John A

Do the provisions of EGTRRA relating to elimination optional forms of benefit in a DC plan apply at all times, or only when a participant's benefits are transferred from one plan to another? Do the EGTRRA provisions override the fairly recent regulations that allowed elimination of optional forms if you met certain requirements, including special notification of participant requirements?

Thanks, Harry. Is it also true then that, for U.S. qualified plan purposes, there is really no difference between the plan sponsor being a U.S. company and the plan sponsor being a non-U.S. company? Or are there other issues that are affected by the plan sponsor being a non-U.S. company?

If a participant has a 403(B) and a 401(k) with the same employer, can the participant roll assets from 403(B) into 401(k)?

A Canadian company purchases a U.S. company that has a 401(k) plan. The Canadian Company becomes the plan sponsor. One of the employees participating in the U.S. 401(k) plan is a Canadian citizen living in the U.S. (resident alien). If that employee leaves the U.S. company to live in Canada and work for the Canadian parent company, what happens? Can a distribution be made to the participant? Does service with the Canadian parent company (and plan sponsor) count towards vesting service in the U.S. plan? Can the plan document specify the answers to these questions (is there a choice)?

A plan sponsor establishes a new plan as of the 2000 plan year by adopting a new prototype document. The prototype document is submitted for a GUST determination letter in 2001 but has not yet received a response. For the 2000 plan year, ineligible employees are given a profit sharing contribution. Is this situation eligible for correction under the IRS Self-Correction Program (SCP) due to the prototype having applied for a determination letter, or is it ineligible for SCP? If it is ineligible for SCP, what actions should the plan sponsor take to correct the contributions for the ineligible employees?

Does anyone have an example of "an actuarial statement of valuation showing compliance" with Section 401(a)(12) and the regs under 414(l) for Form 5310-A question 4(B)? Does the statement need to be signed by anyone? If so, by whom? Does the statement need to show specific numbers? How does the statement "show" compliance? Is it enough to simply have a statement that the action complies with 401(a)(12) and 414(l)?

How can an employer stop a discretionary match mid-year in the following situation: Employer has been putting match in on a payroll period basis. Plan document implies that the match will be determined based on annual deferral amounts. An employee that had deferrals has terminated employment. The plan document is silent about true-ups. The employer is not willing to freeze participant's abilities to make deferrals. Is the employer stuck with contributing at least the match rate of the employee that terminated to all other employees based on their deferrals for the rest of the year? If so, cite or support? Could the employer amend the plan to a short plan year, and immediately start a new plan year? The employer claims to have stopped the match mid-year several years ago without any problem - has there been any change in this area over the last few years? Issues (some also mentioned in above threads): 1. Following terms of the plan document 2. Discriminatory rate of match [1.401(m)-1(a)(2)] 3. 411(d)(6) - had participants accrued right to a match of at least highest rate made so far? 4. Definitely determinable formula [1.401-1]

Would it be a PT due to the interest rate on the policy loan being less than 6%?

A participant has a life insurance policy in the plan. The participant takes a loan of the cash value from the policy directly from the life insurance company without going through the plan, despite the policy being an asset of the plan. Is this loan a prohibited transaction due to not being made in accordance with specific provisions that are set forth in the plan, or could this be an allowable participant loan as long as the plan does have a written loan program? What additional info. do I need to determine whether or not this is a PT?

I basically agree. However: The regulation does not say that contributions attributable to a given calendar year are included in the account balance for minimum distribution purposes; rather, contributions are included only if they are allocated as of a date within the calendar year. I think it is possible to interpret this as meaning that in a daily-valued plan on a cash basis, the account balance on 12/31 could be used with no adjustments. In a "traditional" DC plan on an allocation basis, the account balance would be adjusted for contributions after 12/31 that were allocated on or before 12/31.

I would like to know how other practitioners would proceed in the following situation: A loan policy provides for a minimum loan of $1,000. The vested account balance on the date of a loan request is $2,000, making the loan okay (50% of the balance being $1,000). A day or 2 later when the check for the loan is to be cut, market fluctuation has dropped the balance to $1,900 (Daily world, of course). Should the loan be given to the participant for $950 (50% of the account balance) since the loan request was available on the request date? Or should the loan be denied until such time as the account balance rises to or over $2,000? What is your practice in situations like this?

You're welcome, but I still think it's a bit confusing. While I think it can be done, I also think it might be necessary to get a determination letter on the document (or amendment) containing the mixture, which sort of defeats the purpose of the safe harbor in the first place (the purpose being that IRS approval is not necessary).

http://www.benefitslink.com/cgi-bin/qa.cgi...id=26&mode=read

Can a safe harbor 401(k) plan allow participants to take loans from the safe harbor matching and/or nonelective contribution sources? If not, can the safe harbor required contribution sources be used in determining the maximum loan amount?

Thank you. There is confusion in our office due to the precise wording of the question and the regulation. Specifically, the question on the Schedule H is: "Did the employer fail to transmit to the plan any participant contributions within the maximum time period described in 29 CFR 2510.3-102? (see instructions) " The wording "maximum time period" is confusing, because 29 CFR 2510.3-102(B) is labeled: (B) Maximum time period while 2510.3-102(a) is labeled: (a)General rule If the Schedule H question was meant to refer to the general rule, why wouldn't the question have left out the term "maximum" and just read: "Did the employer fail to transmit to the plan any participant contributions within the time period described in 29 CFR 2510.3-102?" But the instructions for line 4a refer to the "earliest date" language without using the "maximum time period" language. There is no difference of opinion in our office about the actual standard being the "earliest date" language, but there is a difference about what the 5500 Schedule H question is asking. R. Butler, do you think you are running a risk of having to file amended 5500s by answering based on the "15th business day" language (if the DOL were to audit the plan and find that an earlier standard should have applied)?

Should Schedule H, line 4a, be answered based on DOL Reg 2510.3-102(a) or 2510.3-102(B)? That is, is the 5500 Schedule H question answered based on the "15th business day of the month following the month in which the participant contribution amounts are received" or is it answered based on "the earliest date on which such contributions can reasonably be segregated from plan assets?" I know there have been other threads saying that the DOL has focused on the "earliest date" language for determining whether or not a 5330 was required, but I have not seen a thread on which standard should be used for the 5500 question.

If a plan document says that forfeitures will be restored upon repayment of full amount distributed to participant, how is a 0% vested participant treated? Is the participant automatically assumed to have repaid a $0 distribution, or is this dependent on the plan document? Does it make a difference if the plan does or does not have language about a 0% vested participant being deemed to have receive a distribution? Do you have plans that do not restore forfeitures to 0% vested participants that are rehired prior to 5 consecutive 1-year breaks in service?

If Company A hires all of the employees of Company B (all of whom terminated employment with Company b), but no sale or merger is involved, and the companies are not related (not a controlled group, affiliated service group, etc.), can the "same desk rule" apply? The employees continue to perform their same job duties, but now for a new, unrelated company and without any sale or merger.

Do new small plan audit rules apply to plans that file a Form 5500-EZ?

The end of the remedial amendment period is the end of the plan year starting in 2001. However, prototype plans get an extension to 1 year after receiving a favorable IRS letter. So let's say a prototype gets the IRS letter on August 1, 2001, so that the Remedial amendment period for the plan using that prototype ends August 1, 2002. Say the plan is a calendar year plan. Does that plan have the choice of current year or prior year ADP and ACP testing for 2002 no matter what was done in 2001, or is 2001 the last year that the choice is "free?"

The specific situation is: Illegal aliens supplied false social security numbers to employer. These individuals participated in the plan and received contributions. The plan happens to be an ESOP plan. Common sense (always dangerous to use in this industry) tells me that the money should be forfeited and used to reduce other contributions. But I do not know what gives the plan permission to do this. Should this be treated as an operational error and corrected under SCP (Rev. Proc. 2001-17)? The plan did nothing wrong based on the false information provided to the employer. Has anyone else run into something like this?

Thanks Richard and Tom. I don't know how I missed Example 3 - I thought I had read that. It's nice to have a clean, black and white answer once in a while - every issue I've looked at recently has seemed gray.

Is anyone aware of court cases in which participants were awarded this match because the communication was not sufficient to inform the participants of the last day requirement for the match? I seem to remember reading about cases like this in the last year or 2, but I cannot remember where.

rcline46, I thought it was only Standardized Prototype plans that automatically cover all members of a controlled group, and Nonstandardized Prototype plans could exclude some members of a controlled group. Is that correct?

Tom, I agree with you, but that is not the way the ERISA Outline Book says it. It says the employer has 2 "choices"; it does not say the employer must use 1 choice before getting to use the other. In this case, I believe the wording in the book is wrong, or at least misleading, since the employer does not get to choose (does not have "choices").