404c compliance

[Guest CJDwyer]

What's your opinion on how to answer the defined contribution pension features and whether or not a plan is intending to comply with 404c (code 2F)?

I think a lot of plans try to comply, but I've always heard that 404c is impossible to comply with.

We have a lot of clients using insurance group annuity contracts with brokers telling them they are complying with 404c. I have some trouble not marking that they saying that they are not when clients think that they are. Someone said that the IRS is gathering this data so that they can start auditing plans for 404c compliance.

[R. Butler]

The key word is "intending". If the employer is diligently trying to meet the 404©requirements than the answer is yes. Most of the requirements are fairly straight forward and the employer is either meeting them or not.

You definitely don't want to lie on the form, but it is my understanding that a no answer is more likely to trigger an audit.

[Guest rmeigs]

If the plan is intending to comply, then you should so indicate on the 5500. Intending to do something doesn’t mean you will get it done.

Evidence of intend should include adoption of an appropriate resolution, a statement in your investment policy, a plan on how the plan will go about complying, and of course, actually taking active steps to comply.

[Guest]

Fred Reish wrote a very good discussion of this point for ASPA in their ASPA ASAP #2000-29. If you can't find a copy, I can email it to you.

[Guest rmeigs]

Good point Keith... the article on 404c by Fred Reish can be found at this web address:

http://www.reish.com/framemaker.cfm?masthe...m?ARTICLEID=231