ERISA25

Thank you! very helpful.

Participating employer has received a notice that the plan is in critical status. It is, therefore, obligated to pay a 5% surcharge on the contribution otherwise due to the Plan. I understand that the Plan must adopt a rehab plan within 240 days following the deadline for plan certification, but is there any means by which a participating employer can force the Plan to develop a rehab plan earlier than such time or force negotiation over such rehab plan prior to the imposition of a 5% surcharge. I am curious as to whether there is any way to avoid the 5% surcharge. It seems to me that the employer should review its CBA to see if they have anything in it that would compel mid-term bargaining over the surcharge. Any other ideas or comments?

Thanks for the help. One follow-up to BG5150. Please excuse me if this is a dumb question, but I assume that they would be worse off because that would have, but for the election, lowered the ADP for the HCEs had that person been included in the testing group. Is that right? Whereas, after the election, that ADP would be computed without regard to that person who did not defer. Is this correct? Tks. Also, is it true that if you make the election for one plan, you would have to apply that HCE definition to all other plans of the Employer too? I was under the impression that if you make an top paid election then you must be consistent in regard to the exclusions that you use in determining the top 20%. I'm somewhat new to this, so I could be wrong.

Thanks for the help. One follow-up to BG5150. I assume that they would be worse off because that would have, but for the election, lowered the ADP for the HCEs had that person been included in the testing group. Is that right? Whereas, after the election, that ADP would be computed without regard to that person who did not defer. Is this correct? Tks.

Is there any negative effect from making a Top paid group election. If we were considering making a top paid group election to help pass testing, is there any potential negative consequences for doing so. It appears to me that the election may be made and changed pretty freely. I realize it's a very general questions, but I was wondering if anyone has any general thoughts or comments.

Mike, I'm not sure I completely understand the term "good faith amendments." I believe that you're saying that all good faith amendments must be adopted by 12/31/2009 for calendar year plans.

It is my understanding that for a calendar year plan all PPA amendments must be made by the last day of the 2009 plan year. Am I right that there has not been any extensions that would allow the Plan to wait until its cycle filing date to adopt such amendments?

Thank you, Kevin. That section indicates that you can do such for distributions with annuity starting dates after the date the amendment is adopted. I assume that means that if you already started paying MRDs in installment payments, then you must continue to offer the installment form of payment, but if the MRD installments have not already begun, you can amend to make the payment a lump sum assuming they are otherwise identical. Do you agree?

I am trying to determine whether the right to receive MRDs in annual payments, as opposed to a plan provision that requires a lump sum distribution of the participant's entire account balance upon the first MRD date, is a 411(d)(6) protected benefit. In other words, if a plan used to allow participants to make the minimum payments each year, but now requires a lump sum distribution of the participant's entire account balance upon the first MRD due date, is there a cut-back?

I first should disclose that I know very little about ESOPs, so some follow-up qs may help. In connection with a refinancing, a company made a special allocation that was funded from unallocated dividends, cash, and forfeitures. The allocation was made to induce the trustee to do the refinancing. I am curious as to whether the amount of the special contribution that is funded from unallocated dividends and forfeitures is considered annual additions? Any thoughts or citations that can point me in the right direction?

Notice 2007-6 provides cutback relief for an amendment that eliminates the excess of the participant's hypothetical account balance with respect to distributions made after the later of August 17, 2006 or the effective date of the amendment. My question has to do with "distributions made after the later of August 17, 2006." With regard to this language, what is considered the date of distribution? Is it the benefit commencement date or is it the date the money is actually paid to the participant. For example, if a participant makes a request for payment on August 14, 2006, but does not receive the money until August 20, 2006, what is the date of distribution for purposes of PPA relief? I know some plans have provisions that say the benefits will be paid as soon as administratively possible after the request or benefit commencement date. Any thoughts. (Please include citations to any authority.)

What is the process for termination? Is there a formal process for paying excess assets (i.e. a certain method for paying such excess assets)? I gather that one would have to pay in accordance with Trust and Treas. Reg. 1.501©(9)-4; have sponsor adopt termination (is that termination of plan or VEBA); and file final Form 990 and 5500. Any thoughts on this process? Thanks.

If a plan's trigger is a separation from service, and it currently provides that any benefit will be paid in a single lump sum payment within 90 days after separation from service, why would it include the following provision: "with respect to Participants who Separate between December 15 and December 31 of a year, payment will be made on or before March 15 of the following calendar year." I cannot think of a reason for including this provision in the Plan, as I do not believe the payment will qualify as a short term deferral under 409A for prior year deferrals. Any thoughts?

Section 415 regulations require a plan to include as compensation any payments made by the later of 2 ½ months after severance from employment or the end of the limitation year that includes the date of severance from employment if such payment would have been paid to the employee prior to a severance from employment if the employee had continued employment with the employer and are regular compensation for services during the employee’s regular working hours, compensation for services outside the employee’s regular working hours (such as overtime or shift differential), commissions, bonuses, or other similar payments. If our plan excludes bonuses, commissions, shift premiums, allowances, fringe benefits and all other types of remuneration from regular compensation, do we have to include it if it fits within the 415 language above? I’m having a difficult time reconciling the two.

The regulations lead me to the first Treasury Decision under 1.411(d)-4, TD 8212, 7/8/88. Such TD says that the “final regulations also continue to provide that 411(d)(6) prohibits any qualified plan . . . from containing such employer discretion provisions with respect to section 411(d)(6) protected benefits.” I assume that “continue” refers to the temporary regulation, rather than a previous version of such regulation. Does anyone have any suggestions on how to track down a copy of such temporary regulation?

I am trying to track down a copy of the Retirement Equity Act of 1984 (Public Law 98-397). Does anyone have any suggestions as to how I can obtain a copy online. I can't seem to find anything online using google. I need a copy b/c I am trying to determine the genesis for Q&As 4 & 5 of Treas. Reg. 1.411(d)-4. Any suggestions as to how I can retrieve a copy of the REA or the proposed regulation for 1.411(d)-4 would be helpful.

If a plan is frozen in that it no longer accepts contributions of any kind, then what type of notice is required to participants under a 404© participant directed account. I have read 404©(4) but that seems to fit more of a liquidation process, a mapping of the assets out of one fund into another. My concern is how do you handle current elections that are going into the fund. I suspect that you could create some type of notice asking participants to change their elections. However, what do we do with participants who do not change their elections after a notice is provided? Maybe place funds into QDIA?

I'm just reading through a lot of these whipsaw cases and I noticed an interesting unpublished case that raised some concerns. I'm trying to determine what would happen where a court orders a rewrite of the plan with retroactive effect. i.e. a plan was paying the acct balance for years for lump sum payments and a court orders that they fix the problem through a rewrite of the plan document, so that lump sums will be paid in accordance with the 417(e) projection/discount back method for payments prior to 8/17/2006. Can you think of any title 1 or title 2 issues raised by this type of court order? It seems to me that you would have operational failures for all payments made in previous years based on acct balance.

My question is in regard to the whipsaw litigation. I was curious as to what qualification/erisa issues are raised when a court orders a plan to recalculate benefits retroactively using the whipsaw calculation (i.e., a plan that was paying the hypothetical account balance for lump sum payments is ordered to do the whipsaw calculation for such payments retroactively). Under such order, would the plan be amended to comply with the order and, if so, does that raise any other issues. If not, do you have operational failures for the new calculations? Notice to participants?

Other than an amendment to the plan and trust, is there anything else that needs to happen before a plan can freeze a fund inside the plan. I believe they are just trying to eliminate a stock fund as an investment option under the plan. any thoughts?

I was wondering if you know of any support for this position, other than the regulation I cited in my post. Do you know of any cases, dol guidance, etc. supporting the position that the QDRO rules do not apply to top hat plans. I agree with you, by the way, as you can tell by my original post.

My question is whether a top hat plan has to supply information as required by Title I of ERISA if it receives a QDRO. Although top hat plans are exempt from Parts 2, 3 and 4 of Title I of ERISA, they are subject to Part 1, which includes reporting and disclosure requirements, and Part 5, which includes criminal penalties for willful violation of the reporting and disclosure requirements. ERISA Sections 104(b)(4) and 105 are included in Part 1 of Title I. A plan administrator will, however, be deemed to satisfy the reporting and disclosure provisions of Part 1 by filing a top hat filing with the Secretary of Labor. Thus, it seems to me that if a top hat filing was timely made, the plan administrator does not have to comply with any reporting or disclosure requirements under Part 1. My question has two parts: 1) if a PA receives a signed authorization from particpant to release top hat plan info to requesting attorney (atty drafting qdro), does the PA have to distribute such information; and 2) does a top hat plan have to comply with a QDRO?

My question is whether a top hat plan has to supply information as required by Title I of ERISA if it receives a QDRO. Although top hat plans are exempt from Parts 2, 3 and 4 of Title I of ERISA, they are subject to Part 1, which includes reporting and disclosure requirements, and Part 5, which includes criminal penalties for willful violation of the reporting and disclosure requirements. ERISA Sections 104(b)(4) and 105 are included in Part 1 of Title I. A plan administrator will, however, be deemed to satisfy the reporting and disclosure provisions of Part 1 by filing a top hat filing with the Secretary of Labor. Thus, it seems to me that if a top hat filing was timely made, the plan administrator does not have to comply with any reporting or disclosure requirements under Part 1. My question has two parts: 1) if a PA receives a signed authorization from particpant to release top hat plan info to requesting attorney (atty drafting qdro), does the PA have to distribute such information; and 2) does a top hat plan have to comply with a QDRO?

Mike, Do you know of any published guidance discussing this issue?

Thank you for your response. I'm trying to wrap my head around all of these complicated rules. Do you know of any guidance issued on this. My issue is whether a plan is bound by its assumptions it used for purposes of Section 401(a)(4) accrual testing, particularly whether those assumptions - the interest rate used - is a protected benefit under 411.