SMB

I have a client whose 401(k) Plan uses the "facts & circumstances" general approach to defining the conditions which qualify as "financial needs" for hardship distribution purposes. The Plan document does not delineate the conditions, but merely states that the employer shall adopt a written policy setting forth same. This is my first encounter with the "F&C" approach to hardships and was wondering - other than the usual IRS "safe-harbors" - for those of you whose Plan or clients' plans use this approach, what other types of "financial needs" are being used? Thanks for any and all input.

It has always been my understanding that for life insurance to be an "incidental benefit" that the cumulative premiums could not exceed 25%/50% (depending on type of insurance) of the cumulative contributions. Assuming that's correct (?), could a rollover amount be used for premium payment?

Thanks to all of you who took the time to respond. Your input is valued and much appreciated. SmB

QDROphile, Thanks - you provided me with a natural segue to a follow-up question, as I suspect that when I contact the Alternate Payee's attorney regarding the proposed QDRO that she will naturally ask if the Plan has a sample QDRO format (which it does not, nor do I) that she could use. My question - has anyone ever used one of the "flat fee" QDRO preparers (family law attorneys, retired judges, etc.) who advertise their services on-line? If so, how was the "experience" and woiuld you recommend?

DC Plan client (I'm the TPA) forwarded a presumably "proposed QDRO" to me for initial review and input. First and foremost - I do not even begin to presume or purport to have the knowledge and/or experience to deem whether a "DRO" is qualified or not - but can usually point out any "glaring" issues - and then recommend forwarding "to counsel" for review and opinion. Apparently, the participant's now ex-spouse (trying to save a few bucks) attempted a "do-it-yourself" QDRO and was able to get her attorney to file it with the court. The proposed QDRO appears to me - at first blush, anyway - to contain language more pertinent to a DB Plan than to a DC Plan. I am posting this just for general feedback from the more learned and experienced of you out there. Following is some of the language contained in the proposed QDRO (all "emphasis" has been added by me): The Alternate Payee's award is payable for "the duration of the Participant's lifetime". The Alternate Payee's interest in the Plan is to be determined by the following formula: A marital fraction multiplied by 50% and then multiplied by the Participant's "accrued benefit at benefit commencement". The Alternate Payee's benefit shall be paid to the Alternate Payee in such form "as elected by the Participant" (?!) at the Participant's benefit commencement. In the event of the Alternate Payee's death, either prior to or after the commencement of the Alternate Payee's benefit, the Alternate Payee's benefit "will revert to the Participant". (Sounds like a CSI - Pension Crimes Unit plot/motive to me!) In addition, there are other references to "standard actuarial assumptions", "early retirement factors", "post retirement increases" - all of which lead me to believe that this is "way off base" for a DC Plan QDRO - or am I? Thanks for any and all comments.

If memory serves (and it seems to do so less and less!), I don't think "-EZs" are posted on the FreeErisa.com website, as these are "not open to public inspection". SmB

Probably not big deal, but the instructions to form 8109 and 8109-B indicate to also make the check payable to the "Financial Agent".

A sole proprietor (SP) operates two (2) separate and distinct businesses. No employees in either enterprise (never has been - never will be). For 2008, SP has a separate Schedule C for each "business" - one with a "Net Profit" the other with a "Net Loss". SP has an SEP. Must the 2008 "Net Profit" and "Net Loss" be further "netted" for SEP contribution purposes, or can a contribution be made only by the business that had a "Net Profit"? Thanks!

I have always thought that a "standardized" prototype plan - by definition - had to include in the allocation of the employer contribution: (1) any active participant still employed on the last day of the plan year (regardless of credited Hours of Service in that plan year) and (2) any participant who terminated during the plan year with more than 500 hours - which is why a "standardized" plan is deemed to always pass coverage and non-discrimination. No? Or, where have I been and what else have I missed along the way?

Construction company currently sponsors a 401(k) Plan for the benefit of its non-union employees, as well as contributes to a bevy of various "union" plans for the benefit of its union employees. A couple of former union employees reached their NRA under the union plan and are now receiving pension benefit payments from same. These same employees are continuing to work for the company - but now as non-union employees (i.e., the employer is no longer making contributions for these individuals to the union plan). There are other former union employees who are also now "company" employees and are covered under the "company's" plan - but have not as yet reached NRA under the union plan and are not receiving pension benefits from the union plan. The company would like to consider (unless it's more hassle than it's worth) excluding the "former union-now company" employees who are receiving benefits from the union plan from the company plan. Definition of the "excluded class" would be something like: "Any employee who is currently receiving retirement benefits from Union Local 000 Pension Plan". Their exclusion will not create a "minimum coverage" issue. Just trying to see if this definitional approach for excluding these individuals sounds o.k. to those of you with more experience than I with such matters. All comments, concerns, etc. most welcome. Thanks!

With so much going on during this "economic downturn", I admit I have not been able to stay "current" with the all of the goings on coming out of Washington. Does anyone know if there has been any "waiver" (authorized or proposed) of the 10% pre-mature distribution penalty on cash distributions to participants (under age 55) who have been terminated due to an employer's "downturn in business"? What about a "hardship withdrawal" to prevent foreclosure on a mortgage? Thanks!

QDROphile and Bird - Thanks for your replies. Much appreciated. I similarly wasn't sure whether Jennyb473 had a "grasp" of the situation. Hopefully, she will have found this dialog as helpful as have I. Enjoy your weekend!

Granted I completely missed the "elephant in the room" - i.e., the RMD "waiver" for 2009 - absent such waiver, is my original analysis anywhere near correct? Or, it this a "10-foot pole" post - i.e., ain't gonna touch it with...? Thanks to any and all who bother to reply.

Having my first "encounter" with a direct rollover to a non-spouse beneficiary and want to make sure I correctly understand the rules and process (have my doubts). Facts: Profit Sharing Plan participant died in September, 2008 at age 68 (i.e., before her required beginning date for required minimum distributions). No spouse. Daughter is the participant's "designated beneficiary" and is electing to have the death benefit distributed as an direct rollover to an "inherited IRA" in 2009. Questions: 1. Must a required minimum distribution be made to the daughter from the Plan for 2009 (i.e., the 2009 RMD amount may NOT be rolled over to the inherited IRA)? 2. If the answer to 1. is "Yes" - is this RMD based on the daughter's attained age in 2009 and her Table 1 - Single Life Expectancy factor? 3. If the answers to 1. & 2. are "Yes", is the RMD for 2010 (from the inherited IRA) based on the daughter's Table 1 - Single Life Expectancy factor for 2009 minus 1? Am I anywhere close to understanding this correctly? Any there other "aspects/pitfalls" of which I need to be aware? Thanks!

NPS Darren, Does the Plan in question use a document from one of the "nationally-recognized" providers (e.g., Corbel, Datair, FT Williams, etc.)? If so, perhaps someone can point you to the appropriate provision. SmB

Thanks - Pub 560 is quite helpful - especially the worksheets (except that the worksheets don't show an example with employee salary deferrals). So, a couple more questions - Can the individual in my example above make an employee salary deferral contribution of the full $12,000 "net profit" or just the "net" amount after reduction by 1/2 of the S/E tax (~$11,152 if I calculated correctly)? Are both employee salary deferral contributions and employer contributions reported and deducted together on Line 28 of the S/E individual's Form 1040?

Individual expects to receive $12,000 of self-employment income for 2008 and is considering adopting a Solo-k Plan by year-end in order to shelter all - or as much as possibe - of same. Was wondering how FICA is handled or interacts in determining the "net" amount that can actually be deferred? Thanks!

Looking for a provider (preferably a mutual fund family or discount broker) who offers a "prototype" SEP versus IRS Form 5305-SEP. Client also sponsors a 403(b) Plan, so cannot use IRS model form. Thanks!

Have a client who has managed to dig himself into a deep hole. Need a referral to an ERISA attorney in the Lawrence-Kansas City, KS area who can provide competent legal counsel and (almost certainly) prepare an EPCRS submission. Thanks!

I am a TPA. About to have my first "encounter" with 401k ASP (RIA's recommendation). Any complements, complaints or comments - good, bad or indifferent - from current users regarding this platform provider? Thanks!

Is a withdrawal from an IRA originally funded by a direct rollover distribution from a qualified plan also eligible for the "first-time home buyer" exemption from the premature distribution penalty? In other words, would a terminated plan participant requesting a cash distribution from his/her qualified plan account be better off doing a direct rollover to an IRA and then withdrawing his/her home-buying $s from the newly established rollover IRA - i.e., to avoid the penalty on the first $10,000 of the distribution? Thanks!

(I'm sure this has been discussed previously. I did a quick scan of this forum, but couldn't find anything "on point". If someone could provide a link to a previous discussion of this (or similar) subject, I'd be most appreciative.) PS Plan is being amended to allow participant direction of investments. One participant would like to have her son (a broker) handle her account. I have a faint recollection that such a relationship might be a PT. I am assuming this would be where the participant's account is maintained with the son's brokerage firm and where son receives commissions on trades. What if the participant maintained an account with a discount broker and son merely provided Mom with investment advice, on a non-compensated basis? Thanks for any and all comments.

Have a client who is considering becoming a participating employer in the Teamsters National 401(k) Savings Plan. Was just wondering if any of you fellow BenefitsLinkers have had any experience - good, bad or indifferent - with this particular plan that you'd be willing to share. Thanks!

Hoo, boy! Either I'm getting far too set in my ways - or this is really "out there"! Client (a construction company) is pulling out of a union DB plan. The intitial collective bargaining agreement for this union provides that, in lieu of participating in the union DB plan, the employer will be required to sponsor a DC plan covering the members of this union, which provides for a fixed contribution amount "per hour worked" (i.e., a contributory DC Plan versus the DB plan). All well and good - EXCEPT the collective bargaining agreement contains the following additional requirements: (a) If an employee is absent because of illness or off the job injury and notifies the Employer of such absence, the Employer shall continue to make the required contributions for a period of two (2) weeks. (b) If an employee is injured on the job, the Employer shall continue to pay the required contributions until such employee shall return to work, however, such contirbutions shall not be paid for a period of more tha six (6) months. © If an employee is granted a leave of absence for any reason other than those set forth in (a) or (b) above, the Employer may collect from said employee, at the employee's option prior to the leave of absence being effective, sufficient monies to pay the required contributions into the Plan during the period of absence. If the employee chooses not to exercise this option, the Employer will not contribute to the Plan on the employee's behalf during the employee's leave of absence. Am I missing something - or is this a totally ridiculous and unworkable crock of you know what?! Absent whatever constructive feedback I may receive from my fellow BenefitsLink readers, I am inclined to advise my client to get the CBA revised to provide for a contribution equal to $x dollars per "Hour of Service", as defined by DOL Reg 2520.200b-2(a)(1), i.e. each hour for which an employee is paid or entitled to payment. I might add that the section of the CBA refers to this as a "401K" plan - with no mention whatsoever of "employee" salary deferral contributions. No clue, or what?! Thanks for any and all comments.

For fellow pension and pension trivia geeks (and anyone else interested): Does anyone have - and would be willing to share - an historical list of the various and sundry pension-related pieces of legislation enacted since ERISA? Alternatively, does anyone have knowledge of a resource that might have such information and/or a link to same? It would also be helpful if such list would include a summary or bullet points of the pension aspects addressed, added or changed by each such piece of legislation. Thanks!