jpod

If the employer is NOT a federally-chartered credit union, the plan is subject to ERISA. As a result of a 2004 IRS private ruling dealing with Section 457 of the Code, there is some uncertainty as to whether a plan maintained by a federally-chartered credit union is an ERISA plan or an exempt governmental plan. IRS and DOL are studying this right now. With that said, however, in all likelihood the employer has been filing 5500s, paying PBGC premiums and otherwise treating the plan as subject to ERISA, so that pretty much forces the employer's hand unless and until there is some dramatic announcement by IRS and DOL that plans of federal credit unions are governmental plans exempt from ERISA.

Depending upon the amount involved, and your ability to pay attorneys fees, you may wish to consider hiring an experienced securities lawyer to investigate whether the Company(ies) complied with applicable state and federal securities registration requirements or exemptions from those requirements and to advise you of your rights if the Company(ies) did not comply with same.

Whether or not we think the employer is holding the $$ for an unreasonable period of time is irrelevant, if this is an ERISA plan. If it is an ERISA plan, most of the $$ is not being deposited by the drop-dead deadline in the regulation. I keep harping on the "ERISA" issue because in my experience there just aren't too many contributory DB plans in the private employer world any more; most of what I see today is in the governmental sector.

If the DB plan in question is a plan that is subject to Title I of ERISA, the same rules apply. If ERISA does not apply, the time limit - if there is a time limit - will be found by consulting state law and the terms of the plan.

If it is simply a name change as you stated, you don't HAVE to do anything. You don't need to change the name of the Plan and you don't need to amend the plan to reflect the new name of the employer. You don't need any Board resolutions.

Interesting question, although not one that tends to come up every day. Obviously, this plan permits investments in anything legal, such as individiual securities and heaven knows what else. I would serioudly consider amending the plan to provide that all assets which cannot be readily converted to cash shall be distributed in kind.

I'm confused. I understand the facts of the original post to be that the participant received a distribution of his/her vested account balance (i.e., the amount attributable to elective deferrals), and as a result the nonvested money was forfeited immediately. Otherwise, there would have been no reason for the poster to ask about buy-backs. If these are the facts, why wouldn't a timely buy-back be required in order to restore the forfeited money?

I had to go hunt for it myself. It is 29 USC Section 1055©(6) [section 205©(6) of ERISA, as amended]. Now that I've actually looked at it, I see that if ©(6) relief is available, it seems to protect the plan from claims by the surviving spouse, in which case I was wrong about that one point in my previous post.

There is a provision in the ERISA Title I J&S rules (but not in the Internal Revenue Code's J&S rules) that says something like this: fiduciaries will be protected from liability under ERISA if they in good faith pay out death benefits to the wrong person, although the plan's fiduciaries will still have a fiduciary duty to try to get it back from the recipient. Whether any particular fiduciary is protected will depend upon the facts and circumstances of the particular case. However, I think this only protects the fiduciary from claims that he/she breached a fiduciary duty to the plan in paying the wrong person; I don't think this eliminates a surviving spouse's entitlement to his or her benefits.

If the so-called common law spouse was truly the spouse, he is entitled to the 401k balance. This is a question of state law; many states no longer recognize the concept of common law marriage. No federal law requires spousal consent to the designation of a non-spouse life insurance beneficiary (other than perhaps federal laws governing federal employees' life insurance programs).

PS Plan = no excise tax. That doesn't mean that the employer does not have a past due obligation to the plan.

1. PS plans can be designed to avoid J&S requirements; MPP plans cannot. 2. PS plans not subject to minimum funding requirements and minimum fundnig excise tax; MPP plans are. 3. PS plans not subject to ERISA 204(h); MPP plans are. 4. Can't incorporate a cash or deferred feature into a MPP plan. There may be more differences but these are off the top of the head. You can have a PS plan with a fixed contribution formula. Just make sure that the plan says, somewhere, that it is a PS plan.

I'm afraid I don't have a firm opinion on the participant's tax issue. However, concerning the Plan's right, and the Plan fiduciaries' legal duty under ERISA, to try to get the money back, doesn't the plan document contain the IRS-required pre-termination restrictions? If so, the participant was not entitled to the distribution under the terms of the Plan. It is on that basis that the participant can be sued by the Plan for recovery.

If you satisfy the conditions for the transition rule, you test for 410(b) coverage as if the transaction never occurred (until the end of the transition period).

You'll never get an exemption if you're using 90% of the plan's assets. Aside from pt issues, this is pretty close to a per se fiduciary breach (to invest 90% in one non-diversified asset), assuming the plan is subject to Title I of ERISA. I am imagining that this is a small plan (physicians perhaps?). If he/she/they wish to own the building, wouldn't they be better off taxwise and otherwise owning it himself/herself/themselves and renting it to the plan sponsor, even if a mortgage is necessary?

Do we not perform ADP/ACP testing based solely on those employees who are eligible to participate in the plan being tested? If you agree, please elaborate or re-state your question.

I am assuming you represent the plan in some capacity. I am also assuming from your post that the "problem," as you put it, is that the existing order is subject to varying interpretations. If that is the case, I believe the plan's interests (in avoiding tax disqualification or a later claim for more benefits) are protected if both parties to the order and their counsel sign off on a letter agreeing to a particular interpretation of the order that is consistent with the QDRO rules, but let me stress only if both counsel sign off. If one or both parties does not have counsel, make them go back to court to get a new order. If this is more than just a question of interpretation of the order, for example, the order is requiring something to be done that violates the QDRO rules, I would refuse to honor the order and make them go back to court and get a good QDRO.

I made the assumption that Company B dropped out of the plan immediately following closing because Company A says there was a distributable event, but I suppose I should not have made that assumption. If appropriate resolutions were not adopted to kick Company B out of the Plan, and if the Plan permits participation by a non-414-related employer, then there has been no distributable event and you're ok to do a direct spin-off or plan to plan transfer.

If Company A's plan was amended after EGTRRA to make "severance from employment" a distributable event, as opposed to the old "separation from service" standard, I believe that Company A's position is the correct one (assuming that A and B are not somehow members of a 414 group). A severance from employment occured immediately upon the closing of the stock purchase deal, so presumably employees of B now have a plan-given right to distributions which you cannot override via a plan to plan transfer.

Please explain why a divorced spouse would ever be able to elect COBRA under the employee's FSA, or would want to do so assuming he/she could. Are you suggesting that the divorced spouse would get to tap the employee's account to some extent?

Would not the J&S requirements, including spousal consent, apply separately to the additional pension amount paid on account of a disability retirement? In other words, is there a sepaparate annuity starting date for that additional increment?

Papogi: Vast majority? You think? Maybe you're right, but as far as I can recall the technique of not allowing mid-year changes was something that was widely discussed as soon as the proposed regs. came out in 1989.

Doesn't your plan say that the expense must be "incurred" while the employee is participating in the FSA? Just out of curiousity, why do you allow employees to drop out of your medical fsa mid-year? You are inviting them to use up the full year's allotment and then leave the employer holding the bag.

Granted I have not looked at Section 125 or the regs (proposed or final), but I think the Section 125 plan has to be maintained by the person (i.e., the employer) who would pay the cash compensation to the employees in lieu of the benefits choices allowed under Section 125.

I can't think of a reason why he could not take a loan from his company's 401a plan; what he does with the loan proceeds is not relevant. What do you mean by "effectively" repay the loan?