Belgarath

Hey, it's still suntanning weather. As of 3:45, a balmy 7 degrees Farenheit here in the frozen North, with a nice, brisk northwest wind. As the saying goes, a "fine, large day." Tom, I think you've got your seasons mixed up for your wardrobe. If you have to wear that thing in the Florida heat and humidity, no wonder you are Grinchy! And speaking of Grinchy and going off-topic, has anyone heard any further rumors about a delay on the regulations regarding fee disclosure? I haven't...

I'm not quite understanding the line of thought here. In order to apply the rule of parity for eligibility purposes under IRC 410, you have to be non-vested. There's nothing in 410 that says if you are a 401(k) participant, that any vesting of a safe harbor match is disregarded. So, you go to the 401(k) regs, which give you a specific dispensation for purposes of applying 411(a)(2) only. So I just can't get to a conclusion that in your situation you could apply the rule of parity. But I could be all wet. I'd love to hear any other opinions.

As to the first question, see 1.401(k)-1(d)(3)(iv)(D). As to the second, for a quick off the cuff response without really thinking much about it, I'd say an additional loan would be required.

I think the employee would be considered as vested for purposes of the rule of parity. See 1.401(k)-1©(1), (final regs) which differs from the prior version. Since vested, then the 411(a)(6)(D) requirement isn't satisfied, so you can't use the rule of parity.

Wow. I had never heard of such a thing until this thread. I'd be willing to wager on one thing - I'll wager that there are a lot of insurance companies who will be glad to take the annuity premium without this foolishness about a sign-off by the EA.

I like that. Which President said it?

Simply stunning! We routinely have them request the amendments that we already sent in with the termination. It's like they know nothing, and are working with a checklist and can't be even bothered to look at what you sent. Once we point out to them that they already do, in fact, have what they are requesting, it is USUALLY sufficient. This one today was incompetent on a whole different level... And of course it takes them 12 months to review the filing initially, then they give you 2 weeks to respond. Heads need to roll! But like you, I'll probably cool off in a day or so. The one today was faxed to the client yesterday, with a response date of Monday!

I'm feeling particularly irate this morning with regard to stupid IRS agents. While I do not yet have full details: Profit sharing plan (NOT a 401(k) plan, nor even a document with a 401(k) option) was terminated as of 12-31-06. We (or more accurately, the client) applied for, and received, a favorable determination letter for the termination. Client subsequently received a letter from a Revenue Agent, who shall for the present remain nameless. In this letter, the agent presents a list of "failures that were presented and the correction that was completed during the examination of the plan." The agent also says that the Area Coordinator has proposed a sanction of $7,000.00. The "failures" are: 1. Not timely amended for automatic rollover requirements under IRC 401(a)(31). Naturally, it was timely amended, and this amendment was provided as part of the termination. 2. Not timely amended for final 401(k) regulations. Interesting, since it isn't a 401(k) plan anyway!! I'm surprised they don't want a PFEA amendment as well! 3. Not timely amended for 401(a)(9). It was. So now the client is understandably in a tizzy, and we have to waste our time educating one or more morons at the IRS. We've been having a lot of trouble on plan terminations with people who don't know what they are doing, and WE have to waste our time instructing them - are we alone, or are others having similar problems? GRRR!

Funny, I thought the Pilgrims landed in Massachusetts, not Florida. But we'll forgive you. It's a little known fact, but their Red Flannel long underwear showed below their pantaloons at the ankles, and the First Thanksgiving featured the first appearance of the Boston Red Sox. However, in their first scrimmage, an after-dinner affair Captained by Samuel Fuller for the Pilgrims, and featuring an early form of baseball using sticks for bats and Quahogs for the ball, the Native Americans won in extra innings, 7-5. A happy Thanksgiving to you as well!

I thought that was Gordie Howe. Shows how much I know about hockey.

Reviving an old post here. I just saw a plan using age as one of the primary factors in the groups, and it makes me squeamish, yet I couldn't fnd any specific prohibition. Can you elaborate a bit re the 410(a) comment? As long as the plan has allowable age and service requirements, why is there a 410(a) issue? Have you seen a real situation where the IRS has asserted this, or do you have any sort of a citation? Thanks!

Or, (if anything like MY house) this would preclude ever being wrong...

Let's say a client had a Volume Submitter document, with an Advisory letter, effective date of the plan was 1/1/02. Type of plan doesn't matter - let's say a MP plan with some fancy provisions for the sake of argument. The VS provider stops sponsoring such a document - goes out of business, whatever. Let's say in 2005. So the client amends to a PS plan with another provider who has IRS approved VS or prototype document, with different provisions than the document that was in place from 2002-2004. Now the client goes to restate. The new, approved 2008 document is not only a different type (PS as opposed to MP) but even the MP plan available from the current provider doen't match the provisions under which the plan operated from 2002-2004. How do y'all handle this? I could see this coming up for incoming plans, or perhaps for plans which leave and they subsequently come back asking for docs/amendments. Do you take your current document and just amend back to 2002, which seems ridiculous, or must you do some sort of custom amendment, which will of course make it so current plan can't rely on the opinion/advisory letter as a determination letter? Other thoughts/solutions? I expect this might come up a bit in months to come.

There's no point in trying to make any sense of the English language. I gave up long ago. Consider: bomb comb tomb womb And why is the word "verb" a noun? And finally, to hopefully put a smile on your face: Tony Blair is visiting an Edinburgh hospital. He enters a ward full of patients with no obvious sign of injury or illness and greets one. The patient replies: "Fair fa your honest sonsie face, Great chieftain o' the puddin race, Aboon them a you take your place, Painch, tripe or thairm, As langs my airm." Blair is confused, so he just grins and moves on to the next patient. The patient responds: "Some hae meat and canna eat, And some wad eat that want it, But we hae meat and we can eat, So let the Lord be thankit." Even more confused, and his grin now rictus-like, the PM moves on to the next patient, who immediately begins to chant: "Wee sleekit, cowerin, timrous beasty, Thou needna start awa sae hastie, Wi bickering brattle." Now troubled, Blair turns to the accompanying doctor and asks "What kind of facility is this? A mental ward?" "No", replies the doctor. "This is the serious Burns unit."

Yup - Qua (as in Qua-lified) - dro (as in dro-ne). Or, "Oh No - not another one of these @%%**##@!! things."

I think that 1.402©-2, Q&A-7 will confirm that the RMD amount is not eligible for rollover. Also, see 1.401(a)(9)-7, Q-3. Now, if the money is first distributed to the participant, then the participant rolls it over to another plan or IRA, (as opposed to a direct transfer/rollover which is more likely what we're talking about) that's a different story. The Plan can distribute the entire amount to the participant without withholding the RMD, and the distributing plan will have been deemed to have made the required RMD. See Q&A-1 of 1.401(a)(9)-7.

1. I agree. 2. Although I believe the answer is no, I'm not entirely certain without a little checking. 3. I don't agree - whether the other businesses have plans or not is immaterial. If the business sponsoring the plan is part of a CG/ASG, as it apparently is, then this plan is ineligible to file an EZ. 4. $250,000 asset limitation is at the end of the plan year. (but as BG mentions above, the plan year had to begin on or after 1-1-07 - so if it was a 7/1/06 to 6/30/07 plan year, for example, then the 100,000 limit would still apply.)

Ignoring my previous tongue-in-cheek response, I find this fascinating. Let me try this on as a hypothetical situation. Someone gets a fake seal, and produces a supposedly authentic cout order or QDRO, with forged signatures, etc... (I don't know if such a thing is really even possible, but let's suppose for the moment it is). Under this, there is a substantial payout to an alternate payeee, who is in fact entitled to no such thing. All this comes to light at some future date, 1 month or 3 years or whatever down the road. A legitimate court order/QDRO is now presented to the Plan Administrator. What happens? Let us say that the alternate payee has spent the whole $200,000, but has other assets. Does the Plan no longer have any obligation to attempt to recover? Perhaps not - is the obligation only if there was an error on the part of the Plan Administrator, and this isn't necessarily considered an error? Etc. etc...? Is the real question whether the Plan Administrator acted prudently and properly in making the distribution, and if so, the plan's obligation ends?

"There are court cases that have required the plan to trace the distribution to determine that the funds paid are still in the participant's possession as the date the action is commenced. If the distribution has been spent there can be no recovery by the plan." Wow. MJB - can you cite one or two of these cases? As a non-lawyer, our legal system never ceases to amaze me! I'd like to read up on how this is done, so that I can hopefully somehow fraudulently obtain a distribution from a plan. Then apparently all I have to do is spend it and I'm home free! Except for the criminal charges, I suppose...

Thanks for enlightening me!

Thanks Janet. This seemed like the logical approach to me as well.

IMHO - yes. 1.401(a)(26)-6 says that the employer would disregard excludable employees.

Assuming anyone actually elects that option, the plan would presumably purchase another such contract from either the same or another insurance company. The insurance company probably can't be forced to offer an option not contained in the existing annuity contract, although they might agree to do so extracontractually, or possibly they will be filing with the states for approval to add this option to existing annuities - or something like that.

Company A sponsors a plan, #002. Company B now takes over the employees of company A, and assumes the assets and liabilities of the Company A plan as the new plan sponsor. Company B has never sponsored a qualified plan. Does the 3 digit plan # remain #002, or does it change to 001 as they are a new sponsor? I lean toward 001, as this is the first plan ever being formally sponsored by Company B, but some folks think it should still be 002. Opinions?

Gracias!