Belgarath

I will leave the question of Fiduciary vs. E&O to the legal experts - which type of ins. is appropriate in all or specific situations is not my bailiwick. Purely for informational purposes - we've had clients audited by the DOL in the past, and a couple of them have paid penalties for fiduciary breach. In all cases, however, the DOL has looked at our legal agreements with clients, and the facts and circumstances of each case, and they have immediately determined that we are in no way a fiduciary or operating in any fiduciary capacity. We're very careful to avoid any fiduciary actions. Can someone argue that we are acting as fiduciaries? Sure - you can bring suit and argue anything. If the fiduciary liability insurance isn't too expensive (and if the ins. companies will even issue it to someone who is not a fiduciary?) maybe it would be a worthwhile safety net. Have any of you (TPA's) ever had to pay up because you have been found to be operating in a fiduciary capacity? I'm under the impression that fiduciary liability insurance costs are skyrocketing - so it might be a pretty expensive safety net? And would you have to purchase this coverage for each plan, or is there "blanket" fiduciary coverage for TPA's that would cover all plans you administer?

I've never seen this one - Client had a document - non top heavy plan - that called for 7 year vesting. I haven't seen one of these in a long time! Anyway, prior TPA evidently did admin based upon 6 year graded. So, some terminated participants have received overpayments in the past, and some remaining participants received smaller forfeitures than they would have been entitled to under the terms of the plan. I don't know the scope of this yet - # or % of participants, dollar amounts, etc. - assuming for the moment that this could be self-corrected under Rev. Proc. 2003-44, how would you correct it? Appendix B, .03 gives specific corrections for vesting failure situations where a participant receives too SMALL a distribution, but not the reverse. So, should this not be considered a vesting failure, but simply an overpayment, and be handled accordingly according to .05 of Appendix B (which in this case refers you to 2.04(2)(a)(iii)?) That's how I'd be inclined to handle, but thought I'd see if anyone has run into this before. Thanks.

I'm not advocating this, but in an emergency situation, could you: 1. Roll the funds back into the IRA. 2. TRANSFER the IRA to another custodian. 3. Then withdraw from the new IRA? In other words, if you take advantage of a transfer (which I believe you can do an unlimited # of times) does this make it a "new" IRA, and therefore you can go through the whole exercise again in the same 12-month period? Or is it still considered the same IRA? I would think the former.

One additional note of caution: If I had 5 dollars for every time I've seen a disaster from setting up a "one person" plan, using a brokerage house or ins. co. document, and expecting to never have any administration, I'd be wealthy beyond imagination. Yes you can do this in theory, but in reality, many documents don't get updated for law changes, they take impermissible loans or withdrawals, etc., etc... Someone who knows something has to monitor such a plan, whether client, accountant, TPA, whatever. If they go off half-cocked, it will likely come back to haunt them, at a far larger expense than the small benefit they may gain from "easy" loan availability.

IMHO - taking into account the parallel provisions of 410(b)(6)© and 408(p)(10) - 1. Yes - but only for the transition period. 2. There is a cutoff. The transition period is through the end of the first plan year beginning after the transaction. So assuming calendar year, ok through 12-31-05. 3. Nothing has to happen this year.

I don't think it is just you. For a few pay periods, yes, I could understand it. But an extra 10% for two years? I agree with 401der - it's there, can't be reomoved, so sorry, and have the employees thank the employer for the unanticipated largesse. Is this employer currently hiring? I can get them a batch of applicants!

I should add that I was making an assumption (perhaps unwarranted) that Mr. D is an adult.

As always, I recommend consulting an ERISA attorney. But since I no longer have any ego or dignity (after enough years in this business) and I don't mind appearing to be a bonehead, I'll give you my opinion. No. I don't read 1563(e)(6)(B) to make this a controlled group. Neither mother nor grandfather owns MORE than 50% of the stock in XYZ, therefore there is no attribution between mother and grandfather, and no attribution from Mr. D. to either mother or grandfather. No doubt someone else can point out the flaws in my thinking.

Aren't you now required to use the Uniform Lifetime Table? (Unless a spouse is more than 10 years younger)

Maybe not an ASG, but don't you now have a controlled group? And therefore the desired arrangement gets thrown out the window?

Jquazza - thanks - actually, I "knew" that the faster traveler just ages more slowly - I just don't really understand it. And I tip my hat to all of you who are smart enough to comprehend it! It's too late. My brain no longer has the capability (not that it ever did) to grapple with these mysteries. I'm now reduced to such simplistic questions as, "If a man speaks in the forest, and his wife isn't there to hear him, is he still wrong?" At least I can answer that one. And if not, my wife can answer it for me.

Two plans. Don't know if gateway is a problem - at this point, the whole question is purely theoretical. Of course, I usually find out three months later that the "theoretical" question was based on a real situation... But I suppose that it might mean the employer has to put in as much as 2% more in the age weighted, if gateway will apply. (I haven't seen many AW, but they were always top heavy, so I'm assuming min 3% anyway.) So I'm not sure if this means that gateway automatically applies, or will it apply only if it has to move to the average benefits test?

Say you have an age weighted PS plan. The plan never gets to the average benefits test. And gateway doesn't apply. Now you add a 401(k) plan. And let's assume that it is a safe harbor nonelective, so there are employer contributions that are not 401(k) or (m) contributions. Does this move the age weighted plan into having to pass the test for gateway?

Interesting. Now, assuming for the moment that there is no contingent beneficiary as Appleby stipulated, then am I correct that a disclaimer is better than a gift, at least from Martha's viewpoint? Because without the disclaimer, Martha pays income tax on the whole 75,000, plus uses up a portion of her lifetime allowance - whereas the disclaimer gets the money directly to Mary Jane with no adverse consequences to Martha? Have I got that right, or is there other fun stuff to be considered?

Clever!

I'm just hoping for that wild card. It does seem that the Yankers may be a bit more vulnerable in a short series this year - starting pitching leaves something to be desired. Although it doesn't seem to have slowed them down much... I just hope they don't get Randy Johnson!!!

I liked the title so much that I just had to respond. Seems to me like EVERY group I work with is uncontrolled... First, my longstanding advice is to consult an ERISA attorney. I'm not too swift on these CG/ASG questions. But FWIW, it seems likely that this could be an ASG. Under the regs, a business is automatically considered a service organization if it engages in the field of "health." While I'm by no means certain that an assisted living facility qualifies, it would seem reasonable that it might - I suppose it might depend upon the level of "assisting" that takes place. If it just means grocery shopping, maybe not, and then you'd have to get into the capital angle. As to #2, facts and circumstances, unanswerable, (by me, anyway) without specific knowledge of situation. #3 - Agree. #4. It might, in terms of "regularly performing services" requirement. Again, I think facts and circumstances. Good luck! And the client could request a determination letter on this, maybe, if necessary?

Let's just say that I'm far enough North of Boston so that we outnumber the Yankee fans by about 10 to 1. 20 to 1 would be better, but life isn't perfect. New England is just one state anyway, right?

Agree.

Ah - well then, FWIW, in the absence of specific guidance, my opinion is that you can't take a hardship withdrawal in this situation. Hardship withdrawals are meant to be in-service withdrawals in situations where distribution wouldn't otherwise be permissible. Since a complete withdrawal can be taken upon termination, then I don't see how it could be classified a hardship. But perhaps someone else can come up with a different rationale that would help you out.

Tom - I would love a good explanation of the theory of relativity. Having read science fiction since I was a pup, I accept it but still don't understand it! I even bought a book called "Einstein's Universe" to try to solve the mystery, but I always get stuck on the part where someone in a starship at the speed of light doesn't age... simply cannot comprehend how biological and chemical processes of cell ageing can be different for two people just because one is traveling fast. Besides, I apparently am not subject to the laws of relativity, since I'm getting younger every year.

A disclaimer of a portion of the benefit? Just a guess...

Not sure about the PBGC coverage without checking first, (my recollection is that coverage would be required) but definitely not eligible to file an EZ - must file a 5500.

flosfur - well, you have now! As I said in my original message, I didn't have a copy of the 1987 regs handy when I was typing the response. But I had a few minutes this morning, so I dug out a copy. See 1.401(a)(9)-1, Q&A F-3(e) of those regs. Also, See 1.401(a)(9)-6, Q&A 1(e) of the 2001 regs. Aside from the plain language of the regulations, it's also instructive to note the preamble to the 2001 regs. Under the "annuity payments" section, there is a paragraph stating that ,"One of the rules in the 1987 proposed regulations that the IRS and Treasury are continuing to study and evaluate is the rule providing that if the distributions from a defined benefit plan are not in the form of an annuity, the employee's benefit will be treated as an individual account for purposes of determining required minimum distributions. The IRS and Treasury are continuing to consider whether retention of this rule is appropriate for defined benefit plans..." I don't know how it could be any clearer that using this rule was a reasonable interpretation, since the regs specifically provided for it, and I have no hesitation about referring anyone to these sources in support of this.

Not sure I see the point. If the person has terminated employment, can't they take a withdrawal anyway?