Mike Preston

Sounds right to me.

I vote yes. No research, though, just gut feel.

While QDROPhile was yanking your chain a bit (although within the bounds of reason for our government, that's for sure), there are other reasons why multiple employer plans are less beneficial than single employer plans. Have you researched what happens when an individual portion of the multi-employer plan is DQ'd? Aren't there at least some circumstances where Employer A's action can have a negative impact on Employer B's qualified status? I know you came here looking for support of multiple employer plans and not for the opposite, but I'm afraid it might be difficult to come up with any you haven't mentioned. Economies of scale are certainly one advantage. Most of my clients, however, would much rather be a big fish in a small pond than a guppy in the ocean. How much time does the multiemployer plan allocate to each participating employer to determine HCE's? Don't forget the 17 and 1/2 hour rule. In all seriousness, the only time I would ever go on record to a client that a multiple employer plan was a good idea would be when the individual employer wanted a plan that didn't require any testing (a safe-harbor plan without ER contributions other than safe-harbor match such that there is no need for any top-heavy determination). Even then I'd be a bit scared and would caveat my recommendation. Obviously, the marketplace could prove me to be on the wrong side of this issue.

LOL. I was just saying that if one does not know how to apply -a4 in a specific situation, whether for amounts testing or for BRF testing, the general solution is to put something in place and then submit for an LOD. When putting "something in place" if you want to make some sort of adjustment to benefits in order to help ensure non-discrimination, and if you felt like it, you might use 81-202 as a first attempt and then sit back and wait for the IRS to tell you that it works or doesn't work. And if you lose your yacht in the process, so be it. <smile>

LOD and 81-202?

Look up the North Shore Auto case. I think you'll end up concluding that the entry date is 7/1/07.

It is allowable.

What corporations?

You do not aggregate for 401(k) unless you aggregate for 410(b). The exception is if your HCE participates in both, in which case you count all deferrals and all compensation for that one individual in BOTH plans. The new regs are slightly different from the old regs on this point, so look it up if it applies. I note that you already said it doesn't apply in this case, but I thought I'd mention it anyway.

Get ERISA counsel to sign off on it and everybody (except potentially ERISA counsel's E&O carrier) should be happy.

You must.

You might want to peruse this thread: http://benefitslink.com/boards/index.php?s...amp;#entry88861

mjb, how about because the regs say one must?

Reduced. To me, "reduced" is what you have described as reduced, reduced by deferrals. Something tells me that goes the wrong way for you.

It seems like people are arguing that an amendment executed before the beginning of the year would somehow escape being treated as within the scope of an amendment that must be ignored. Leaving aside the fact that it is extremely unusual to adopte a plan or amendment before the beginning of the year it is effective within (although I fully admit it is possible), I just don't see how the language of the statute allows one to ignore such an amendment: "resulting from a plan amendment which is made or becomes effective, whichever is later" seems pretty clearcut to me. Blink, I like the argument. I don't think it would stand up, but I like it nonetheless!

How is it not also unavailable in year 3? Since the language of the code specifies that it is with respect to the later of the adoption or effective date, with an effective date of 1/1/03 (year 1), we find that the effective date of the plan falls in the second previous plan year when referencing the 2005 plan year (year 3). Note that this is how the IRS manages to make something that sounds like "two" mean "three". For no good reason, IMO.

Maybe I'm just not understanding what you are driving at. But my understanding of the regs is that you will find it difficult if not impossible to change the annuitization in such a flexible manner.

Unfortunately, the IRS believes that top-heavy minimums are not a statutory overlay. Instead, they believe that the top-heavy minimums must be clearly delineated in the terms of the plan(s). Hence, if the real (statutory) top-heavy minimum is satisfied (as would be obvious with a 7.5% of pay contribution), the terms of the plans can still operate to cause additional allocations/accruals. It is therefore impossible to answer the original question without an in-depth analysis of the language in both plans.

It is getting worse. I have been told that the mid-atlantic district of the IRS is, upon audit, using the statutory dates. This is directly contrary to Lisa's stated position. She believes it is crystal clear to use the plan's entry dates. Get the tape from ASPPA if you don't believe me. It would be funny if it wasn't so sad. In the olden days, where reasonable people such as Ira Cohen held the "powers that be" mantle, when an inconsistency or ambiguity was discovered they would make it clear, either formally or informally, that either (any?) approach would be acceptable through a certain date and then, based on a specific clarification, only one approach would be allowed after that.

It is very difficult to write a response to the original post without hurling unkind adjectives at the clients who want to run a blatantly discriminatory plan. Either do as suggested and remove the accrual requirements or insist that the funding not take place early. Either run the plan as a non-discriminatory operation or remove yourself from its operation, as when it comes down, it will take you with it.

Tread very carefully here. The company owes the plan. The plan owes the beneficiaries, as per the plan participant. The estate's heirs own the company. They, in essense, owe the money to the plan's beneficiaries, as qualified plan money, eligible for rollover. If they aren't one and the same, there are competing interests. Even if they are one and the same, they may not understand that it is their best interests, most likely, to do whatever it takes to fund the liability. Be very careful.

Your client isn't going to like the result. He stole $16,000 from the plan. He should give it back. With interest. He is much better off doing that than any of the alternatives. Since his RMD for 2008 will exceed the amount repaid, he will receive from the plan the money back (plus some). Should be very easy to make this transaction work. Any other alternative makes no sense to me. Your second suggestion doesn't satisfy the 401(a)(9) regs so the whole plan loses its qualified status. Hardly the best result.

From what you have described, it sounds like your wife's attorney "assumed" certain things and the assumptions were incorrect. He may have more information than what you have indicated. Certainly your claim with the company would have been better served had that information, if it exists, been forwarded with your claim. Should you appeal, you should ensure that all information favorable to the claim be submitted. For him/her to be billing you now to clean up the mess it appears that he might have created by assuming a DRO he forwarded to them would be accepted even though he has no proof that they not only received it but opined as to its acceptability as a QDRO seems a bit weird to me. Perhaps you can come to an agreement with him as to the issue at hand before you render payment? If he is uncooperative, it may be that you will need independent counsel.

412c8

All or nothing.