k man

depending on some of the answers to some of the questions brought up in the previous posts, you might have be able to allege that you have had a lack of control over the investments. The DOL Regs specifically provide that an employer must give participants the opportunity to direct investments at least once in a 3 month period. However, this would only mean that the fiduciaries could not rely on 404© to protect them. You would still have to show that you lost money as a result of this "blackout."

this might be somewhat basic, but i need to know whether in a 401(k), if a distribution form that contains a waiver and spousal consent is dated more then 90 days ago, do i need to go back and get the form executed again? if so, what is the cite for this rule?

mr. x. i think the problem here is that they are vesting people for something less then a "partial termination." for example, they are using this clause in the case of a person who is terminated due to elimination of their position. i do not think that would be a partial termination. i guess i am trying to work with the client on this but dont want some indefinite term hanging out there. [This message has been edited by k man (edited 05-12-2000).]

it is not defined in the document. i advised them if they want to have it that we should at a mimimum define it in document when we restate the plan. that is what brings it out of prototype.

we just took over a plan that has a clause which provides that employees who are terminated due to a "reduction in force" will be vested 100%. I have consulted with another attorney on this and he thinks it is not a great thing to have unless it is defined properly. also, use of such a clause will take the document out of prototype status. anyone have any opinions on this.

I thought 415 went away in 1999.

thats what i thought but had to get comfirmation. does the fact that it is a SIMPLE plan change anything?

The KJohnson post scares me in that it seems to imply that the education process extends to the complete plan and all possible investments. Futher, that plan sponsors might have to expressly caution against participants buying risky stocks in a directed brokerage account at the expense of maintaining some acceptable asset allocation model.

Someone help me settle a bet. Jim owns 100% of company A Jim owns 51% of several other companies Jim wants to set up a SIMPLE plan for Company A. Is there a control group situation with the other companies? The companies have nothing to do with each other and there is no other common ownership.

Fred Reish also has an article out concerning directed brokerage and 404©. His contention is that plan fiduciaries can get 404© protection on these accounts so long as the plan meets certain 404© requirements. To obtain protection he says that the plan must offer a broad range of investment alternatives. To meet this requirement, the Regs say the plan must provide at least three diversified investment alternatives. These are called the "core investments." Second, the plan must give participants the opportunity to excercise control. This is done byu giving participants the opportunity to change their investments frequently and by providing prescribed information to participants. [This message has been edited by k man (edited 05-10-2000).]

Alan's post assumes that there will be a broker making recommendations. I don't think this is the way they are set up these days. I think the trend today is to offer self directed brokerage as an investment "option" in addition to several mutual funds and the firm offering directed brokerage will try not to take a fiduciary position.

One more question. Under Rev. Proc. 90-49, should the employer take back the contribution immediately or it do so only after IRS sends letter saying it is ok? [This message has been edited by k man (edited 05-09-2000).]

Some people think that self directed brokerage is the ultimate 404© compliance since participants have seemingly infinite investment choices and access to their accounts anytime. Thus fiduciaries would have an added level of protection when offering this vehicle.

I need to review the plan but new facts have come to light. the employer claims they were told to make the contribution by the adminstrator who of course denies this. the plan is fully funded and the investments have performed extremely well.

What is the method for taking out a DB contribution after the close of the plan year. In particular, I am concerned about an employer who wants to take out a contribution they cannot deduct. the plan year end was 3/31.

Rev. Procedure 90-39 sets forth the porcedure for taking back non-deductable contributions. How does an employer provide documentation that employer contributions were "conditioned on deductability"? We dont have employer resolutions to that effect.

Are you aware of any legal authority concerning the reasonableness of blackout periods?

I think it is critical to understand that leave of absences and military service are treated differently than bankruptcies.

what about just filing the letter late without the 2500? do you think that would be a problem?

A participant is taking a distribution from a Top-Hat Plan. Does he receive a 1099 or W-2 for the distribution?

We have a client that terminated its plan in december of 1999. most of the plan has been paid out. however,we did not update it for GUST or submit it for a determination. We would like to do this however, the plan sponsor does not exist anymore. What can we do?

I am faced with a similar issue and I believe that once the grace period passes, the loan must be declared in default and the participant should receive a 1099 for the deemed distribution.

for the record, we are talking about a small plan in this case and only one person is currently deferring. However, I want to take the correct action to protect my firm in the event the employer does not make eventually forward the deferrals.

I know. Unfortunately I looked at the case and I agree. The next question is what can we do as a fiduciary in order to protect ourselves. I suppose we should send out some kind of letter to the client.

Does anyone know the cite for that case discussed by the previous post.