Trekker

I plead ignorance in advance. I do not work on 457(b) plans but had this question thrown my way. May a 457(b) plan condition its match on last day employment? The plan is silent. If permitted, am I correct that it is too late to amend for this for the 2014 calendar year? I also just found out that there is a 403(b) plan. I do not know if the match is made to the 457(b) or the 403(b), so an answer covering both situations would be helpful. Thank you!

Thanks, all, for the responses, or at least for your agreement that the form is confusing! I may just send in all amendments not covered by the prior EGTRRA letter and include a clear description of each amendment.

We also have a volume submitter, but some clients have minor variations and, therefore, may not rely on our letter. After looking at this form, I hope we do not have many in this situation!

Line 3g (the chart) is confusing in so many ways, but I will limit my question to a couple of issues. For the PPA amendment, what are folks entering in column (vii)? Many PPA amendments (and other interim amendments) were model amendments or some kind of standardized format addressing numerous changes. Should we have an attachment listing all of the provisions? The instructions do not address this column. The instructions describing which amendments to list in this chart are not clear. It seems we are to list certain amendments and include with the submission, but also we are NOT to list certain amendments but still include with the submission. Has anyone seen guidance on when we must start using this form? Are others puzzled by this form, or is it just me? Thank you!

I believe you must run the ADP for the employees who defer but are not yet eligible for the PSP (which includes the 3% safe harbor). However, since most of these employees are Non-HCE, should not be a problem.

Thank you both for replying. I should have clarified that by "pension" funds I meant Money Purchase Pension funds that were either transferred or else the Plan was converted from an MPP to a PSP.

I have always wondered how you can impose a restriction (spousal consent) on a participant obtaining a distribution when the Plan has no pension funds at all and no QJSA options. I know it is done but can't find official justification for what seems to be a violation of the participant's right to his or her account. No question; just a wondering.

This may be the cite PLR 8336006, IRC Sec. 6081 I have not read it over again; just pulled from one of my very old files. Wanted to get this out to you in a hurry.

In a Cash Balance Plan, very often we will amend retroactively to increase the staff (i.e., Non-HCE) group to pass 401(a)(26). This is permitted under Reg. 1.401(a)(4)-11(g). Question: Instead of amending the hypothetical allocation for the Non-HCE group, may the credited interest rate be increased (retroactively), thereby increasing all allocations and passing the tests? This is a calendar year plan. The Employer is under extension for fiing corporate return and wants the amendment to be effective 1/1/13. Thanks for any insights.

A non-electing church plan erroneously excluded eligible employees and did not allow them to make elective deferrals or receive the match. The correction methods are clear when you have a qualified plan. Would the same corrective measures apply to a church plan and will the IRS accept a VCP application for a church plan? Thanks for any insights.

We have an old MPP effective in the early 1970's. It has always contained a provision as follows: "Each employee who is eligible to participate and who desires to participate shall contribute 9% of his compensation for each plan year...." The Employer matches the Employee contribution. For the first time ever, the Employer has an employee (a re-hire who formerly participated) state he does not wish to participate. The Employee was paid out when he terminated a couple of years ago. Is it permissable for this employee to choose not to participate? Even though this is an MPP, does this bring into play the opt-out provision in the 401(k) regs? Any thoughts are appreciated. Note: These are after-tax mandatory employee contribuitons.

The exemption is still available. If your new plan meets the requirements, it should be exempt.

Thank you all for your responses!

Cross-tested Plan requires "1000 hours/last day employment" to share in Employer PSP contribution. There is also a 3% Non-Elective Safe Harbor contribution. Participant Bob terminates during the year with less than 1000 hours, but he is benefitting under the Plan due to the safe harbor. The Plan does not contain an allocation group solely for participants who share in the safe habor or top-heavy (i.e., benefitting under the Plan) but who do not satisfy 1000 hour/last day requirements (i.e., the Plan does not have a catch-all group). The Plan DOES have the gateway provision that "the minimum allocation rate for Non-Highly Compensated Participants shall be the lesser of....." and then goes on to state the 5% or 1/3 rule. Bob did receive the gateway allocation. Question: Is there a plan document issue since there is no catch-all group defined? Bob's group was the staff group. Active participants in the staff group received more than the gateway, but Bob only the gateway. Make sense to anyone? Thanks.

The following language has been in our approved VS specimen plan for years: "If the Employees of the withdrawing Participating Employer cease participation in the Plan as a result of the withdrawal, the employment of such Employees shall be considered terminated. Distribution of the vested account balance of each such Employee shall be made in the same manner and at the same time as provided in Section ___. The non-vested account balance of each such Employee shall be treated as a forfeiture in accordance with the provisions of Section ____." Hope this helps.

We are considering stating the 2013 limits and adding that these are projected to remain the same.

A Cash Balance Plan frequently amends to increase the hypothetical allocation to Non-HCEs in order to pass 401(a)(26). These amendments are adopted retroactively in accordance with Reg. 1.401(a)(4)-11(g). The required increase is not known until after testing is done at the end of the Plan Year. Has anyone had an IRS agent reject these amendments, considering them part of a pattern of amendments being used to correct repeated failures? 11(g)(3)(vi) is cited. Thanks. ADDITION from Trekker - Is the amendment for 401(a)(26) considered an amendment to a "Benefit, Right or Feature"? Is the hypothetical allocation in a CBP considered a BRF? The 11(g)(3)(vi) cite seems to refer to a pattern with BRF's,thus hope for this Plan's situation.

In Reg. 1.411(d)-4, Q&A-2(b) - I lost track of the subparagraph and sub, sub, sub section numbers, but it is "(ix) De minimis change in the timing of an optional form of benefit." Seems to say you can only change the timing if the optional form is available within 6 months of the time it was available prior to the amendment. Not sure if this is on point but thought I'd share.

Church plan would like to raise Normal Retirement Age, for current and future participants. This will have the effect of postponing distribution of benefits to which they would have been entitled to prior to the amendment. Is this permitted? Thanks for any insights.

Thanks all for the good information. It turns out that the facts were a bit different than we were first told. This was a change in document providers and investment platform. An education experience for me.

Employer desires to merge two 403(b) plans and transfer all assets from one to the other. After the transfer, there will be no assets in the transferring plan. Must this plan continue to be maintained, languishing in the file with no activity? How do you actually get it to go away? Thanks for any thoughts.

Key-employee borrowed approximately $15,000 more than permitted. We intend to correct under VCP. QUESTION: Must we also file VFCP with DOL's Employee Benefits Security Administration and report this as a prohibited transaction? Can't seem to find a precise answer. Thanks.

Accountant and attorney are both involved. We had this thing almost resolved (the right way). Thanks, guys.

Thanks, all. Since I am unable to provide more facts at this juncture, don't take time to advance it further on my behalf.

Oh, yes, he was advised in writing many times and had intended to purchase the ill-fated assets out of the plan. For some reason, he is backing off that idea. Even if he resigns, his account remains in the plan with the bad assets. Aren't the other trustees at risk?