30Rock

Could this regulation be part of the annual notice requirement, where you have to offer the plan at least annually which is the notice requirement. However that does not really have anything to do with entry dates. I have not seen any 403b plan document, including the proposed LRMS, that allow you to elect an entry date. They all state date of hire or immediate.

The bill was originally issued in 2009. The statement issued in 2010 still shows the amount due.

I do not interpret the regs to allow this either under the default provisions Does anyone else have views?!

If a participant fails to respond to a mandatory distribution either because he has terminated and his account balance is between $1000 and $5000, or because the plan is terminating and the account must be distributed, then an automatic rollover IRA account can be established for the account, per IRS regulations. What is the employer has another qualified plan, can the money be automatically rolled over by default to this plan, or must it only go to an IRA?

What do you do when the expense submitted was over a year ago? Is there a time limit for approving hardships distributions? What do other practioners do, is it an internal procedure that you need to establish as to how old an expense can be? This is an ERISA 403b plan using the IRS safe harbor standards. Thanks!

A participating employer in a multiple employer plan withdraws from participation and starts a "new" plan as a single employer. If assets from the MEP are transferred to the new plan, do you have to protect benefits? IF it is part of a sale/acquisition such that there is a distributable event - ie termination of employment and then hired by new entity and rollovers go into new plan, I assume the answer would be different?

Good point. I guess you could exclude from HCE comp because you know they have effective opportunity to defer the max. Other than that, it appears not.

415 limits apply, and a plan document. That is all I can see.

I think he is talking about 457 plans, not 403b plans. Since there is no testing involved in a governmental 457b plan, it seems a much safer design than a qualified plan MEA.

I got an answer from TAG DATA I wanted to share - ANSWER 1) If permitted by the loan policy, such a loan may be allowed, because "residence" has been defined in the regulations to include houseboats and house trailers. See below. §1.121-1 Exclusion of gain from sale or exchange of a principal residence. (b) Residence--(1) In general. Whether property is used by the taxpayer as the taxpayer’s residence depends upon all the facts and circumstances. A property used by the taxpayer as the taxpayer’s residence may include a houseboat, a house trailer, or the house or apartment that the taxpayer is entitled to occupy as a tenant-stockholder in a cooperative housing corporation (as those terms are defined in section 216(b)(1) and (2)). Property used by the taxpayer as the taxpayer’s residence does not include personal property that is not a fixture under local law.

Participant has requested primary residence loan to purchase an RV. Repayment period is 20 years It is possible someone could live in his RV, but what documentation does plan administrator ask for? He may use a PO Box as his mailing address. Need some type os proof that RV is really his primary residence Any help is appreciated!

Right, and if you lets say 6 years under a graded schedule, you are crediting more than the employee really worked. I think this requires BRF testing. Also, is the 5 year rule a DC rule or DB rule. Maybe Mike Preston knows? What I mean is, how much prior service can you credit before you need to test - 5 years, or is this just for prior service in a defined benefit plan?? THANKS

Is there a problem granting 100% vesting when certain employees are hired and they previously worked at certain medical facilities and are now being hired by a certain employer, lets call it an anesthesilogy PA. If HCEs and NHCES of the group being hired are treated the same, there is no discriminatory treatment. But granting this group 100% vesting and immediate eligibility while new hires of the employer have to work 3 years for 100% vesting and one year to be eligible, creates BRF testing does it not? I appreciate any insights, thanks!

It is easy to terminate - they are individual contracts, and so anyone that does not consent gets the contract distributed out to them as a nontransferable annuity. The insurance provider would retitle the contract as an individual NTA (nontransferable annuity) which sits as a frozen contract, no new contributions.

There is another thread on benefitslink which I have attached below, that deals with this. Neither a 457 plan nor a 403b plan are permissible options under a Section 125 plan. If the employer contributes to either plan in lieu of the health option then the health plan becomes taxable to all employees - this would be the result upon IRS audit. Advice is to pay the health opt out in cash, and let employee decide whether to defer into either plan as a salary reduction contribution. http://benefitslink.com/boards/lofiversion....php/t2501.html

I found it! But not sure this really answers the question because note he says "they need not be top hat". Since the religious org is not subject to ERISA, they can offer the plan to all employees, or limit it to the top hat group. Keeping it "unfunded" appears to be the main issue. b)lines Ask the Experts – Church 457(b) Plans Dec 22, 2009 (PLANSPONSOR.com) -- December 22, 2009 (PLANSPONSOR (b)lines) – A plan provider notes: "If a nonelecting church, non-ERISA 414(e) organization sponsors an eligible 457(b) plan, it appears that this plan can be offered to all employees, rather than limited to a top hat group, since the plan is not subject to ERISA. However, 457(a) requires all non-governmental 457(b) plans assets to be unfunded." The provider asks: "Since the employer is exempt from ERISA, does this requirement apply to the 414(e) religious organization? Is the plan considered funded or unfunded? In addition, in general, do the 457(b) rules applicable to governmental plans or top hat plans apply - i.e. rollovers, age 50 catch-up, assets protected from the 414(e) organizations, plan loans?" David Powell, Groom Law Group, answers: First, note that many church organizations are not employers eligible to maintain a 457(b) plan. (See Code section 457(e)(13)). Only tax exempt organizations which are NOT churches or qualified church controlled organizations under Code section 3121(w)(3)(A) and (B) (usually, church hospitals, colleges, universities and nursing homes) may maintain 457(b) plans. Because such plans are exempt from ERISA as church plans, they need not be top hat. But if funded, they will run afoul of the constructive receipt/economic benefit rules and will be immediately taxable to the participants. Consequently, most use, at most, a rabbi trust where the assets are exposed to creditors of the employer. And they do not get the benefit of the rules applicable only to governmental plans, so no age 50 catch-up, no loans, and distributions are not eligible rollover distributions. They are essentially like other tax exempt organization 457(b) plans, just not limited to the top hat group. NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice. PS editors@plansponsor.com

Thanks Oldman! How did you find that David Powell article?

NO they are not a 3121 church. They are a religious affiliated entity under 414(e) in the healthcare area.

I have a question on church and religious organizations and adoption of a 457b plan. I do not think a steeple church or QCCO under 3121 can sponsor a 457(b) plan. However, it appears that a 414(e) religious organization that is not a steeple church, can sponsor a 403(b) plan however since the employer is not subject to ERISA, the plan would be a deferred comp plan for all plans, and NOT a top hat plan. However, as a governmental plan, the features of the plan are similar to a top hat - ie no loans, no rollovers, no age 50 catchups Can someone confirm?? Thanks!

Thanks Oldman!

What are the thoughts on excluding leased employees? Does 414(n) apply to a 403b? I know a 403b plan can only cover common law employees, however after the statutory one year and other leased requirements, the leased employee is treated as a common law under qualified plan rules?

Oldman It looks like the PPA and HEART provisions are all optional for a top hat plan so if nothing was elected for 2009 then it would not be too late to amend the plan this year for the PPA provision. I agree the one HEART provision I forgot was the military distribution under PPA which HEART extended, although not the qualified military provision. This is optional too. Also - The disability and death provision does not apply to a employee deferral only top hat plan, because in most cases, the plan will already be 100% vested and employee funde And the 2009 WREA RMD suspension does not apply to a nongovernmental 457b plan

Are there any required amendments?

Is anyone aware of legislative amendments needed for a 457(b) top hat plan? I can only think of a couple optional provisions - ie adding beneficiary hardship distributions, and differential pay - the ability to defer from diffential pay. One is PPA one is HEART, I am not sure what deadlines apply?

Page 4 of this ASPPA ASAP on qualified plan amendments, optional and required, for 2009, has as optional PPA plan provision Announcement 2007-59 language on mid year changes to safe harbor plans - ie to add Roth or hardship withdrawal for beneficiaries. I find this interesting! Does this imply you need this language in the plan in order to make these 2 changes, as no other changes are listed. http://www.asppa.org/document-vault/pdfs/asaps/09-42.aspx