KJohnson

The reg states that a cash or deferred election "can only be made with respect to amounts that would (but for the cash or deferred election) become currently available after the later of the date when the employer adopts the cash or deferred arrangement or the date on whch the arrangement first becomes effective." Therefore, unless employees would not have been paid for January until after the employer signed the document on 2/15 I think you have a problem. My recollection is that the IRS's position is that corporate minutes aren't sufficient to "adopt" the arrangement and that this position has been upheld by the Courts although I don't have a cite handy. I do think that if, for example, an employee is paid on February 15 for all of January wages that the employee could make a deferral election on February 14 for the month of January because those January wages had not yet become "currently available" tot he employee.

I agree with the timing of the notice and also that 2000-3 modified 98-52 section XI.A to provide that the deadline for the amendment for the SHNEC is 12/1. However, Q&A 1 still appears to acknowledge the effect of 98-52 XIB and give you the leeway to amend the Plan within "the remedial amendment period applicable to plan changes incororating the 401(k) Safe Habor Provisions"). Tom, in your view would this be applicable to the year 2000 as well? In other words, a plan that first used safe harbor in 2000 and sent out the SHNEC "maybe" notice by 5/1/00 would have to amended by 12/1/00 (in addition to sending out the "confirmation notice") and thus would not have benefit of the full remedial amendment period. On the other hand, an employer who used the safe harbor match for 2000 would still have until 12/31/01 to amend? This would appear to present a problem to prototype and volume submitters who probably did not have approval of SHNEC amendment language by 12/1/00.

Assuming a timely notice and a calendar year plan, I guess the question is when do you have to amend the document for a plan that first "goes" safe harbor in 2001. My understanding is that the deadline is 12/31/01 for both the matching and QNEC methods because of the extension of the RAP. Then, in 2002 an amendment would have to be in place by 12/1/02 for the QNEC method and by 01/01/02 for the match method.

Tom, I thought Q&A 1 gave you to the end of the remedial amendment period so that calendar year plans had until 12/31/01 to amend if they used safe harbor in 1999, 2000 or 2001.

I wonder if the simple answer is that the "plan" is not engaging in any type of transaction. I think this might get you around 406(a)prohibited transactions, but I am not sure about 406(B) problems. I guess for 406(B) the issue then becomes what is the "fiduciary" doing. If a plan fiduciary does not personally benefit by such an arrangement then I suppose you may not have a 406(B) problem. Of course, DOL felt that a PTE was needed in the IRA context for this exact type of situation. However, in that case the individual who establishes the IRA is considered a fiduciary with respect to the IRA and is in fact reaping the personal benefit of using the IRA's assets for the "break points" for discounts in personal brokerage or bank services.

Look at 1.411(a)-4T. The first example in © should be the most helpful.

Tom, although it is a little off topic, do you put the top-heavy into the (k) for these individuals rather than the money purchase?

I understand that the control group is determined at the date of termination of the Plan so that, in a stock sale, if the target terminates its plan before it is acquired there is no problem. However, I've always wondered what happens if the target is then merged into the purchaser within a year after the transaction. From a corporate law standpoint the target and the purchaser are then "one company" and it would appear that the merger would create a violation of the successor plan rule (assuming that the purchaser has a plan that covers the target's employees).

As a technical matter the reg states that: ...a plan may require that a participant file a claim for benefits before payment of benefits will begin." So as long as your plan states that a claim or application is required I think you are o.k. However, this does not get you around Harry O's point regarding nonforfeitability and the retroactive payment rule. My recollection was that the Ninth Circuit looked at this issue a number of years back.

ERISA provides concurrent jurisdiction in state and federal courts for participant suits (although a defendant plan can usually remove a state court action to federal court). As to jeanine's question, once the claims regs are finalized, they would apply to both insured and self-funded plans.

b2kates-- Even if Plan is not subject to QJSA isn't consent still required to designate anyone other than a spouse as a beneficiary for the pre-retirement death benefit-- 401(a)(11)(B)(iii)(I)?

I think for QJSA's this is adressed in the 401(a)-20 regs regarding when new consent is required. You might want to look at this thread: http://benefitslink.com/boards/index.php?showtopic=4470 I work with several plans that have these two-step distributions and have always required new paperwork for the second distribution.

I would have to disagree with Kip's comment that "Group insurers, ever since ERISA was inacted have been providing employer with ERISA compliance information related to sale of their products." My experience has been just the opposite and that the employer's contact with the insurer often does not even know what an SPD is. They simply provide the certificates of insurance to employers without ever telling them that anythng more is required under ERISA. Even if you find someone who understands the issue, the response has simply been that "we leave that to the employer." I would hate to guess how many insured plans there are out there that do not fully comply with the SPD requirement. I think jeanine's comments are indicative of the erroneous "understanding" of may employers.

I agree with Nader12. Unless you are a big group, must insureres will not put all that is required in an spd in their insurance booklets. You need an addendum with things like an ERISA statement of rights, plan number, employer EIN etc. that will not be in the booklets

Plan has been terminated all checks have been issued prior to the end of the Plan Year. However, two checks remain uncashed at year end. Can the Plan file a final 5500?

MOJO---What if an insurance company selected by a Plan to provide annuities only wanted to write those annuities for balances of over $50,000. Do you think that you could offer an annuity distribution option on this basis without testing the BRF because it was a condition imposed by the insurance company rather than the Plan sponsor?

My recollection is that there were "dueling" IRS statements made a different ASPA conferences. In one, the IRS said it was o.k. as long as the broker set the minimum. In the other the IRS said it did raise a BRF issue. Personally, I wouldn't think the identity of the person who set the minimum would be relevant to whether it is a BRF. You may want to look at the following where this was discussed previously. http://www.benefitslink.com/boards/index.p...=ST&f=20&t=4558

I agree with Cutfade the "earliest date on which such contributions can reasonably be segregated from the employer's general assets" is the test for both 401(k) deferrals and welfare plan "employee" contributions. I think the 90 day reference is probably meant to tie into the DOL's non-enforcement position on holding employee contribuitons in trust. (DOL Tech. Rel. 92-01)

I am not sure I agree. I have always read the plan asset reg to reqire segregation into the Trust as soon as possible but within 15 days after the end of the month. I don't think this requires posting or allocation within this time period. Here, it looks like the employer is segregating in a timely manner. However, what the Plan does with the interest accrued in the period between when the contribution is made and when it is allocated to a participant's account is an interesting quetio

My understanding is that they are included in 410(B) for coverage testing. However, if you are using 401(a)(4) safe harbor you then have to perform your coverage test again excluding these individuals. If you don't pass when they are excluded then you can't use the safe harbor. All this means is that you will have to test for discrimination but it should have no effect on coverage.

Both insured and self-insured health plans are required to have and distribute SPDs.

In order to avoid being considered a CODA there can only be a one-time irrevcoable election not to particpate upon a participant first becoming eligible for the Plan. There are also other requirements for such an "opt out" and it does not appear that your client qualifies. I think a Plan amendment "writing the owner out" of the Plan is the only way to go.

Individual is the sole employee/owner of a C Corp. He wants to establish a medical reimbursement account to "pick up" anything that his health insurance does not cover. He also wants this Plan to be "retroactive" for four months (back to when he incorporated). This will be funded entirely by "employer" contributions (no 125 Plan). 1) I assume the Plan cannot be retroactive because Prop. Reg. 1.125-1 Q&A 17 is applicable to all 105 Plans even those not funded through a 125 Plan. Do you agree? 2) If there is only 1 employee do I avoid any 105 discrimination issues? 3) Any other problems that you see here

Any other idears on who would sell a terminated plan subject to QJSA requirements a deferred annuity for a truly missing participant? How have other people dealt with this situation after all avenues of locating the participant have been exhausted?

I've always viewed 97-03 as more cautionary that supportive of paying administrative expenses out of plan assets. I have always thought that the language regarding the need to hire an independent fiduciary for "mixed" settlor/fiduciary functions (such as plan qualification) not to be a "real world" analysis. However, as the rumblings out of Kansas City indicate, DOL is apparently serious about this issue. Here is a link to 97-03 if anyone is interested. http://www.dol.gov/dol/pwba/public/program...ry97/97-03a.htm Also, the following is a link to a 9th Circuit decision last year that discusses in detail the "fiduciary exception" to the attorney client privilege. http://caselaw.findlaw.com/scripts/getcase...case&no=9710504