Must a Code 4 (death) be used on Form 1099-R to report periodic annuity benefits to a surviving spouse? Or is Code 7 (Normal) more appropriate? The guide to the codes in the 1099-R instructions indicate the following for 4: use it regardless of the age of the employee/taxpayer to indicate payment to a decedent's beneficiary, including an estate or trust. But it also says to use Code 7 when no other code applies.

I think I have read somewhere that in J&S situations, the surviving spouse is to be treated the same as if he/she was the participant, meaning 7 might be more appropriate and I know of a number of plans that use this method.

It seems to me that either way, the IRS isn't going to care that much as neither code suggests the payments aren't taxable. I'm just wondering what's most appropriate.

For a new Plan effective 1/1/06, since there is no lookback year, only the determination year, who is an HCE for the first year other than the 5% Owner, if any?

We have a client that is considering a plan, but they have a lot of seasonal employes. Any ideas on how to handle those contributions?

For a first year 401(k) Plan, are there regs that allow a Plan to switch from ADP/ACP testing to a Safe Harbor during the Plan Year?

I have a participant who went out on Disability in 1/2006 and is expected to return in 7/2006. She has now called the Plan Sponsor and asked about taking a loan from the 401(k) Plan. If the Sponsor and Trustee believe that she can make repayments to the loan, can she take a loan?

Furthermore, if the Sponsor and Trustee do not believe that she can make repayments to the loan, can they stop her from taking a loan? If so, what documentation should I request from the Sponsor/Trustee?

Any thoughts would be greatly appreciated.

Regarding the same plan under audit in my last post - the employer still owes some 2001 matching contributions. The IRS agent wants it to fund the missing contributions, then put the plan through Audit CAP to avoid disqualification for "failure to operate in accordance with the document." I can't think of any statutory authority to support this, as long as the contributions are eventually made (or does the fact that the audit has been initiated create an artificial "deadline" that the employer has passed?). I don't believe there are any statutory deadlines for employer contributions, other than for the purposes of deduction and 415.

Also, the IRS agent wants to accrue interest on the matching contributions - again, I don't believe there is any requirement for this on employer contributions, only required by the DOL on employee contributions.

We have a plan under IRS audit - previously, the employer owed some unfunded required matching contributions, and the DOL instructed us to "forfeit" the trustees' accounts to fund those contributions. It did not instruct us to treat those amounts as taxable to the trustees.

The IRS says 1099-Rs should be issued, as the funds are considered "distributed" and then deposited to the plan from the trustees' personal finances. I disagree, as the benefits were treated as forfeitures and transferred within the trust, not actually distributed. In addition, though the trustees made pre-tax deferrals to their accounts, they will realize no personal tax benefits as they have forfeited those contributions.

I do realize that there may be problems with the corporate contribution deductions, if it took deductions for the trustees' 401(k) contributions, and again for matching contributions funded by those same 401(k) contributions... but that's not a plan issue.

Has anyone else encounted this issue with the IRS?

Thanks

Employer maintains SH plan with basic SH match, as well as fixed and discretionary matches that satisfy ACP safe harbor.

ER wants to discontinue fixed match. If plan is amended and timely notice provided to eliminate fixed match mid-year, e.g., 7/1/06, and fixed match is provided on deferrals from 1/1/06 – 6/30/06, will the fixed match be subject to ACP testing?

In the past, I've always been able to print out a listing of the required reading sections of the ERISA outline book....but I'm not able to locate the topic outlines with the required reading sections at asppa.org for the Spring 2006 DC-3 exam. Is there anyone who knows where I can find this info or has a copy of the prior reading listings from a past exam to help me study? I'd be extremely grateful!!!!

Thanks,

Vicki

What is the industry standard percentage withheld for automatic enrollment?

Do we have to write a new Plan Document every year?? Why or why not?

I posted this question on the Distributions Message Board, but no one seems to know the answer (or will respond). Since this is an annuity issue potentially involving the Norris case, perhaps I should have posted my question on this Message Board to begin with. Thanks, in advance, for any guidance.

A DC plan offers a single life annuity as a payment option. A participant has selected the single life annuity. Her vested account balance is about $17,500. If the DC plan elected to make the annuity payments itself, I believe, in order to comply with the Norris decision, it would have to compute the payments using sex-neutral mortality assumptions. Instead, the DC plan wants to purchase an individual annuity contract from an insurance company it selects (which is essentially what happened in the Norris case).

The largest monthly quote that we obtained from an insurance company provides the participant with a monthly payment of about $120 for life. However, the quote is based on a female-specific mortality table. A female-specific mortality table generally assumes higher mortality (higher when compared to a male specific mortality table) which means that a female recipient is presumed to live longer than a male and, as a result, to receive a smaller monthly payment than an identically-situated male would receive.

Is the DC plan required to purchase an annuity based on a sex-neutral mortality table? I don't know whether the Norris decision applies to the purchase of an annuity contract? Although, if the DC plan would have to make the annuity payments using a sex-neutral mortality table, it seems to me an annuity contract purchased from an insurance company would also have to use a sex-neutral mortality table (otherwise, the purchase of an annuity would be an easy end-run around the Norris decision). Can anyone help me here? How are other TPAs handling this issue?

A lawyer I spoke with says Norris doesn't apply--he didn't/wouldn't tell me why. An enrolled actuary I spoke with told me that Norris applied, but that virtually no insurance companies provide individual annuity contracts using unisex mortality assumptions.

ok, here is another use at your risk

this report should list anyone with deferrals, match or profit sharing.

it will indicate 415 comp and allocation comp, and show % of pay based on allocation comp. it will inicate ees who have different comp with **. e.g. ees enter midyear.

will also inicate hours if < 1000 and status if terminated. thus some ees may show with deferrals but 0 profit sharing due to last day or hours requirement.

DOH is also indicated if 1 year before plan year begin.

for example plan may have immediate eligibility for deferrals but 1 year wait for profit sharing. these ees will show with 0 profit sharing if they deferred.

sort by division, so if you run cross tested at least people are in groups.

well I'm sure it can't catch everything, but worked well on the last plan I ran.

I have a participant who has a loan and is currently out on their second leave of absence. Their one year was up in March and their current leave of absence began in April. Both leaves are medically approved.

Has anyone ever had this and how did you handle it?

I have looked at 72(p), but I do not see specific language addressing back to back Leave of Absences and whether or not you can grant another year of not making loan payments.

Hello im brand new to investing my money in any type of securities. I have about $10,000 that I want to put in a Roth IRA or whatever would be best. Im 30 yrs old. I basically want to put it in something high growth. I want to leave it in there for retirement and add to it whenever I can from now until then. I really have no clue where to start. Im thinking about going in and talking with a financial advisor but just wanted to get some feedback here. I dont know if stocks are the best, IRA's, mutual funds. Its really scary because I dont want to do the wrong thing. What kind of interest rates can i look for? What would be the best thing for me to put that 10,000 in to grow the most for me? Also if i just left the 10,000 in for say 30 years what could it turn into? Thanks for any help on what I should do and who you would advise me to go talk to.

Is a Common Law spouse considered a tax dependant for FSA Plans?? Help!!

Can a 501c3 NPO have a 401(k) plan alone, or do they have to have a 403(b)?

My wife and I just purchased into Vanguard's Emerging Markets Stock Index Fund (VEIEX) via our Roth IRA's. The VEIEX fund has a purchase and redemption fee structure of 0.05% for each move in or out of the fund.

I was wondering if anyone knows how this fee is handled in terms of taxes:

- is it written off as an investing expense?

- or is it written off against any gain/loss upon sale?

Thanks for all of your help in this matter.

TnGuy

I am trying to match results for a 401k safe harbor cross-tested plan between Datair and Relius.

I pass the Gateway Test and the Ratio Percentage Test.

On Datair the plan passes the Average Benefits Test by the Equivalent Annual Benefit Basis with PD. Relius also passes this test with the same percentage.

I am having problems with the 401(a)(4) test. When the test is done on Datair it passes based on both the Equivalent Accrual (Acc-to-Date) with and without permitted disparity. It does not pass the rate group based on the Equivalent Accrual (annual) with PD. Relius also does not pass the rate group based on the Equivalent Accrual (annual) with PD. On Relius under the General Nondiscrimination Reports, there is a DB tab which contains the options for the Actuarial Equivalent Accrued-to-Date option. Relius has told us that this option is not available for DC plans. It has been my understanding from conversations with Datair that you only have to pass 1 of the 6 rate group tests to pass the 401(a)(4) test. I am confused as Datair and Relius seem to be contradicting each other.

I'm hoping that someone can clarify what is really needed to pass the 401(a)(4) test.

Thanks,

A DC plan offers a single life annuity as a payment option. A participant has selected the single life annuity. Her vested account balance is about $17,500. If the DC plan elected to make the annuity payments itself, I believe, in order to comply with the Norris decision, it would have to compute the payments using sex-neutral mortality assumptions. Instead, the DC plan wants to purchase an individual annuity contract from an insurance company it selects (which is essentially what happened in the Norris case).

The largest monthly quote that we obtained from an insurance company provides the participant with a monthly payment of about $120 for life. However, the quote is based on a female-specific mortality table. A female-specific mortality table generally assumes higher mortality (higher when compared to a male specific mortality table) which means that a female recipient is presumed to live longer than a male and, as a result, to receive a smaller monthly payment than an identically-situated male would receive.

Is the DC plan required to purchase an annuity based on a sex-neutral mortality table? I don't know whether the Norris decision applies to the purchase of an annuity contract? Although, if the DC plan would have to make the annuity payments using a sex-neutral mortality table, it seems to me an annuity contract purchased from an insurance company would also have to use a sex-neutral mortality table (otherwise, the purchase of an annuity would be an easy end-run around the Norris decision). Can anyone help me here? How are other TPAs handling this issue?

A lawyer I spoke with says Norris doesn't apply--he didn't/wouldn't tell me why. An enrolled actuary I spoke with told me that Norris applied, but that virtually no insurance companies provide individual annuity contracts using unisex mortality assumptions.

Thanks in advance for your help.