KJohnson

Moe, for Trustees you go to 408©(2) of ERISA (as opposed to 408(B)(2)) that provides that a trustee can receive reasonable compensation from a plan provided that the trustee is not receiving full time pay from the employer (or union) that sponsors the plan.

I think according to 2000-3 you must amend: Thus, for example, a plan sponsor that maintains a calendar-year 401(k) plan using the current year ADP testing method and that wishes to have the flexibility to decide toward the end of a plan year whether or not to adopt the 401(k) safe harbor nonelective contribution method with respect to its 401(k) plan could achieve that flexibility by providing the initial notice described in section V.C. of Notice 98-52 (as modified by this Q&A-1, and Q&A-7 and Q&A-8 of this notice) before the beginning of the plan year, as provided under section V.C.2. of Notice 98-52 (as modified by Q&A-9 of this notice). If the plan sponsor then decides to adopt the 401(k) safe harbor nonelective contribution method for the plan year, the plan sponsor must, by December 1 of the plan year, (1) amend the 401(k) plan accordingly and (2) provide a supplemental notice to all eligible employees stating that a 3-percent safe harbor nonelective contribution will be made for the plan year. Kman 2000-3 says you must otherwise satisfy the ADP and ACP test safe harbor : Notwithstanding section XI.A. of Notice 98-52, a plan that provides that it will satisfy the current year ADP (and, if applicable, ACP) testing method for a plan year may be amended not later than 30 days before the last day of the plan year to specify that the 401(k) safe harbor nonelective contribution method will be used for the plan year (including that the safe harbor nonelective contribution will be made), provided that the plan otherwise satisfies the ADP (and, if applicable, ACP) test safe harbor for the plan year (including the notice requirement under section V.C. of Notice 98-52, as modified by this notice). For purposes of the preceding sentence, in applying the content requirement of section V.C.1 of Notice 98-52:

I don't know of anything that contains a list. My guess is that most of the national multiemployer funds have websites. I know that even many local multiemployer funds now have their own websites. However, on these sites you are more likely to get the SPD thah the actual plan and trust documents (by the way my experience is that most multemployer plans have the plan and trust as separate documenst-- the trust contains most of the LMRDA provisions, delinquency provisions, trustee deadlock in addition ot the typical "investment stuff" You might just start searching on the web with the name of a major union followed by pension fund (i.e. "Carpenters pension fund" or the like). Multis are in many industries, but you will have your greatest success with construction unions. I have noted below two sites that I think contain at least one actual document in pdf format. If you find others or a list, be sure to post. That would be a good resource for folks who work with multis. http://www.nasifund.org/ http://www.iuepension.org/

I have heard Wickersham say informally that he does not see a 411(d)(6) issue in adding QJSA provisions.

MWEDDELL, Could a calendar year plan that provides for a discretionary contribution with a percentage of comp allocation formula and a 500 hour rule for an allocation amend its plan now and provide for a second cross-tested discretionary allocation and then simply decide not to fund the "orginal" allocation method. It would seem that you could not take the "old" allocation method away for this year under Technical Advice Memorandum 9735001. However, it would seem that you could add a new allocation method, keep the old, and then simply not fund it. This seems to work logically, but I am not sure whether it would be attacked as an end rund around the TAM.

Do a search on this bulletin board. I think there was a recent post from Tom Poje that the consensus at an ASPA conference was that it was a year-to-year test so you should automatically pass top-heavy. Of course, I wasn't at the conference, I may be misquoting Tom, and I don't believe that there is any formal guidance on the isue. Real helpful --right?

JOHN, SPOUSAL CONSENT IS NOT REQUIRED FOR A RMD, BUT I THINK THAT IF YOU DON'T GET CONSENT TO AN ALTERNATIVE DISTRIBUTION FORM, THE RMD MUST BE PAID IN THE FORM OF A QJSA. YOU MAY WANT TO LOOK AT THIS LINK IN THE OLD PLAN DISTRIBUTIONS Q&A'S. http://www.benefitslink.com/cgi-bin/qa.cgi...d=122&mode=read HOW I HAVE ALWAYS HANDLED THIS IS TO GIVE THE PARTICIPANT AND SPOUSE SPECIFIC NOTICE THAT IF THEY WAIVE THE QJSA FOR THE FIRST RMD, THEY HAVE WAIVED THE QJSA FOREVER AND THEY ARE "LOCKED INTO" RMD'S BASED ON THE "REGULAR" DEFINED CONTRIBUTION METHOD. THAT WAY THEY HAVE ALREADY "ELECTED OUT" OF THE QJSA AND I DON'T THINK THERE IS AN ISSUE PROSPECTIVELY. YOU MAY WANT TO LOOK AT 401(a)(9)-8 Q&A 4 in the new proposed regs which covers the rare instance where someone's benefit is still "immeidately distributable" and also must receive an RMD (this would now seem to cover the rare instance of a 5% owner in a plan that defined NRA as the latter of 65 or 5 Years of Service who reaches age 70 1/2 without the requisite five years) This reg provides that you can still must distribute the RMD, but it should be in the form of a QJSA unless you get consent otherwise. Where benefits are not "immediately distributable" (ie. they have reached NRA) you can always distribute in a QJSA without any spousal consent if your Plan so provides. Alternate forms, however, still require consent. However, I think that once benefits are not 'immediately distributable" and someone reaches their required beginning date, unless you obtain consent the same rule mentioned above applies, you must distribute the RMD in a QJSA form.

I think that if you haven't distributed assets as soon as administratively feasible, you really aren't terminated and you would have to update for any GUST provisions that became applicable since your "tried" to terminate. On the other hand, if you terminate an update for GUST at that time, and then distribute as soon as administratively possible. I don't believe that you have to update for a new GUST provision has an effective date between the date of termination and the date you distribute. I don't have any cite that is "right on", but you may want to look at the following: Rev-Rul 89-87 h basically says that a plan that has been terminated whose assets have not been distributed as soon as administratively possible must continue to meet 401(a) of the Code. It then gives the "rule of thumb" of one year. I have always taken this to mean that the converse is also true, that if you do distribute assets as soon as possible you don't have to continue to meet 401(a). 89-87 modified 69-157 that says that a trust whose corresponding plan has been terminated is no longer a trust exempt under 401(a). Finally under the determination letter Rev. Proc. at the beginning of every year, they indicate that a Plan must be updated for new law prior to termination but they never say anything about after termination. So I guess that the specific requirement that you update prior to termination PLUS the notion that the trust after plan termination is no longer qualified anyway PLUS the fact that after the plan has been terminated you have nothing to "amend" brought me to that conclusion. At this point, we really should not be talking about much other than the stuff that became effective in 2000 or 2001. It would seem that anyone else would have the problem that they have not distributed as soon as administratively possible and do not really have a terminated plan.

You are right Tom I was just reading a "write up" when I did my post. It always helps to look at the statute itself.

Thanks for the clarification Tom.

For 2002 Plan Year on doesn't a safe harbor matching plan automtiall pass top-heavy? Is there any "counting" of matching contributions to even be done?

Is there any rush to merge if you have a money purchase pension plan with a 1000 hour of service and/or last day of the year requirement. It seems that as long as you merge before the accrual of the 2002 contribution and give yourself plenty of time for the 204(h) notice we should be o.k. Anyone have different thoghts?

Most provisions of GUST were effective for Plan Years beginning after 12/31/96 (some were effective even earlier). Accordingly, your plan should have, prior to termination, been updated for all GUST provisions that were effective up to the date of termination. Did you get a determination letter on the termination? If so, the IRS should have checked to see that you were up to date on all GUST provisions that were effective prior to termintaion. Generally, a plan that has terminated is no longer a qualified plan, but considered a "wasting trust" and the IRS generally provides that assets must be distributed as soon as possible and sets a presumptive guideline of one year from termination. However, I don't think this rule is "hard" if you have legitimate reasons why assets could not be distributed. Someone else may have a different opinion, but assuming that all amendments were done at the time of termination, I don't think anything else is required--you really don't have anything to amend--your plan is gone.

TA-DA! It's too long to paste into one message so it all is not here. Rev. Proc 2001-55 - GUST DEADLINE EXTENDED Part III Administrative, Procedural, and Miscellaneous 26 CFR 601.201: Rulings and determination letters (Also, Part I, §§ 401; 1.401(B)-1.) Rev. Proc. 2001-55 SECTION 1. PURPOSE This revenue procedure extends the GUST "GUST" refers to the following: · the Uruguay Round Agreements Act, Pub. L. 103-465; · the Uniformed Services Employment and Reemployment Rights Act of 1994, Pub. L. 103-353; · the Small Business Job Protection Act of 1996, Pub. L. 104-188; · the Taxpayer Relief Act of 1997, Pub. L. 105-34; · the Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. 105-206; and · the Community Renewal Tax Relief Act of 2000, Pub. L. 106-554. remedial amendment period under § 401(B) of the Code for qualified retirement plans. First, the revenue procedure extends the GUST remedial amendment period for all plans to February 28, 2002, if the period would otherwise end before then. Second, the revenue procedure provides an additional extension to June 30, 2002, for plans that were directly affected by the September 11, 2001, terrorist attack on the United States (the "Terrorist Attack"). Finally, the revenue procedure provides that in cases of substantial hardship resulting from the Terrorist Attack the Service may, in its discretion, grant additional extensions of the GUST remedial amendment period to particular plans up to December 31, 2002. SECTION 2. BACKGROUND .01 Under § 401(B), plan sponsors have a remedial amendment period in which to adopt plan amendments for GUST. The end of the GUST remedial amendment period is the deadline for making all GUST plan amendments and other plan amendments specifically enumerated in Rev. Proc. 99-23, 1999-1 C.B. 920. The GUST remedial amendment period also applies with respect to all disqualifying provisions of new plans adopted or effective after December 7, 1994, and with respect to all plan amendments adopted after December 7, 1994, that would cause an existing plan to fail to be qualified. .02 Rev. Proc. 2000-27, 2000-26 I.R.B. 1272, provides that the GUST remedial amendment period for nongovernmental plans ends on the last day of the first plan year beginning on or after January 1, 2001. This is also the end of the remedial amendment period for the Tax Reform Act of 1986 (TRA '86) for nonelecting church plans. The GUST remedial amendment period for governmental plans, as defined in § 414(d), ends on the later of (i) the last day of the first plan year beginning on or after January 1, 2001, or (ii) the last day of the first plan year beginning on or after the "2000 legislative date" (that is, the 90th day after the opening of the first legislative session beginning after December 31, 1999, of the governing body with authority to amend the plan, if that body does not meet continuously). This is also the end of the TRA '86 remedial amendment period for governmental plans. .03 Rev. Proc. 2000-20, 2000-6 I.R.B. 553, as modified by Rev. Proc. 2000-27 and Notice 2001-42, 2001-30 I.R.B. 70, provides an extension of the GUST remedial amendment period for employers who, by the end of the GUST remedial amendment period (determined without regard to the extension), have adopted a pre-approved plan (that is, a master or prototype or volume submitter plan) or certified their intent to adopt such a plan. If the requirements for the extension are satisfied, the GUST remedial amendment period for the employer's plan will not end before the later of December 31, 2002, or the end of the 12th month beginning after the date on which the Service issues a GUST opinion or advisory letter for the pre-approved plan. .04 Rev. Proc. 2001-6, 2001-1 I.R.B. 194, contains the Service's procedures for issuing determination letters on the qualified status of employee plans under §§ 401(a), 403(a), 409 and 4975(e)(7) of the Code and the exempt status of related trusts or custodial accounts under § 501(a). .05 Section 1.401(B)-1(f) of the Income Tax Regulations provides that, at his discretion, the Commissioner may extend the remedial amendment period or may allow a particular plan to be amended after the expiration of its remedial amendment period and any applicable extension of such period. In determining whether such an extension will be granted, the Commissioner shall consider, among other factors, whether substantial hardship to the employer would result if such an extension were not granted, whether such an extension is in the best interest of plan participants, and whether the granting of the extension is adverse to the interests of the government. SECTION 3. GENERAL EXTENSION OF REMEDIAL AMENDMENT PERIOD TO FEBRUARY 28, 2002 .01 The GUST remedial amendment period is extended to February 28, 2002, if the period would otherwise end before then. This extension applies to all GUST plan amendments, including all those plan amendments specifically enumerated in Rev. Proc. 99-23. In addition, this extension applies with respect to all disqualifying provisions of new plans adopted or effective after December 7, 1994, and with respect to all plan amendments adopted after December 7, 1994, that would cause an existing plan to fail to be qualified. .02 The TRA =86 remedial amendment period for governmental plans and nonelecting church plans is also extended to February 28, 2002, if the period would otherwise end before then. .03 This extension also applies to the time by which an employer must either adopt a pre-approved plan or certify its intent to adopt such a plan in order to be eligible for the extension of the GUST remedial amendment period under Rev. Proc. 2000-20, as modified. SECTION 4. EXTENSION OF REMEDIAL AMENDMENT PERIOD TO JUNE 30, 2002, FOR PLANS DIRECTLY AFFECTED BY THE TERRORIST ATTACK .01 The extension of the remedial amendment period provided by this section applies only to plans directly affected by the Terrorist Attack, as defined in sections 4.02 and 4.03 of this revenue procedure. .02 For purposes of the revenue procedure, a plan will be considered to be directly affected by the Terrorist Attack if any of the following were located at the time of the attack in the area of the New York City borough of Manhattan bounded on the north by 14th Street: the principal place of business of any employer that maintains the plan; the office of the plan or the plan administrator; the office of the primary recordkeeper serving the plan; or the office of an attorney, enrolled actuary, certified public accountant or other advisor retained by the plan (or by the employer with respect to issues involving the plan). A plan will also be considered to be directly affected by the Terrorist Attack if any individual required under the terms of the plan or corporate rules to approve plan amendments, the plan administrator, or an attorney, enrolled actuary, certified public accountant or other advisor retained by the plan (or by the employer with respect to issues involving the plan) was injured or killed or is missing as a result of the Terrorist Attack. .03 A plan sponsor of a plan that is not described in section 4.02 may ask the Service to designate the plan as directly affected by the Terrorist Attack if the plan sponsor's ability to amend the plan and file a determination letter application has been severely impaired as a direct result of the Terrorist Attack. Upon a showing of such directly related, severe impairment, as determined by the Service in its discretion, the Service will designate the plan as directly affected by the Terrorist Attack. The plan sponsor's request should be sent to the following address: Manager, EP Determinations Attention: RAP Extension Coordinator 550 Main Street Room 5106 Cincinnati, Ohio 45202 The request must be made by the later of December 31, 2001, or the 60th day preceding the end of the plan's GUST remedial amendment period (determined without regard to the extensions under this revenue procedure). The request must explain how the Terrorist Attack has directly and severely impaired the ability to amend the plan and file a determination letter .

I had thought about the compensation issue and the change in the allocation formula after someone has "accrued" a right to an allocation under a discretionary profit sharing plan. As far as anything formal from the IRS on this issue, I think Technical Advice Memorandum 9735001 is pretty much on point that you cannot change your allocation formula after the accrual of a beneift for the year--even under a plan with a discretionary contribution. I always wondered, however couldn't you have two separate 401(a) formulas for the year? For example, for this issue have a discretionary formula using the $170,000 comp limit that the employer decides not to fund and a discretionary formula using $200,000 comp that it decides to fund? You have not taken away an allocation formula for the year, you have simply chosen, as you are entitled to do, not to fund that formula for the year. I suppose there could be "permanent cessation" and vesting issues involve with this, but it strikes me that this does not apply to any particular allocation formula but to discontinuance of contributions to the 401(a) portion of the plan as a whole. Of course, if your plan references 401(a)(17) limits instead of a $ amount then you could have the cut-back problems for anyone earrning over $170,000 who has, for example, over 500 hours for the year in a standardized plan, if you wanted to subsequently limit comp to $170,000. The vesting/forfieture point made is a good one. This must have come up in other contexts where there is a voluntary change to a more favorable vesting schedule. Anyone looked at this issue in that context?

I think the Segal Company did a bulletin on this. Try this link. I believe it is in .pdf format. http://www.benefitslink.com/links/20011001...01-013102.shtml

CTYSON, I agree that could be considered a cut-back (even thugh pre-EGTRRA you could still use the match to satisfy top-heavy as long as it wasn't included in ACP). But I don't see this as an "early amendment issue. They are getting their match without regard to what you do for top-heavy. The only time they could "accrue" the match plus the 3% is as the end of the year. So if you amend before the last day of the Plan Year have you cut back anything that they have "accrued"?

Stephen, I agree that those are all potential cutback issues, but if a non-key does not accrue a top heavy benefit until the last day of a plan year in a d.c. plan or until he or she accrues 1000 hours in a db plan, it would seem that you still have "breathing room" to adopt your good faith amendments and they don't have to be in place prior to the beginning of the 2002 Plan Year.

Belgarath, I agree that you have correctly stated the GUST remedial amendment period for those who have adopted volume submitter plans or prototype plans. I have been operating under the assumption that we have until 12/31/02 to adopt the RMD amendment retroactive back to 1991 for those plans. However, I wonder why 2001-82 just mentions 2000-27 and not the other guidance on the extension of the R.A.P.? Oh well, I still think that even if you are doing RMD's in 2001 under the new proposed regs, you would have until at least 12/31/02 to amend if you have a V.S. or prototype plan.

2001-82 contained the following regarding the two model RMD amedmments : In order for a qualified plan sponsor to use either model amendment, it must adopt the amendment prior to the end of the plan's GUST remedial amendment period. Revenue Procedure 2000-27, 2000-26 I.R.B. 272, extends the GUST remedial amendment period for most plans until the end of the first plan year beginning on or after January 1, 2001.

2001-42 is pretty specific. It says that (2) if a ˜good faith˜ EGTRRA plan amendment is required to be in effect with respect to the provision, the plan provision was added or changed by a ˜good faith˜ EGTRRA plan amendment adopted no later than the later of (i) the end of the plan year in which the EGTRRA change in the qualification requirements is required to be, or is optionally, put into effect under the plan or (ii) the end of the GUST remedial amendment period for the plan. Thus you have until the end of the 2002 year to amend when you previously put an EGTRRA change "into effect". The only exception given is for anything that would constitute a cut-back under 411(d)(6). What you describe does not appear to be a cut-back I went back and checked 2001-42 and it is pretty specific that you don't need your top-heavy change for a DC plan until the end of the 2002 year. The only time this could be before your EGTRAA good faith deadline is if, for some reason, your GUST remedial amendment period extends beyond the end of your 2002 Plan Year (for example if the prototype or volume submitter sponsor gets its letter after 12/31/01). Then you have to have your EGTRAA good faith top heavy amendment in place before the deadline for your other good faith amendments-- but you would still have until the end of your 2002 year to amend for top-heavy.

I guess that is what the prior poster must have been talking about (although this is the 401(k) Board). However, even then don't you have a 1000 Hour requirement for the top heavy db accrual so you still have some "breathing room" For a D.C. Plan do you agree that you can adopt top-heavy along with other EGTRRA amendments anytime prior to 12/31/02 for a calendar year plan?

The termination is not ceasing or reducing benefit accruals--you've already done that so my reaction would be no. My recollection is, however, that the new EGTRRA provisions regarding 204(h) notices were effective immediately (i.e. these rules already apply). I don't think these rules changed the basic concept that it is only a reduction in accruals that you need to worry about However, you should probably verify this. There are, however, new and stiffer penalites regarding failing to send a notice. Here is a thread that came to the same conclusion under the old rules. http://benefitslink.com/boards/index.php?showtopic=484

Thanks, I caught 404(n) but did not catch the addition or 404(a)(12).

As I always undertood it the reason for excluding 125 Plan salary reductions under the definition of compensation for deductibility under 404 was that since 401(k) elective deferrals were employer contributions and therefore excluded from the definition of comp under the language of 404 and 1.404(a)-(9)(B)(2) and since amounts under a 125 salary reduction were kinda-like 401(k) deferrals they should also be excluded in the definition of comp. The only thing I ever found on this was PLR 9225038 Was there ever anything else? Now, under EGTRRA it is clear that elective deferrals are not taken into account in determining the amount of contribution subject to the 15% limit, but I assume the rule relating to the definition of compensation remains the same--elective deferrals and salary reductions to a 125 plan are excluded from the definiition of compensation for 404? Is this correct?