chris

PSP or MPPP that E/er currently maintains.....

E/er is a medical practice and has had a number of doc's leave over the past few years. As the doc's left the staff numbers also lessened. Thus, e/er is paying admin fees, etc... with respect to the 401(k) plan for a much smaller number of participants. The main shareholder is older and is close to retiring and just so happens that business is not as good as it was a few years back. In short, the e/er/medical practice may dissolve within the next year or so. 401(k) plan was a positive from the benefits perspective when it was added b/c it aided in recruting doc's; however, now that majority of doc's are no longer there and main shareholder is looking to close up shop relatively soon the expense of the 401(k) has become burdensome. Again, my initial reaction is that bank wants to hang onto the assets and the fees......

Bank is directed trustee on 401(k) plan w/ 3% safe harbor/NEC and deferrals. There are no psp contributions in the plan. IN other words, everything is 100% vested. Bank is advising client to merge instead of terminate the 401(k). Looks like to me a way to hold onto the assets and trsutee fees....??? Generally, from the e/er perspective the main benefit of merging vs. termination is that the participants do not become 100% vested in a merger, but that is not applicable in this situation. Anyone see any other benefits to merging vs. terminating? Thanks.

Should've posted here first...... Plan participant has purchased beach property through his directed investment account in PSP. He does not personally use it or otherwise benefit from it. Plan allows for in-kind distributions. Would IRC §4975(d)(9) exempt the distribution of the beach property to him assuming there is an otherwise distributable event (ie, termination of employment, retirement....)? He has been told that to receive the real estate even as part of his distribution would be a prohibited transaction..... Thanks.

Plan participant has purchased beach property through his directed investment account in PSP. He does not personally use it or otherwise benefit from it. Plan allows for in-kind distributions. Would IRC §4975(d)(9) exempt the distribution of the beach property to him assuming there is an otherwise distributable event (ie, termination of employment, retirement....)? He has been told that to receive the real estate even as part of his distribution would be a prohibited transaction..... Thanks.

E/er PSP allows for directed investment accounts. E/er wants to have each such account pay its own way as to accounting expenses. For example, one e/ee makes numerous trades daily and thus the annual accounting attributable to going through all of the trade history/data at year end is significant when compared to other participants. Generally, the plan provisions provide for the directed investment account to be segregated as to income, gain, loss, etc... as would be expected, but the E/er wants to also peg the administrative fees as well. Obviously, if we were talking about former participants, recent (sort of...) pronouncements by DOL and IRS would allow the plan to let the former participant accounts pay their own way; howeverm we are dealing with a current participant. Any suggestions appreciated.

As for the second prong/issue of 2. the E/er's PSP's section regarding plan-to-plan transfers provides for maintaining the 401(k) distribution restrictions.......

Two separate issues: 1. Safe Harbor 401(k) to be terminated prior to year end. Seems that if the facts/circ's meet the requirements of obtaining a funding waiver as if it were a MPPP, then safe harbor status remains intact.....???? 2. Regular 401(k) to be terminated where e/er maintains a "successor plan". Even though deferrals cannot be distributed to participants it appears that they can be transferred to the successor plan. I assume this can be handled in the termination amendment. I also assume that the successor plan will need to be amended to maintain the 401(k) distribution restrictions as to the transferred deferrals.....??? Any comments/feedback on either or both of the above greatly appreciated....

Plan year is cal year. E/er (medical practice) to dissolve as of Nov. 1, 2006. Appears that if circumstances approach those that would allow for a funding waiver then the final short plan year would be treated as meeting the safe harbor 401(k) rules. I know the grounds for a funding waiver are generally tied to economic hardship, etc. of the e/er, but could the argument also be made that dissolution of the e/er is similar? As an aside the e/er is dissolving as the principals (doctors) will be employed as independent contractors(? says them?) by the local hospital and the e/er to dispose of all assets. Thanks for any feedback.

As Tom pointed out the doc. does actually allow for the allocation of the forfeitures on a comp to total comp basis. Thanks.

Any idea how to handle the allocation of forfeitures in frozen MPPP where the formula was amended to 0% of compensation? The TPA firm may or may not have read the allocation provision of the plan document which allowed for forfeitures to be used to pay plan admin. expenses. In any event the TPA firm allocated forfeitures on the basis of compensation or they might have used current acct. balances over total acct. balances to make the allocation. Have tried to convince client to terminate the MPPP to get it out of the way, but to no avail. Any suggestions appreciated.

Tom: Thanks. No need to worry about job security. Archimage is right....I have no experience in singing/writing any songs for that matter. AndyH: In addition to doing a paper or two on the taxation of qualified plan distributions during my Tax LLM Program at Villanova in '96 I had approx. 75 profit sharing & money purchase pension plans fall into my lap on my first day on the job. I probably spend 1/3 of my overall time working with existing plans and setting up new ones. I have ordered some of the study materials for the DB, C-3 and C-4 exams and will review those briefly before I consider registering. I have ZERO experience with DB plans and fear that one the most........

I ended up registering for the DC-1, DC-2 and DC-3 in the Spring Exam Window. Fortunately, I passed all three. Am considering registering for the DB, C-3 and C-4 in the Fall. AndyH: You posted that you would not double up on the C-3 and the C-4. Any particular reason why not? Thanks.

Just curious if it's feasible to take more than one exam during a testing window. I may have a block of time that I can set aside to do nothing but study. How much preparartion time is needed to study for the DC-1, DC-2 or DC-3 exam? I have not taken any of the exams so I have no clue what the practical time requirement might be to get prepared for them. For example, would it be possible to schedule the DC-1 at the beginning of the testing window and the DC-2 toward the end of the testing window or is that not at all doable nor sane...?? Thanks for any help.

Recently handled a takeover PSP which was on a prototype document. Plan was initially effective Jan. 1, 1989. Amended and restated on a pre-approved volume submitter document with a few language changes. Submitted the plan to the IRS for a determination letter. IRS agent recently requested all plan documents and amendments from 1-1-1989 to present. Was able to find a favorable determination letter that Plan received back in 1991. Prior prototype sponsor also forwarded to me the 2001 prototype doc. approved by the IRS and employer adopted the doc. before the end of the 2001 plan year. I should not have a problem with persuading the agent to start the review from the most recent FDL, i.e., 1991, however, does anybody know when the proptotype sponsors had to amend their prototype documents for the 401(a)(17) and 401(a)(31) changes? I cannot imagine that the prototype sponsor (a law firm) did not make those amendments in a timely manner, however, if so, they failed to send me those pursuant to my information request. Thanks for any help that can be provided......

Thanks for keeping me straight.

Would it not be OK for XYZ, Inc. to file a certificate of assumed name in order to do business as "ABC", reflect its corporate name (XYZ, Inc.) on the Form 5500, but name the plan ABC Retirement Plan and reflect on the SAR and the other plan documents that the employer is "ABC"?

Actually the corporate name "gives away" who the principals are in the business and I believe they want to use an assumed name so it is not so readily apparent who the principals are in the business.

Client XYZ, Inc. will do business under an assumed name of ABC. Client wants to name plan doc. as well as reflect on all participant communications ABC Retirement Plan. The Form 5500 will include client's name as per the Articles of Incorporation. Any reason why client cannot use the assumed name as referenced above? Thanks.

What do you mean that the IRS has seen the amendment and issued a determination letter on it?

Am I correct in assuming that the initial step to take if you have an additional discretionary match with 1000 hour/last day requirement would be to amend that contribution out effective 1/1/06?

From what I've found thus far the Amendment re the Mandatory Distribution/IRA Rollovers is the only thing that's currently applicable to a terminating PSP. Since PSP is a calendar year end plan that amendment is scheduled to be adopted prior to 12/31. That should be it....

Any chance the IRS has any form/canned amendments for plans terminating in 2005? I recall a few years back that the IRS was actually providing canned amendment language for terminating plans... I have an employer who just wants to do a bare bones amendment prior to terminating their PSP. Didn't want to re-invent the wheel if I didn't have to do so..... Thanks for any help.

Client adopted prototype document in late 80's. Client recently made changes to plan by adopting a volume submitter document with special language changes. Client is submitting plan to IRS via Form 5307. Anyone see a problem with submitting what client has in hand now plan document-wise and then supplementing the information with the IRS once it is received from prior TPA? IRS will request to see original adoption agreement, etc.... anyway which TPA has but has yet to forward. Client wants to get the process started and due to the amount of time in which the 5307 will be assigned to an agent I don't see a problem with submitting what client has and then forwarding additional info. to IRS agent once it's assigned. Any comments? Thanks.

Don't know if it makes a difference but the plan is a PSP and not a 401(k). The last category within the Plan doc provision regarding hardships is "An immediate and heavy financial need of the Participant provided that the Administrator applies the need to all the Participants in a uniform and discriminatory manner." It is a Corbel Volume Submitter PSP document with IRS approval. I assume the last part re "uniform and nondiscriminatory manner" keeps it in in line with the last part of the language you quoted.....?