Madison71

I agree - you should include the 8905.

My understanding is that under the proposed cafeteria plan regulations which can be relied upon until made final provide that no retroactive amendments can be made. I do not believe the current final regulations say this, but once proposed are final they will replace and be effective 1/1/2009. Anyway, we have a situation where the TPA said our client needed to amend and restate their plan for changes that include Michelle's Law, etc. We just received an amended and restated document effective 4/1/2010. Nothing in the document references a separate effective date for Michelles. I thought Michelle's, etc. went into effect for plan years on or after October 2009? Therefore, shouldn't the restatement date say 1/1/2010? I know there are no retroactive amendments permitted under the proposed regs, but if client signs with restatement date of 4/1/2010, then late for Michelle's Law. If retroactive, in violation of proposed regs, even though final I believe permits retroactive to the beginning of the yar. Any suggestions on what to do?

Company A has a cafeteria plan. Company B is being formed and there is some common ownership to Company A, but does not meet the definition of a controlled group and is not an affiliated employer. Company B wants to be added as a participating employer of the Company A cafeteria plan (Company A approves). I know the proposed regulations asked for comments on multiple employers in cafeteria plans. At this point are you permitted to have a multiple employer cafeteria plan? If so, any thought on the future in this area? Thank you!

One last thing.....you indicated the way you could correct a failure going forward. But, what about if in 2009 the tax-exempt contributed X amount to the 403(b) and the for-profit has nothing in place. I see the options going forward, but how do you correct the past? Participants in the 403(b) tax-exempt received employer contributions that the participants of the for-profit did not.

Thanks Tom.

Thank you. Sorry I didn't mention it, but I believe the tax exempt makes employer contributions under the 403(b). It seemed to me from the reading I did that because there is common control between the tax-exempt and for profit that you need to include as one for control group purposes. I also read that if the tax-exempt offers a 403(b) and the for profit offers a 401(k) and specifically excludes the members of the tax-exempt that you are ok. What about a tax-exempt with a 403(b) that has employer contributions and a for profit under common control that does not offer a 401(k) and does not want to. Any issues here? If so, how would you correct this? I could see offering a 401(k) to your for profits on a go-forward basis, but how are you going to correct retroactively if you even need to do so. I appreciate your time!

I don't know what the correct answer is, but what is the real harm to the participants or the plan here? I would argue scriveners error. The next option would be SCP. I wouldn't correct under VCP.

A not for profit organization offers a 403(b) plan and a for profit organization does not sponsor a plan, but is is 80% or more controlled by the trustees or directors of the other organization. It seems clear to me from the final 403(b) regs. that you have a controlled group. First, am I reading correctly that the IRS wants an analysis to be done to see whether a not-for-profit and for profit are in the same control group? If so and they are in fact in the same control group, how do you test and what do you do if they fail? I would think universal availability wouldn't apply to a for profit organization b/c they cannot offer a 403(b) plan. Do you have to then offer a 401(k) plan to the for profits? That can't be what the IRS meant. Thank you!

It passes by itself. It doesn't seem right to me though. If you have a control group where - one company has a plan that makes a safe harbor match, and the other two companies have plans with discretionary match and nothing is made, seems to me like it would fail.

3 companies are part of a control group with 3 separate plans. 2 plans have standard 401(k) with discretionary match and profit sharing. The other has standard 401(k) with safe harbor match and discretionary profit sharing. I looked at the testing just done and it passes 410(b). Any issue here with disparate benefits? I would think it wouldn't pass because of that safe harbor piece.

Thanks GMK - I think I am going to just suggest they leave it in there. AP will most likely take the distribution anyway.... Thanks again all.

I guess if it is under 5K (which this is not) you could roll or cash out if low enough....not sure, but a good question. My biggest concern is having the language in the QDRO. The AP will most likely take her money....I'm just wondering if it is something that the plan administrator can request be removed and have an argument for AP's lawyer on why it should be removed. Not compliant with the terms of the plan?

Excellent point. I am pretty certain the A.P. will want her money out of the plan, but we don't want to keep language in the QDRO opening the possibility that she may keep it in if we can help it.

....oh and this is a defined contribution plan and the distribution options are lump sum only. Thanks.

Client received a QDRO permitting the A.P. to receive a distribution or keep the money in the account. Client is close to the large plan audit requirement and does not want to permit A.P. to keep her money in the plan as an option We are reviewing the DRO. Any grounds to require them to take that language out?

Thanks - that makes sense. I also am just noticing that the matching contributions are quite a bit more generous for employees of the affiliated employer (probably provided these benefits in their old plan) and this is spelled out in the amendment referencing the provisions in the old GUST document. How would you address this? Would you do an amendment effective 1/1/2010 with this benefit schedule or would you date that back to February 2009 when they actually came over?

Client with a 401(k) prototype plan had an amendment signed in early February 2009 and effective at the same time adding a company as an affiliated employer and permitting this company immediate eligibility while normal eligibility is 1 year. The amendment references all the appropriate sections of their old GUST document. Plan was also amended and restated and put on an EGTRRA document effective 1/1/2009 and signed in January of the same month. There is no mention of this affiliated employer in the EGTRRA document. So, there is an amendment referencing all the provisions of the old GUST document after the EGTRRA document was already put into place. How do I go about preparing an amendment referencing the new EGTRRA document? I don't see how I can prepare a discretionary amendment effective in 2009 and signed in 2010 without having a late amendment, and this amendment was prepared and signed timely, it just referenced the wrong document. Thanks.

found the answer to my own question. 5% rule does not apply. Thanks.

403(b) plan provides that the required beginning date for a participant other than a more than 5% owner is the later of age 70 1/2 or retirement. Pretty standard. My question is if any participant in a 403(b) of not for profit has to take an RMD prior to retirement? There are no owners. Thank you.

Great - thanks.

Nothing has come out on the large plans - there has been discussion of making it less than 7 business days though. Until then its still as soon as administratively feasible.....

Can anyone provide a specific ruling, etc. that permits matching contributions to be stopped? I know you can do it on a prospective basis, but nothing to back it up. Any help would be appreciated.

Great point on the double taxation, but this happened in 2010...no 1099 issued yet. Our approach is to going to be to treat as a hardship and upon termination distribute the rest...make a note in the file and be done with it. Thank you!

I actually learned that the advisor is suggesting doing a trade of the life insurance policy to his foundation in exchange for cash. I'm still getting all the details. I guess he is concerned about passing away and the policy actually going to his estate. He indicated that the plan's actuary and advisor both agree it is the right thing to do, but I haven't talked to either yet.