30Rock

Can an ERISA 401k plan that is not subject to QJSA requirements require spousal consent on normal distributions when a married participant terminates employment? I have seen spousal consent for plan loans and hardships, but do not see how it can work for distributions on termination of employment. Essentially the spouse could prohibit any distribution until RMD's become payable. Thanks!

I have a plan that is considering using the QSLOB rule. However, I am struggling with the gateway test which requires coverage testing on an employer wide basis. With this test being necessary, how will QSLOB testing help my plan pass coverage, if I still have to pass this gateway? My plan fails ratio % and average benefits test - both parts. Thanks!

Let me explain better - A. Non ERISA 403b - no testing required B. Tax Exempt of controlled group has safe harbor ERISA 403b using the safe harbor match - fails coverage on a controlled group basis

The plan is both tax exempt and governmental, therefore dual status. They are thus governmental until IRS issues other requirements

Let me explain better - A. Non ERISA 403b - no testing required B. Tax Exempt of controlled group has safe harbor ERISA 403b using the safe harbor match We have to test for coverage on the match to see if ERISA plan B can stand alone. It cannot because Plan B does not cover enough NHCES - Plan A is not participating So we need to pass coverage - it fails ratio % and average benefits test. One fix is to cover employees of Plan A, but plan sponsor will go nuts over that solution. Or try to pass ABT by bumping up the NHCEs in Plan B. Question is can we aggregate the 2 403b plans to pass coverage, which it will. Once you aggregate for coverage, you have to aggregate for nondiscrimination - I realize Plan A does not have testing. And Plan B is safe harbor and cannot be aggregated with a non safe harbor. So what can we do????

They failed coverage - the ERISA 403b has too many HCEs and not enough NHCEs. So if you understand coverage, if you fail you can elect to aggregate with another plan. THis is the cheaper option. Can I aggregate a safe harbor with a governmental?

We have a hospital (tax exempt and governmental) with a 403b plan and this hospital owns a tax exempt that has their own ERISA 403b plan. The ERISA plan is a safe harbor plan. The ERISA plan fails coverage on a stand alone basis, but if we aggregate it with the non ERISA plan it passes. Once we aggregate, what happens with testing issues where a safe harbor plan cannot aggregate with a non safe harbor plan? Does this rule even matter since neither plan is subject to ADP or ACP testing - the governmental 403b is non ERISA so no testing, and the ERISA plan is safe harbor so no testing. Any thoughts?

So it just comes down to 410(b) coverage testing?

A plan has immediate eligibility however the matching contributions have a 1000 hour allocation requirement for employees coded as part-time ineligible for benefits. So each year this group must work 1000 hours to get the match however full time employees do not have any allocation requirements. Is this a permissible allocation condition that just requires coverage testing under 410(b) or possibly could it be construed as a disguised service condition? Your thoughts are appreciated!

We have had this issue come back and it is unclear. DOL needs to issue guidance. At a recent ASPPA webcast Bob Toth said no 5500 should be necessary. But again, plan sponsor should consult with their legal counsel.

Stole money from employer by giving himself fake raise which ended up in contributing more to the plan. I do not have all facts, but could have submitted phoney ER contributions to his acccount. In addition he amended the plan to allow for loans and then took out max loan and never repaid it. Court has approved the conviction order so now we just have to offset the account, my question is how to get it out. I assume he has been fired so there would be a distributable event. Do we just issue a check to the employer?

In the case of a trustee who embezzled from his employer, and contributed some of the embezzled funds to his 401k account, once the court order is issued convicting the trustee, how does the plan distribute this? Is court order sufficient for the vendor to cut a check to the employer, or does the convicted participant have to sign off this distribution? Any help would be great!

Tom - thank you. Is this something you would normally test? The position of my provider is not to run effective availability tests, I am wondering if plans normally do this? Also didn't the IRS question a 10% QACA level, or was it really 6%?

Thanks, so to recap - they need to do 1. ACP test, 2. BRF test, both tiers? Current availability and effective? Is there another test?

Doesn't this match go into the plan's forfeiture account, not to participants. Does it really matter whether you credit earnings?

Can anyone advise as to whether the following tiered match formula requires BRF testing? The rate of match increases as the deferrals increase, which could be discriminatory. But there are no age or service restrictions. 0-3% deferrals = 0% match 4% deferrals = .75 match 5% deferrals = 1.5% match 6% deferrals = 2.25% Thank you

Of course the top hat plan provisions will only apply prospectively to new accounts, but I can see how existing account balances would be muddied with top hat funds being mixed in with deferred comp funds if the plan covers the same participants. Thanks!

We have a governmental employer that just received 501c3 approval from the IRS, and due to an acquisition they will become an ERISA sponsor. Can a 457b governmental plan be restated as a top hat plan, or should the plan terminate and then a new top hat plan be set up?

Sounds good Tom!! Thank you

A 401k plan terminates 3/31/2011. Question on testing for this short period - it appears that for 415 purposes, you have to pro-rate comp i.e. 3/12 x $49,000 = $12,250. Is this right? And then for ADP purposes, can you use any compensation after the termination date when running the test, or is this also pro-rated? Can you look at comp beyond the 3/31 termination date for ADP? Thanks!!!

Does the plan document allow you to specify that the compensation period for the fixed match will be based on compensation accrued through a certain date? I have seen plans where this language could be added to stop the compensation accrual at the time the fixed match is suspended.

We have a sponosr that wants to cease automatic enrollment mid plan year, and the plan was structured as an EACA with the 90 day permissive withdrawal feature and an annual escalator. It appears that an EACA is supposed to be based on a 12 month plan year unless the plan allows mid year entry for new hires, and then the 6 month extension on testing is lost, but the 90 day withdrawal can still be used for the new hires. But can the feature cease mid-year, provided the client does not use the 6 month extension? Thanks!

We have a 401k plan and last year the money purchase plan merged in. Participants in the MPPP as of 3/31 have a grandfathered nonelective contribution based on years of service. However, the employer announces that if the participant terminates employment and is rehired after 90 days, then the participant is no longer eligible for the grandfathered benefit, and instead gets the current discretionary match under the plan, which is not as generous. I am wondering if this can be written in under the eligibility exclusion provisions of the plan document, so that it is an eligibility provision. Would it then just be a matter of 410(b) coverage testing each year? Does anyone have any thoughts?

Can anyone share their opinion on whether salary deferrals under a 403b plan are included in the average benefits test, both when testing for coverage and nondiscrimination. If I use a cross tested allocation formula in a 403(b) plan and I need to use ABT, do I include the deferrals? I have attached a prior link on this subject. It appears it was unclear at this time. Has anything changed? How is it being done in the real world?! Thanks! http://benefitslink.com/boards/index.php?s...+403b+deferrals

A consulting firm claims they made an error in the contract with the plan and charged too many basis points for their fees. I believe this affected 3 plans in the controlled group and during one or two prior plan years. Is this a prohibited transaction? If they claim administrative error or oversight does that ondo any prohibited transaction liability for the plan sponsor, as the fiduciary, that allowed plan assets to be used to pay excessive fees? Remedy is to disgorge the excess and return to the plan, plus lost earnings I would think. Should it be recommended that the sponsor file under DOL Voluntary Fiduciary Correction Program? Thanks for any comments you may have!!