Mike Preston

Well, it seems that you need some work to do. Digging up old threads, huh? Hmmmmmm. In any event, I'll register just a small modification. While I agree that the Plan Sponsor should be willing to enter into such an agreement with any participant that would want one in order to effect the distribution of choice, whenever I see language like the above I think that the Plan Sponsor must have some discretion to reject agreements it doesn't feel adequately protect the plan. Agreed that it is a 411(d)(6) issue (and, hence, the fact that this involves HCE's doesn't matter). But if an HCE waltzes in with an agreement that appears to have provisions in it that the Plan Sponsor feels uncomfortable with, they should have the right to reject it. It seems to me that it would boil down to a facts and circumstances analysis to see whether the plan was operated in accordance with its terms. If the Plan Sponsor is seen as over-protective it could be viewed as a disqualifying the plan due to not operationally following the plan document.

I don't see the same tie in that you do. You are looking at a coverage section (410(b)) and applying it to compensation (414(s)). I don't think you can do that. Look at the 414(s) regs. Is there anything similar in there that would lead you to believe that bifurcation can be or must be done? It has been a while since I've reviewed the entirety of the 414(s) regulations, but I don't recall such a bifurcation. Doesn't mean it isn't in there, though.

Well, I'm not aware of anything directly on point. But this is not a new circumstance and many firms have adopted policies and procedures which are meant to address what they will, and will not do. At one end, one might decide not to create a plan for anybody because everybody is a member of the union and therefore if the union exclusion is operative, nobody participates in the plan. At the other end, one might look to the fact that the wages paid in excess of union wages creates a circumstance where those amounts paid are not pursuant to a collectively bargained contract and decide that such an individual can not be excluded from a plan established by the employer which is outside the auspices of a collectively bargained contract. It is my understanding that the latter is the more widely held view. Once an individual is a participant, however, it is inconceivable to me that you would be able to ignore any portion of the person's compensation for plan purposes. I don't have time to read 414(s) at the moment, but I don't recall anything in there that would allow one to ignore compensation paid pursuant to a collective bargaining agreement. What you describe as "too good to be true" is I think the natural extension of the latter position.

Since it is specifically allowable to do what you want to prohibit, I don't think you'll find a citation that supports your position. I think you need to look to the plan itself. Does it provide solely for individual accounts? If so, isn't that your cite?

Agreed, but who is to say that 5% won't satisfy the eventual definition of what a market rate is.

I'm not sure I'm understanding. If the plan provides for pooled accounts the contribution can be made at any time. If the plan provides for individually allocated accounts, no contribution can be made unless it is directly into an individual account. Maybe this has already been said in the above messages. If so, ignore.

I think the answer you are looking for is just the hypothetical. But that presupposes that 5% won't satisfy the regs that are about to be published. How would you know?

It depends on what the document says. Some allow for a special allocation in order to satisfy the top-heavy minimum. Others don't. If your plan does not, then everybody would need to be lifted up to the same percentage of plan compensation in order to satisfy the plan's terms.

I'm not sure I would use the phrase "all PPA amendments", because I think the requirement is for "good-faith PPA amendments", but no, there has been no extension.

Yes, it is allowed. As Chad mentioned, you are misusing the term "rate group". Either the document has the flexibility that Chad mentioned, or the Plan Sponsor can insert it after the end of the year with a targeted amendment.

You should talk to the reviewer, if one has been assigned. They will most likely say that you should send something to them clarifying the record, indicating exactly when the Notice was distributed. Obviously, you would need to have the Notice distributed if you haven't at that point. It has been a while since this has happened to me, but when it did I seem to recall that the reviewer wanted the Notices to reflect the proper dates with respect to a later distribution of the Notice and that is all. As speculated earlier, the reviewer indicated that the primary purpose of the notice is to ensure that all parties can make comments to the governmental agencies on a timely basis. To that end, the reviewer said the clarified record would ensure that the governmental agencies would allow a comment to be considered as long as it was sent within the appropriate comment period as measured from the actual date the notices went out. The net effect, theoretically, is that the reviewer said he/she would ensure the determination would not be issued until the comment periods had run. As most of us have experienced, determinations usually take far longer than the comment periods, so re-issuing (or, as in this case, issuing them for the first time) the Notices and clarifying the record has no practical effect on the timing of the determination. I suppose it is possible that a out of sorts reviewer would suggest that the entire process be restarted, but better to know that is the suggested course earlier rather than later.

Don't have time to cite the reg, but remember that a 412(d)(2) election is mandatory if the amendment would otherwise be restricted under 436©(2). Hence, you can't increase the TNC for the year if the effect of including it in FT would have been that the amendment can't be adopted. I think the impact of this provision is to require a 436 contribution, not to actually modify the FT (although it does do that). Ciao from DC.

Your numbers don't seem to be consistent with your percentages, can you detail your calculations?

I think the semi-annual entry date solves this issue for this plan. I think the right way to look at coverage is based on zero service, irrelevant age and entry on 1/1 or 7/1 following hire. Seems like only the two HCE's enter the plan.

You misread the reply. The individual is not a participant for non-discrimination testing purposes, like any other person employed by the employer not covered under the plan. That is, shows up as a big fat zero in all the tests. It was never said that the person was excludable from the non-discrimination test.

If the plan is not an ERISA plan, then no SAR is needed.

Keep in mind that if you choose to correct by QNEC, you will need to bolster your 140 by around 385 folks to get to the safe-harbor percentage. This would argue for hitting the unsafe harbor percentage if that is possible under EPCRS. In any event, the QNEC sounds like a large number.

Well, I know you say that the ADP tests are done, but it seems like if you do what Blinky says, it should pass coverage, assuming satisfaction of the ABT. What it does to your ADP/ACP tests I have no idea. If combined, isn't the ratio: 1200/3655, which is 32.8%. And with a concentration percentage of something close to 3655/(3655+230) = 94.1% isn't the safe-harbor percentage 24.5%? What am I missing?

I am supportive of this policy.

Buckaroo, can we get some body counts? I'm finding it a bit difficult to imagine the percentages being that bad. Maybe I'm just not very imaginative today.

Hypothetically, of course, just when are we talking about having followed the proposed regs? Before they were even published? Yeah, I don't think I'd sweat too much over that. Would you?

You mean the PROPOSED regulations that, once finalized, will not be effective until 1/1/2010 (stay tuned later this week for proof)? I don't want anybody to be cavalier about the fact that the regulations aren't technically in effect. On the other hand, they aren't and the standard is along the lines of good faith compliance with the Code. Have you reviewed the above in light of what the Code says?

As mbozek said, it is usual and customary (but not required by any specific law) for benefits that have commenced to be fixed as of the date that they began, at least with respect to death benefits. It is certainly that way in ERISA plans. It sounds like the university plan that you are dealing with, though, is not an ERISA plan. That means it is subject to State law and only counsel familiar with how your State's laws are worded can help you. But it would, I would hope, have to be clearly spelled out in participant communication materials if it is possible that a divorce would automatically change a benefit that has commenced prior to death. Since your husband has already commenced benefits, and has clearly elected a form of benefit that reduced his lifetime benefits so that the plan can provide a continuation benefit to his surviving spouse, I would be surprised if a divorce which takes place after such commencement of benefits can modify the continuation benefit. *IF* it does, then the plan should (but probably doesn't have to from a legal perspective) remove the reduction in his lifetime benefits from the point in time that it erased the continuation benefit. You need to review, in conjunction with counsel, the materials available from the plan to see if there is a section that deals with modifications that take place after benefits have commenced upon a participant's divorce. Good luck. If you mention the university and their plan communication materials are available online, somebody might take a look and let you know what they think.

Agreed on all counts.

Strangely enough, and I don't mean to minimize your efforts, you aren't really entitled to an answer to these questions. As a participant, you are entitled to ask questions about your accounts and your benefits and about the plan's documents and disclosure items. But you aren't entitled to information regarding other participant's benefits or accounts, I don't think. I understand that you are just trying to help, but I doubt your employer will see it that way. They might, especially if they perceive that you might take your concerns to a governmental agency if they don't bring you in to the situation. But I still doubt it. Keep us informed as to what your employer decides to do, as I, for one, am interested in the outcome.