Kimberly S

Would you also agree that after the expiration of the notice period you must re-notice before processing?

My former employer (known for being somewhat aggressive) taught that when forcing out a participant the distribution had to be processed after 30 days, but before 90 days (pre PPA06) had passed from giving the distribution notice. My new employer says that there is a special rule that requires that force outs to be processed only after the 90 (now 180) days have passed. I have not been able to find anything that says that force out rules are different than regular distributions as far as the notice requirements. Have I missed something?

This was a current spouse when the distribution was taken, if I'm reading the prior entries correctly. If they filed a joint tax return couldn't it be argued that she did effectively receive the benefit when it was distributed to her husband? This is the best argument I've heard for ALWAYS getting spousal consent on a distribution over $5,000 regardless of the J&S requirements of the plan!

[because the employer is contributing the money rather than actually deducting it from pay, it sounds more like a profit sharing contribution (which can be made by certain deadlines after the end of the year) (provided the plan allows for discretionary profit share contributions). ] And if it profit sharing you need to make certain that it was allocated in accordance with the document -- which may or may not match the W-2 error for each person.

Locust, what about the ERISA 402(a)(1) requirement that a plan be in writing? I agree that the verbal promise of a benefit could create a liability, but not a qualified plan under ERISA.

Since it is not possible to establish an ERISA plan without signing a written document, how could the employer not know it had a plan?

If the document says the match is discretionary, they do not need to amend it. If they have a separate corporate resolution saying that they will match X% for 2006 that resolution may need to be amended to a new lower percentage, but that would be unusual. The true up mentioned above would need to be done to make certain that each participant received the same percentage, but that doesn't mean they have to increase everyone to the percentage that was anticipated by those first couple of deposits. So if they matched dollar for dollar in the first part of the year, they may end up with an annual match of 10 cents on the dollar for the whole year, for example.

Although I've worked with qualified plans for many years, I know little or nothing about SIMPLEs. Recently I was asked if Roth provisions can be added to SIMPLE IRAs. Is it possible under current rules? And if not, is it something that is being considered for addition in the near future?

Yes, and he probably should since it sounds like they are likely a controlled group.

If you want to exclude the 12/20/06 new hire, but inlcude others with less than 1 year of service, you can set your waiver date to 12/19/2006. It does not have to coincide with the effective date of the plan.

I'm looking at a 2002 ASPPA & IRS Q&A session transcript that clearly indicates that a contribution that has been allocated and deducted for a particular year is part of the participant's account balance regardless of when it is deposited. Is there a reason to think that has changed?

Having just taught a pension law class at a local university, you are absolutely correct! The big issue among my students, that appears relevant here as well, is the public's lack of understanding that their 401(k) money is NOT a personal savings account to be used, withdrawn and/or invested as they choose. Many media articles make reference to the participants' "right" to choose investments. Since ERISA sees that issue totally differently, it is an unfortunate perpetuation of misinformation. It doesn't appear that the paper writer ever fully understood that either. Those of us who work in the industry tend to forget that the general population doesn't understand this issue.

For those of us who don't have Crystal Reports, would it be possible to see a PDF file of this information?