Mike Preston

Two issues: 1) The plan must allow the match to be made only for the employees of the adopting employers, rather than for the plan as a whole. 2) those eligible for the match must, on their own, be a 410(B) group. If these are three separate entities, each with their own management structure, you will probably not have too much difficulty establishing the aggregation of the smaller companies as a 410(B) group. If, on the other hand, the smaller companies have a higher concentration of HCE's than the large company, then it may be more problematic.

AndyH has it right, as usual, but I think there is a clarification needed. The employer contribution is included in the a4 testing for all of the employees. The only question is whether the plan is being restructured to test one group separately from another. Let's assume the plan is being restructured into two groups, one which includes those who are statutorily eligible, the other includes those who are not statutorily eligible. Fine. When doing the test, under a4, of those that are statutorily eligible you will include these contributions. Similarly, when testing those who are not statutorily eligible you would also include these contributions. Usually, however, the testing for those who are not statutorily eligible is trivial because there are no HCE's in that group. Of course, care must be taken if you have an HCE in the non-statutorily eligible category.

Of course.

I think they say exactly what was said by lforesz. If a non-key participates even for 1 day in a top-heavy plan, and, at the end of the year is still employed, that individual must receive the top-heavy minimum. See Q&A M-10 of 1.416-1. Having the participant participate in another plan is irrelevant.

Let me guess, Do, you work for an asset gatherer?

How many more sections are you going to trot out? As I said, I think the whole document probably needs to be reviewed. Good luck.

Yes, the current version of Circular E does indeed say to make the check payable to Financial Agent. Only the Treasury could come up with something so nebulous. Really makes our clients feel good about sending a check, doesn't it? "Financial Agent - US Treasury" would have been so easy, wouldn't it? Sheesh.

Well done, Tom.

I agree that the country would be better off with a host of simplifications. And the rules on ERSA's are fine as they will encourage understanding of the rules as to employee deferral, simplify choices as to non-discrimination within the four corners of salary deferral and therefore promote savings. The creation of the LSA's and RSA's however, discourages capital formation as they require saving by individuals on a non-deductible basis. This just isn't going to happen for the vast majority of workers. Even saving on a deductible basis has not been popular outside employer plans. Witness the lack of traditional IRA contributions by those eligible. But if the employer has the incentive to retain or create a plan removed by the elimination of disparities, the worst of all worlds has been implemented. While I don't think it is good public policy to force employers into defined benefit plans as they are currently regulated, if the defined benefit plan rules were substantially simplified and, at the same time, substantially modified to provide more flexibility, it MIGHT begin to sound like good public policy. But, right now, it is merely something that will dramatically reduce retirement savings for the people who need it most. Oh, it will mean an increase in business for me. A big increase. But I still don't think it makes sense in its current form, my previous tongue-in-cheek comments notwithstanding.

It appears that this individual is not a 5% owner and began a lifetime annuity distribution before actual date of termination of employment. Do I have that right? So, the distribution clearly conforms to the minimum distribution requirements. But that isn't exactly what you asked. You asked when the first minimum distributuion is/was due for this person. Are you asking because you want to know if this person must have started earlier? No, the document appears to allow them to wait until the 4/1 after retirement. In this case, that would be 4/1/2003. . Are you asking because you want to know if this person could have started later? Yes, because the document appears to allow them to wait until the 4/1/ after retirement. Ignoring the minimum required distribution rules for a second and turning to the terms of the plan document, another question might be whether the Plan Administrator has interpreted the document to allow commencement of benefits before separation from service? It appears that the Plan Administrator has done so. The provisions you posted don't directly address the issue for this participant, though. If the document generally precludes pre-termination commencement of benefits, then it appears that this participant was not eligible to commence distributions on 4/1/2001. However, this document may have other paragraphs that bear on the issue, so you might want to have the entire document reviewed to see whether this is indeed the case.

I don't think the LRM's have a resignation letter.

Mail the check made payable to the US Treasury, along with an 8109 (or 8109-B properly filled out) to: FINANCIAL AGENT FTD PROCESSING P.O. BOX 970030 ST. LOUIS, MO 63197 This address was current when I last used it. You should look up the instructions to the 8109 to ensure it is still the correct address. The phone number I used at the time to ensure the address was correct is: 1-888-568-7343. I am amazed that financial institutions are incapable of making checks payable to the US Treasury. They may need special authorization from the Trustee, but to not allow it at all seems very strange. But, as you mention, if all else fails, set up a bank account in the name of the plan. I seem to run into at least one plan sponsor a year that resists this. Once they try it, they really like it. They find all sorts of uses for the checking account, like avoidance of DOL penalties if the payroll system has a hiccup, for instance. I am particularly unsympathetic to a plan that would have EFT requirements. If they are distributing that much where withholding rises to the level that requires electronic filing, how can they not have the ability to pay taxes automatically? BTW, what are the thresholds on this, as it has been a while since I looked it up for a qualified plan?

Mail it to St. Louis?

OK, did the participant retire? If so, when?

Pax is right! However, I'd be very surprised if the Trustee were to be relieved of its fiduciary liability to vote the unvoted shares by a statement in the proxy which calls for the Trustee to vote the shares based on any predetermined method. If challenged, I would back the party that says the Trustee retains the fiduciary duty to vote the shares according to the normal fiduciary responsibilities it accepted when becoming Trustee. But with that said, Pax is right!

Marino13, your response to the vesting question was incomplete. Yes, if someone reaches the age under the plan where retirement benefits may commence they are 100% vested. What about the vesting schedule in the plan for those who have not reached the age where retirement benefits commence? 3 year cliff? 5 year cliff? 20% per year?

Is the person a 5% owner? What does the plan say as far as Required Minimum Distributions relative to the start date? Does it say that everybody begins when they attain age 70 and 1/2, or does it say that non-5% owners begin when they retire?

More than likely the former, but definitely not the latter. In between is possible, also, although not terribly common in a participant loan. If the note that the participant signed calls for a prepayment penalty (which I believe is theoretically possible, although not a common provision) then the amount of the payoff would be the principal remaining plus the prepayment penalty.

Well, it depends on what you are asking about. If you are asking whether the 3% SH can function as the base 3% contribution in an integrated allocation, then jaemmons has already answered your question. If you are asking whether a single plan can be set up which allows for an integrated PS alllocation in addition to a 3% SH, the answer is yes.

I think they were talking about modifying the regs, not literally the repeal of 401(a)(4) itself.

You should re-read what Katherine wrote.

I don't think there is any question about the fact that your design satisfies a plain English reading of the section. I have known people to go much farther. The universe of people being discussed is the universe of people in the DB plan. To the extent that people benefit in the DC plan over and above the people who are also in the DB plan is irrelevant. The question then goes to what is "reasonable and uniform". Some have taken the position that "reasonable" under that context is intended for non-discrimination purposes, not 401(a)(26) purposes. I think this was based on a comment from the podium at some long forgotten conference. But you don't even get close to this issue of varying DC amounts for HCE's in the DB plan.

You are correct, former key employees. Pretty sure this was in the Q&A at the 2002 ASPA Annual Conference.

I didn't think that HCE's had much impact on a26 testing, unless the plan is comprised solely of NHCE's. Are you saying that your DB plan participants, before offset, do not satisfy 401(a)(26)?

Any truth to the rumor that as part of the President's plan, the enrollment exams will increase from 2 to 4 and will be 8 hours each and there will be a 7 year experience requirement? No? Shucks. Well, that's ok. There apparently will be enough to do for all actuaries. Seriously, does anybody really think that this thing will pass in its current form?