PMC

Does anyone know the current OA portion of the current OASDI rate?

Plan states death benefit payable to - the designated beneficiary, and if none, to the spouse, if no spouse to the participant's estate. Unmarried participant dies. His brother is his named beneficiary. The deceased participant does have minor children. The beneficiary brother wants to know, can he now decline to be the beneficiary entitled to receive the death benefit and instead have the death benefit paid to the children? Or is the brother "stuck" with being the beneficiary and if he wants to provide the death benefit to the children he needs to explore other "gifting" type avenues?

Employer currently has a MPP. Plan year is 10-1 to 9-30. Employer contribution is 3% to be made at the end of the plan year (9-30-06). Employees have already accrued a right to the allocation formula for the current plan year. Employer wants to establish a 401(k) plan - let's say 5-1-06 (keep the plan year the same as MPP). . Can the MPP be amended into a 401(k) plan 5-1-06 and make sure that the 3% contribution previously provided by the "MPP" be carried forward in the 401(k) - perhaps via a 3% safe harbor nonelective? Participants won't lose out on the 3% since that will be required under the 401(k). Or, since the MPP is a pension plan subject to minimum funding etc. the 3% must be contributed to the "pension" plan and not to a PSP? Is the alternative to keep the MPP though 9-30-06, start up a 401(k) as of 4-1-06 with just 'EE deferrals ('ER can't afford to contribute to both plans) and then merge the MPP into the 401(k) as of the end of 9-30-06?

Employer has a Simple IRA. Now wants to establish a 401(k). No employee or employer contributions have been deposited into the Simple IRA so far in 2006. If the employer failed to provide the 60 day 'EE Notice in Nov. '05, could the employer decide to discontinue/terminate the Simple IRA for 2006? What if the Simple IRA was using the 2% nonelective? Would the employer still be required to make that contribution thereby precluding the employer from establishing the 401(k) for 2006?

Look at IRC 410(a)(4)

Difference of opinion here - Participant elects a rollover of his Roth (k) account from Plan A to Plan B and held in a Roth Rollover account in Plan B. Plan B allows other non-Roth (k) rollovers in too and allows an employee to take an in-service distribution of their Rollover account at any time for any reason. Is the Roth Rollover account able to be withdrawn at any time similar to any non-Roth Rollover account and then it's just a matter of determining how much is taxed (proposed regs)? Or, does the Roth Rollover have to follow the availability rules for withdrawal of before-tax deferrals and Roth deferrals (i.e. hardship, 59 1/2 etc.)?

Can you rely on the DOL's calculator for determining earnings on late deferrals even if you don't file under VFC?

Notice 2005-95 extends the time by which certain amendments need to be signed depending on whether the amendment is a discretionary one or one due to correct a disqualifying provision. The Automatic Rollover/ Mandatory Cash-Out amendment is one needed to correct a disqualifying provision and the time to sign the amendment has been extended for certain plans. Question - if the plan had a $5000 cash-out threshold and has decided to lower that threshold to $1000 via the Automatic Rollover amendment, does the fact that the cash-out level has been reduced to $1000 constitute a "discretionary" amendment on behalf of the employer and should have been signed under the time frame disregarding the extension afforded by 2005-95?

Took over a plan where the required beginning date is defined based on the TRA '86 of age age 70 1/2, regardless of whether the 'EE has retired. Participants have been paid their RMDs based on that RBD. The employer now (2006) wants to amend that provision to the SBPJA date of the later of 70 1/2 or retires. Can participants, who are over age 70 1/2 but not yet retired, now elect to suspend their RMDs because of the amendment? Or is it too late for those participants because the plan wasn't amended during the GUST remedial amendment period and such a participant did not make an election during that RAP?

Debate re- whether a plan needs to file for a determination letter - Ann. 2001-77 indicates an employer can rely on the opinion letter only if it has not added any terms to the approved Prototype and has not modified any of the terms of the document other than "choosing options permitted under the document..." As with most, the Adoption Agreement we use has an "Other" box which can be selected and the option written in. For example, if a plan wants quarterly or monthly entry dates the "other" box is selected and the entry dates written in. Would you consider this adding to or modifying the terms of the plan and thus file for a LoD, or would you view this as still choosing an option under the plan, albeit the "other" box that needs specifics written in, and not file and can the plan rely on the opinion letter?

The 414(h)plan has a 3% mandatory employee contribution picked up by the employer. They are in union negotiations now and they want to provide a range of employee contributions e.g. 3%-9%. Once selected by an employee, it would be irrevocable. What about those existing employees who have already made their 3% irrevocable election? Can they change, or would the range now only apply to new participants?

Looking at some old (1991) proposed regs. and it states that a part-time, seasonal and temporary employee's benefit provided under "retirement system" must be nonforfeitable. Can you explain why nonforfeitable just for these employees?

May not be as complicated as I am making it but - Car dealerships A and B each have a 401(k). Car dealership A purchased B in 2002, inventory and employees. B no longer exists. Haven't seen any agreements, amendments, resolutions and don't know whether A actually assumed sponsorship of B plan. If there no longer is a dealership B, and A purchased the assets of B, is B's plan an asset and therefore A automatically assumed the sponsorship of B's plan? Can B's plan be terminated and assets (including deferrals) distributed without any successor plan issues? Could assets be distributed as a severance from employment, or would it be too late if A is now the sponsor of B's plan? Should B's plan adopt the EGTRRA provision allowing the severance from employment distribution? Trying to stay away from merging the two plans because there may be a testing issue in the B plan.

Isn't that for the elimination of optional forms of payment (e.g. annuities0? Aren't in-service withdrawals (non-hardship) still protected?

3 Safe harbor questions - 1. Notice 2000-3 allows a plan using the safe harbor matching contribution to reduce or eliminate the matching contributions provided the proper notification is met and then test under ADP/ACP. What if a plan is using an enhanced s-h match but wants to reduce it to the basic s-h match? Seems like if they can do the above, they could do this, provided proper notification is given? 2. S-H match can be made annually or on a payroll basis. Using a payroll basis can avoid the true-up situations as long as that basis is at least quarterly and the match made by the end of the following quarter. What about a plan that makes the s-h match semi-annually? Is this O.K but they need to take into consideration true-ups at the end of the year? 3. Anyone seen any additional guidance re- corporate or plan mergers and s-h? For example an employer has a MPP and 401(k) and they use the MPP to satisfy s-h but want to merge the 2 plans mid-plan year and have the 401(k) provide the s-h contribution. Doesn't seem like participants would be harmed but the s-h Notice that was given for the plan year wouldn't be correct and would this invalidate s-h?

Is there any concern with 1.401-6(B) and the definition of termination and the fact that the 401(k) plan in this case could be considered a comparable plan?

Can a governmental defined contribution plan impose a maximum age (e.g. 70) for contributing to the plan? Or would this be prohibited under ADEA?

Many plans state that the 501 hours for a terminated employee doesn't apply to those who retire, die or become disabled. Wouldn't the employer need to make sure no participant accrued a right to the allocation based on those exceptions before the plan was changed?

What about an employer who also maintains a plan just for their union employees and the union plan doesn't allow for catch-up, or the union plan does and the non-union plan doesn't? Does the statutory exclusion under 410 meaning anything for catch-up purposes?

Still unsure about this one - Reg. 1.401-6 deals with the termination of a qualified plan. Para.(b)defines a termination and states a plan is not considered terminated merely because an employer consolidates or replaces that plan with a comparable plan. 1.381©(11) describes what constitutes a comparable plan. An employer currently has a Profit Sharing Plan ('ER $ only) and wants to terminate it, distribute assets to employees and then start a 401(k). The 401(k) would seem to be a comparable plan. Would the employer be making an impermissible distribution of those PS $ because the plan wouldn't be considered terminated? (The PSP doesn't allow for any other in-service distributions now.) Or could the PSP be terminated and assets distributed but the 401(k)would be "viewed" as an amendment and there would be 411(d)(6) considerations?

Employer A was a controlled group member with Employer B under Plan #1. Controlled group no longer exists and Employer A wants to establish their own plan and spin-off the assets attributable to Employer A and merge them into their new plan. Employer A workforce is aprox. 40% of A & B. Plan #1 will still exist for Employer B. Do you think this would be a partial plan termination requiring 100% vesting in Plan #1 for Employer A's participants? Or given the fact they are merging their portion of Plan #1 into their new plan, and vesting can continue for them, they don't have to vest them 100%.

Plans with after-tax employee contributions determine pre-'86 and post '87 amounts in the event a participant receives a distribution of after-tax prior to termination of employment for calculating taxable distributions and what portion of the distribution of after-tax needs to be considered a withdrawal of interest. Now that after-tax contributions can be rolled over to another plan, is there still the need to ascertain the pre-'87 and post '86 after-tax contributions? Or, given the fact that the after-tax is a "rollover," the accepting plan doesn't have to worry about it? Essentially treat the rollover of after-tax as being made Post-'86 and determine whatever needs to be considered interest under Sec. 72?

I understand comp. for 415 purposes is based on the limitation year, but I thought the annual comp. limit (401(a)(17) is applied to the comp. for the plan year- 1.401(a)(17)(B)(3). The sponsor's main concern is to include as much comp. as possible to maximize their deduction for their 12-31-01 FYE.

Company just came into existence in June 2001. Want to establish a plan this year (7-1-01). Highly paid employees and don't want to be limited by the pro-ration of compensation for a short plan year (7-1 to 12-31-01)for allocation purposes. Can the effective date of a plan pre-date the existence of a company? Establish the plan effective 1-1-01 with a full 12 month plan year to avoid pro-rating comp.? If not, can the plan be effective 7-1-01 but define the compensation period be as the entire calendar year to avoid pro-rating? Anyone have anything from the IRS re- this?

I guess my question is, can this employer terminate the PSP, distribute the assets to participants and then start a new 401(k) plan? Or does 1.401-6 mean that, if the 401(k) is considered a "comparable" plan, the PSP really can't be considered terminated and therefore no distribution of assets should ahve occurred (disregard any other satisfaction of a distributable event for this argument).