BFree

Two companies that are related, but not part of a controlled group, have their plan assets held in a single brokerage account. Aside from administrative concerns, what other issues (legal, liability) should the plan sponsors be aware of? We are trying to get the money split into two accounts, and would like to raise issues besides "it is difficult to administer." Thanks in advance.

I agree with MGB. Note that you can also file the SSA to take people off the Social Security Administration's list when they are paid.

I was responding to the apparent contradiction of "401k plan outside the United States." The response about the British equivalent not being to be rolled over is in line with my original thoughts.

I wouldn't think that people in England are subject to the tax code here in the U.S.

You're right. Hire a lawyer and report the plan administrator to the DOL.

The original question was what is the participant's recourse. The recourse is to get the transaction accomplished and make the participant whole. If you can't demonstrate that the participant lost something of value, then the only to do is get the transaction accomplished. Maybe if you stated what you wanted in return for this oversight, someone could answer with a direct response to that.

The use of "class warfare" here makes me fell like I'm watching a shouting match on cable t.v. where style rules over substance. Allowing the "rich" to save more is not a detriment to the "not rich," in and of itself. And, If you were "not rich" and you maxed out your Roth IRA last year, you may like being able to put more into a similar account (especially if your employer no longer sponsored a 401k plan). To the extent that this legislation decreases the desire to have employer-funded contributions made to plans, that is bad for the not rich. But "warfare" it isn't. To the extent that this legislation increases the budget deficit in future years, that may or may not be bad. But it is beyond most people's skills at predicting with precision and certainly not germane to a discussion looking at this from a perspective of killing employer-sponsored DC plans. I agree with many of the other comments in the posts that try to use "class warfare" to make a point. I just think it is an over-used term whose meaning has been lost.

Why can't Fidelity cut a check for a flat $15,000?

As a terminated employee due a benefit from a DB plan at retirement, should you receive annual statements? My former employer insists "No" - as the amount will not change from amount given at termination.

I thought the Notice said you were "deemed" to satisfy the notice requirements if you gave it out 30 days before the plan year started. That may not preclude a shorter time period. I think the original question was something along the lines of: We can't have 30 days, there is no at December 2. Can we have less than 30, even if it is the 2nd year of the plan, if the first year of the plan begins post-Dec 2?

Yes - I agree, vesting must be based on a 12-month period. My equivocation came as a result of not providing a citation and a lingering question as to whether it is the (a) 12 months ending on the plan year end or the (B) 12 months from the plan year beginning.

http://www.irs.gov/pub/irs-pdf/n746.pdf This is Notice 746.

I'm talking over $100,000 in forfeitures, and while I don't begrudge anyone the fees they can charge, I hope an ERISA attorney's fees for this question wouldn't rise to that level.

I know that lforesz is not going to amend to allow reversion to the Employer, but could you do so with a PSP/401(k) plan? We have the same situation. Any caveats? Thanks.

Hours of service for vesting are not normally prorated for a short plan year.

Could you give an example to clarify the PEO prohibited transaction you are referring to?

Our document provider has provided us with (1) a pre-GUST document and (2) a GUST document. The good-faith EGTRRA amendment (which does not require the adopting employer to sign anything) applies to (2) above. If, at the end of 2002, we are still on (1) above, we don't have the benefit of the good-faith amendment. Consequently, we must adopt (2).

Although your question and assumption imply that the testing for the plan was done incorrectly, it seems that your issue is more likely that you haven't received the money back. I suggest that your first inquiry be made of the employer. Ask why the refund/distribution was made and note that you have not received it. Ask for a timeframe for receipt. Any employee deferrals will be refunded to your wife. As you note, you may or may not receive the employer money that was taken out of the account, it depends on the test. You should be able to get clarification about that if you persist in your questioning. If your true concern is that you believe that the actual tests were done incorrectly, you will need to find out which specific test the brokerage account is referencing.

I assumed Reywal was joking. I mean, "don't take food out of this man's family's mouth" is s-t-r-e-t-c-h-i-n-g it a bit.

This isn't legal advice, but: I assume it was you who initiated the resignation. If you didn't work out payment for 6 weeks before submitting it, why would you think the company would pay you for work not done? Why not resign with 6 months notice and collect checks for the next half-year?

If the $10 distribution is related to a previous, withholding-eligible distribution, I believe the 20% will apply to the $10. This would be the case if it is a residual distribution.

I thought you received an hour of service when you WORKED an hour, not when you were paid for an hour.

Since two of you weighed in... Actuarysmith and Kirk are comparing investments within a plan. Of course, keeping your account balance in a higher-performing asset is better than keeping your account balance in a lower-performing asset. In any case, actuarysmith's statement is not true because the "loan interest rate" that the loan earns is not earnings to the individual at all. It is the participant shifting money from one pocket to another. Hence, my call above to compare a plan loan to a loan outside the plan where you pay yourself.

I think that the fiduciary won't be able to tell the TPA the numbers because everyone expects the TPA to determine the numbers. It is number-crunching that no one wants to do. I am in a similar situation, but the order has not been deemed qualified by the plan sponsor. As TPA, we noted when we saw the draft dro that it would be difficult to administer. Now the order is signed and I will tell the plan sponsor and attorney again that it is going to take a lot of time to segregate the accounts. I do not expect anyone to change the terms of the order; that's just the way it goes. The order specifies that the account be segregated 50/50 as of a day more than 1 year ago. The account is contained in six or seven individual brokerage accounts that contain several hundred individual stocks, plus life insurance. The date chosen to segregate accounts is not a month-end, and the trustee has no record of those security prices at that date. The account was not frozen on that date, so there has most likely been activity in the account since then. I don't think the drafters of these orders (MPP and PSP) took the time to look past the 50/50 split. The alternate payee can have absolutely no idea of how much money she would receive if the balances were split tomorrow. No questions, just commiserating. Will accept any suggestions.

mbozek - I think that given their frequency of use, discussing mortgage loans made out of plan does not address the general question as a participant poses it. I concede that if you secure your loan within a plan with your home, you may be able to deduct the interest. Just stating this point makes it clear that some plan loans are more valuable than others. If some are more valuable than others, they cannot all be equivalent on an economic basis. Loans from a 401k plan are often touted as "paying yourself back." For that reason, a plan loan should not be compared to another investment inside the plan. (As contained in the argument where the earnings inside the plan - if the loan is not taken - are compared to loan interest). A loan costs money - interest. Of course, taking a loan is going to cost more money than not taking a loan. So, a plan loan must be compared to some other kind of loan. A plan loan is rightly compared to loaning yourself money outside the plan. When you pay yourself interest outside the plan, that interest is a certain amount. When you pay yourself interest, AND you have run that interest through a qualified plan, what you will get upon distribution is a certain amount less taxes. Thus, plan loans are not equivalent to their "outside the plan" equivalent.