A participants 401k balance is 4,000. His life to date contributions are $5,000.

He has a residence hardship of $7,000. The plan allows loans.

Please calcualte his net hardship and loan amounts? Please also discuss the issue that since he can not get any more to cover $7,000 he will more than likely not be able to repay the loan.

Thank you

The exclusive benefit rule mandates that, for qualified plans, no part of the corpus or income of the trust be diverted for any purpose, other than for the exclusive benefit of the participants and beneficiaries.

Here is my question:

If we cash out an account and a small contribution in an amount less than $1 comes in after the cash out, are we required to spend $5 to send another check, or can we write off these de minimus accounts? What if we have 100 participant accounts less than $1, and it would cost us $10,000 to mail all of the checks?

Thanks in advance.

Troy Riley

The exclusive benefit rule mandates that, for qualified plans, no part of the corpus or income of the trust be diverted for any purpose, other than for the exclusive benefit of the participants and beneficiaries.

Here is my question:

If we cash out an account and a small contribution in an amount less than $1 comes in after the cash out, are we required to spend $5 to send another check, or can we write off these de minimus accounts? What if we have 100 participant accounts less than $1, and it would cost us $10,000 to mail all of the checks?

Thanks in advance.

Troy Riley

I have a participant who works for two different companys. Company A has a SIMPLE and Company B has a 401(k) Plan.

What is the limit for this participant? Is it capped at $ 14,000 total? For example, can they max out the SIMPLE at $ 10,000 and $ 4,000 in the 401(k)?

I have a client who had an IRA investment disqualified in the 1990's (It was a real estate partnership that upon disqualification ceased to be an IRA and became a personal investment rather than tax deferred).

In 2002 and 2003 the real estate partnership distributed cash. The cash (to the tune of about $50,000 per year) went into his IRA by mistake, instead of going to his non-IRA personal account.

Questions: Is this considerred an excess contribution to the IRA for those years, which would be subject to the 6% excess contribution penalty? Or, is there another remedy to correct this due to it being a deposit in error? No contributions were deducted in 2002 or 2003 because this money that ended up in the IRA was not intended to be a contribution. Therefore, I am not sure if it would be classified as an excess 'contribution'.

The discovery of this is current and the money plus earnings will be withdrawn from the IRA in 2005. Should the 1099-R have only the earnings on it as taxable?

The partnership issues a K-1 and any flow-through income from that will or has been properly reported on his 1040.

Thanks,

Mike

What communications and/or education pieces work at your company to minimize FSA plan losses from those employees who spend all their FSA monies, then leave the company during the year before all contributions have been made?

In reading instructions to Form W-2, and knowing what I know of Section 125 plans, it is agreed that a 2% S-Corporation owner could not participate in a POP plan, or any Section 125, for that matter. However, a question that has come up is in regard to the actual reporting of wages. In looking at the Form W-2 instructions, it indicates that the payment of insurance premiums on behalf of 2% owners is added back to Box 1, 3 and 5 of Form W-2, thus meaning the payments are subject to FICA. However, a client has presented me with a memo that seems to indicate that if there is a "plan" in place for the S corporation employees and their dependents, that the amount of premiums would only be subject to Federal Income Tax Withholding, and would not be subject to FICA.

Is this true? We have been under the impression that the premiums are subject to FICA, but the S Corporation owner gets the 100% "above-the-line" deduction for the premiums paid on their behalf. Thanks for any replies.

The owner of a company is planning on rolling his IRA assets into his 401(k) plan. Then he wants to amend the plan to permit investment in the employer. Then he will use the cash to buy employer shares.

When I read the prohibited transaction rules, it seems that the above transaction meets one of the exceptions, but I would like to get opinions from other more knowledgeable practitioners.

Has anyone used a QTA to handle an orphaned plan? Based on the DOL's proposed regulations, a QTA could designate a plan as abandoned and wind up the affairs of the plan. I am just curious if anyone has used these guidelines and if you could share what vendors out there offer this QTA service.

I'd like to get some opinions on the following situation:

Participant retires and elects a joint and survivor pension with spouse as beneficiary (plan is a defined benefit plan). Former spouse has a DRO, but Plan has no knowledge of it until after Participant dies. Plan is allowing her to go back to court and get a QDRO that would award her a piece of the surviving spouse pension.

My question is what happens to the AP's share if she dies before the surviving spouse? At first I thought the AP's share would go back to the current spouse, but is it okay to allow the AP to designate a beneficiary that would get the AP's payments until the current spouse dies? Does the AP's beneficiary have to also satisfy the definition of an AP?

Suppose an officer of a company that maintains a defined benefit plan is a member of a fiduciary committee responsible for investing plan assets in company stock. What happens if/when the officer has material nonpublic information? Is the officer prohibited by securities laws from acting on the insider information when making investments on behalf of the plan? If so, is the fiduciary committee violating its fiduciary duty owed to the plan under ERISA if it does not act on material nonpublic information possessed by its members?

Suppose an officer of a company that maintains a defined benefit plan is a member of a fiduciary committee responsible for investing plan assets in company stock. What happens if/when the officer has material nonpublic information? Is the officer prohibited by securities laws from acting on the insider information when making investments on behalf of the plan? If so, is the fiduciary committee violating its fiduciary duty owed to the plan under ERISA if it does not act on material nonpublic information possessed by its members?

An officer of a company that maintains a defined benefit plan is a member of a fiduciary committee responsible for investing plan assets in company stock. What happens if/when the officer has material nonpublic information? Is the officer prohibited by securities laws from acting on the insider information when making investments on behalf of the plan? If so, is the fiduciary committee violating its fiduciary duty owed to the plan under ERISA if it does not act on material nonpublic information possessed by its members?

Is there a legal way to have a participant's life insurance policy reimburse the DB trust in the case of an over payment of a deceased pension participant? Both are provided by the company (two different funding sources).

Plan written with three classes. Owner, former owner, all others. Former owner is gone. Owner's adult children now working for him. Cross Tested allocation not working with the adult children included. I would love to exclude them but since they were not around when the document was written they do not have their own class or were not written out of the allocation.

We are amending and putting them in their own class ongoing but this is an issue for the 2004 allocation.

Any other way to exclude certain HCEs (they are HCE only by attribution)? Only three HCEs in plan dad and 2 kids.

I have a client who maintains a SEP Plan. They use to be invested at Smith Barney and therefore adopted their SEP Adoption Agreement. However, in the past year they moved to Merrill Lynch and ML does not maintain a SEP Document. Isn't it most likely true that the Smith Barney document probably doesn't satisfy the ML investing? I spoke with both SM and ML and they cannot give me any answers.

Do you think I should adopt the IRS Form 5305-SEP Document to be safe?

Any suggestions?

I have a quick question on amending a “wrap-around” plan document. I work for a TPA in Iowa, and we recently went from a full plan document that includes all plan provisions to a “wrap-around” plan document that only contains the necessary ERISA information, and refers to the SPD for all benefit, eligibility, HIPAA, COBRA, etc.

When I amend a “wrap-around” plan document, am I amending the original plan document and the SPD issued at that time, or am I amending the current SPD? I’m a little confused!

Any help will be appreciated!

Thanks!

A participant (age X) is currently receiving a monthyly benefit payable as a joint & 2/3 Survivor benefit with the cavaet that if he outlives his spouse (age X-1) he receives a $100 increase in the benefit. Per divorce settlement, each party is to receive half of value as of specific date. I know i haven't provided many specifics, but does it sound reasonable that after the settlement the participant would receive a monthly benefit that is less than half of the original amount?? I can provide more info outside the board. Thanks.

I took ove a defined benefit plan that has been using Unit Credit funding method, can I change to Individual Aggregate without filing for approval of the change? Thanks.

Just a question on how others are handling this plan provision. We have amended a majority of our plans to force payouts under $ 1,000. We have done this to avoid setting up the IRA for the $1,000 to $5,000 balances.

In practice, are administrators giving the participant notice (30 days for example) at the time of termination to make a decision on what to do with their funds, or are they just paying them out the full balance and putting the rollover onus on the participant?

Just wondering.