ERISAAPPLE

I had similar thoughts. The article does not explain things fully, but reading between the lines I think it works. It is impossible to know though without seeing the details. Nonetheless I have to assume counsel for Abbott Labs didn't miss the contingent benefit rule.

Look at the terms of the old plan on the date of the merger to see who the administrator was at the time of the merger.

You have to make sure you are not violating the contingent benefit rule. I think Abbott labs set it up as a profit sharing contribution. I imagine testing is a mess unless it is only for NHCEs.

Assume you are drafting a DB plan. The client says the only available benefit forms will be the single life annuity, 50% QJSA, 75% QOSA, and 50% QPSA. The survivor benefits are fully subsidized, and all optional forms are actuarially equivalent. Assume further that the client asks the following. He says he knows an employee is going to submit a QDRO that says the alternate payee is considered the participant's spouse solely for purposes of the QJSA, and not for any other purpose (including not for purpose of the QPSA). He asked what will happen if the participant dies after submitting a distribution election form for the QJSA, but before payments actually begin. He says in this regard he does not want the plan to offer one penny more or any option more than the law requires. What is your response? Will the alternate payee receive the 50% survivor annuity under the QJSA or nothing because the participant died before the annuity starting date, i.e., pre-retirement, and the participant is not the spouse for purposes of the QPSA?

Got it. Thanks.

Let's start with the basics. Who has the money: the plan, or was it distributed to somebody? As David Rigby asked, what is your interest or your client's interest, i.e., who are "we"? It sounds like the Alternate Payee was receiving installments or an annuity, and you think the money should have gone to you (or your client). Did the QDRO say the payments stop when the AP remarries? And the big question is does this AP have any money worth going after?

Larry are you saying there is no rule because the regs are proposed? Are you saying there is no rule that a corporation (other than a professional corporation) is excluded from the definition of FSO for A-orgs? Are you saying there is no rule that an S-Corp is excluded? Are you saying something else?

This is the same line of thought I had. I was just wondering if there might be any guidance somewhere which says an S-Corporation is not a "corporation" for purposes of the exemption that excludes corporations (other than PCs) from the definition of an FSO. For example, in 318 an S-Corp is treated as a partnership, but that is statutory.

The proposed regulations for the affiliated service group rules exclude corporations, other than professional service corporations, from the definition of a first service organization. I can find any guidance on whether a subchapter s-corporation is a corporation for this purpose. Is anybody aware of any guidance or has anybody heard anything about this, perhaps informally from the IRS?

I would think if you are meeting 104-44, you would not required to report them. But I think you may be correct. It doesn't look like 104-44 applies to a wrap plan if any portion of plan assets are held in trust. The auditor should be able to answer this question for you.

Do the other components even have plan assets? I'm not saying that would answer the question, but it might help to point you in the right direction.

When I read the question I assumed it is talking about a 403(b) plan where the participant, such as a professor, sponsors his or her plan in a separate business, etc.

What is the code for exceeding the 402(g) limit?

I suppose the maximum tax rate on the federal level for reversions to a corporation is now 71%. Is that enough to re-think reversions?

Kevin C, do you read eligibility service crediting rules to mean eligibility requirements? I look at that language to mean a change, for example, from hours of service to elapsed time, or perhaps changing from actual hours to equivalencies.

Just thinking off the top of my head, I think this would narrow the class of employees eligible for the safe harbor and therefore is not allowed mid-year. I know the notice mentioned some exceptions, and I can't recall them, but I don't think eligibility is one of them. I think it was entry dates and something else.

Thanks everyone.

Not available. They did the prior actuarial valuation using the wrong benefit formula. They misread the plan.

We have a new client with a defined benefit plan. The prior actuary did the valuations wrong for several years. Do you think we need to file amended 5500s, or should we just fix it on the next 5500 and move forward, perhaps with an explanatory note. Had the valuations been done correctly, nothing would have been different in terms in things like excise taxes, etc.

Thanks. Me neither. The question doesn't even really make sense to me, but I am being asked and so I thought I would run it by this board. Maybe the client is thinking of the old 415(e).

If your DB plan fails 415, is there anyway to correct that failure in a DC plan sponsored by the same sponsored?

You can't use an FSA to pay for any health insurance premiums, even for health coverage under the plan of the employer that sponsors the FSA. In contrast, for example, you can use distributions from an HSA or an HRA to pay for COBRA coverage. I believe the IRS publication on FSA covers this. It is also in the proposed regs, which of course are not binding. It is, however, the long-standing position of the IRS.

If COBRA applies (e.g., more than 20 employees last year), and there are 4 employees covered by the health plan who are staying on to wind down the business, you have to offer COBRA. It sounds like, however, that there is no plan and that the last 4 people will not be offered a health plan. In that case, if no plan, no COBRA. The employer (or bankruptcy trustee, debtor in possession, etc.) should adopt a resolution terminating the health plan in order to document that the plan was in fact terminated.

The "cancellation" of the loan is a deemed distribution. If the participant is under age 59 1/2 the participant gets hit with the 10% additional tax (assuming no other exception). The deemed distribution of ROTH money is not a qualified ROTH distribution, even if the participant meets the 5 year/59 1/2 rules. Thus, any earnings used to fund the loan are taxed. With a deemed distribution, unless the loan is afterwards repaid, the outstanding balance plus accrued interest reduces the maximum amount allowed under future loans. I continue to believe there is a real possibility that the loan is a deemed distributed (and taxed) plus the use of the pre-tax 401(k) to repay the loan could be considered a taxable distribution (also potentially subject to the 10%), resulting in double taxation. I'm not sure about double taxation though.

I agree with ETA. How do you cancel a loan without paying it back, refinancing, or a 1099R? I am just thinking out loud here and spotting issues. I have not researched this. But it seems to me that paying off a loan from after-tax funds with pre-tax contributions could be deemed a distribution of the pre-tax amounts and then a repayment by the participant. Conceivably that could disqualify the plan if it does not permit in-service distributions, and could result in the additional 10% penalty if the participant is under 59 1/2.