PensionPro

Are you saying the deferrals were wrongly deposited into the non-union plan instead of the union plan?

The corrective amendment can not be discriminatory. From §1.401(a)(4)-11(g): Corrective amendment for coverage or amounts testing--(A) Retroactive benefits must be provided to nondiscriminatory group. Except as provided in paragraph (g)(3)(v)(B) of this section, if the corrective amendment is adopted after the close of the plan year, the additional allocations or accruals for the preceding year resulting from the corrective amendment must separately satisfy section 401(a)(4) for the preceding plan year and must benefit a group of employees that separately satisfies section 410(b)(determined by applying the same rules as are applied in determining whether a component plan separately satisfies section 410(b) under §1.401(a)(4)-9©(4)). Thus, for example, in applying the rules of this paragraph (g)(3)(v), an employer may not aggregate the additional accruals or allocations for the preceding plan year resulting from the corrective amendment with the other accruals or allocations already provided under the terms of the plan as in effect during the preceding plan year without regard to the corrective amendment.

Plan eff 1/1/97. Orig docs not available. Adoption agreement available for restatement eff 1/1/1 (seems to be TRA 86, opinion ltr available, but base docs not available). No FDL was ever issued on this plan. No GUST or EGTRRA docs were adopted. Is this a good candidate for a John Doe submission? Any other suggestions? Thank you!

Provided your plan document allows and non-discrimination testing passes, why not treat it as a profit sharing contribution? Vesting may or may not be an issue.

Thanks for the helpful response. We are in fact requesting the prior DL from the IRS. We are still trying to determine whose prototype document they used. It is not one of the major providers. It seems to be a TPA firm's but since the base doc is missing it is a little more difficult to drill down but we are working on it. Thanks again.

Thanks, Sieve, appreciate the useful cite. Any insight into the question about applying for FDL with the VCP submission?

On takeover we have a plan that was amended for TRA 86 using a prototype document for which an opinion letter is available, but the base document and FDL (client believes they applied for it, but are unable to retrieve a copy) are not available. My question is: does the lack of a FDL open the door for the IRS to request documents prior to the TRA 86 document restatement? Also I believe an application for FDL is not required with the VCP submission since we are restating to GUST and EGTRRA volume submitter documents. Is that correct? In case we decide to apply for a FDL should we apply for FDL only for the EGTRRA document? Thanks for any help!

try A-7 of §1.402©-2

http://www.clarkconsulting.com/resource/su...1sidedprint.pdf https://www.bucksurveys.com/bucksurveys/pro...ion-survey.aspx (price $250) http://www.plansponsor.com/BuyersGuide.aspx?id=6442478152

The operation of section 414(b), © and (m) and the regulations thereunder necessarily require that controlled group members exist concurrently. However, also see post # 9 of this thread: http://benefitslink.com/boards/index.php?showtopic=8553

Thanks for the helpful comments.

Can the plan still rely on the advisory or opinion letter after adding a provision relaxing the eligibility requirement for some employees?

See if this discussion helps ... http://benefitslink.com/boards/index.php?showtopic=43314

Regarding your second question, if one of the exceptions to application of the tax under §72(t) applies (e.g., for amounts paid after age 59 1/2, after death, or as part of a series of substantially equal payments), the exception also applies to distributions within the 2-year period and the 25-percent additional tax does not apply. Regarding your first question I am not entirely sure, but I believe the clock would continue to tick regardless of no contributions being made.

An employee's service with all controlled group members are aggregated to determine eligibility. If this individual worked 1000 hrs for Co A, this service must be recognized in determining eligibility for Co B as well.

Are we talking about one plan or two plans?

Trying to understand the train of thought here ... Sec. 411 pertains to minimum vesting standards. What precludes the various sponsoring employers of a multiple employer plan from adopting different vesting schedules that meet the minimum standards?

I believe the SIMPLE contributions are treated as excess and reported on box 1 of W-2. This seems to mean the SIMPLE contributions go out first. I don't have a cite, but that is my understanding.

My understanding is the eligibility provisions and vesting schedules can be on an employer basis. What is the basis of the argument to the contrary?

Yes to the question in the title. See §§1.401(a)(9)-5 Q&A9 and 1.401(a)(9)-8 Q&A2.

There was a recent thread on this subject as well ... http://benefitslink.com/boards/index.php?showtopic=48687

I am assuming they meet the conditions for the noninvolvement exception under IRC §1563(e)(5). It is possible to enter into a legally binding agreement renouncing community property. At the very least each party should be represented by separate legal counsel experienced in the community property laws of that state. It is possible, but may not (or may) be worth the effort. An improper agreement may result in unintended consequences in the event of divorce, death, etc.

Actually, I was thinking the plan compensation definition could be written to include severance. There is no requirement that plan compensation be based on 415©, 3401(a) or W-2. It doesn't even have to be a definition that satisfies 414(s) [see 1.414(s)-1(a)(2)]. That's why I asked what definition the plan uses. It's also possible the definition isn't clear and has to be interpreted by the ERISA Plan Administrator. We typically use 415© as the basis for the plan compensation definition in part because the regulations language is pretty clear that severance pay doesn't count. Thanks for clarifying!

Under which definition of plan compensation in your view would severance pay be includible if paid on or before term date? 3401(a) Wages means all remuneration (other than fees paid to a public official) for services performed by an employee for his employer. So following similar logic, severance pay would not be includible under this definition since no services were performed. Which leaves the W-2 definition ...

See post 6 on this string from 2000 for another way of looking at it ... "Technically, I think that it will depend on when the severance is paid. I know the IRS position is that severance is not paid to an "employee" or for services rendered "on account of employment," so it shouldn't be taken into account under a qualified retirement plan. It is an unworkable standard, so I have heard that a safe approach is to count it (assuming that the plan doesn't exclude it) if it is included in a final paycheck or received (in advance) while the person is still an employee. Once the person leaves employment, amounts paid as severance shouldn't be included in plan compensation even if the plan definition includes it because it is not being paid to employees for services rendered." http://benefitslink.com/boards/index.php?showtopic=437 Also an article on the McKay Hochman Web site states that ... "Theoretically, pure severance pay is not payment for services rendered and should not be considered plan compensation. Often times it is a payment for the release of legal liability for terminating an employee’s services. Other times the payment is unrelated to any actual services, but is a stated amount such as $1,000. Though not our position at McKay Hochman, some industry practitioners argue that the amount can be counted if actually paid prior to or commensurate with the separation." Everyone agrees that severance pay after date of termination is not plan compensation. However on the question whether severance pay on or before date of termination is plan compensation there seem to be interpretations both ways.