Alf

Remember that it is a one-way street. After-tax money can go into an IRA, but cannot be rolled over into a qualified plan.

Great title for your post - it sums up the analysis well. We don't send letters out to participants notifying them of a fiduciary breach regardless of whether the DOL is on board with us or not.

I depends on the account balance pledged as security for the loan. Generally, this will be the amount of the original loan.

Unofficial IRS safe harbor is to look at employment status at time of distribution (assuming it is not a pre-arranged plan). If the distribution went through before re-hire, fine. If not, no distribution. However, you cannot quit, rush a distribution, and then rehire the person if it is all just a prearranged deal. No cite, but that is what the IRS says on the circuit and it is logical.

I understand that a distribution to a nonspouse beneficiary is not an eligible rollover distribution and so a withholding election notice is required by TR Sec. 35.3405-1, Q&A D-18. QUESTION: Does the IRS model 402(f) notice in Notice 2000-11 have to be modified to use for non-eligible rollover distributions? In practice, do we have to have a special notice for non-eligible rollover distributions? From what I can tell 3405 requires that the notice must provide: a) notice of the recipient's right to elect not to have withholding apply and how to make that election (the draft transmittal letter does not mention how to make the election); b) notice of the recipient's right to revoke the election at any time and a statement that the election remains in effect until revoked (the draft transmittal letter does not mention these); and c) a statement to advise recipients that penalties may be incurred under the estimated tax payment rules if the payments of estimated tax are not adequate and sufficient. The IRS model 402(f) notice does not mention b) or c). Does the IRS model 402(f) notice in Notice 2000-11 have to be modified to use for non-eligible rollover distributions. In practice, do we have to have a special notice for non-eligible rollover distributions?

Is there a legal rule for the period in which expenses can be submitted for reimbursement from our health flex plan after an employee terminates (ignoring COBRA)? The expenses were incurred during employment. If there is no law, is there a certain period that is typical?

The IRS has talked about the acquisition issues for HCE determinations for years but has not issued guidance yet. However, if your question does not involve an acquisition, they are HCEs. It doesn't matter if there was a plan in place or not.

I didn't think we could rely on the proposed regs yet because they do not include a certain type of special reliance language in the effective date provision. Is this just a theoretical issue? It seems to me that the only precedence that we can rely on says you can't do it, so you run the risk that the IRS could finalize the regs without this provision and we would be stuck.

500% of the first 5% or 6% of deferrals should qualify as a ADP and ACP safeharbor enhanced matching formula.

416(i)(B)(i) defines it as "more than 5 percent."

Doesn't the IRS's controversial position that a safe harbor plan has to state that it is safe harbor and remove all of the other testing language answer both questions? I am pretty sure that the IRS wants documents to reflect the testing method before the plan year begins.

Are you talking about a limit from the investment fund company or the TPA. It would be incredible if a TPA didn't allow more than one contribution per month. I agree that the DOL is not going to care. The fiduciaries have to comply with the DOL plan asset rules.

To clarify the clarification, the withdrawal restrictions apply only to the safe harbor contributions AND normal QNECs.

Ok, I get it (after re-reading the regs for an hour). We don't limit total deferrals (including catch-ups) to 50% of comp, so catch-ups aren't limited and the UA is not a problem.

Our plan allows deferrals of up to 50% of compensation. Are these the types of limits the final 414(v) regs are talking about in the cash availability (75% or more) rules?? Isn't our 50% limit an employer provided limit that is acceptable? Is the cash availability limit referring to something else?

The cash availability limit Tom mentioned is very confusing!! Does it really apply here where there is a 20% limit on deferrals?? Our plan allows deferrals of up to 50% of compensation. Are these the types of limits the final 414(v) regs are talking about in the cash availability (75% or more) rules?? I will probably start a separate post because I am worried (confused?)!

Also, the safe harbor match generally (assuming all other requirements are met) allows a plan to satisfy the ADP and ACP safeharbors. However, the plan could have other matching contributions or aftertax contributions that would be subject to ACP testing, so the plan would not be "safeharbor" for ACP.

Won't the merger create a multiple employer plan? Make sure that the resulting plan has multiple employer languge regarding amendment, testing, etc..

"Prior to the sale the companies are not related. As a result of the sale they are not part of a controlled group." Won't the merger create a multiple employer plan? Make sure that the resulting plan has multiple employer languge regarding amendment, testing, etc..

Our plan requires payroll deduction for loans too, but our loan procedures provide that the revocation of authorization for payroll deduction is a loan default event. Check all of the detailed language that might apply to loans under your plan. Otherwise you could add this as a default event in your loan procedures without going through the process of a formal plan amendment. Our plan requires Board approval to amend, but the administrative committee can amend the loan procedures. Loan defaults are brutal because of the early distribution tax. Why don't you amend your plan to allow hardships?

Anyone ever been asked to by participant to "measure" their account returns based on investment in a real estate parcel. Rabbi trust would hold the investment (if acceptable to trusteee). I can't see a reason why this would be taxed differently than a hypothetical mutual fund investment as long as the participant was not receiving any current use of the parcel. Could the investment be distributable in kind?

That sounds like it might be a participant's bankruptcy. I understand that area is hard to nail down, but I thought that a sponsoring employer's bankruptcy would be different because it is deferred wages from employees that is involved.

I think that matching/profit sharing contributions are plan assets once they are paid to a trust, but I understand that they can be challenged somehow in bankruptcy. That is not my issue, of course, but I don't think I can get by arguing that they are plan assets without identifying a special rule for 401(k) deferrals. 401(k) deferrals apparently aren't treated like salaries or profit sharing/match, so there must be a special backruptcy rule or theory specifically for these. Any other ideas?

A sponsor has filed bankruptcy and creditors want last remittance of 401(k) deferrals made BEFORE bankruptcy returned to employer. I think it was supposed to be an avoidable preference. It was 401(k) only and it was remitted prior to bankruptcy, so I don't see how it can revert back to employer (antialienation or plan assets??), but I can't find any authority specifically dealing with 401(k) salary deferrals. Who is correct? Does anyone have a cite I can rely on?

A sponsor has filed bankruptcy and creditors want last remittance of 401(k) deferrals made BEFORE bankruptcy returned to employer. I think it was supposed to be an avoidable preference. It was 401(k) only and it was remitted prior to bankruptcy, so I don't see how it can revert back to employer (antialienation or plan assets??), but I can't find any authority specifically dealing with 401(k) salary deferrals. Who is correct? Does anyone have a cite I can rely on?