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The amendment would apply to claims filed on or after the date the amendment is adopted.

A 401(k) plan provides for 100% vesting upon becoming "disabled,' defined as, "a physical or mental condition that makes him unable to engage in any substantial gainful activity and that can be expected to result in death or has lasted or can be expected to last for at least a twelve-month period or results in death." A determination of disability is currently made by the plan administrator. The plan sponsor desires to amend the plan to change the definition of disabled to mean a disability as determined by the Social Security Administration. Would this amendment to the definition of "disabled" under the plan constitute a change to the vesting schedule under Section 411(a)(10) that would require an election to be offered to those participants with 3 years of service? As a side note, the Social Security definition of disability seems to align with the current definition of disability in the plan, so arguably this plan amendment would affect only the party making the determination.

Would an obligation to continue employment for 2 years after receipt of a tuition reimbursement be considered a "reasonable condition subsequent" under Reg. 1.127-2 so that a repayment obligation upon a termination of employment prior to the end of the 2-year period would not, on its own, cause an educational assistance plan to be discriminatory? The regulation includes the example of a 1-year continued employment requirement, but it is not clear if a longer period could also be considered reasonable.

If an employee provides 2 weeks' notice to his/her employer of a voluntary termination of employment and the employer chooses to immediately terminate the employee but pay the employee in lieu of requiring the performance of services during the 2-week notice period, is the 2 weeks of pay "regular pay" from which 401(k) plan deferrals can be made?

A plan excludes "overtime" from "compensation" for deferral purposes. Is "overtime" the full amount of pay (time-and-a-half) for any hour worked over 40 hours, or should "overtime," excluded from compensation for deferral purposes, include only the extra half pay for those hours worked over 40? There is no guidance in the plan document.

A plan to be funded by a VEBA was established in the last part of a calendar year, but no money went into the trust until the beginning of the following calendar year. Is a Form 990 due for the calendar year in which the plan was established, or is the first 990 due for the calendar year in which the trust was established (i.e., the date assets were placed into trust)? In other words, can the trust be viewed as nonexistent (i.e., no 990 required) until the date that dollar one was placed into trust?

Can the employer be the trustee of a 401(k) plan? I have seen it where an employee of the company is the trustee, but can the company itself be named as trustee?

An employer maintains two 401(k) plans, which each provide for plan loans payable only by automatic payroll deduction. An employee has changed status so he is an inactive participant in the plan that holds his contributions to date ("Inactive Plan") and an active participant in the other plan which has a very low balance ("Active Plan"). The employee wants to take a plan loan from the Inactive Plan, but due to payroll issues, the employer is not able to process automatic loan repayments to the Inactive Plan while processing salary deferrals to the Active Plan. Any ideas for how to handle when the employee seems to have a right to take a loan from a plan, but the employer cannot handle the administration of the loan? The plan allows for elective transfers between plans, but the employee may not want to make the transfer from one plan to the other.

The deadline is approaching, but we were considering it. I'd like to just be able to answer "no."

Thanks for the helpful responses. I am not certain how to decide whether an increase in salary was significant for these purposes. I am fairly certain there have been no unreasonable compensation issues, but the "significant adjustment to compensation" language in the request is so subjective. ERISAtoolkit.com's example clearly involves a significant salary adjustment that could potentially raise unreasonable compensation issues, but what about a $30,000 pay hike for someone who previously made $100,000. Certainly significant to the individual, but I'm not sure if it is for IRS purposes. Should we look to the reason for the adjustment?

An IRS information data request regarding a 401(k) plan asks whether there have been any significant adjustments to compensation or any unreasonable compensation issues with respect to any plan participants. What is the request getting at, and what constitutes a "significant compensation adjustment"?

Employer wants to make nonelective contributions on behalf of a certain group of employees to a profit sharing plan created solely for the purpose of receiving such contributions. Employer has determined that it would like to define eligible employees as those with 2 years of service (with immediate vesting) as of the effective date of the profit sharing plan, and the profit sharing plan will be closed to new entrants after the effective date of the plan. (Basically, although there is no intention to do so, the employer could achieve the same result by putting all the eligible individuals on an exhibit to the plan and defining eligible employees as those individuals listed on the exhibit.) There are HCEs and NHCEs in the group of employees, but the plan is expected to pass nondiscrimination and 410(b) coverage testing. Does this plan design cause problems under Code section 410(a) or otherwise? Could this design cause the plan to fail to be a "bona fide plan for the exclusive benefit of employees in general"?

Thank you so much for the quick reply. Very helpful information. Is there any guidance regarding this type of conversion that you could point me to?

Has anyone ever heard of a one-time election to change the form of distribution in a DB plan after payments have already commenced (i.e., changing from a J&SA to a single life annuity)? The plan provision allowing for this requires spousal consent and proof of good health of the participant (among other requirements). Is this type of provision allowed under the Code? I cannot find anything stating that it is not allowed, but the actuary and I have never seen anything like this before. Any comments or help in locating guidance one way or the other is greatly appreciated.

A 403(b) plan is changing from one approved vendor to another. Does the plan administrator have an obligation to notify terminated participants who have accounts or annuities at the old vendor that the plan's approved vendor is changing? The terminated participants are no longer receiving contributions on their behalf. On one hand, the individuals at issue are participants in the plan and likely have the same right to receive notifications regarding the plan as active participants. In addition, if the plan allows for contract exchanges, it seems the terminated participants would have a right to know about the switch so they can decide whether to transfer their contract to the new vendor. However, if the plan does not allow for contract exchanges and the terminated participants do not contribute to the plan, it seems the change does not affect the terminated participants and perhaps notice is not necessary.

I guess I thought that because the title of the reg is "Corrective Amendments" and the reg refers to the "scope of corrective amendments" and appears to only discuss amendments for correction purposes. How else can an 11(g) amendment be used?

The plan definitely does not provide for nonelective contributions. So, are you saying that a contribution can only be added for 2011 if it is being added to correct a discrimination issue under the plan?

Plan sponsor would like to make a profit sharing contribution now (during 2012 but before due date for filing corporation's income taxes for 2011) related to the 2011 plan year. Can the plan be amended retroactively to allow for profit sharing contributions for 2011? Discretionary amendments are supposed to be made by the end of the plan year in which the change was implemented, but in this case, it is an amendment that is favorable to participants, and the amendment would be adopted by the due date for filing the corporation's income taxes.

Church Org A has a DB plan, and Church Org B has a DC plan. Church Orgs are related but not in the same controlled group. Both plans are nonelecting church plans. Assume Church Org A's DB plan allows for maximum service credit of 30 years for purposes of benefit accruals. Can Church Org A's DB plan be amended to count service credited under Church Org B's DC plan against the maximum. For example, an individual who has 25 years of service under Church Org B's DC plan leaves the employment of Church Org B and is hired by Church Org A. Under Church Org A's DB plan, the maximum service credit the individual can receive under the DB plan is 5 years (30 years- 25 years). Any issues with this arrangement?

An employer maintains two plans, one with a year-of-service requirement (the "main plan") and one without (the "alternate plan"). After initially meeting the year-of-service requirement and becoming a participant in the main plan, if an employee falls below 1000 hours in any plan year, the employee is taken out of the main plan and placed onto the alternate plan. Does this violate the minimum service requirement since the employee can lose eligibility for participation in the main plan even if he/she does not have a break in service, or can the plans be aggregated for purposes of evaluating the minimum service requirement so that as long as the employee can participate in one of the plans it's OK? Based on my reading of section 410, it does not appear that the plan aggregation rules apply for purposes of section 410(a)(1).

An employer maintains two 403(b) plans, one with a year-of-service requirement (the "main plan") and one without (the "alternate plan"). After initially meeting the year-of-service requirement and becoming a participant in the main plan, if an employee falls below 1000 hours in any plan year, the employee is taken out of the main plan and placed onto the alternate plan. Does this violate the minimum service requirement since the employee can lose eligibility for participation in the main plan even if he/she does not have a break in service, or can the plans be aggregated for purposes of evaluating the minimum service requirement so that as long as the employee can participate in one of the plans it's OK? Based on my reading of section 410, it does not appear that the plan aggregation rules apply for purposes of section 410(a)(1). The main plan includes a mandatory employee contribution and the alternate plan instead provides for an elective deferral.

Which WRERA amendment (other than 436 amendment)? I thought they were due at the end of 2010?

What are people doing about DB plans that have already been amended to comply with section 436 now that the IRS has issued a sample amendment? Should a plan sponsor simply replace the previously adopted provisions with the sample amendment or try to tweak the language already in the plan to come as close as possible to the sample language? In one case I've seen, the plan language spells out the regulations (not incorporated by reference), but there are slight differences in the layout/order of the information and in the wording. If the sample amendment is adopted to replace the previously adopted language, can the plan still rely on the 411(d)(6) protection provided by Notice 2011-96 with respect to any differences that may exist between the previously adopted plan provisions and the sample provisions (i.e., what if some slight difference exists between the sample language and the plan's prior 436 amendment so that the adoption of the sample amendment to replace the prior 436 amendment eliminates a protected benefit?). Notice 2011-96 provides, "To the extent that the adoption of the sample amendment in the appendix to this notice by the deadline described in this section III causes the elimination or reduction of a § 411(d)(6) protected benefit under a plan, the elimination or reduction is made only to the extent necessary to enable the plan to meet the requirements of § 436 and therefore does not cause the plan to fail to meet the anti-cutback requirements of § 411(d)(6)." This language seems to cover a plan's adoption of the sample amendment even where the plan has already adopted a 436 amendment that it is now replacing with the sample amendment. Thoughts?

I was trying to assume that it passed the 1/3 test. What happened is that there were no contributions to the plan for the year in question. The plan was terminated prior to the due date for the loan payment. Based on a literal reading of Section 415©(6) and the related reg, an argument is being made that the plan passed the 1/3 test because no more than 1/3 of the contributions that were deductible were made to HCEs. The argument is that there were $0 of contributions, so the plan automatically passes the "no more than 1/3" requirement. Although no deductible contributions were made to the plan, the employer could have made deductible contributions because the plan was leveraged for the limitation year. Let me know what you think. (Btw, I would prefer not to get into the issues of 100% vesting and the fiduciary decision to terminate the plan and return the unallocated shares in repayment of the loan because I am already aware of the issues involved, though I do appreciate your thoroughness in trying to answer my question.)

The plan was leveraged until the last day of the plan year, so why would contributions not be deductible under section 404(a)(9)?