to sign that the IRA custodian is an ERISA fiduciary with respect to the IRA, with all the attendant ERISA fiduciary duties and liabilities. That usually causes them to withdraw the request for a "QDRO". As for the LOI (medallion guarantied), I'd explain that if the IRA custodian persists, you'll recommend that the divorce attorney for the spouse of the IRA owner file to bring the IRA custodian into the divorce case as a party to it, so that the court can hold it in contempt if it fails to follow the court's order dividing the IRA.

With the physician having $3m in the 401k and concerned about creditors, I'd investigate and weigh the pro's and con's of creditor protection of an ERISA plan versus a rollover IRA before term'ing the 401k and rolling over to an IRA.

The fact that the IRA is a Roth v Traditional should have no bearing on what it can be invested in. However, there are securities laws implications (a current shareholder would be selling shares--securities--to the IRA). So either there will need to be an exemption or registration that permits this sale. The company and the selling shareholder ought to have the securities lawyer handling or preparing the IPO take a look and issue an opinion first. There is also the possibility of a prohibited transaction if the IRA owner has too close a connection with the company or its shareholders, particularly the selling shareholder. You'll need an analysis and an opinion from an ERISA expert about whether there would be a prohibited transaction. IRC 4975. While you mention 'stock', if this is stock in any type of company other than a C corporation you also have the potential for unrelated business taxable income (UBTI). You ought to also obtain an analysis and an opinion from an ERISA expert about whether there would be UBTI. IRC 512-514.

I would suggest that you insist on a signed authorization from the participant that this lawyer is representing the participant, with respect to issues involving the plan. Never. I would simply respond that the plan has no such DoL certification (I wouldn't mention that there is no such certification process by the DoL). As for the claim that 1/3 of whatever is recovered will be subject to the lawyer's contingent fee, I disagree. Most states Bar ethics only permit contingent fees if per written agreement--doesn't sound to me like you've agreed to this. Also, a recent case held that where the plan subro clause gave the plan a full right of recovery by the employee for the amount paid by the plan for medical and the employee agreed to such, the attorney received plan assets when he received the settlement from the tortfeasor, and held such pursuant to a fiduciary duty. Consequently, the plan was entitled to a judgment against the attorney for the amount so held. Roy F Harmon III's blog has great discussion and analysis of cases on this topic, http://healthplanlaw.com/?cat=17

Without having the benefit of the plan documents to review and study the relevant language, I would nevertheless think that the HCEs that are covered by the CBA are excluded from the non-union plan. Excluded class definitions and provisions would be redundant if they only applied to employees that were otherwise ineligible under the plan. Thus, it would seem that the excluded class provisions override and exclude those employees that would be eligible, like the HCEs, but for the excluded class provision. Extending this rationale, the otherwise eligible HCEs are excluded from the non-union plan by virtue of being covered by the CBA. As for these HCEs' participation in the union plan, as union members they are likely eligible--unless the union plan had a provision excluding HCEs. For 410(b) testing purposes of the non-union plan, the excluded employees (including these HCEs) should be able to be taken into account as non-benefiting HCEs in the minimum coverage testing. That should help or make easier passing the minimum coverage requirement.

kjburt, The way I read 414w is that the 90 day retro opt out (and payback) is optional, not required in order to have auto enrollment.

I think that the notion of successor corporation is perhaps a bit more involved than simply any difference in the identity of the owners between the two entities under consideration--and the threshold under the federal common law for tagging a later company as the successor of an earlier one is lower than under most states' laws.

There is case law to the effect that once subject to ERISA, always subject to ERISA--even when the only ones with benefits remaining in the plan are owners.

A client that is forming a TPA business is interested in learning what software package for preparing Forms 5500, Forms 945 and Forms 1099-R might be best (usability and price). Plan documents are not needed, just the preparation of these forms as listed. The client only knows, at this point, of Datair's package for doing so, but isn't sure how it would even work because Datair plan documents will not be used. An suggestions that I might be able to pass along?

Is the maximum age 21 something like the "part-time" employee exclusion? That is, can you specify a higher age but you must nevertheless take into account all those age 21 or older in your nondiscrimination and minimum coverage testing? I would doubt that only benefiting retiring employees (since presumably on the higher end of the pay scale at the company) would pass those tests. It sounds more like a situation for a nonqualified plan than a qualified one.

Does the doctors group he now works for have a plan that would accept rollovers? Does it permit real estate investments and loans? If so, it would make sense to terminate the PSP and MPPP, and roll the benefits into the new employer's plan (unless there would be other unacceptable restrictions such as on subsequent withdrawal). That would relieve this doctor of all the chores and responsibilities, and potential pitfalls of noncompliance. He'd also be on the beneficiary end of the duty of the fiduciaries of his new employer's plan.