KJohnson

Why is he/she looking at something else? I think it is the most comprehensive. The biggest frustration is when they ocassionally take out content to stick in a whole other manual which they want you to buy or when they mention a possible issue and say that it is covered in another of their manuals (which of course they want you to buy). But for secondary sources I usually go first to EBIA on the welfare/125 plan side and Sal on the qualified plan side.

Do they make this election to receive cash through a cafeteria plan? If not you might have constructive receipt issues for the employees who take the health insurance. http://benefitslink.com/boards/index.php?s...mp;#entry100424

I think you can just distribute check the last sentence of what is pasted below from the (k) regs.... Rules applicable to distributions upon plan termination--(i) No alternative defined contribution plan. A distribution may not be made under paragraph (d)(1)(iii) of this section if the employer establishes or maintains an alternative defined contribution plan. For purposes of the preceding sentence, the definition of the term ``employer'' contained in Sec. 1.401(k)-6 is applied as of the date of plan termination, and a plan is an alternative defined contribution plan only if it is a defined contribution plan that exists at any time during the period beginning on the date of plan termination and ending 12 months after distribution of all assets from the terminated plan. However, if at all times during the 24-month period beginning 12 months before the date of plan termination, fewer than 2% of the employees who were eligible under the defined contribution plan that includes the cash or deferred arrangement as of the date of plan termination are eligible under the other defined contribution plan, the other plan is not an alternative defined contribution plan. In addition, a defined contribution plan is not treated as an alternative defined contribution plan if it is an employee stock ownership plan as defined in section 4975(e)(7) or 409(a), a simplified employee pension as defined in section 408(k), a SIMPLE IRA plan as defined in section 408(p), a plan or contract that satisfies the requirements of section 403(b), or a plan that is described in section 457(b) or (f).

I agree with Andy. I've been asked this question several times and said don't do it. Butsee below from the ABA’s Joint Committee on Employee Benefit’s 2009 Q&A session with the DOL. The ABA’s proposed answer was you couldn’t do this. The DOL, surprisingly, said that you could. Again, completely non-binding Question 14: An employer has about 200 employees, and 160 of them are eligible for one of the employer’s two retirement plans. Except for a provision on which employees are eligible, the two retirement plans have identical provisions. Further, each plan provides that a participant directs investment among mutual funds of the same network. Each plan uses the same prototype document, and the two adoption agreements are identical except for the eligibility provision. The different eligibility provisions do not relate to different business lines or locations. Further, nothing in the terms of the eligibility provisions suggests any business purpose at all. Rather, all of the documents and other facts seem to suggest that the employer designed the two eligibility provisions so that each plan will have fewer than 100 participants. Under both plans, the employer is the administrator and the only named fiduciary. Proposed Answer 14: A fiduciary may not rely on a plan’s documents if doing so is inconsistent with ERISA. See ERISA § 404(a)(1)(D). In deciding whether ERISA requires a fiduciary not to rely on a plan’s documents, an administrator must act according to ERISA’s standard of care. ERISA § 404(a)(1)(B). If a person acting “with the care, skill, prudence, and diligence” that ERISA requires would believe that the two plans really are one plan, the administrator must engage an independent qualified public accountant. DoL Answer 14: Under Title I of ERISA, employers have substantial discretion in designing the benefit plans they will offer to their employees, including decisions on whether to offer the benefits as a single plan or as separate plans. Whether an employer has established one or more than one ERISA plan depends on the facts and circumstances. In the staff’s view, in the absence of contrary annual reporting rule or requirement and assuming the structure of the arrangements is otherwise lawful (e.g., under the Internal Revenue Code), it would be reasonable for a fiduciary to look to the instruments governing the arrangement or arrangements to determine whether the benefits are being provided under separate plans and to treat the arrangement or arrangements for annual reporting purposes as separate plans to the extent the instruments establish them as separate plans and they are operated consistent with the terms of such instruments

I think you can do it but all of the points in rcline46's second post are well taken.

Again, probably not much help but the examination guidelines for multis specifically address reciprocity agreeements and a few of the qualification issues but don't address the issue of a retroactive agreement http://www.irs.gov/pub/irs-tege/multi_er.pdf

I thought that while Keystone generally said that in-kind contributions to a DB are a PT but there is still an exception for employer securities provided the limitations of ERISA §408(e) are satisfied-- IRC §4975(d)(13) Look at Sal, Chapter 7 - Taxation Rules, Section XVI, Part N,

jpod--I think that hits it on the head ---whether the rollover is a "transaction" in the first instance. Then the only question becomes possible (E) issues in voting the shares once they are in the IRA.

I discussed this at one point years ago with the head of fiduciary interpretations at DOL and he didn't see it as a PT. But of course that was just a brief discussion of some of the issues and he was very careful to say that the only real ay to get an answer was to request an advisory opinion. The point QDROphile was making on the right to rollover was part of the conversation.

Medical FSAs are subject to HIPAA privacy and security unless you have under 50 participants and self-administer. A participant is defined as any employee or former employee of an employer, or any member or former member of an employee organization, who is or may become eligible to receive a benefit of any type from an employee benefit plan that covers employees of such employer or members of such organizations, or whose beneficiaries may be eligible to receive any such benefit. Thus folks who are eligible but don't reduce their salary are counted. If any employer of any size uses a third party administrator (TPA) to administer its Medical FSA, it is outside the exception and must comply.

Technical Release No. 92-01 DOL Enforcement Policy for Welfare Plans with Participant Contributions Purpose The purpose of this Release is to announce the Pension and Welfare Benefits Administration's revised enforcement policy with respect to cafeteria and certain other contributory welfare plans and to provide general guidance on the application of the trust and reporting and disclosure rules under Title I of the Employee Retirement Income Security Act of 1974 (ERISA) to such plans. The Participant Contribution Regulation In 1988, the Department published the plan assets-participant contribution regulation (29 CFR 2510.3-102) defining when amounts that a participant pays to or has withheld by an employer for contribution to a plan (including elective contributions) constitute plan assets. The regulation (effective August 15, 1988) provides that such contributions become plan assets as of the earliest date they can reasonably be segregated from the employer's general assets, but in no event later than 90 days from receipt by the employer. With respect to the application of the plan assets-participant contribution regulation, the Department notes that the regulation contemplates that all amounts that a participant pays to or has withheld by an employer for purposes of obtaining benefits under a plan become plan assets without regard to when related plan expenses or benefits are paid by the employer. At such time as participant contributions can reasonably be segregated from the employer's general assets and, therefore, constitute plan assets, plan fiduciaries are obligated under ERISA to treat those assets as any other assets of the plan, which includes ensuring compliance with applicable trust and reporting and disclosure requirements of ERISA. Technical Release No. 88-1 Recognizing that the application of the plan assets-participant contribution regulation may have presented particular problems for plan sponsors and fiduciaries of cafeteria plans, the Department announced, in Technical Release No. 88-1 (August 12, 1988), an enforcement policy pursuant to which the Department would not assert a violation in any enforcement proceeding solely because of the failure to hold participant contributions to cafeteria plans in trust, pending consideration by the Department of regulatory relief from the trust requirement. In conjunction with the enforcement policy, the Department also expressed a willingness to consider regulatory relief from the trust requirements for other types of contributory welfare plans. The Department notes that, while the Technical Release invited applications for regulatory relief for contributory welfare plans generally, the announced enforcement policy was expressly limited to ERISA's trust requirements as they apply to cafeteria plans. Application of Reporting and Disclosure Requirements Since the publication of Technical Release No. 88-1, a number of questions have been raised regarding the application of ERISA's reporting and disclosure requirements to contributory welfare plans in general and to cafeteria plans electing not to establish a trust in reliance on Technical Release No. 88-1. Specifically, these questions relate to the circumstances under which such plans may avail themselves of the reporting and disclosure exemptions set forth in regulations at 29 CFR 2520.104-20 and 2520.104-44. In general, these regulations provide relief for certain welfare plans from various reporting and disclosure requirements of part 1 of title I of ERISA, including, in the case of plans with fewer than 100 participants, the requirement to file an annual report and, in the case of a plan with 100 or more participants, the requirement to engage an independent qualified public accountant. Pursuant to the regulations, exemptive relief is available only to those welfare plans with respect to which: (i) Benefits are paid solely from the general assets of the employer (or employee organization) maintaining the plan; or (ii) benefits are provided exclusively through insurance contracts or through a qualified health maintenance organization (HMO), the premiums for which are paid directly by the employer (or employee organization) from its general assets or partly from its general assets and partly from contributions from its employees (or members), provided that contributions by participants are forwarded to the insurance carrier or HMO by the employer (or employee organization) within three months of receipt; or (iii) benefits are provided partly from the general assets of the sponsor and partly through insurance contracts or through a qualified HMO, as described in (ii). (See: sections 2520.104-20 and 2520.104-44 for specific relief and conditions). In accordance with the terms of the regulations, the relief afforded by §§2520.104-20 and 2520.104-44 is not available to any welfare plan with respect to which benefits or premiums are paid from a trust. Moreover, even in the absence of a trust, (e.g., where a cafeteria plan elects not to establish a trust in reliance on Technical Release No. 88-1), the exemptive relief would, in the absence of additional relief, be available only to those contributory welfare plans which apply participant contributions toward the payment of premiums in accordance with the terms of the regulations. For example, a welfare plan that applies participant contributions directly to the payment of benefits (or indirectly by way of reimbursement to the employer) would not qualify for exemptive relief because the benefits under such a plan could not be considered as paid .solely from the general assets of the employer." At least part of the benefits of such a plan would be considered paid from plan assets. Once the participant contributions are used, directly or indirectly, to pay benefits, they are, by definition, segregable from the employer's general assets. Enforcement Policy Statement The Department is continuing to consider whether, and to what extent, relief from the trust requirements may be appropriate for certain types of contributory welfare plans. In connection with its consideration of the trust issues, the Department also is considering the extent to which reporting and disclosure relief may be appropriate for contributory welfare plans with respect to which relief from the trust requirement is made available. The Department recognizes that there has been considerable confusion on the part of sponsors and fiduciaries of cafeteria and other contributory welfare plans with respect to the scope of the enforcement policy set forth in Technical Release No. 88-1 and with respect to the application of the reporting and disclosure exemptions referred to above. The Department also recognizes that requiring such plans to be brought into compliance with the trust and reporting and disclosure requirements for which the Department is currently considering regulatory relief may result in many sponsors incurring significant, and possibly unnecessary, administrative costs and burdens pending final resolution of the nature and scope of the relief to be provided in this area. For these reasons, the Department has decided to announce the following enforcement policy, which is intended to provide interim relief to plan sponsors and fiduciaries of certain contributory welfare plans pending consideration of these issues by the Department. In the case of a cafeteria plan described in section 125 of the Internal Revenue Code, the Department will not assert a violation in any enforcement proceeding solely because of a failure to hold participant contributions in trust. Nor, in the absence of a trust, will the Department assert a violation in any enforcement proceeding or assess a civil penalty with respect to a cafeteria plan because of a failure to meet the reporting requirements by reason of not coming within the exemptions set forth in §§2520.104-20 and 2520.104-44 solely as a result of using participant contributions to pay plan benefits or expenses attendant to the provision of benefits. In the case of any other contributory welfare plan with respect to which participant contributions are applied only to the payment of premiums in a manner consistent with §§2520.104-20(b)(2)(ii) or (iii) and 2520.104-44(b)(1)(ii) or (iii), as applicable, the Department will not assert a violation in any enforcement proceeding or assess a civil penalty solely because of a failure to hold participant contributions in trust. In the case of either of these types of plans, with respect to which a trust is not established in reliance on this Release, the reporting exemptions would continue to be available where participant contributions are used within three months of receipt to pay premiums as provided in §§2520.104-20 and 2520.104-44. This Release supersedes Technical Release No. 88-1. The enforcement policy set forth in this Release shall remain in effect until the earlier of December 31, 1993, or the adoption of final regulations providing relief from the trust and reporting and disclosure requirements of Title I of ERISA. The Department cautions that the foregoing enforcement policy in no way relieves plan sponsors and fiduciaries of their obligation to ensure that participant contributions are applied only to the payment of benefits and reasonable administrative expenses of the plan. Utilization of participant contributions for any other purpose may result not only in civil sanctions under Title I of ERISA but also criminal sanctions under 18 U.S.C. 664. See U.S. v. Grizzle, 933 F.2d 943 (11th Cir. 1991). Signed at Washington, DC, this 28th day of May 1992 Alan D. Lebowitz Deputy Assistant Secretary for Program Operations U.S. Department of Labor Pension and Welfare Benefits Administration

What about the section of 6.05(3)(a) pasted below for a volume submitter or prototype. 415 and PPA for a calendar year plan would have had to be adopted prior to the deadline for restating for EGTRRA 4/30/2010. What is the "first on cycle year " for such a plan. Obviously this rule makes sense for a IDP so if 415 would have been required in your cumulative list for your filing and you past your cycle you can't call it an interim amendment any more. But a pre-approved plan would have only been considered for the 2004 cumulative list if it had been filed which doesn't include PPA or 415. Does that mean that for pre-approved plans you can still consider 415 and PPA interim amendment until they open up pre-approved plans for the next round of determination letter filings? The provisions of this section 6.05(3)(a) are applicable only if the VCP application setting forth the interim or optional law change failure is submitted, or the Audit CAP correction is made, prior to the plan’s first on-cycle year following the date by which the amendment for the interim or optional law change should have been adopted pursuant to section 5.05 of Rev. Proc. 2007-44.

Rev. Proc. 2010-6 http://www.irs.gov/irb/2010-01_IRB/ar11.html Termination prior to time for amending for change in law .06 A plan that terminates after the effective date of a change in law, but prior to the date that amendments are otherwise required, must be amended to comply with the applicable provisions of law from the date on which such provisions become effective with respect to the plan. Because such a terminated plan would no longer be in existence by the required amendment date and therefore could not be amended on that date, such plan must be amended in connection with the plan termination to comply with those provisions of law that become effective with respect to the plan on or before the date of plan termination. (Such amendments include any amendments made after the date of plan termination that were required in order to obtain a favorable determination letter.) In addition, annuity contracts distributed from such terminated plans also must meet all the applicable provisions of any change in law. See also section 8 of Rev. Proc. 2007-44.

I agree with Sieve. I did however, flag one in a determination letter filing where a sponsor had some minor changes to the VS plan unrelated to the retroactive amendment. Here is what I put in the cover... The amendment listed in Section 3(d)(ii) of the Form 5307 is a retroactive amendment regarding eligibility to reflect the Plan’s operation and corrected through SCP. This amendment was subsequently incorporated in the adoption of a pre-approved volume submitter plan and a determination letter for this corrective amendment would not appear to be required under §6.05(1) of Rev. Proc. 2008-50[1]. Since the Plan sponsor is, however, seeking a determination letter regarding the Plan as restated (due to unrelated modifications to the volume submitter document) then pursuant to §6.05(2)(b) of that same Rev. Proc. we are identifying this amendment as a corrective amendment and this will affirm that neither the Plan nor the Plan Sponsor has been a party to an abusive tax avoidance transaction (as defined in section §4.13(2) of Rev. Proc. 2008-50). [1] 6.05(1) states: Notwithstanding any other part of this section 6.05, a determination letter is not required if the correction by plan amendment is achieved through the adoption of an amendment that is designated as a model amendment by the Service or the adoption of a prototype or volume submitter plan with an opinion or advisory letter as provided in Rev. Proc. 2008-6, 2008-1 I.R.B. 192, on which the Plan Sponsor has reliance.

I don't think it is a true up. It's just stopping deferrals when the payroll period match would otherwise get you over the limit on anannual basis. Indeed on a payroll match the document specifically says not true up will be made. I think in your hypothetical the HCE would not be able to get the full match. On the 100% of the first three % of comp deferred per payroll he woudl get $1,225 per month in match for four months and then the match woudl stop because there are no more pay period deferrals to match.

Thanks all, I had looked at the 401(a)(17) regulations and it said you don't have to pro-rate but didn't say you couldn't and also didn't say what you should do. Document was silent. I ultimately came to the same conclusion as Bird and didn't go with either of my suggestions--Just figure out what the limit would be on an annual basis as a dollar amount. Make the full amount of match for each pay period and then just cut off the match when you reached the $ limit. ($7,350 in my hypo).

401(a)(17) applies on limitations to matching contributions based on a percentage of pay. Howe does this work administratively when you do a pay period by pay period match (say 100% of the first 3% of compensation deferred) based on pay period compensation. Pro-rate the limit by pay period? Just stop the match but continue the deferral after someone hits the 401(a)(17) limit for the year?

Mike, why don't you think option 1 works. Both allocations are design based safe harbors. If each passes coverage why would you need to cross-test? Are yous saying that any time you have a SHNEC and an additional profit sharing contribution with an allocation condition you are stuck with cross-testing? Does the fact that the profit sharing is integrated have anything to do with the analyis?

I think that finanical effect is applicable but relative value is not. http://www.groom.com/assets/attachments/co...g_with_new1.pdf http://www.groom.com/assets/attachments/co...g_with_new2.pdf But as to disclosing the actual benefit in the normal form, I think the regs speak to financial effect and relative value in one paragraph (ii) Actual benefit must be disclosed. The generalized notice described in this paragraph (d)(2) will satisfy the requirements of paragraph (b)(2) of this section only if the notice includes either the amount payable to the participant under the normal form of benefit or the amount payable to the participant under the normal form of benefit adjusted for immediate commencement.

I believe that there are several cases that have found that participants have no automatic right to minutes under the reporting and disclosure provisions of ERISA. You surely have the right to ask, whether you have the right to receive might be another matter.

I don't know what you can do with a standardized prototype that covered everyone. I had this come up for a db volume submitter once where the the document did not automatically cover controlled group members. We actually took the Plan to the IRS and asked for an adverse determination. Under Rev. Rul. 91-4 the assets of a plan can revert to an employer a) the Plan provides for the return of contributions if there is an adverse determination letter issued with regard to the initial qualification of the plan, b) the Plan receives an adverse determination letter with respect to its initial qualification, and c) the application for determination letter is filed within the applicable remedial amendment period...

From the 1999 ABA JCEB Q&A with the IRS 73. Would you confirm that retirement plan trusts should/must obtain and use a separate EIN (or Trust Tax Number) for reporting distributions, rather than using the employer's EIN? Retirement trusts are required to have their own separate EIN, especially for purposes of holding assets. Distributions can be reported under the EIN of the plan sponsor in accordance with published rulings, but that does not eliminate the need of the trust to have its own EIN. It was discussed from the podium by the IRS (and not in the published Q&A's) at the 2005 ABA JCEB meeting and here is what Ice Miller reported that the IRS said. TOPIC COMMENTS Separate EIN The IRS notes that all trusts of qualified plans must apply for a TIN (taxpayer identification number) distinct from any employer's EIN to identify the trust. You can use the employer’s EIN for reporting the distribution or the entity that actually pays the distribution (insurance company, brokerage house etc). But you still need the EIN for the Trust. I am not sure that there is any enforcement activity on this.

The reason that the JCEB one works is that you only have one payment form for the termination payment trigger (and you have limited to involutary terminations). If someone voluntarily terminates they are not entitled to the termination payment trigger. What they are entitled to is the "stated age" payment trigger that applies to all curently employed as well as those that voluntarily terminated from employment prior to age 65.

I agree as well, you could not have different pay out schedules. Only one form of payment per payment trigger. And it is also clear that installments over different periods of time are different forms of payment. For this purpose, a series of installment payments over a predetermined period and a series of installment payments over a shorter or longer period, or a series of installment payments over the same predetermined period but with a different commencement date, are different times and forms of payment. The one I have always strugged with, is, for example a five year employment contract which states that if an employee was terminated without cause he woudl be paid his/her base salary on a monthly basis for the remaining term of the contract. You arguably then have different "lengths" for the installments based on when the employee is terminated and therefore different "forms" based on the same event--separation from service.

I know where you had a money purchase pension plan merger, the PPD document allows you to subject the entire account (including non money purchase amounts) to the QJSA provisions for those who have money purchase amounts remaining and exempt the entire account from the QJSA provisions for those that do not. This makes sense from an administration point of view because it is easier than simply making the money purchase portion only subject to the QJSA provisions. In that instance you can have a single participant whose distribution falls under both the QJSA and non-QJSA rules. My question is whether you have to do BRF testing with regard to offering some participants an annuity option on their non-money purchase pension amounts while not offering it to other participants.