Flight33

Individual intended to invest money held in an IRA into a private fund. Custodian sent check to private fund. Individual always intended for IRA to hold the investment. Custodian mistakenly believed the check was intended to be a distribution from the IRA (and that the individual, personally, would be the investor in the fund, and not the IRA). Individual would like simply unwind the transaction and put the money back into the IRA (fund is willing to return the money). Is returning the money into the IRA allowed? Assume it can be shown that custodian was at fault for not following individual's directions. Thank you in advance.

With respect to the 20%-level of bona fide services under the 409A definition of "separation from service," does anybody know what factors the IRS will look at to determine whether or not the (former?) employee is in fact performing less than 20% of his or her previous services? In other words, how do they determine the level of services that were performed while working as well as the level of services performed after the purported separation from service? Time spent working? Projects worked on? Responsibilities? What constitutes "bona fide services"? Interested in hearing anybody's thoughts on this.

thanks all. classic case of trying to prove a negative on a non-issue. just wanted to make sure there's nothing out there being overlooked.

the company is worried that there is a fiduciary responsibility to provide interest, because the amounts in the account could be considered plan assets until they are paid out. (i.e. the check is presented for payment) so, if a participant fails to deposit the check and the amount remains in the trust or clearing fund (as plan assets), is there a responsibility to add lost earnings/interest to the replacement check. i haven't found any guidance to suggest this is the case (in fact, the negative implication of the guidance i have seen is that interest wouldn't be paid). just wondering if there's something i'm overlooking or not considering...

A DB plan participant did not cash the first check for his benefit distribution. When re-issuing the check, can the employer pay the original amount or does it have a duty to pay interest to cover any lost earnings? Does it matter if the payment was a lump sum distribution or part of an annuity?

i believe all participants are owners (let me know if that makes a difference). And I'm not certain what the additional charges are for, but I believe to cover admin expenses. (again, let me know if you think it makes a difference.)

Company is a partnership offering health insurance to partners. Plan is fully insured. Can the company require the partners to pay more for their insurance than the insurance company is charging the partnership in premiums? For example, the insurance company sets a participant's premium at $100 a month, but the company charges the participant $105 a month and keeps the $5 for administrative costs. This would be similar to the additional 2% employers can charge for COBRA premiums for administrative expenses -- but outside of the COBRA context. (Is the 2% surcharge under COBRA an exception to something that is not otherwise allowed, or is it a cap on administrative surcharges that are otherwise allowed?) This situation involves partners in a partnership, but if there is any insight with respect to an employer-employee relationship, I'd be interested in hearing thought on that as well. Thanks in advance.

If an employer establishes a revocable rabbi trust, may the employer (as the settlor) use the assets in that trust for other general purposes without revoking and terminating the trust? Or is there some applicable general trust law principle that prohibits settlors from using the funds of a trust without revoking the trust completely? For example, would the trust be seen as 'illusory'? Would there be any negative accounting effect? (this is, of course, putting aside the practical question of why the employer would want to set up the trust if it may want to use the funds anyway.) Thanks for any advice/input.

Under the 401(k) regs, an employee who takes a hardship withdrawal may not contribute to any other plan of his/her employer for 6 months following the withdrawal. But, under Section 423's universal availability rules, all employees must be able to participate in a company's ESPP (with certain exceptions). So, if an employee take a hardship withdrawal on a 401(k) plan and then cannot participate equally his/her employer's ESPP for 6 months, does that violate the ESPP's universal availability requirements? I'm assuming that Congress wouldn't set up a safe harbor for 401(k) hardship withdrawals that would directly conflict with another code section (i.e., 423). But does anybody know of any authority on this issue that essentially says that complying with 401(k)'s hardship withdrawal safe harbor does not result in a violation of 423's universal availability requirement? Thanks in advance.

If a company made systematic errors (over the course of a few years) that led to it consistently making untimely contributions to a plan and wants to file for a VFCP exemption, will the DOL treat all of those late contributions as a single transaction (and therefore not subjecting the transactions to the three year rule limitation)? I saw on the DOL's FAQ sheet re: VFCP that they said that they (unofficially) will treat some sets of multiple transactions as a single transaction. Does anybody know if there are specific rules they apply? Would this company's scenario fall into the DOL's view of a 'single transaction'? thanks for your help.

409A uses the 416(i) "key employee" definition to define a "specified employee," including among other things 'officers' that make a certain salary. The regs for 416 say that determining who is an officer is based on the facts and circumstances, but that an officer is generally an "administrative executive." Does anybody know of any clear guidance on determining whether somebody is an "administrative executive" and, therefore, an "officer" for purposes of 409A? Are there cases/guidelines that say doing "X,Y or Z" means the person is an officer? Thanks!