smm

I am not going to attempt to analyze the facts and agree that the correct answer is to get an opinion from an ERISA attorney. However, what I will add to this discussion is that you must always do the ASG from both directions. An entity not be an FSO b/c or the corporation exception or some other exception but could be A-Org if the other entity is the FSO. Also, beware of the stock and ownership attribution rules. There is a Q/A "Whos the Employer" on benefits link. Many of the questions involve ASGs and are very helpful in analyzing fact patterns. Good luck

You may want to try contacting somone who handles EPCRS at the National Office -try Lou Leslie - 202-283-9612 and discuss it with him.

What options are available to a M/P sponsor that failed to adopt 401(a)(9) Model Amendment by 12/31/03. Amendment has since been adopted. Go in under EPCRS as a "group" submission? What if there are fewer than 20 employers that adopted the M/P plan.

Same result. Just like amounts that will be left in a 125 plan. My advice to clients - don't waste your time and money with the amendment. So far, they agree!

To answer the original question, this was the ultimate dumb move. Instead of having amounts left at the end of the year, participants will have amounts left at the end of the 2 and 1/2 "grace" period. Participants will always have amounts left regardless of when the period ends. Look at Blockbuster video. Now instead of returning movies on the due date, people return them at the end of the 7 day grace period - or keep them longer and still end up with a "late" fee (oops, I forgot, there are no more late fees!!!!!!!!)

ok. here is why I am asking this question. Sponsor wants to amend psp to have 2 different allocation formulas, each of which when viewed independently, are safe harbor formulas. Sponsor wants to decide (via board resolutions, hence, outside of the plan) how much to allocate pursuant to each formula. Lots of issues here, but for the moment, I was wondering if you can look to the outside document (resolutions) to determine how to "divide" the contribution for allocation purposes.

Your point is well taken and I agree. I was thinking of a situation where the plan documents contemplates that the employer will look elsewhere to determine the meaning of a provision in the plan, i.e., how a category of employees is defined, how a contribution is determined, etc. I seem to remember something that says that you cannot look outside the 4 corners, but instead spell it all out in the document.

I'm searching for some authority that requires a plan sponsor to stay within the 4 corners of the plan document and precludes him from looking outside the document. I seem to recall the IRS/DOL (??) issuing something to that effect but cannot put my finger on it. Any thoughts???

I was wrong and you (all 3 of the other contributors to the thread) are correct. PLRs 200117045 and 200117044 confirm the analysis and result. Thanks for your help!

Thank you for your comments. The plan is a profit sharing plan for a medical corporation. I do not have a copy of the plan, nor do I represent the group but will ask for copies of the documents. I do know that the after-tax contributions are accounted for seperately. It seems to me that the issue is whether minimum distributions are "periodic payments" for purposes of Section 72. If so, then it would seem that the taxation is governed by the simplified method even though they are not a true annuity. If they are not deemed to be "periodic payments" then then are governed by the pro-rate method, described above. I will check on when they were made and what the plan said.

I just began to look into this issue and that answer does not appear to be correct. It looks like you have to use the simplified method under Section 72(d) to determine the amount that is recovered tax free. The divosor under 72(d) is 160 monthly payments for a 70 year old, which is an annual divisor of 13.3. Of each MRD, the total of the after-tax contributions divided by 13.3 would be tax free. Does this sound correct to anyone?????????????????????????

Participant is a 5% owner and must take his first RMD by 4/1/05. About 2% of his AB consists of after-tax contributions and earnings thereon. How is the distribution treated? Can he take 100% of the after tax contributions first as part of his first distribution? Does he take a pro-rata share? I haven't researched this yet and will, but any thoughts will be appreciated. Thanks.

I agree with Blinky, IRS guidance is coming soon. My understanding is that they are leaning torwards and end of the plan year deadline instead of 3/27 or 3/28 for the amendment.

I don't think that you are going to find anyone on this board who will give you a simple yes or no answer to this question. What you need to analyze is whether the entities are a controlled group/brother and sister group within 414(b)/© and/or whether the entities are an affiliated service group within 414(m). I suggest that you review these sections of the Code along with the underlying regulations. Also, I noticed that the 2004 IRS CPE has an excellent summary of thses issues. The CPE is available on the IRS web site. Finally, you can always contact an experienced ERISA attorney for help. Good luck!

Any update on this?

No, with so many changes these days, however, I just wanted to be sure that I was not overlooking something.

Can a new plan provide for full vesting on a change in control?

When would acceleration be automatic? Would the plan have to say that "...upon termination of the plan, all participants are 100% vested...." before the plan is amended to terminate. I've seen plans that do not contain this language. Does that mean that if those plans are terminated the assets revert to the employer. If so, no taxation occurs. Of course, the employer could simply "bonus" the affected participants with the amount of the non-vested amount. If there is no tracing, then everyone wins.

don't think that it is implicit in 18©. I thought that it could be derived from 15(a) because that section allows the service recepient to reduce the number of years for full vesting. But maybe this will be addressed tomorrow.

Can the service recepient accelerate vesting in connection with a plan termination and distribute the vested amounts prior to 12/31/05. Several of the commentaries suggest that this is possible, and I think I agree, but wanted to run my analysis through the message board to see if others agree. Q/A 18© allows a plan to be amended on/before 12/31/05 to terminate the plan and distribute the deferred compensation. The section does not discuss vesting, but presumably, the ability to accelerate vesting to the date of the plan's termination, 12/31/05 is derived from Q/A 15(a) which allows a service recepient to accelerate vesting. Is this correct? Thanks.

Obviously, some people received it earlier than others. Kilpatrick et. al. published an analysis of the Act by 12:45 PM EST. Either someone there is a speedreader or had some inside information.

I am signed up for the teleconference and it is available on the JCEB website for registered attendees only. I'm sure it is elsewhere (Notice 2005-1) but I don't know where.

It was just issued and the teleconference has been rescheduled for 5 today EST.

That is why the ABA teleconference was postponed until tomorrow.

Thank you for the reference.