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Found 6 results

  1. With the understanding that the entity sponsoring the plan is usually the employer, this question arose in connection with a transaction where we just found out the seller, and plan sponsor, is a trust. Forgive me if there is an obvious answer, but wondering if, as a technical matter, a trust can be the plan sponsor of a 401(k) plan? Thanks!
  2. We have a pre-approved plan document that requires participating employers to adopt the plan by signing a Participation Agreement, which is also signed by the signatory employer. Participating Employer X and the signatory employer signed a Participation Agreement properly in 2012, and again to mark Participating Employer X's cessation of participation in 2015. During the restatement process, it has been discovered that Participating Employer X is now totally out of business. Participating Employers are supposed to sign a Participation Agreement for the plan right now, in order to adopt the terms of the restated, pre-approved plan. But Participating Employer X does not exist. The pre-approved plan does not address this situation. Do others think that it would be sufficient for the signatory employer to add a note to the restated plan indicating that the Participating Employer cannot be found, and attach the old Participation Agreement that was originally signed? Thanks.
  3. I have a plan that has held a life insurance policy for only 4 participants for many years. They would like to terminate the polices, just get rid of them and take whatever the value is to themselves (they want the cash). Our record-keeper is telling us that in order to cancel the policy they HAVE to deposit the funds into the plan and then follow the plan document as far as being able to actually take the funds themselves. In this case, you have to either terminate employment or be 59 1/2 take a distribution, per their plan doc. However, we were told by the outside insurance agent that they could take the cash and be taxed on it, as normal. I just need guidance on how to get a life insurance policy out of a plan - when the participant is under 59 1/2 and still employed?? It is possible, right?? TIA!
  4. My question relates to 29 CFR 2510.3-2(b) Severance Pay Plans The Regulations state "the total amount of such payments does not exceed the equivalent of twice the employee's annual compensation during the year immediately preceding the termination of his service." What does the phrase "the equivalent of" mean? Is the DOL referring to the time value of money? Additionally, in referring to the annual compensation, how is that determined? Is the annual compensation the employees previous years salary or is it the salary it would have been if he had continued working? Essentially I'm asking if anyone knows what they mean by "usual rate of compensation". Any thoughts? Thank you!
  5. Client is surviving spouse. We believe her to be the beneficiary of a large account held in a "PSP." Husband and his attorney are both deceased. Life insurance salesman who sold them on the nonstandardized plan created by life insurance company is senile. Only papers related to plan date back to 2000. Those include some 5500s. We have contacted the insurance company and it cannot produce the nonstandardized plan, let alone the adoption agreement. We don't think it will ever be capable of being reproduced. Likely that the plan just went totally silent after about 2001, but no contact we can find in deceased's files from the IRS. Further, the small 3 person company that sponsored the plan is no longer and no one can be found. The investment firm holding the account says, "produce the plan document" before it will do anything. No plan document exists. What to do? One take I have is to say, "There is no plan document, hence, it's a after-tax account. Make a distribution and don't report on a 1099-R. I've read in this forum about the King case and the issues of "consistency" but, if I can convince the investment firm that it is an after-tax account, perhaps they would distribute the account to the surviving spouse. I do have an issue with not having a beneficiary designation, it appears. But, I do have a letter from way back from the attorney indicating that the deceased husband's revocable trust is the beneficiary. The King case might allow me to argue that if the plan went out of compliance from the get go due to lack of a document, that cash contributed was taxable in a closed tax year. And, now, the distributions are tax free from the account. We can't establish that a plan ever existed but there are just a couple of returns that the deceased attorney prepared (1997, 2000 and 2001). Nothing after. We have exhausted our search and I have concluded no documentation will ever be found. Thoughts?
  6. Hi all, Hopefully someone can help, I've searched and not much has come up on the subject. We have a plan that consists of 4 groups. (A,B,C,D) Group A would do administration and training for the other 3 groups. Recently, ownership and roles have changed and it made more sense to convert the plan to an open MEP. Group A still handing the work regarding the plan and letting the other groups adopt provisions within the plan. In past years and from 1/1/2016 to 6/30/2016 it was all in 1 plan, 1 5500. Filing with Group A's data. From 7/1/2016 to 12/31/2016 (and beyond) it is going to be treated as an open MEP. 4 5500's going forward. My question relates to the 5500 filing for this conversion year. It would seem two scenarios are at play, and I'm having trouble finding guidance: Scenario 1 - A 5500 filed for 1/1/2016 to 6/30/2016 showing a transfer out of all the assets. This would be due 4/15/2017 with extension. Then 4 5500's for the 4 groups 7/1/2016 to 12/31/2016 with assets transferred in. Scenario 2 - Since Group A will exist throughout the whole process. Group A files a 5500 from 1/1/2016 - 12/31/2016 - showing a transfer out of the other 3's assets. Then the other 3 groups file their 5500's from 7/1/2016 to 12/31/2016. We are leaning towards Scenario 2 but unsure. Thank you in advance!
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