Belgarath

Firehawk - I must say I can't follow your thinking on the Roth loans. Perhaps you might post an example showing the relative annual flow of money and balances to illustrate your position. Rcline - I respectfully disagree with your premise regarding directing where the loan money comes from, if I properly understand what you are saying. Sungard,for example, which is a big document provider, provides an option for the plan to restrict the source of loans/distributions, and many plans do in fact prohibit distributions/loans from Roth accounts. But maybe you were really saying something else, and I'm misinterpreting your meaning?

Thanks Tom, BUT, Company A didn't cease to exist. (Would this alter your thinking at all?) This was a stock purchase, not an asset purchase. So arguably, since there is the 410(b)(6)© transition period, the Corporation A could continue a safe harbor plan for 2013 for the full year, which negates following what I'd consider the more common sense approach, which would be to allow SH treatment for the short period. My personal "scales of justice" say that since the plan could clearly be terminated and receive safe harbor treatment for the short year, the same treatment should be permissible for a merger. However, the IRS seems to have some strange ideas on safe harbor plans. If they would just allow me to dictate policy, then life wouldbe a lot easier.

Just checking again to see if anyone has opinions on the last question?

Ok, it works great. I'm technologically disadvantaged, so I usually have an initial hiccup whenever something new comes up. Thanks.

I agree. Maybe we can get it back?

A quick and probably dense question: Let's say the hypothetical account balance (HAB) credits interest at (pick a number - say 5%). If the plan earns 15%, can a lump sum distribution be made to a terminated participant based on the current, very high, HAB? Or is it simply based upon 5%? Same question if it is a variable rate: I belive there is a floor requiring that the HAB payout can never be lower than the sum of all "principal credits" - but can the HAB amount be extremely high if investment returns go through the roof? I'm sure there are limitations on this - 415 and/or others, but I just wanted to ask the basic question. Haven't paid any attention to CB plans for years. Thanks!

Oldman - take a look at 1.403(b)-6(i). But first, check the plan document as ERISAtoolkit advised.

This issue has been debated before, and mostly it is just an "agree to disagree" type of thing. FWIW, not that he's always right, Sal's book discusses this issue, and his conclusion is that a split election isn't required. See page 11.654 of current EOB. Having said that, I think I've only ever seen (or perhaps noticed) a couple of plans that didn't allow the split election.

I think what this is saying is that you must be given the opportunity to switch from Roth to pre-tax or vice versa. But the regulations do not require a plan to allow a "split" deferral (you must offer a pre-tax in order to offer a Roth, but you don't have to allow any specific deferral amount to be split) - so for a given deferral, the plan may require it to be all Roth or all pre-tax. That's a plan design issue. You could likely defer as Roth for 1/2 of the year, then switch to pre-tax for the other half, or vice versa, and accomplish the same result, if your compensation pattern is consistent and depending upon when or how often you can make changes.

Thanks all. It just seemed very much against the "normal" thrust of the RMD regulations, which is why I wanted to see if I was missing some crucial point. I wonder whether the client would have to fight with an IRS auditor if this was questioned? Most of my experiences with IRS auditors is that they are untroubled by such trivialities as adhering to their own published regulations. Hopefully we'll never find out.

Hi Tom - not trying to put words in your mouth - so are you agreeing? I looked up the reference in Sal's book that you provided, and going on to 1.d.4)b) and c) (Page 6.413) it appears that this would also agree with my reading of the situation?

Seems like the regulations produce a possibly unintended consequence, and I'd just like to see if I'm way off base on this. A person starts a new business when he is 75. According to 1.401(a)(9)-2, Q&A-2©, this person wouldn't be a 5% owner, becasue he wasn't a 5% owner with respect to the plan year ending in the calendar year in which he attained age 70-1/2. Under the prior regulations, there would have been a different result, and the RBD would have been April 1, 2013. But the (current) final regulations changed this - whether intentionally or unintentionally I don't know. Does anyone disagree with this? It makes a difference, because if my reading is correct, then any distribution taken at this point would NOT qualify as an RMD, and would be an ERD and subject to 20% withholding.

Yes, I think so. There's a 2-year grace period under 1.401(k)-(4)(b)(2), but the 410(b)(6)© requirements, to the extent that they are more restrictive, would override. I didn't know anyone in the world actually had a SIMPLE 401(k)...

I have blessedly cleansed my mind of anything to do with 412(e)(3), or thought I had. I do seem to recall that Revenue Ruling 2004-20 specifically addressed this issue,and that it furthermore wasn't a disqualifying event necessarily, but WAS a deduction issue - that is, you couldn't currently deduct the disability waiver premuim. If you look at 2004-20, I'm sure it will expalin this in more and better detail.

I have a separate question on the same situation. An employer (A) with a SH matching contribution was acquired in a IRC 410(b)(6)© transaction (in a stock purchase) by an employer (B) with a non-safe harbor plan. They want to merge A's plan into B's plan mid year. Question is, does that blow the safe harbor for Employer A's plan? 1.401(k)-5 naturally is "reserved" so it gives you nothing. 1.401(k)-3(e)(4) makes it clear that you could preserve the safe harbor treatment if the Plan A is TERMINATED, but it naturally doesn't discuss a merger. Absent any specific guidance, it would appear that the conservative position is to say that plan A can't be treated as a safe harbor in the year of the merger. And yet, this is so asinine that it is rather hard to believe. So, I'm just soliciting opinions - does anyone hve any specific experience, knowledge of conversations with IRS officials or questions from the podium at conferences, etc., that deal with this issue? Any opinions on the "risk" of treating it as a safe harbor for the year of merger?

Thanks - we had basically given them a sternly worded warning/caveat to consider all the appropriate Fiduciary aspects, seek appropriate ERISA counsel, etc., etc., etc. - I don't expect that they will end up doing it, but that's up to them!

AAAARRRRGGGGHHH! The Grinch strikes again!! The annual confirmation that I'm not very clever.

Didn't want to insert this in the other active thread concerning Plan Administration, so started this new thread. Specifically regarding their document system - we currently use the Relius Document system. Wondering if folks here have used the FT William Document system and if so, what is your experience? We're giving some consideration to switching over from Relius to FT William for documents only - if anyone else has done this, what was your experience? Did the "mapping" project go reasonably smoothly? Is their amendment system/module user friendly and does it work well? Do they have a good "Pension Library" similar to the Relius Pension Library, with specimen forms, amendments,etc.? Any and all comments appreciated!

See 1.403(b)-5(b)(4)(iii)(B). I'm assuming this is a non-ERISA plan. If it is an ERISA 403(b) plan, then I think you'd have to make sure the plan contained "fail-safe" language to automatically override the exclusion if anyone works 1,000 hours.

A client is thinking about investing in "pink sheet" stocks, which as far as I can tell are certain over-the-counter stocks that don't have to file with the SEC. Other than the normal Fiduciary prudence rules, etc., etc., is there any regulatory prohibition against a plan investing in these? I don't believe there is, but I never heard of them until today...

I'd HIGHLY recommend that you run any per stirpes designation by an attorney licensed to practice in your state. The reason I say this is because when I was doing some investigating on this some number of years ago, I was somewhat shocked to find that "per stirpes" didn't necessarily mean the same thing or produce the same result in all states! Now, this could have been changed since that time, or the original information may possibly have been faulty, but since it can end up making a big difference with substantial sums of money, it seems worthwhile to involve a competent estate planning attorney.

After making the unworthy observation that I sure wish I had so much money that I could have $100,000 transferred to my personal account, and not notice that the balance seemed abnormally high for a year... On a purely gut reaction, I'd say that he should pay it personally, but I've done no research whatsoever to support that gut reaction. The plan sponsor isn't technically the offending party (I know, in many small plans, the functions of owner, fiduciary, plan administrator, and trustee are all combined in one person).

Let's see...if I'm thinking straight this afternoon (a dubious proposition at best) With regard to the RMD for the deceased, it isn't a "post death" distribution in the year of death. The RMD for the year of death is determined under, in this case, the uniform lifetime table. For the applicable distribution period in subsequent years, see 1.401(a)(9)-5, Q&A-5(a). For the beneficiary's RMD's, from the beneficiary's own account, since they are still lifetime distributions, again, you'd continue use the uniform lifetime table.

IMHO this situation as you describe would not qualify for hardship distribution treatment. I think it wouldbe a very aggressive (unjustified) reading of the regulation to allow a hardship for the purchase of a principal residence that will not even have any joint ownership on the part of the participant.

Why do you have to keep the annuity options? As long as it isn't prior Pension money, annuity options aren't protected - as long as they have a lump sum option available, right? Or did my marbles fall out again...