Belgarath

Cats rule! Dogs, like people, are subservient to them.

I agree with WDIK. See following from Revenue Procedure 2005-16. SECTION 19. EMPLOYER RELIANCE .01 Standardized M&P Plans - An employer adopting a standardized M&P plan may rely on that plan's opinion letter, except as provided in (1) through (3) and section 19.03 below, if the sponsor of such plan or plans has a currently valid favorable opinion letter, the employer has followed the terms of the plan(s), and the coverage and contributions or benefits under the plan(s) are not more favorable for highly compensated employees (as defined in §414(q)) than for other employees. (1) An employer may not rely on an opinion letter for a standardized plan with respect to the requirements of §§415 and 416, without obtaining a determination letter, if the employer maintains at any time, or has maintained at any time, another plan, including a standardized plan, that was qualified or determined to be qualified covering some of the same participants. For this purpose, a plan that has been properly replaced by the adoption of a standardized plan is not considered another plan. The plan that has been replaced and the standardized plan must be of the same type (e.g., both defined benefit plans) in order for the employer to be able to rely on the standardized plan with respect to the requirements of §§415 and 416 without obtaining a determination letter. In addition, an employer that adopts a standardized defined contribution plan will not be considered to have maintained another plan merely because the employer has maintained another defined contribution plan(s), provided such other plan(s) has been terminated prior to the effective date of the standardized plan and no annual additions have been credited to the account of any participant under such other plan(s) as of any date within a limitation year of the standardized plan. Likewise, an employer that adopts a standardized defined contribution plan that is first effective on or after the effective date of the repeal of §415(e) will not be considered to have maintained another plan merely because the employer has maintained a defined benefit plan(s), provided the defined benefit plan(s) has been terminated prior to the effective date of the standardized defined contribution plan. (2) An employer that has adopted a standardized defined benefit plan may rely on an opinion letter with respect to the requirements of §401(a)(26) only if the plan satisfies the requirements of §401(a)(26) with respect to its prior benefit structure or is deemed to satisfy §401(a)(26) under the regulations. However, an employer may request a determination letter if the employer wishes to have reliance as to whether the plan satisfies §401(a)(26) with respect to its prior benefit structure. (3) An employer that adopts a standardized plan may not rely on an opinion letter with respect to: (a) whether the timing of any amendment to the plan (or series of amendments) satisfies the nondiscrimination requirements of §1.401(a)(4)-5(a), except with respect to plan amendments granting past service that meet the safe harbor described in §1.401(a)(4)-5(a)(3) and are not part of a pattern of amendments that significantly discriminates in favor of highly compensated employees; or (b) whether the plan satisfies the effective availability requirement of §1.401(a)(4)-4© with respect to any benefit, right, or feature. An employer that adopts a standardized plan as an amendment to a plan other than a standardized plan may not rely on an opinion letter with respect to whether a benefit, right, or feature that is prospectively eliminated satisfies the current availability requirements of §1.401(a)(4)-4 of the regulations. Such an employer may request a determination letter if the employer wishes to have reliance as to whether the prospectively eliminated benefit, right, or feature satisfies the current availability requirements. .02 Nonstandardized M&P Plans and Volume Submitter Plans - An employer adopting a nonstandardized M&P or volume submitter plan may rely on that plan's opinion or advisory letter as described below if the employer's plan is identical to an approved M&P or specimen plan with a currently valid favorable opinion or advisory letter, the employer has chosen only options permitted under the terms of the approved plan, and the employer has followed the terms of the plan. Also see section 19.03(3) below. These employers can forego filing Form 5307 and rely on the plan's favorable opinion or advisory letter with respect to the qualification requirements, except as provided in section (1) through (4) and section 19.03 below. (1) Except as provided in section 19.03(2), (3) and (4), adopting employers of nonstandardized M&P plans and volume submitter plans may not rely on a favorable opinion or advisory letter with respect to the requirements of: (a) §§401(a)(4), 401(a)(26), 401(l), 410(b) or 414(s); or (b) if the employer maintains or has ever maintained another plan covering some of the same participants, §§415 or 416. For this purpose, whether an employer maintains or has ever maintained another plan will be determined using principles consistent with section 19.01 above. (2) Adopting employers of nonstandardized M&P plans and volume submitter plans may rely on the opinion or advisory letter with respect to the requirements of §§410(b) and 401(a)(26) (other than the §401(a)(26) requirements that apply to a prior benefit structure) if 100 percent of all nonexcludable employees benefit under the plan. (3) Nonstandardized M&P plans must give adopting employers the option to elect a safe harbor allocation or benefit formula and a safe harbor compensation definition. Adopting employers of nonstandardized M&P plans that elect a safe harbor allocation or benefit formula and a safe harbor compensation definition may rely on an opinion letter with respect to the nondiscriminatory amounts requirement under §401(a)(4). Adopting employers of nonstandardized M&P plans that are §401(k) and/or §401(m) plans may rely on an opinion letter with respect to whether the form of the plan satisfies the actual deferral percentage test of §401(k)(3) or the actual contribution percentage test of §401(m)(2) if the employer elects to use a safe harbor definition of compensation in the test. Adopting employers of nonstandardized M&P plans described in §401(k)(11) and/or §401(m)(12) may rely on an opinion letter with respect to whether the form of the plan satisfies these requirements unless the plan provides for the safe harbor contribution to be made under another plan. (4) A VS plan may give an adopting employer the ability to select an allocation formula for the employer non-elective contribution which satisfies one of the designbased safe harbors in §1.401(a)(4)-2(b)(2) or a benefit formula which satisfies one of the design-based safe harbors under §1.401(a)(4)-3(b)(3), (4), or (5), and the ability to select a safe harbor compensation definition for such formula which satisfies §1.414(s)-1©. If the adopting employer selects (utilizes) such formula and compensation definition, then the adopting employer may rely on an advisory letter with respect to the nondiscriminatory amounts requirement under §401(a)(4). .03 Other Limitations and Conditions on Reliance - The following conditions and limitations apply with respect to both M&P and VS plans: (1) An adopting employer can rely on a favorable opinion or advisory letter for a plan that amends or restates a plan of the employer only if the plan that is being amended or restated was qualified. (2) An adopting employer has no reliance if the employer's adoption of the plan precedes the issuance of an opinion or advisory letter for the plan. (3) An adopting employer can rely on an opinion or advisory letter only if the requirements of this section 19 are met, and the employer's plan is identical to an approved M&P or specimen plan with a currently valid favorable opinion or advisory letter; that is, the employer has not added any terms to the approved M&P or VS plan and has not modified or deleted any terms of the plan other than choosing options permitted under the plan or, in the case of an M&P plan, amended the document as permitted under section 5.06 or 5.09 or, in the case of a VS plan, modified the document as permitted under sections 14 and 15. Thus, for example, in the case of a VS plan, the employer's plan must be identical to the approved specimen plan except as the result of the employer's selection among options that are permitted under the terms of the approved specimen plan and modifications permitted under sections 14 and 15. (4) An employer's plan will not fail to be identical to an approved M&P or specimen plan merely because the employer modifies or amends the plan to: (a) Add or change a provision and/or to specify or change the effective date of a provision, provided the employer is permitted to make the modification or amendment under the terms of the approved M&P or specimen plan as well as under §401(a), and, except for the effective date, the provision is identical to a provision in the approved plan. Thus, an employer is not required to restate its M&P or volume submitter plan in order to change options under the plan or to specify different effective dates. Also see section 5.02, which limits an employer's ability to amend an M&P plan without causing the plan to be treated as an individually designed plan, and section 5.11, which requires the employer to complete a new signature page when the employer changes options in an M&P adoption agreement. (b) Correct obvious and unambiguous typographical errors and/or crossreferences that merely correct a reference but that do not in any way change the original intended meaning of the provisions. No such changes may affect any qualification requirements of the plan. The Service in its discretion may determine that any such changes are not considered identical. © Adopt model, sample or other required good faith amendments that specifically provide that their adoption by an adopter of a VS and or M&P plan will not cause the plan to be treated as an individually designed plan or cause the plan to fail to be "identical" to the approved M&P or specimen plan within the meaning of this section. (5) An adopting employer cannot rely on an opinion or advisory letter if the adopting employer has modified the terms of the plan's approved trust in a manner that would cause the plan to fail to be qualified. .04 Reliance Equivalent to Determination Letter - If an employer can rely on a favorable opinion or advisory letter pursuant to this section, the opinion or advisory letter shall be equivalent to a favorable determination letter. For example, the favorable opinion or advisory letter shall be treated as a favorable determination letter for purposes of section 21 of Rev. Proc. 2005-6, regarding the effect of a determination letter, and section 5.01(4) of Rev. Proc. 2003-44, regarding the definition of "favorable letter" for purposes of the Employee Plans Compliance Resolution System. Of course, the extent of the employer's reliance may be limited, as provided above.

The latter option.

Right, it is for limitation years ending in the calendar year. So a DC plan with a 7-1-06 to 6-30-07 limitation year would have a 415 limit of $45,000.

However, this link has apparently been edited quite a bit since I glanced at it originally. Until I work through this step by step, I don't know what I think...

I don't think too many people agree with Deloitte on this. In fact, if you do a search on these boards, there is even a discussion thread on this very subject. P.S. - here's the link I was probably thinking about: http://benefitslink.com/boards/index.php?showtopic=36196

Thanks all. This clears it up.

I don't even know if such a scenario is possible, but here goes: Suppose you have a DB plan, where under the plan formula, the participant has accrued a benefit in excess of the 415 dollar limit. Naturally, the participant cannot receive payments in excess of 415. Plan is now frozen. Can the frozen plan provide for an increase in this participant's benefit solely due to increases in the 415 dollar limit, or does frozen mean FROZEN so that the participant's benefit payable cannot increase over the dollar amount in effect as of the freeze date of the plan? Thanks.

Well that's good news. On the other hand, I might be a politician, so I can hope for the sewer rat. At least SOME people like rats...

You may find this link helpful as to the discussion of the DOL reasoning. http://www.dol.gov/dol/allcfr/ebsa/Title_2...FR2509.94-3.htm As to the IRS, and the new provisions of 4975(d) that you mention, you might find it helpful to read the JCT explanation of PPA sections 601 and 611. (I don't have a link, offhand, for this, although I seem to recall I might have archived one somewhere) This gives a more detailed explanation than you will find in the bare bones statutory language. I do not believe that you will find much agreement with your assertion that the transaction would fall within these exemptions. As to whether it all makes sense, that is an entirely separate issue. My mentor, when I started in this business, instructed me not to get hung up on whether it makes sense, or is "right" according to common sense - but to concentrate on the Code, ERISA, and the accompanying regulations. Sometimes it saves a lot of stress not to make yourself nuts because a provision is stupid - just accept that you have to live with it! If you aren't convinced, then I encourage you to contact an experienced ERISA attorney, who can undoubtedly give a more detailed explanation than many of us can provide. Hope this is of some use to you. Ok, I see Andy beat me to it while I was typing. Andy, hope we get better run support than Dice-K. 12 out of the last 16 with 2 runs or less!

I believe the date, given your parameters, is 210 days after 12-31-07. See DOL 2520.104b-2(b). Link attached. http://a257.g.akamaitech.net/7/257/2422/12...2520.104b-2.htm And no, we wouldn't do a new SPD every year.

Don't know about the rest of you, but when we submitted our documents, the reviewer required language substantially similar to the following: In the case of self-employed individuals (i.e. sole proprietorships or partnerships), consider the requirements of IRS reg. § 1.401(k)-1(a)(6) so that the allocation method does not result in a cash or deferred election being created for any self-employed individual.

If there is such a thing as reincarnation, I'm sure that with my luck, I'll come back as a toilet bowl brush.

While this generally helps mostly in family situations, it is sometimes used for non-family... they might consider excluding one of the owners (and they make it up outside the plan) which reduces the number of NHC to around 18 in your example of 50, assuming no other HC. This also sometimes allows them to more closely target the NHC's that they DO wish to benefit, depending upon job classifications, etc.. So likely not a good solution, but possibly worth looking at.

I also will claim no expertise in PT's, but FWIW... This would be treated as a "sale" transaction for PT purposes. This means that the "amount involved" is the greater of the FMV of the stock, or the amount paid. Since nothing was actually paid, then I think you'd use FMV of the stock. As for correcting, I would say that the stock must be distributed back out of the plan, and the appropriate amount contributed. I don't think that merely paying the excise tax does the trick. And as Pax suggests, ERISA counsel!

There are different schools of thought on this, and it comes down to personal preference. Assuming your account maintenance fees are low or non-existent, then it could create an ease of accounting 30 years down the road. But as you note, not necessary. If you are eligible for a ROTH IRA, then I'd certainly recommend that you consider a ROTH over a non-deductible traditional IRA. However, I'm a TPA and not a financial advisor, so please investigate further and don't take my word for it!

I agree with Bird. See IRS Notice 98-4, Q&A C-3.

mjb - as someone who doesn't know beans about a "taxable trust" I find this solution interesting, but also confusing. I'm presuming that a taxable trust is non-qualified - so what happens to any interest/earnings? And if it is non-qualified, and hence a distribution from the plan, how is it then eligible for rollover by the participant unless it is liquidated in time to allow a rollover within 60 days? And what if the participant doesn't want a share in a RE trust - suppose this is a DB plan that allows lump sum distributions, and all the participants want a lump sum, etc.. I'm not seeing how all the parts work together here. Is there some citation (RR, Notice, PLR) that discusses and approves this method? If plan subject to PBGC, will the PBGC approve this? Thanks in advance for educating me a bit on this subject!

I'm not so sure about that. I think given that there are 300 participants, and this error was only on one person (albeit a H/C - hopefully not a majority owner? Doesn't sound like it in attempting to read between the lines) then I think you could consider this an "insignificant" error and therefore eligible for SCP without a VCP filing being required. These determinations are facts and circumstances, with no one factor being "determinative." You need to read Revenue Procedure 2006-27 carefully. For example, there is the Section 4, .04 requirement to have proper "Established practices and procedures." But having said all that, on the face of this, I'm thinking SCP is reasonable here.

FWIW - I would use cash surrender value.

Just an added citation - take a look at IRC 414(n)(1)(B). Contributions made under the leasing organization's plan are treated as made by the recipient employer IF they are attributable to services performed for the recipient employer.

Tom - I think he meant "can't defer receiving RMD's," not "can't make elective deferrals."

Good point! I wouldn't have thought of that initially. Heed the wisdom of the fish! That trinocular focus confers unusual powers of perspicacity.

FWIW - while I've never seen any IRS blessing of this, the interest rate I've seen most commonly used is (prime +2%.) While I haven't heard of it being blessed, neither have I heard of it being challenged. This is for the 5 year loans. For a longer term loan for a purchase of a principal residence, I suspect it might be appropriate to adhere more closely to comparable local commercial rates?

Here's a link. And if you get this filed relatively soon, you will come in well under the $750.00 max. Say they were filed by the end of next week, that's what - about 18 days, so $180.00. Not quite so bad. http://www.dol.gov/ebsa/newsroom/0302fact_sheet.html