Peanut Butter Man

I've received email about several seminars covering this topic. On the left-hand sidebar, there is a link for upcoming seminars. You can search there for one on PPA Distribution Notices. I saw an article from BNA or CCH reporting that the IRS will be issuing guidance in April on what the notices should contain.

Just curious - did you submit using Form 5307 or Form 5300? I have seen 1014 letters sent for plans which submitted using Form 5307 but haven't seen one yet for a plan submitted using Form 5300.

With a few plans that use the participant's employment anniversary date to calculate vesting instead of the plan year, we are also struggling with what to charge for the new statements, if anything. Also adding complexity this year is the change in vesting for non-elective contributions made by the Pension Protection Act.

You definitely want to talk to an ERISA attorney before approaching the IRS on your own. If they were also pretending on their corporate tax returns that they had a plan by taking deductions for the contributions, you have more problems than VCP can resolve. You will need a more comprehensive settlement agreement with the IRS.

What definition of comp is the plan using for deferrals?

If she provided a letter from the treating physician saying that it was medically necessary, I would approve it. The treating doctor's opinion on whether something was medically necessary is better than my layman's opinion.

The most recent Model Amendment is the one the IRS published in 2002-29. The IRS currently requires a good faith Required Minimum Distribution amendment for defined benefit plans. It should contain the language in 2002-29 along with the language from the final regulations published June 15, 2004.

I would use the language from IRS Quality Assurance Bulletin FY-2006 No. 3, from February 14, 2006, on Part-Time Employees Revisited. It is on the IRS' website at http://www.irs.gov/pub/irs-tege/qab_021406.pdf

I think you might be on the 5-year cycle for individually designed plans for two reasons. Section 12.01(3) of Rev. Proc. 2005-16 states that "until issuance of the official opinion or advisory letter no reliance exists." This is consistent with the IRS' position in the past that a plan signed before the opinion/advisory letter is issued is individually designed. Stated again in Section 19.03(2) of Rev. Proc. 2005-16 states: "an adopting employer has no reliance if the employer's adoption of the plan precedes the issuance of an opinion or advisory letter for the plan". Since your employer adopted a plan before the opinion letter was issued, the plan is individually designed. Second, a prototype becomes individually designed when it is amended to include language which is not one of the pre-approved options. Since the adoption agreement was amended to include a matching formula which was not one of the pre-approved options, the plan is individually designed. I would treat the plan as individually designed. If the employer intends to adopt the EGTRRA-approved version of this plan once the opinion letter is issued, I would have them sign Form 8905 before the end of their 5-year remedial amendment cycle in Rev. Proc. 2005-66.

This topic started in another thread, and I didn't want to post my question there because it was off-topic in that thread. That thread was http://benefitslink.com/boards/index.php?s...c=33564&hl= How are you handling the vesting and withdrawal provisions in the safe harbor notice? Without being able to reference the SPD, the withdrawal section becomes almost a repeat of the SPD because the language of the Final 401(k) Regulations is that the notice must contain "withdrawal and vesting provisions applicable to contributions under the plan". My concern is that the Final 401(k) Regulations do not limit this requirement to "withdrawal and vesting provisions applicable to safe harbor contributions under the plan".

The Explanation, on page 240, says that the faster vesting provisions "The provision applies the present-law vesting schedule for matching contributions to all employer contributions to defined contribution plans." It doesn't say whether you can have a 3-year cliff for one, and a 6-year graded for another type of contributions. Section 904 of the Act is Faster Vesting of Employer NonElective Contributions. It amends IRC section 411(a)(2)(B) to say: ‘‘(B) DEFINED CONTRIBUTION PLANS.— ‘‘(i) IN GENERAL.—In the case of a defined contribution plan, a plan satisfies the requirements of this paragraph if it satisfies the requirements of clause (ii) or (iii). ‘‘(ii) 3-YEAR VESTING.—A plan satisfies the requirements of this clause if an employee who has completed at least 3 years of service has a nonforfeitable right to 100 percent of the employee’s accrued benefit derived from employer contributions. ‘‘(iii) 2 TO 6 YEAR VESTING.—A plan satisfies the requirements of this clause if an employee has a nonforfeitable right to a percentage of the employee’s accrued benefit derived from employer contributions determined under the following table: The nonforfeitable ‘‘ Years of service: percentage is: 2 ................................................................................ ........................ 20 3 ................................................................................ ........................ 40 4 ................................................................................ ........................ 60 5 ................................................................................ ........................ 80 6 or more ................................................................................ .......... 100.’’.

Blinky is correct about the Code cite - 1563(e)(5) is the spousal rules for constructive ownership. I am curious about whether they are a controlled group due to have a minor child. 1563(e)(6) is one of my favorite Code sections when it comes to evaluating controlled group situations. Treas. Reg. 1.1563-3 contains examples.

A copy of the Act is available at: http://waysandmeans.house.gov/media/pdf/ta...siontextpt1.pdf