Trekker

That would fix prospectively, but the bad assets still remain in the plan in the participant's account.

Participant is an owner of the Employer and trustee of PSP. Self-direction for all participants. This participant invested portions of his plan account in property he owns outside the plan. Participant has access to other funds sufficient to purchase the bad asset back from the plan but refuses to do so. Over $200,000 involved. This is a sketchy facts situation, but I am hoping a quick answer may be found. A VFCP application was ready to go when the participant balked. Thanks.

May a non-electing church plan eliminate early retirement?

After reading the replies and thinking until my head hurt, I must agree that service is counted. It's not really a case of predecessor employer since the employer still exists. Not the answer I wanted, but it is what it is. If anyone can think of a loophole, I'm open! Thanks.

ABC Corporation has existed for several years and does not maintain a retirement plan. ABC became part of a controlled group with XYZ Corporation on October 1, 2011. XYZ has maintained a calendar year plan for many years. ABC will adopt the XYZ plan effective January 1, 2013 (the end of the transition period). May XYZ consider October 1, 2011, the hire date for all ABC employees and NOT count prior service with ABC for purposes of eligibility and vesting? It seems this should be acceptable, but I can't quite find an affirmative answer. Thanks for any insights.

We submitted a Plan in 2010 for an updated D-letter. The Plan (a takeover for us) had not timely adopted its EGTRRA good faith addendum. Had to go through Audit Cap, sanction was $3000. Ah, the classics. Galaxy Quest and Princess Bride - seen them both at least four times. They never get old.

That is encouraging. The TPA was of the opinion that the plan first had to pass on its own and then it would have to pass when the rest of the controlled group (consisting of several employers and two other plans) was considered. The average benefits test for the controlled group passes (including the stand alone Employer), but the stand alone plan does not pass the 70% test on its own. There is no QSLOB involved. The Employer maintaining this stand alone plan has been deemed (by its parent company) as excludable due to a reasonable business classification. We are not the TPA and are attempting to nail this down. Thanks for any other thoughts!

Our plan has been able to stand alone for years by first passing the 70% test on its own, and the controlled group of which it is a part passes using the average benefits test. This year our plan will not pass the 70% test. QUESTION: Assuming we have an acceptable business criteria for excluding a classification of employees, is there any prohibition against using the average benefits test for our stand alone plan and also using the average benefits test for the controlled group? Is there some obscure multiple use rule? Thanks in advance.

We had a cycle changing event. The Plan was originally in the first Cycle A and submitted by January 31, 2007. Received a Determination Letter that expired January 31, 2012. In 2009, the Plan became a multiple-employer plan due to an acquisition. This put the plan in Cycle B with all multiple-employer plans. We will submit the Plan by January 31, 2013, even though the letter expired Jan 31, 2012. The IRS informally told us that there is no issue, even though there is a "donut-hole" in which we have no express letter coverage. Hope this helps.

I thought the 11(g) amendment could only be used if the plan would not be qualified without it and not simply for convenience of passing the test while keeping the HCEs at their desired level. We had a similar situation and the HCEs had to accept a lower amount for that particular year so the tests would pass. I may be wrong and off of your issue but I wanted to put this out there.

I may have misspoken in using the term "meaningful benefit" or even 401(a)(26). I don't speak the actuarial lingo, but I'm thankful for those who do. The increase might have been necessary to maintain the desired level for the HCE. I can confirm that with the actuary. In any event, these message boards are invaluable. Thank you for your replies. More are welcome if they are out there!

The CBP has two allocation groups. Group 1 is the HCE with a dollar amount specified in the plan. Group 2 is the staff, all NHCE, with a hypothetical allocation of 3.75% specified in the plan. The actuary advised that, in order to satisfy 401(a)(26), Group 2 needs to be increased to 4.75%. The allocations reflect that increase, back to 2009 and going forward, but the plan document does not. All NHCE's were allocated what they were entitled to. Does the question make more sense now? Thanks for replying.

Even though a Cash Balance Plan has complied operationally with the meaningful benefit requirement and all participants received the proper allocation, the amendment to increase the NHCE by 1% was never done. Should have been adopted for the 2009 year going forward. Calendar year plan. This is a very small plan. The increase for each year was probably less than $2000 spread among 6 NHCE. There is one HCE. The EGTRRA restatement was submitted to the Service, Cycle E. Acknowledgment received but no contact from an agent. The demo submitted with the restatement reflects the correct percentage, but the plan document does not (off by just 1%). Any suggestions on how to fix? All participants are whole. Thanks for any suggestions.

Instead of payroll deduction, why not suggest she save that amount out of her check and set it aside in order to restore all at one time. She's asking you to do what she could easily do for herself.

If, early in the year, you let an HCE take a lump sum (or a loan, hardship, etc.) that was previously not permitted under the Plan, and closer to the end of the Plan Year you amend and notify all other participants of this new feature, could raise some eyebrows. Just sayin'.

Agreed. Thanks for weighing in.

Our client has a 12/31 cash balance plan and makes deposits monthly. Each partner is in his own allocation group by name, with his dollar amount specified in the document, and non-partners are in the rank and file group, getting a percentage of comp that is specified in the document. As of Dec 1, 2011, one partner will no longer be a partner but will be in the rank and file group. He has accrued the benefit for the year (1000 hours). Is there any way he can jump to the staff group for one month of 2011 and get the staff percentage for that one-twelfth of the year? The client is willing to make this effective January 1, 2012, but asked that we check to see if the change can be made Dec 1. I've never dealt with this question and will probably end up with the January 1, 2012, date, but appreciate any thoughts. We will also need the 204(h) Notice. Thanks.

To answer David's question at #2, the accrual rate for future years was reduced to zero%. And, #4, the plan did not provide any sort of minimum. Thanks for all responses. I welcome others. An attorney will definitely be involved.

DBP (effective 1995) had a benefit formula of 10% Average Annual Comp times Years of Credited Service. (Average Annual Comp uses 3 highest years- from date of hire to date of employment termination.) The Plan was amended effective 1/1/03 to reduce the benefit to zero% of Average Annual Comp. Question 1 - does this effectively freeze the Plan? No other language relative to freeze was used. Question 2 - in determining the highest 3 years, do you look at comp earned in the years after the freeze? The Plan has not terminated, but soon will be. Question 3 - 204(h) notice was not given for the reduction to 0%, but an SPD containing the change was provided approximately 7/1/03. Would failure to provide 204(h) notice render the change void, or would the reduction to zero% be effective with the issuance of the SPD? This is a takeover plan. Thanks for all insights.

We have an S-Corp that sponsors an ESOP. The plan states that all distributions will be made in cash. An Amendment is being considered to allow current shareholders to elect stock distributions when they become Qualified Participants for Diversification purposes. The Amendment would also permit current shareholders to elect stock upon termination of employment. Non-shareholders would not be permitted to elect stock. Is this discriminatory, or is there some element to ESOP's sponsored by S-Corps that would allow this? There are some shareholders who are Non-HCE, but the satisfaction of the 70% test of 410(b) is not guaranteed (effective availability issues). Any thoughts?

Schedule 1 has been revised to include PPA. I was told that if you don't have it with the submission, the VCP reviewer will send it to you and ask you to complete it before continuing with the review of Appendix F. I was fortunate to be on a telephone call with an agent in the VCP section who e-mailed the revised Sch. 1 to me. If I can figure out out to attach to this post. Appendix_F__Sch._1.pdf Hope it goes through. If not, here is the text. There are blocks to check to the left of each item which do not show on this cut/paste version. Each item starts with either a Code Section number (like the first two items) or a capital letter (like the third item). Sorry for the bad format. I'm technically-challenged. Plan Name: ____________________________________ EIN: ____________ Plan #: _____ LAW: Pension Protection Act of 2006 From the 2008 cumulative list: - Failure to timely adopt amendments for the following: § 401(a)(35) requiring that defined contribution plans provide employees with the freedom to divest publicly traded securities. (see Notice 2009-97 for impact on applicable deadlines for adopting amendment) § 401(a)(36) regarding distributions to a participant who has attained age 62 and who has not separated from employment at the time of the distribution. Hardship distributions from a § 401(k) plan: Permitting plan to treat a participant's beneficiary under the plan the same as the participant's spouse or dependent in determining whether the participant has incurred a hardship pursuant to PPA '06 § 826 (see Notice 2007-7) Permitting reservists called to active duty to take in-service distributions from a § 401(k) plan pursuant to § 401(k)(2)(B)(i)(V) Providing for a qualified automatic contribution arrangement (QACA) pursuant to § 401(k)(13), § 401(m)(12); updating the top heavy provisions to reflect the provisions of § 416(g)(4)(H) which generally provides that a plan that consists solely of a qualified automatic contribution arrangement is not a top heavy plan Providing for the elimination of the gap income rule for excess contributions (§ 401(k)(8)(A)(i)) and/or excess aggregate contributions (§ 401(m)(6)(A)) Permitting nontaxable distributions from a qualified plan to be directly rolled over tax free to another qualified plan or a § 403(b) plan if the separate accounting requirements are met pursuant to § 402©(2)(A) (see Notice 2007-7) Permitting non-spouse beneficiaries to directly roll over distributions from a qualified plan to an individual retirement plan pursuant to §§ 402©(11), 402(f), 417 (see Notice 2007-7) Providing for a faster vesting schedule of employer nonelective contributions pursuant to § 411(a) (see Notice 2007-7) Providing that notice required to be provided under § 411(a)(11) may be provided as much as 180 days before the annuity starting date (see Notice 2007-7) § 411(a)(13) (added by § 701(b)(2) of PPA'06) with respect to special vesting rules for applicable defined benefit plans, such as cash balance plans (see Notice 2007-6 for guidance regarding cash balance and other hybrid defined benefit plans; also consider Notice 2009-97 for impact on applicable deadlines ) § 411(b)(5) (added by § 701(b)(2) of PPA'06) with respect to applicable defined benefit plans such as cash balance plans, and special rules relating to age.(see Notice 2009-97 for impact on applicable deadlines) Providing for an eligible automatic contribution arrangement pursuant to § 414(w) Providing for the elimination of the active participant restriction pursuant to § 415(b)(3) Incorporating the interest rate assumptions for applying benefit limitations to lump sum distributions pursuant to § 415(b)(2)(E)(ii) (see Final 415 regulations, which provide guidance regarding § 415(b)(2)(E)(ii), as amended by PPA'06) Incorporating the applicable interest rate and mortality table to be used for determining the present value of lump sum distributions in § 417(e)(3) (see guidance for mortality table in Rev. Rul. 2007- 67; also see Notice 2008-30) §§415(b)(2)(H) and 415(b)(10) (modified by § 906(b)(1) of PPA'06), regarding Indian Tribal Governments Providing for the qualified optional survivor annuity benefit pursuant to § 417 (see Notice 2008-30

I think this will help. Regs. 1.7476-1(b)(5) (5) Plan terminations. In the case of an application for an advance determination with respect to whether a plan termination affects the continuing qualification of a retirement plan, paragraphs (b) (1), (2), (3) and (4) of this section shall not apply, and all present employees with accrued benefits under the plan, all former employees with vested benefits under the plan, and all beneficiaries of decreased former employees currently receiving benefits under the plan, shall be interested parties.

Have I missed the official IRS 2011 Plan Limits? The only thing out there is on the BenefitsLink newsletter from either 10/18 or 10/19, found in an entry from Kushner & Company, saying all limits remain the same for 2011. I have no reason to doubt this, but I'm puzzled that the 2011 limits are not splashed all over the usual sites. Anything official from the IRS? Thanks.

How was this eventually resolved? We have the exact same situation. Thanks.

On a few plans I've seen that permit this, the participant(s) requesting the distribution must pay for the valuation. It doesn't seem fair to impose this expense on all participants when you're doing it for the benefit of a few.