ERISA-Bubs

We have already amended several plans for PPA, but we recently discovered that we did not include the language regarding rollover to Roth IRAs. Is this language necessary? Will we have failed to properly amend the plans if we do not include it? Can we simply handle this by including Roth IRA rollover language in the plan's rollover documents?

More information: I spoke with the 409A hotline and they refused to comment on this issue. Is anyone aware of additional guidance on this? Is anyone willing to offer up an opinion?

Under the 409A regulations, an employer can change the employer's contribution until the later of 1) the employee obtains a legally binding right to the amount or, 2) the latest date the employee could make an election to defer. The employer wants to give a match, but wants to be able to change the match % on a payperiod-by-payperiod basis. I think the employer can do this so long as the change is prospective only (i.e. it only relates to compensation earned after the change). This is because the employee does not have a legally binding right to the compensation deferred, to which the match applies, until the employee actually earns it. Does anyone see a problem with this? (please also let me know if you agree).

We have a 401(k) Plan that covers only highly compensated employees (there are no non-highly compensated employees). Is there any problem with offering a 200% match under the plan?

We would like to amend our defined benefit pension plan to encourage older employees to stay. One idea is to increase the annual accruals upon the attainment of a specified age/service. For example, benefits would accrue at 1% annually, but will accrue 1.25% after age 55 + 30 years service. Is this allowed?

This is a typical missed contribution scenario with a twist. An employee had an election on file, but it wasn't honored by the employer for several months because the benefits department did not receive it. Employee noticed this and contacted the benefits department. Benefits department told employee they had no election on file. Employee, with this knowledge, waits several months to inform the benefits department that she should have an election on file. At that point, the election is found and implemented. I know that the employer will have to correct for the first period (50% deferral plus 100% match), but what about the period where employee had demonstratable, actual knowledge of the error and did nothing to correct? Is the correction the same for this period? Thanks for all responses.

We have a plan that has two subrogation clauses. One was in effect when the initial claim came through and the current one was in effect when the matter was settled. The terms do not clearly state which clause to use. Does anyone know of any guidance or general practice on how to handle this?

Can an Estate that is a beneficiary of a 401(k) plan make a nonspouse rollover to an IRA?

Can an estate open an IRA? I'm specifically trying to figure out if an Estate that is a beneficiary of a 401(k) plan can make a nonspouse rollover to an IRA.

We have a defined benefit plan. The plan calls for payments to begin in the month after Late Retirement. We had an individual retire at Late Retirement date, but he did not make an election until 6 months later. We have yet to make a payment, 8 months after his Late Retirement date. The Plan only provides for one benefit calculation, which is based on his age, service and other factors as of the Late Retirement date. Should I start making payments now based on that calculation even though he missed out on several months worth of payments? Would this be a violation of the actuarial adjustments rule under Treasury reg 1.411©-1(e)? Should I recalculate the benefit even though it's not provided for in the plan? Should I pay the several months of missed payments in a lump sum and go forward from there? The plan allows for a “retroactive annuity starting date” but my understanding is that this is only used where the QJSA is not provided before the actual annuity starting date (in this case, the Late Retirement date). This is not the case. Am I right that this option is not available to me? Thank you all.

A 501©(3) entity maintains a defined benefit plan. For purposes of determining whether "compensation" is an "excess benefit transaction" (i.e. has appropriate "comparability), vested retirement benefits are included for a defined benefit plan. Is the benefit included in "compensation" at retirement or is it determined based on the present value of the accrued benefit? Is it based on a straight life annuity (the normal form) or a lump sum? How can an older participant fund for maximum benefits without violating the private inurement rules?older

Originally, yes. But the date for making amendments was delayed a year. I think largely because IRS hadn't released a sample amendment yet.

My understanding is that the IRS has indicated that it will has yet to issue sample amendments regarding the Code section 436 limitations. However, I do not believe these have been issued (I can't find them). I anyone still expecting these to be issued? Has there been any indication as to when they might be issued? Or is everyone just drafting their own amendments, rather than wait for the IRS? Thanks.

I have an employee who deferred and vested $50 prior to 2005. Since 2005 he has deferred and vested thousands. We had a slight operational failure that needs to be corrected under Notice 2008-113. I'd like to treat the $50 as subject to 409A so that we can make one correction under Notice 2008-113, instead of two (one for the thousands deferred after 2005 and one for just $50). Is it ok to treat grandfathered nonqualified deferred compensation as subject to 409A?

Can anyone verify for me whether or not the new pension funding relief provisions of the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 apply to governmental plans? Thank you!