chris

Any limit on how far in advance employer can provide 204(h) notice, assuming amendment has been adopted and is effective at a date in the future, e.g., plan year ends Dec 31, 1999 and employer amends on July 1, 1999 to freeze contributions beginning Jan 1, 2000? ------------------

Is there any guidance on how far ahead a 204(h) notice can be provided to participants, assuming the plan amendment has already been adopted, e.g., plan year ends December 31, 1999 and employer amends on July 1, 1999 to freeze contributions beginning Jan 1, 2000 ? ------------------

MPPP has a last day of the plan year requirement with respect to allocation of contribution. Plan year ends October 31. Employer required to contribute 8%. Employer going to amend plan to: 1) Amend contribution formula to 0% of compensation for plan year ending Oct 31, 1999; and 2) Freeze MPPP by having 0% of compensation formula apply to all following plan years. 1) above is O.K. because of last day of the plan year requirement, i.e., no §411(d) cutback because no accrual until Oct 31, 1999. With respect to frozen plan, plan operates as if ongoing plan except for fact that no further contributions will be made, unless, perhaps, employer decides to turn it on again. Thus, vesting, etc. applies as it normally would. Any comments or suggestions?? ------------------

So the IRS is accepting Requests for Determination Letters with respect to the amendment of qualified plans regarding all aspects of the GUST changes? My previous understanding was that the IRS was not prepared to issue determination letters on full GUST review. Did I miss the Rev. Proc. opening the determination letter program with respect to full review under GUST?? ------------------

Tax-exempt non-governmental employer has a 403(B) Tax-deferred Annuity Plan and a 403(B) Defined Contribution (Money Purchase)Plan with TIAA-CREF funding vehicles. Employer contributes 4% of regular salary to the Def. Cont. Plan annually. Employer sends the contributions to TIAA-CREF. Vesting under the Def. Cont. Plan is two year cliff. If employees do not meet the two year requirement, TIAA-CREF returns the portion of the contributions made on that employee's behalf to the employer. According to TIAA-CREF, the employer can use the returned contribution amounts to reduce future contributions or it can use them for whatever purpose it wants and the employer does not have to maintain any type of separate suspense account or otherwise segregate the funds. Per TIAA-CREF, that is the standard practice. The Def. Cont. Plan contains a provision regarding "no reversion of contributions to the employer..." I deal exclusively with 401(a) plans and am not extremely well-versed in the 403 area, however, it appears to me that there clearly is a reversion of plan assets here. Do 403(B) plans really work that way or am I just hung up on 401(a)(2)?? Any comments or suggestions that may help????? After originally posting above paragraph I took a look at 403(a), 404(a)(2) and 4980. Looks like, per 403(a) via 404(a)(2), even a 403(a) plan is not subject to 401(a)(2). With respect to 4980 (tax on reversion of qualified plan assets to employer), 4980 applies to 401(a) plans and 403(a) plans but in no event to a plan maintained by a tax exempt employer. I'm still concerned that the plan document speaks to no reversion but, in fact, there is a reversion. Also, wondering if 403©(1) of ERISA applies. There's no trust arrangement with a 403(B) plan, however, a 403(B) plan is subject to ERISA. Any comments or suggestions??? ------------------ [This message has been edited by chris (edited 07-14-99).]

Does anyone see any drawbacks to client's naming a private foundation set up by him as the beneficiary of his 401(k) account?? ------------------

Does anyone see any drawbacks to client's naming a private foundation set up by him as the beneficiary of his IRA??? ------------------

Do the funding vehicles for a TIAA-CREF 403(B) plan have to be the vehicles offered by TIAA or CREF? Can a participant direct that his salary deferral be sent to XYZ Investment Firm? Even without looking at the plan, I would think that a participant would not be locked into only TIAA-CREF funding vehicles. The only restriction would seem to be that the XYZ Investment Firm would need to invest in annuity type investments and otherwise comply with the rules under 403(B).... Any comments???? ------------------

Plan Year End is September 30. 204(h) notice ( and amendment to freeze) to be distributed (and executed) prior to mid- September. ------------------

So, if total compensation is 1,000,000, and of the 1,000,000, 20,000 consists of employee deferrals, the employer's deduction limit is 15% of 980,000, i.e., 147,000?? ------------------

Do e/ee deferrals under 401(k) count against e/er's 15% contribution limit?? In other words, where e/er maintains PSP with 401(k) salary deferral, would deferrals by other e/ee's keep highly compensated e/ee's from getting to 30K limit because of overall 15% deduction limit on e/er's contribution?? ------------------

Do e/ee deferrals under 401(k) count against e/er's deduction limit of 15% of compensation?? ------------------

MPPP has 1,000 hours and last day of plan year requirement. E/er required contribution is 10% of compensation. E/er is going to amend MPPP to freeze contributions and change contribution percentage for current plan year to 0% of compensation. Does anyone see any problems with this? ------------------

Would the same argument apply (i.e., cannot amend to change the allocation formula) if today were the first day of the plan year and the plan had a 1,000 hours and last day of the plan year requirement? In other words, one could say that you could not amend such a plan for cross-testing because an e/ee might work 1,000 hours and might be employed on the last day of the plan year. If the plan did not have a last day of the plan year requirement, then I would agree that it could not be amended for cross-testing. Satisfaction of the 1,000 hours requirement would entitle a participant to a benefit under the old allocation formula under a 411(d)(6) protected benefit analysis. It just seems that the last day of the plan year requirement would allow such an amendment. Can you point me to any cites to the Code, Regs., Rev. Rul.'s, PLR's, etc. that might address this? ------------------ [This message has been edited by chris (edited 06-05-99).]

What effect do contributions under other plans mainained by the E/er have on determining whether a cross-tested plan is within the requirements of the Regs?? For example, assume E/er has a 401(k) plan, a new comparability PSP and a MPPP, and the E/er is obligated to make a 10% contribution under the MPPP. How does the 10% contribution under the MPPP affect the determination of the allocation percentages under the new comp. PSP?? Any suggestions?? ------------------

The plan has an employed on the last day of the plan year requirement. Wouldn't this requirement allow for the amendment of the allocation formula regardless of the number of hours?? The plan has a 1,000 hour requirement.

Currently have a volume submitter PSP which is integrated with Soc. Sec. Want to amend PSP to allow for allocations based on classification of employee, e.g., Class A = participants who are physicians and shareholders, Class B = participants who are physicians and non-shareholders, Class C = participants who are neither physicians nor shareholders, ..... The percentage allocated among the participants in each class will be determined depending on cross-testing towards the end of the plan year. Is all that's necessary is to amend the allocation provisions of the PSP document before the end of the current plan year????? ------------------

Pax, to clarify your message, you are basically agreeing that the plan must have an employer as a sponsor? The agent was saying that since there was no "employer" there was no qualified plan. Under state law, a corporation that has been dissolved is considered still in existence for the purposes of liquidating and winding up the corporation's affairs. My position is that the plan still had a sponsor in that handling the plan and the plan assets was one of the duties of the corporation in winding up its affairs. The agent was adamant that the lack of an employer caused the plan to be nonqualified. In response to the original message, is it possible that someone, or some entity, has the authority under the relevant state laws to wind up the affairs of the former employer, i.e., terminate the plan and distribute the assets accordingly?? Or would no one be willing to act in that capacity even if possible?? ------------------ [This message has been edited by chris (edited 06-02-99).]

I recently had a revenue agent examine a psp previously maintained by a client. The client corp. went out of business in mid 80's and liquidated and dissolved ( except for assets etc. of the psp). Forms 5500 were filed annually. The plan document was amended and restated as required. Most of the e/ee's were paid out following the year of dissolution of the corp., but some e/ee's elected to leave their funds in the plan. The examination agent took the position that the plan should be disqualified because only an "employer" could sponsor a qualified plan. No "employer" , no qualified plan. After discussing a few Revenue Rulings with him (which I don't think he understood), his response was that the plan should be disqualified but that if we distributed all of the assets and filed a final Form 5500 he would not disqualify it. I would think you could allow the e/ee's to elect whether to receive their funds from the plan or keep the funds in the plan. As pointed out above, if assets remain in the trust, 5500's must be filed. The plan document should also be kept in compliance with legislative changes... ------------------

What is the annuity starting date in following situation under the following facts?? 1. Corporation dissolved on date X; 2. Corporation X froze PSP and MPPP prior to dissolving; 3. Prior to freeze the two participants executed waivers (with spousal consents) of the QPSA with respect to MPPP; 4. 5500's have been filed annually since the freeze and the plan documents have been kept in compliance; 5. Participants elected to not take distributions from the plans; 6. Request for Determination Letter filed with respect to termination of both plans as of 4/1/99; 7. Both participants have been taking required minimum distributions. The issue is that the IRS Specialist reviewing the 5310's wants to know if the spousal consent requirements of 401(a)(11) have been met. 417(f)(2)(A)(i) defines "annuity starting date" as "the first day of the first period for which an amount is payable as an annuity." My initial thought is that the "annuity starting date" has not rolled around yet. The participants have not consented to nor directed that their account balances be distributed. It would appear that the QJSA notice/waiver/consent forms would need to be provided within the appropriate time period before the date of distribution of the assets on termination. Has the plan administrator missed the boat on failing to provide QJSA notice/waiver/consent forms earlier, or has the annuity starting date not yet arrived??? Any comments/suggestions appreciated... ------------------

Re: termination or freeze of 457 Plan, clearly the plan sponsor could discontinue employees' deferrals and maintain the assets in the plan until a participant is entitled to distribution under one of the three circumstances set out in 457(d)(1). Is that a fair assessment?? ------------------

Is the termination of a 457 Plan much the same as the termination of a plan qualified under 401??? Also, can a 457 Plan be frozen, i.e., no more deferrals allowed, and the assets held in the plan distributed as per the terms of the plan??? Any help appreciated, ------------------

Taxpayer names Spouse 1 as beneficiary of IRA. Taxpayer divorces Spouse 1 but does not change IRA beneficiary designation. Taxpayer dies. Apart from any divorce decree or property settlement agreement which may have addressed Spouse 1's rights to the IRA, is there anything in §408 or Regs thereunder such that beneficiary designation is void by operation of law? Does answer change if taxpayer remarried prior to death? Pretty sure that Spouse 1 gets it, but just wanted to see if anyone else had run across anything different. ------------------

Does anyone know if the IRS has approved language for the above legislative changes? Also, has IRS formally stated whether plans may be amended using model language or whether plans must be restated entirely? The deadline is the last day of the plan year beginning on or after January 1, 1999. thanks...

Does anyone know where I can get DOL Opinion Letters on the Internet??