My 2 cents

Is there any reason not to put 1/15/11 down as the extended filing deadline on the 5558 and let the chips fall where they may? To be on the safe side, perhaps the filer might want to be sure to file on or before that date, even if that means getting it done by the 14th. Can EFast2 filings be submitted on a Saturday? A holiday? What would the DOL consider timely (or not timely)?

If the parties negotiated the termination of the plan, that would seem to be that. How could that create a qualification issue? If it was negotiated, it would have to be carried out. That is not the same as saying that if the parties negotiated to impass and the sponsor then terminated the plan then timing could not become an issue.

Wouldn't it be reasonable to say that a contribution is made to the plan when it is allocated to someone's account? That if hundred dollar bill serial number xxxxxxxxxxx was originally put into the plan (say on January 1, 2009) as a non-safe harbor employer discretionary contribution, then if something happens and that account is forfeited in January 2011, why shouldn't that $100 be considered to be MADE as a contribution in 2011 when reallocated? Something about the idea that "those dollars are tainted and cannot be used towards safe harbor contributions because they were not fully nonforfeitable when they were first put into the plan" strikes me as sophistry. Or is it basically required that forfeitures under a 401(k) plan operate to increase participant account balances?

My vote is that it would not be a prohibited transaction but that it does appear to represent a potential conflict of interest. The Trustees retain the fiduciary obligation to select the plan's investments appropriately. Doesn't Fidelity do things like this all the time? The Trustees hire Fidelity and Fidelity picks one or more of the funds they manage and puts the money into them. Or am I missing something here?

Pretty sure that you cannot use permitted disparity to determine if a plan is top heavy, and suspect (don't do 401(k) plans or their testing) that ADP testing can't use it either. Becoming top heavy could become a problem for an employer of this sort (since it could force employer contributions), but if they fail ADP testing they just have to spit back some of the HCE contributions (I think), so failing ADP would not endanger the employer's avowed disinclination to contribute. Technically, the employer is putting money into the plan, since all salary reductions are characterized as employer contributions.

Small plans: 2009 annual funding notice is due on the date that the 2009 5500 filing is due. Large plans have a shorter timeframe (120 days after end of relevant year, so 2009 AFNs for large plans had to be distributed by 4/30/10).

I am not involved with defined contribution plans, but I am a bit confused by the logic of saying "you can't use forfeitures for [some stated purpose] because contributions for [that stated purpose] must be non-forfeitable at all times." I understand that concept but don't understand how that could mean that you can't use forfeitures (which, being forfeitures, must have been related to some other source under the plan, which clearly did not have to be automatically nonforfeitable, since they were forfeited). Suppose that, for example, a plan encompasses 401(k) salary reduction amounts (which, as I understand, must always be nonforfeitable), matching contributions (not sure whether or not), and discretionary profit sharing amounts (which can certainly be subject to a vesting schedule). Suppose that some short-service people terminate without being vested in recent discretionary profit sharing amounts, and there are forfeitures. Why couldn't those amounts, having in fact been forfeited, be used to reduce the amounts which the employer is otherwise required under the terms of the plan to contribute, even if the amounts, once so applied, cannot ever again be forfeited? Unless, of course, the rule is that all forfeitures must be applied to increase benefits, so they can't be used to reduce employer contributions and therefore, perforce, could not be applied towards safe-harbor contributions.

OK, you're right about April 2010, so it's just a half year advantage for the small plans. I think I was confused by the PBGC premium small plan vs large plan due date thing. But where did you get April 28th? 31 days in January plus 28 in February plus 31 days in March plus 30 days in April = 120 days, and we didn't have to deal with either leap year day or April 30 being on a weekend this year. The key fact being that the small plan AFNs were due a week ago.

My understanding is that a small plan with a calendar year plan year would have had to distribute the 2009 annual funding notice by October 15, 2010. No extra 30 days. In effect, the plan already got nearly a year and a half extra time (compared with a larger plan, which would have had to distribute the notices by April 30, 2009). Given that the absolute latest day that a contribution could have been made was September 15, 2010, even plans with end of year valuations should have been able to complete the preparation and distribution of the notices by October 15th.

Haven't looked at the regs, but wouldn't the plan have to be changed, prospectively, to use a market rate commencing on the effective date of the change? The benefit would be defined in terms of the equivalent of the balance (which is what it is but which will accrue interest period by period). I presume that there is sufficient permission to reduce account balances to the extent necessary to make the switch retroactive the date as of which the rate must be set to a market rate. Are people who administer cash balance plans locking in a monthly benefit as of date of separation from service or would the monthly benefit float from year to year (up or down) to reflect a floating interest credit rate, or are they just continuing to accrue the floating rate on the undistributed account until benefit commencement date, even if the equivalent monthly benefit would go down?

How could a plan with a QJSA as the normal form of distribution be amended to have a lump sum as the only form of distribution? How could a plan with a QJSA ever be amended to eliminate it? Certainly, it couldn't possibly be any sort of defined benefit plan (even a hybrid defined benefit plan). If it were a defined contribution plan with provisions involving a QJSA, how could it be amended to not only make it no longer the normal form of distribution but not available at all?

Our recollection was that the IRS Notice only granted an extension on some of the mandatory interim changes, so we pushed on with our kitchen sink interim amendments without regard to the Notice. We are not aware of any movement by the IRS to issue any sort of model language, especially for an interim amendment, and the Notice itself does not seem to mention anything about model language (or lack thereof) as a reason for the extension. Be prepared to complete the process on your own. Whoever handles your document work ought to have something for this purpose.

I think that the QOSA for a plan with a 100% contingent annuitant QJSA is a 50% contingent annuitant form (with spouse as contingent). So the plan has to permit married participants to elect that form. Participants wanting a larger monthly benefit (the 50% form, if the normal form is really a 100% contingent form, would necessarily have to be a larger monthly benefit, with an actuarial adjustment factor somewhere around 107% to 110%) have to be given the opportunity to elect to do so, just as plans with a 50% QJSA have to allow participants to elect a form with a larger survivor benefit. It is my understanding of the spousal consent rules that spousal consent would not be needed to go from a contingent 100% QJSA to a 50% QOSA or from a 50% QJSA to a 75% QOSA, since all such forms meet ERISA's definition of a Qualified Joint and Survivor Annuity (and would thus be exempt from spousal consent requirements).

Didn't calendar year plans have to adopt something by the end of 2009?

Comment on comment from Relius: Are we supposed to be satisfied by a notice at 3pm on October 15th that high speed servers have now been brought on board? Classic example of too little too late!!!

It depends on what the waiver covers. There are waivers of QPSAs (qualified pre-retirement annuities) and there are waivers of QJSAs (qualified joint and survivor annuities). Each must provide their own explanation of what is being given up. It is possible (but certainly not automatic) that waiving a QPSA could also entail waiving a QJSA, if the information provided covered the consequences of both and the waiver explicitly made it clear the spouse was giving up his/her rights to both pre-retirement coverage and post-retirement death benefits. Otherwise, a QPSA waiver would not also cover the spouse's waiving QJSA rights.

Was this not the subject of a prior discussion thread? Don't remember whether any sort of resolution was reached.

"...or have the distribution taxable when distributed.." from the earlier response means "as opposed to being taxed right now on the account balance when the plan is disqualified". If the sponsor is not about to go under, this is not a matter of choice. And even if it is about to go under, life will be much simpler if they do find a way to get the top heavy minimum contributions in for the non-keys. How much could the required contributions be? This is about a 401(k) plan, right? What valuation are people talking about (not a 401(k) service provider myself)? Can the participants sue the sponsor (with a reasonable likelihood of success) for failing to make required contributions on their behalf?

Is the sponsor unable to take out a loan to cover the required contribution? It may be that important, that they will need to borrow to raise the necessary funds.

My recollection is that the unrecovered basis goes with the proceeds. That is, the beneficiary in your example would receive a lump sum payment of $10,000 ($15,000 less the $5,000 already paid), of which $9,700 (the original basis of $10,000 less the $300 basis already returned) represents a return of basis. But that is just my recollection.

My vote is that non-explicit fees of that sort are indirect compensation, and represent probably the biggest reason that reporting of indirect compensation is now required.

Is being able to take an in-service reduction a protected plan feature? You can make accrued benefits payable at 55, adjust the formula and early/late retirement adjustments and make it all pretty much come out the same EXCEPT for the ability to take an in-service adjustment before 62. Is that protected?

And all of those expenses are related to plan business? Remember - the union can't use plan assets for its own benefit. How could, for instance, one assert that insurance is needed to maintain the qualified status of the plan or to carry out the terms of the plan? The rent had better be for the provision of office space for the people working exclusively on plan administration. You get the idea.

Is such a thing permissible under age discrimination laws? It is one thing to force benefit receipt, based on age, when there are laws mandating it, but another thing entirely when there are not. My vote is for not doing it.

Not a lawyer, not involved with health insurance (except as a consumer). Sounds like fraud on the employer's part. The insurance company's claims are not related, in my opinion, to an ERISA plan but to the adverse consequences of the employer's deliberate behavior. I can see no legitimate reason to shield the employer from the insurer's action.