Phlyers

I have a participant applying for a 10 year loan, but mentions her name will only be on the deed. She is going to gift the loan proceeds to her fiancé and the debt to acquire the home is only in his name. The ERISA books are a little light on the documentation required. I looked through similar threads on this. But, doesn't the documentation need to show that she also incurred the debt to acquire the home?

Thanks for all the replies. I also contacted FT William who said they wouldn't recommend catchall language and have never seen any that works. They continued prior service with non-affiliated employers need to be specified. It seems all are on the same page on this one. To make the situation murkier, the sponsor and additional adopter are both employers and management companies. Some businesses they own the building but weren't managing the employees. As of certain dates, they will be managing and paying the employees at these locations through their own EINs. In terms of service, I know the document automatically credits service with companies from the point of being in a controlled group, credits services with additional adopting employers and leased employees. Any suggestions to these situations of owning the buildings but later managing and paying the employees there in terms of their prior service with the old managers.

We have a sponsor and additional adopting employer who are acquiring the assets and employees of numerous companies, who want to credit prior service. Is it permissible to have some sort of catchall language that credits prior service with all companies that will be purchased instead of amending the plan each time and listing out all individual companies? The ERISA books didn't seem to address the situation and the FT William document sections says list each company. Just asking because I think I've seen Relius documents in the past have such a catchall provision. Thanks in advance.

Apologize for not asking the right question: The accounts were to be split and the document permits it. Since the son is requesting his distribution in this calendar year, the year of death and year prior to RBD, part of the distribution must first satisfy the RMD under 1.401(a)(9)-5. Under who's life expectancy is this RMD portion calculated? I know a non-spouse beneficiary calculates under their own for the year following the participant death and reduce by 1 in the following years. But is there a cite or reg. somewhere that says how it's calculated this year, is the participant's life expectancy used? Is it the entire account balance done prior to segregation, or just the son's half afterwards? The ERISA outline books only tell me that the 5 year rule or life expectancy rule must be satisfied.

Thanks for the reply, Tom. In my time searching these boards, you seem to be the authority; no monkey. I had come across this article, but wanted to make sure nothing had changed since 2004. I did some checking in the ERISA outline books, but some answers are a little scattered, therein.

Wanted to run a reverse example of Tom's: We have a new client who had profit sharing only with the entity they're winding up, wants us to terminate the plan. Then is forming a new entity and wants to get a safe harbor non-elective with profit sharing in place by 9/1. Because the old plan didn't have a 401k feature with deferrals needing distribution, the issue of whether the safe harbor may be a successor plan is irrelevant? And, I don't need to track down ownership information on the old entity for controlled group 'same employer.'

Participant was a non-owner, born 5/6/47, still working when he died on 1/27/18. ERISA outline books seem to treat the situation as death before the RBD. Participant had no prior distributions; especially no annuities, so still a death before RBD. ERISA books and plan document requires either the 5-yr. rule or life expectancy rule be satisfied. The two beneficiaries are non-spouses. One is electing to take their half in a distribution. The other leaving theirs in the plan. The ERISA book examples do not address multiple beneficiaries electing both options. Only mention of multiple beneficiaries is if they both take the life expectancy, the oldest beneficiary age in the year following participant's death is used to determine the life expectancy. I looked at the Q&A reg. 1.401(a)(9)-3 Death before RBD: employee dying before the RBD, thus before distributions are treated as having begun under 401(a)(9), distribution of the entire interest must be made in accordance with one of the methods listed in 401(a)(9)(B)(ii): the 5-year rule or the life expectancy rule. I am unsure if the language of one method means multiple beneficiaries may take only one option or the other. PLEASE HELP... And, if my analysis seems wrong at any stage, please correct me.

You're right Kevin. His termination with Co. A and new employment with Co. B was not considered a severance from employment as it was within the controlled group. 414 treated the move as a transfer between companies. I had to look into the QSLOB rules, and found they only take employers out of a controlled group for testing purposes. The transfer of 1.411(d)-4 was appropriate as both Companies had 401k's and the transfer was in connection with a change in employment status. I just wanted a quick answer instead of navigating the ERISA outline books.

We have an employee leaving Co. A for Co. B. Both companies are in a controlled group, but Co. B and a few other Companies are covered by a Qualified Separate Line of Business. The employee wants to roll over his monies to Co. B's own plan. Is a rollover appropriate in this scenario where the QSLOB treats these companies as separate employers? Or are the companies still considered a controlled group for this purpose and a rollover is inappropriate? Or am I off on both possibilities?

I knew the 30 day notice requirement was relaxed for these safe harbor conversions to the effective date, but it didn't occur to me when he made the suggestion. Even if I made both deferrals and safe harbor provisions effective Aug. 1, would it be alright to use the entire plan year as the computation period for calculating this non-elective 3% contribution for the shortened period.

Profit sharing plan's year ends Dec. 31. My boss wants to convert the plan to add deferrals and safe harbor non-elective 3%. I know the regs. treat this as a new plan for ADP/ACP and notice purposes. The issue I'm having is the deferrals are going to be effective as of August 1, but he wants the safe harbor provisions to be effective as of the beginning of the plan year on Jan. 1 so they can make the 3% contribution for this year, using it as an offset for the profit sharing piece. I know the compensation computation period can exclude pre-participation comp., but something doesn't sit right with me on this. Is there a reg. that precludes the safe harbor prior to August 1 as nobody can defer during this period. And is the restatement date of Jan. 1 correct then, and there are no short plan year issues I'm missing?

Only contributions are Employee Deferrals and Employer Safe Harbor Match, our documents ask which test the safe harbor is intended to satisfy, just ADP or both ADP/ACP. Our old documents from McKay Hockman noted that the ACP was automatically satisfied if the only employer contribution was a safe harbor match. Was I correct in drafting the safe harbor match with only the ADP safe harbor selected to be satisfied and assuming that ADP/ACP election was only for a safe harbor match with additional discretionary/fixed match or after-tax contributions. Wanted to know for our new docs.