KJohnson

MAL--I haven't gone back and read it but I wonder if Deak holds up after the Supreme Court's decisions in Spink and Jacobsen with regard to settlor/fidcuairy funcitons. In the last few weeks the DOL has come out with some guidance on when trustees of a multiemployer plan act in a settlor function and when they act in a fiduciary function in amending a plan. Also to the extent that the attack was on sole and exclusive benefit under 302 of Taft-Hartley--this argument would seem to be dead because of the Supreme Court's decision in Demisay. Again, haven't gone back to read Deak lately.

Caution, if this is a money purchase pension plan or a profit sharing plan that has any sort of annuity option you cannot use the reg cited by MBOZEK. However, if it is a profit sharing plan not subject to 412 you may be able to do this in two steps. First, eliminate the annuity option under 1.411(d)(4)-3 and then use the reg cited by MBOZEK to cash out people over $5k involuntarily.

B/T/W I AM NOT SURE ANY RESEARCH WOULD SHOW ANYTHING ON THIS DIRECTLY, BUT I KNOW MUTLIEMPLOYER PLANS ARE ALWAYS IN LITIGATION ABOUT CHANGES TO THEIR SUSPENSION OF BENEFITS RULES WITH REGARD TO PEOPLE WORKING UNION AND NON-UNION. YOU MAY WANT TO DO A SEARCH AND SEE IF ANYTHING HAS EVER COME UP ON THIS. (ALTHOUGH THE 411(d)(6) ASPECTS SEEM TO COME UP ON THIS MORE FREQUENTLY THAN ANY SORT OF 401(a)(4) DISCRIMINATION ISSUe).

Collectively bargained plan pass all of 401(a)(4) automatically under 1.401(a)(4)-1©(5). This reg then sends you to 1.410(B)-2(B)(7) with regard to a collectively bargained plan. Then under the 410 regs you go to 1.410(B)(6)(d) to see who is collectively bargained. This rule contains provisons on bargaining unit "alumni" being treated as collectively bargained and it sounds like Bill, being the good guy that he is, falls under the defintiion (you would have to read this in more detail to make sure-- and also make sure that you fall within any consistency or other rules). If this is the case then it does not appear that you could have a 1.401(a)(4)-5 violation given the automatic "pass" for collectively bargained plans. If this all pans out to be true, I would think that you would want your amendment to specifically reference the alumni regs and that only alumni would be entitled to this credit.

"Suppose they terminate the current 401(k) prior to year end and adopt a new 401(k) profit sharing plan effective for all of 2002." You really could only "freeze" you cannot terminate and start another 401(k) without running afoul of the successor plan rule. Frozen plans are still in the required aggregation group. Also, plan amendments and terminations are subject to the "smell test" under 1.401(a)(4)-5...and this one kind of stinks.

I know the tendency has been to go "bare bones" in the Plan with regard to cross-tested allocations and testing, but I did put this into my volume submitter(and it was approved): For Plan Years beginning on or after January 1, 2002 any allocation under this Section 4.02 must satisfy one of the two minimum allocation gateways provided in Section 1.401(a)(4)-8(B)(1)(vi) of the Treasury Regulations.

You can keep a frozen plan open indefinitiely as long as you continue to file 5500's, update the plan for new law, make distributions when required under the plan (i.e. retirement, termination of employment etc), put out a new SPD (probably ever 10 yrs).........

I have had similar problems. I believe that the IRS's response to this question at an ASPA conference in the late 1990's was: "There is no good answer to this question. It requires a statutory fix..." That was helpful--right?

Christine, there are actually three pages to the thread. The first time I posted it it only linked to the first page. I have now tried reposting it and now I think all three pages are there.

You might also look here: http://benefitslink.com/boards/index.php?showtopic=16129

I agree with MGB and I think that is the best you are going to find in the regs. You can ask the participant why there would be a regulation that says you can eliminate something that is mandatory? Also the IRS's examination guidelines for CODA's contain the following examination steps with regard to hardship provisions: Examination Steps (1) Inspect the language in the plan document to determine when and under what circumstances distributions can be made. (2) Inspect the language in the plan document to determine if hardship distributions are allowed and under what circumstances (general or deemed standards)....

First, it is usually the trustee of a multiemployer fund that are due the contributions and so the trustees must choose whether or not to waive interest in a settlement. Actions by the parties to the CBA may not bind the trustees. Prohibited Transaction Exemption 76-1 sets forth the criteria for multiemployer trustees to follow on if and when they will waive interest. If these are elective deferral contributions in a 401(k) plan then there would be additional issues about restoring account balances. I am not sure if DOL has spoken to how delinquent elective deferrals to a multiemployer 401(k) plan intereact with prohibited transaction 76-1.

Julie, I would take a careful look at the plan being provided by the broker. This is an ERISA-covered plan (although you will probably be exempt from annual reporting). Does it have an SPD? Does it have claims and appeals procedures that comply with the new regs? Does it have a named fiduciary? etc. Does it deal with COBRA? I believe that an employer funded medical reimbursement account does not get the relief that a medical FSA under a 125 plan has. Some of the things that I have seen insurance brokers hand out are only two to three pages and don't do the job under ERISA.

My reaction is the same as Kirk's which is why I went for a letter at 38.

Plan year changes in 2002 creating a short year from 7/1-12/31. If a Plan has a last day 1,000 hours requirement for a profit sharing contribuiton allocation what do you do with the 1,000 hours requirement? You can find some guidance on short years regarding vesting, initial participation, 415, and 401(a)(17) on short years, but I haven't seen anything on benefit accrual?

This was discussed a year or so back. Look here: http://www.benefitslink.com/boards/index.p...t=ST&f=20&t=534

I still don't believe that you can have in-service distribtuions at any time. I think you are limited to a stated age, two year "seasoned money" or five years of participation per Rev. Rul. 68-24, 71-224, 71-295, and 73-553 You may also want to look at this: http://www.benefitslink.com/cgi-bin/qa.cgi...d=148&mode=read

I don't know what would prevent it. I used age 38 once for one plan and received a favorable determination letter (I even flagged the age in the cover letter). Of course if it has a (k) feature you are stuck with 59 1/2 for electiive deferrals.

This was on Benefits Link today posted by SunGuard Corbel 11/21/2002: GUST Extension Doesn't Address Anti-Cutback Problems; Amending by 2002 Year-End Might Be Prudent (SunGard Corbel) Word on the street is that the IRS believes Rev. Proc. 2002-73 also extends the time for adopting good faith EGTRRA amendments to plans eligible for the extended GUST remedial amendment period under Rev. Proc. 2000-20, but because no section 411(d)(6) relief is provided for the EGTRRA amendments, top-heavy amendments would have to be adopted by the end of 2002 to avoid a prohibited cutback under a top-heavy plan if existing top-heavy provisions were not amended until after the 2002 year-end.

Jody303--I believe that the answer to most of your questions is no because you have until the end of the EGTRRA good faith remedial amendment period to amend your plan to conform on how you have operated. Thus, you can operationally put in a provision and amend later as long as you do it by the end of your EGTRRA period. Thus 2001-42 provides: A plan amendment to a disqualifying provision described in this section III can be made retroactively effective within the EGTRRA remedial amendment period to the extent necessary either to satisfy the qualification requirements as amended by EGTRRA, as interpreted in published guidance, or to make the plan provisions consistent with plan operation. To the extent necessary, such a remedial amendment may be made retroactively effective as of the effective date of the "good faith" EGTRRA plan amendment or, where the plan provision automatically reflects the EGTRRA change, as of the effective date of the change. However, unlike other remedial amendment periods EGTRRA does not give you 411(d)(6) relief for a retroactive amendment. Therefore some of the points you raise are valid. For example if a dc plan would not be top-heavy post-egtrra but would be top-heavy pre-egtrra you need your amendment in by the end of the year because you cannot retractively take away that top-heavy minimum that would accrue to your non-keys under your pre-EGTRRA plan. The $200K issue is an interesting one. Suppose a plan has a last day of the year requirement for an allocation. If an employer has only $X to put into the Plan then obviously certain individuals will be allocated more and certain individuals will be allocated less if the compensation limit is raised to $200,000. Therefore, I would think that at the end of the Plan Year all employees have accrued a a contribution based on an allocation formula that limits comp to $170,000. Therefore you would need an amendment by the end of the year to avoid a cutback.

MGB I thought that if a prototype sponsor amends the Plan for EGTRRA it is doing it on "behalf of" the employers adopting the Plan. Under the guidance it appears that the employers have until 9/30/93 so why would a prototype sponsor have a deadline to act before this on "behalf" of the employers. Also, many EGTRRA amendments for prototype plans (an almost all for volume submitter plans) require an employer's signature. Are you saying for those plans as well the deadline is still before 9/30/93? Here is the language from 2001-57 A pre-approved plan may be amended by the document's sponsor to the extent authorized. For example, a sponsor of an M&P plan may amend the plan on behalf of adopting employers. If the amendment of a pre-approved plan includes an addendum to the adoption agreement, the addendum is effective only if signed and dated by the employer.

I agree with you Blinky. However, the issue for some DC Plans is avoiding a possible cutback on top-heavy in which case you still must have the amendment in place by 12/31/02 for a calendar year plan. The EGTRRA RAP does not give you 411(d)(6) protection. I think there were some other possible 411(d)(6) implications regarding the applicaiton of various other provisions if you don't have them in by the end of the plan year (such as the inrease in the comp limit for a plan that has a last day reqirement). If you are not concerned about these issues, then I think that this, in effect, extends EGTRRA good faith.

PAX and JudY303 are both right. Everyone who either adopted or signed a certificate for a volume submitter or M&P Plan now has until 9/30/2003 (assuming a timely adoption of the certificate or non-GUST Plan and assuming the sponsor sought a GUST letter by 12/31/00). However, you may have even later than that if DATAIR has not received its letter for its DB Plan or some other Plan. Judy303 gave you the right reference for this proposition. Unfortunately the IRS mis-numbered the notice when it first came out and it it is actually now 2001-12 and can be found here: http://www.benefitslink.com/IRS/ann2001-12.shtml You can see the list of porotype/volume submitter sponsors and when they got their letters on the various plans here: http://www.irs.gov/pub/irs-tege/mplist.pdf

< the question is whether making a distribution 30 or more years or so since the plan was terminated is administratively feasible so as to consider the distribution of the demutualization proceeds to be eligible for a rollover. My question is will the plan admin issue 1099s to the IRS and participants certifying that the proceeds are distributions from a qualfied plan.> I agree that those are the two questions. Thirty years is a long time, but then again the distribution could not have been accomplished at an earlier date. Back in 2001 I had a conversation with the IRS with regard to a Plan that terminated but had one small asset that would not become liquid until 2003 (and for which an in-kind distribuiton was impossible). I told them that 95% of the assets would be distributed within 12 months, but 5% of the assets would not be distribyted for 1 1/2 to 2 years. I asked whether the Plan would haave to be amended for EGTRRA. Their response was no-- as long as all assets were distributed as soon as administratively feasible. Of course I recognize that this sort of informal advice and $2.00 will buy you 1/2 of cup of coffee at Starbucks.

Although I know that I am getting off the original topic I am not sure that I agree. Take as an example a Plan that terminates in October 2001 but does not make its final distribution until February 2002. Must that Plan be updated for EGTRRA? Similarly, a Plan that terminates today must be updated for EGTRRA and GUST. However, if that Plan does not make a final distribution until February 2003 must that plan be updated for the final 401(a)(9) regulations? My understanding has always been that as long as you are "up to date" at termination and as long as you distribute assets as quickly as administratively feasible no further amendments are required.