RCK

The instructions to the 2004 W-2 say that distributions from NQ plans are to be reported in Box 1 and Box 11. (Bottom right of Page 8. I'd include a link but . . . .) RCK

We have non-union, and company sponsored union plans, and I think that it is important to note that they are not multiemployer plans. Anyhow, the plans that operate within the same trust with the same recordkeeper have automatic plan to plan transfer provisions. So a union employee who is promoted out of the union, and therefore out of the union plan takes his money with him to the new plan. The vesting schedule on the old funds remains the same, and all service with the employer counts under both vesting schedules. It is not treated as a distribution. And if he ultimately terminates before 100% vested in the original plan, the forfeiture leaves the successor plan and goes back to the original plan (as kind of a reverse plan to plan transfer). All plans have determination letters on those provisiions (for what it's worth). RCK

You can sometimes show extenuating circumstances. One of our subsidiaries filed late, and when threatened with late fees explained all the turnover in staff, recordkeepers and auditors. Penalties were waived. But by all means file as soon as possible. RCK

I would think that you could add natural disaster wording to the definitions in the plan. That would of course take you out of the safe harbor definition, but that does not strike me as a big problem. RCK

I know that there are sponsors who put disclaimers in their communications, saying something like they will only be responsible for up to 3 months or 6 months of corrected deferrals nor allocations, if the participant got statements that showed the incorrect information. My question is whether anyone has successfully applied this defense in a self correction situation. RCK

In a former life, I created market value adjustment formulas for Guaranteed Investment Contracts (GICs). I think that the formula should be in the contract or policy, and they should be able to walk you through it. It's too late now, but you should be looking for a formula that is nearly symmetric. That is, it should provide a credit if rates have moved down, and a charge if rates have moved up. And in a perfect world, the credit for a 1% decrease would be the same as the charge for a 1% increase, and any surrender charge would be shown separately. But it's not a perfect world, so all you can hope for is for those to be close. RCK

I've always showed the date that the interest waspaid. And the instructions say "correction is defined as undoing the prohibited transaction to the extent possible". Although not directly on point, I think it supports using the date that both the deposit and the interest are made. RCK

In addition to the name on the paychecks, has the EIN on the w-2's changed? RCK

www.ssa.gov

By my count, two of FYI411's posts were not actively soliciting business. If FYI411 were an active sponsor of this valuable service, I would not mind. But I'm guessing that is not the case. RCK

In my experience, the DOL/PWBA/EBSA is a lot more interested if they get the same or similar complaint from more than one person. If you could find someone else in a similar situation (a long shot I'm sure), they might be much more interested. We had a situation several years back where the plan of an acquisition had some administrative problems, and I was on a first name basis for quite a while with people in the regional PWBA office until we got it fixed. With the right person at the right time, I'm sure that they will be an advocate for you. I do see the resignation letter as a problem though. RCK

I agree that the client needs help, but think that the (external) corporate auditor should be able to answer the quesiton. I could provide anecdotal information about what we do with our plans (some with full scope audits, some with limited scope, and some with none), but that seems dangerous in this situation. RCK

FWIW, I agree. RCK

We have had good experience with the IRS program, and we have had horrible experience with it. Depends on the office they go to, how busy they are, and who gets the project. One batch that we sent was not forwarded for over 6 months. So how long have you been using Automatic Enrollment? Your description of a large number of lost participants with small accounts is what happened to us after we went to auto enrollment. RCK

If the other plan is a DB plan, I would think that the odds are that it won't accept rollovers. A rollover into a DC plan is pretty straightforward--just an increase in the account. A rollover into a DB plan is a little harder to deal with--it can't really increase the DB benefit, so at the minimum it is going to create a recordkeeping problem that the adminsitrator would rather not have. RCK

Our strategy is to file the Form 5500 and only the pages that are being changed. So we do not file a copy of the extension. RCK

I agree with Belgarath and Archimage--you don't need to know exactly how much it was, as long as it was enough to put him at the limit and as long as he certifies that. But I also recall from my small plan administration days that there are some clients that you are better off without, and this might be one of those. If this is an isolated problem, then you want to keep the client. But if there is a pattern of mistrust and difficulty, cut them loose. RCK

To your first question, if you count hours to determine vesting, you have to be careful how you handle the short year. If you do elapsed time, your compliance is automatic. RCK

pax, I've always taken it literally. It seems like the Schedule H instructions are pretty clear. For the lines of Schedule B that tie to Schedule H, the same logic must apply. I suppose that in the lines that are actuarially calculated, you could argue that your reasonable actuarial cost method produces rounded results, and therefore that's what you put on the form. RCK

Jon, I admire your persistence in getting that expressed in a manner that even I could understand. I'd like to return to rcline46's point. There is a distinct possibility of a Benefits Rights and Features problem, depending on what the non-expanded fund group looks like. This is much more dangerous than the potential 404© issue. RCK

It's a taxable distribution unless both the distributing plan will distribute the loan and the receiving plan will accept the loan. I'd say that finding both of those is extremely rare. The only time that I've seen it was in a merger situation , where as a favor to the acquirer and their new employees we agreed to distribute the loans as rollovers to the acquiring plan. It was an asset deal for a small part of our company, with no plan termination, partial termination, etc. RCK

I think that each of the observations here is generally on point. I would however strongly suggest looking at the purchase agreement for confirmation. We have had situations that fly against those general rules. That is, we had a stock acquisition where the seller did an eve of closing termination of the plan, and agreed to wrap up the plan--so we did not get it. On the other hand, we have done asset purchases where we also agreed to pick up the plan. RCK

You will of course offer this feature to all participants.

To MGB: Yes, I believe that we would take the charge where a final contriubtion was allocated to a fund and then a distribution was taken. I think that is what SEC 2004-23 contemplates, subject to the $50 de minimis fee rule. To Demosthenes: I don't see that the SEC cares with the trading strategy is effective or not. Your warnings are well taken. I see the flow here as SEC says it can be done, fund says the they are going to do it, we tell the recordkeeper that they have to facilitate it. To mbozek: I understand the international arbitrage possibilities, but I don't see that the SEC is going to confine it's rulings to international funds. I agree with demosthenes--the fee goes to the fund, not the plan. To Jon Chambers: good point on the 401© issue--I guess that if we go with the limited trade route, I'd prefer a quarterly limit on trades, so the participant has at least X chances to trade every quarter. RCK

In response to the all the current Mutual Fund commotion, as well as insider trading issues, we are considering: 1. Imposing fees on quick round trip trades in any fund. This could be along the lines of last week's SEC proposal (2% fee on shares redeemed within 5 days of their purchase). 2. Imposing a limit on number of trades a participant could make during a specified time period, or a complete ban on round trip trades over time periods shorter than XX days. 3. For the Company Stock Fund Only, greatly expanding our definition of what constitutes a 16(b) insider, and prohibiting all trades by that group in the period 10 days preceeding and 3 days following a earnings release date. Background: plan has approximately 20,000 participants and $500 million of assets, a third party recordkeeper, and no two funds from the same investment manager. So the question is: We are aware that many companies are thinking about these issues, but has anyone done anything yet? RCK