12AX7

I would think that the adopting employer could cease participation in the plan and therefore create a distributable event for the participants, provided there is no successor plan. I'm not aware of any specific guidance on this particular matter, but I suppose your suggestion to create a spin-off plan would be the safest method of getting this done, but at the cost of a new plan setup, 5500 preparation etc. I'm sure this similar issue has been addressed with PEO plans before. Perhaps someone else out there works in this market and can confirm.

Would this still be an option when considering the guidance in Rev. Proc. 2008-50? (Part III, Sec. 6).

Plan compensation definition excludes bonuses, overtime and commissions (does not meet compensation ratio test). When testing ACP with any other 414(s) definition, the test fails. Since this is considered the general test for matching contributions, would the following be true: 1. Plan Compensation would need to be amended to a definition that meets 414(s) - for example, the definition is amended to include bonuses and the comp now meets 414(s). Additional contributions would need to be made to participants. 2. I need to re-test ACP, now to include the additional contributions. I know this issue has been covered with respect to testing comp, but I could not find any discussion with respect to a failed ACP test under these circumstances. Thanks!

Client filed their tax return on 4/15/09. The accountant forgot about the required contribution to the DB plan and didn't put the return on extension. Therefore, the contribution will not be taken as a deduction in 2008. Client is surprisingly not upset, however the question I have concerns taking the deduction in 2009 (for 2008 and 2009 contributions). How would this get coordinated? Thanks.

Thanks for heads-up on the catch-ups !

A strange as this may sound, we're the former TPA for the plan (client left on friendly terms), so I won't be able to verify funding status. I appreciate the advice.

Thanks for your help, Mike.

Can the lump sum option be removed from a DB plan? I have one participant that has reached NRA has not not yet made a distribution election. Would I have to preserve the option for this one participant and be able to remove the option prospectively?

Is it possible to reduce the plan's 401 (k) deferral limit mid-year. Currently, a plan has a deferral limit of 80% for HCEs and the employer wants to reduce the limit to 5% for 2009. This would mean a forced reduction of deferrals for some participants for the balance of the year. Would this be a cutback issue?

The notice is not mandatory to my knowledge (unless perhaps otherwise mandated by the plan document), but I would strongly suggest providing notification to eligible employees so that a change of deferral election can be made to coincide with the suspension of the match. This is good practice for an employer and avoids any confrontation over the issue in the future.

TL, I'm not sure what you're suggesting. Going forward, the Volume Submitter plan has an election to remove provisions not applicable to Governmentals. My concern was for the existing document since it's from the 1990s and has ERISA provisions.

Thanks mjb for distilling it down. At this point, I'm going to suggest the client have ERISA counsel look it over.

Am I for real? Let me check...ok, I passed the reality check! But seriously for a moment, a governmental employer can adopt a Volume Submitter (at least they can adopt ours), and have the proper exemptions that apply to such entities. I understand and appreciate your concern about the exiting document, but my underlying question is perhaps does the client need to be concerned that the current plan exists on a 1990 prototype? Would EPCRS need to be considrered to "correct" the plan before EGTRRA? I typically work with non-govermentals, so that's the reason for these questions. This is a profit sharing plan, according to the existing prototype document.

I'm reviewing a governmental plan for takeover and was provided a New England Prototype document that was executed in 1996. The Opinion Letter dates from 1990. We would like to amend and restate the plan using our EGTRRA Volume Submitter Plan. The client claims this is the most recent plan document. Although the prototype subjects the plan unnecessarily to some ERISA requirements that are normally exempt for governmentals, I'm questioning if the plan document should have been updated through the years. Are the compliance rules for plan docs the same as they are non-governmental plans? Thanks.

I need to complete Form 5307 to be filed with a Volume Submitter plan document. My question concerns line 3c, where the number of amendments is indicated for the submission. Since there were required amendments after the execution of the plan (e.g. EGTRRA, 401(a)(9), etc.), I would imagine I need to total these amendments, plus any other discretionary amendments and put this amount into 3c? Now, if I was preparing a submission for a Standardized Adoption Agreement and if the regulatory amendments were prepared on a Sponsor Level, would I still be including these amendments in the line 3c? Is an amendment an "amendment" for 5307 purposes regardless if Sponsor or Employer level? I appreciate any thoughts on this.

fender, I didn't think we were permitted to advertise or showcase our busineses here on the message boards. That is my understanding. Perhaps a moderator can clarify this better.

kg78, I hope your payroll department is not living in the future. GMK has pointed out very clearly that the limits illustrated apply only to the 2009 year. So, for 2008 the match limit would be $13,800. If the limits were applied correctly for 2008, then the high wage earners would have understood this concept, unless it's a new plan effective in 2009. Good luck!

I would not use the Safe Harbor match for this purpose, regardless of the offsetting provision in the Plan Document. Employer Match contributions are not nonelective contributions, and would only be used in the Average Benefits Test, where required.

Thanks again, but not an issue since the plan has full and immediate !

Thanks, Blinky. I would put an in-service distribution at 55 to cover this.

I was thinking of amending a client's plan to a cross-tested allocation for the plan year ending 12/31/08. To make this work, I would need to also amend the NRA from 55 to 65. Since the plan has last day accrual, I don't see an issue with changing the allocation method. Does anyone believe there would be an issue to change the NRA during before the end of the plan year? Thanks.

Thanks for the second opinion. Since we're a week away from the 9/30 deadline, I wanted to feel secure on this issue.

What would be "restarted" in the amendment? I don't see the accrued benefit affected within the first 5 years. I appreciate clarification.

We have a number of plans that cover only owners and are less than 5 years old. The plans have year-end valuation dates. Our Consulting Actuary has suggested holding off on the 2008 AFTAP cerfitications for now, rather than change the valuation date to beginning of year. 2007 AFTAP certifications were done timely. So, the only restriction for these plans would seem to be the inability to pay lump sums. Since the plans only cover owners, this would not appear to be an immediate concern. Is there anything other issue I would need to address? Thanks.

Thanks for the responses. I'll look into NexusTPA for now as this seems closer to what we're looking for.