John A

My apologies - I should have specified that it is a DC plan in this case. The problem of course is that the plan has substantial market losses from the date that the dollar amount was assigned to the AP. In this case, the QDRO specifies the dollar amount as of a date during which the funds were employer-directed. In the meantime, the funds have become participant-directed. Did the employer have any fiduciary obligation to invest the "segregated amount" for the AP any differently than other assets of the fund? Was the participant limited in any way as to what investment choices to make due to the DRO? Would the AP have an argument that the Plan Administrator and/or the participant should have invested the segregated amount in a more conservative investment?

A QDRO assigns an Alternate Payee a dollar amount "plus interest on that amount." Should "interest" be interpreted to include losses? How should "interest" be interpreted? Does the "segregated amounts" requirement mean only that the plan must be able to separately account for the segregated amount? Or does this requirement mean that the dollar amount specifiec above should by physically separated from other assets? If it has to be physically separated, are there requirements on how the segregated amount should be invested? Is there guidance on these issues in the law, from the DOL, and/or from court cases? Thanks!

Is a 401(k) plan sponsored by a union aggregated with 1 401(k) plan sponsored by the employer? For example, suppose the the union employees participate in both plans - do the 415 limits apply to the combination of the plans or to the plans separately? How is deductibility affected? Are the plans aggregated or treated separately for other purposes?

Kirk, is that available elsewhere in Benefits Link or on some other internet site? A short article on freezing or terminating an ESOP is available at http://www.neco.org/library/freeze.html

A plan has life insurance policies as part of the assets of the profit sharing plan. Can an individual elect to cash out his life insurance policy into the profit sharing source of the plan? The profit sharing source is participant-directed. Does this depend on the plan document, or is this action prohibited? If the action could be acceptable, would the plan document have to specifically provide for it?

A plan document has a provision in the participant loan section about terminated participants. Terminated participants are allowed to get a loan from the plan only if they are a "party-in-interest" as defined in ERISA. Is this an allowable provision in a qualified plan? The provision seems like it would be discriminatory in favor of Highly Compensated Employees. If a terminated HCE requests a loan, does it have to be given to them due to how the plan document reads, or should the plan sponsor refuse to give the terminated HCE the loan because it would be discriminatory?

KJohnson, sorry - guidance was the wrong word. I was referring to an article in RIA's Pension & Benefits Week that said that an IRS had confirmed the above when RIA asked about it. The part about being able to roll over any amount in excess of the RMD was confirmed in IRS Announcement 2001-23, but then hasn't that always been true? I should have indicated my source in my original post - again, sorry about that. Since the clarification is verbal rather than written, does that change your reaction to what a TPA should advise clients?

Does anyone else think the new simplified rules for Required Minimum Distributions just got confusing for 2001? The IRS seems to have clarified that plan participants can use the new rules to calculate the amount of their Required Minimum Distribution (RMD) despite the plan not being amended to use the new rules for 2001. In that case, why not just make the rules effective for 2001? Does the plan sponsor have any obligation to calculate the RMD under the new rules and inform the participant that the participant is allowed to use those rules even though the plan did not? Does it make any sense that the plan would not have to do 20% withholding but the participant could roll over the amount of the difference? Should TPAs just have every plan sponsor adopt the amendment to avoid any confusion?

Can a plan sponsor make a loan to a participant that the participant then uses to pay off a loan from the plan, or is this a prohibited transaction?

If the initial plan year is the calendar year, but the deferrals were allowed starting March 1, is compensation for the full year used in testing, or is compensation from March 1 on used?

Plan Design: Money Purchase Plan and 401(k) Profit Sharing Plan Money Purchase Plan Formula: 25% to HCEs, 3% to NHCEs, money purchase allocation to each participant will be reduced to meet combined plan 415 limit Determination Letter for money purchase plan says that plan passes nondiscrimination testing on the basis of the 401(a)(4) general test. Money Purchase plan document is silent on what to do if 401(a)(4) general test fails. Letter from plan sponsor indicates that an additional profit sharing contribution has been allocated in the past when the general test failed. Profit Sharing Allocation Formula: uniform % of recognized earnings. Is there any compliance problem caused by reducing the money purchase allocation to each individual due to the combined 401(k) and money purchase 415 limit? Is there a default of how to get a 401(a)(4) test to pass when the test initially fails, or does the document or an addendum have to contain language specifying how to correct a failing general test? Is this language unnecessary as long as the plan sponsor continues its practice of making a profit sharing contribution to get the general test to pass? Do reallocated forfeitures in the profit sharing plan affect the 401(a)(4) general test?

Does anyone have a plan in which the only compensation is commissions? How does the plan operate? What special considerations should be given to a plan that has irregular compensation because all compensation is based on commissions?

For any of you that deal with several plans that invest in an institutional account, how do you allocate interest from the "float" in the brokerage account for the minimal time that money is in the brokerage account before getting invested in funds? Does all money in every fund share equally in this interest? Does it matter what source (profit sharing, deferral, etc.) the money is in as to whether or not it shares in the brokerage account interest?

richard, I agree that starting a new plan would probably work, but I don't think I agree with being able to change in the same plan because of the "definitely determinable" requirement. It seems to me that for a plan to have a "definitely determinable" allocation method, the allocation method cannot change after someone has accrued the right to that method. This does not mean the participant has accrued the right to any specific amount, only that the participant has accrued the right to the way that their share of an employer contribution, if it is made, will be determined. How do you get around the "definitely determinable" requirement for an allocation method if you try to make the change in the same plan?

In this case, the document is a prototype, so it appears to me that even a correctly-worded amendment would kick this out of prototype status and change it to an individually-designed document (I do not see a way to use any language in the prototype to accomplish the change).

Is there any reason that an employer could not adopt a Board Resolution (or a plan amendment) that specified a 4% contribution for compensation during the first 6 months of the year and a contribuiton of 5% for compensation during the last 6 months of the year?

I thought this had been discussed before, but I cannot seem to find the appropriate thread. Can a 1999 5500 Form to be used to file for a short plan year beginning and ending in 2000 (and due by March 31, 2001)? Do you cross out the 1999 and write in 2000?

Is there any disadvantage to a plan sponsor to making the top-paid group election to determine HCEs? The only one I have been able to think of is that it introduces some additional complexity to the HCE determination, conceivably raising the chance of errors. Are there any other disdavantages? I guess I wasn't thinking. Of course, at least in a 401(k) plan, whether or not the top-paid group election is helpful or harms the plan depends on the amounts the participants who would be changed from HCE to NHCE by the election are deferring. Anything else I should have thought of?

If a participant properly rolls over an amount well within 60 days, but the company receiving the rollover does not cash the check for 4 months because the company did not realize it was a check (evidently thought it was a receipt), is the rollover still proper (can the check be cashed now as part of a "60-day" rollover)?

Has anyone dealt with a plan in which participant loans were treated as plan assets and the interest paid on the loan was shared by all participants in the same way as any other general investment of the trust? Is this allowable? Is this treatment of participant loans specified in either the loan policy or the plan document? What other information is important if participant loans are treated as an investment of the plan rather than of the participant with the loan?

You're probably right that it does not have to be removed at all. However, if a plan sponsor wanted it to be removed for the calendar year 2000 plan year, when would the amendment have to be adopted?

If the "self-destructing language" is not present, then when does the amendment have to be adopted? Does the plan sponsor have until the end of the GUST remedial amendment period, or must the amendment be adopted sooner?

Is there any problem if a defined contribution plan document reads that the DC plan will be reduced for the 415(e) limit and the plan document has not been amended to reflect the repeal of 415(e)?

I have talked to other administrators who have a policy of treating any amount under $1 as forfeitures and cutting a check for any amount that is $1 or above, but I have not talked to anyone that was willing to go "on record" as having that policy.

Can a plan document be amended to change a profit sharing allocation formula during the plan year, or does the amendment need to be adopted prior to the beginning of the plan year for which the change will be effective?