Hello--Does anyone know where I can get an updated reference chart of all the distribution codes? I'm trying to ensure I use the right ones. Thank you.

Currently, a 401k plan allows for full participant self-direction of assets, but restricts it to one family of funds. One of the owners recently decided that he does not like this arrangement and wants to direct his money to another place. Allowing him to do so would require giving all others this option, which could get messy. While the owners sort that issue out, he inquired about another way to achieve this via taking in-service withdrawals periodically (eg, quarterly, semi-annually, or annually). The plan does not currently allow for in-service w/d's although it could be amended. Still, this seems to not be do-able, since the money would have to accumulate for 2 years before taking it out. Also, the participant is only 45 years of age.

I haven't come across a situation where a participant wanted to use an in-service withdrawal feature in such an ongoing manner and it sounds like it wouldn't work. Does anyone agree?

Does anyone have a copy of the last two DOL FMLA Opinion Letters. In the letter dated 10/4/04, the DOL found that an employer's sick leave poilcy that required employees absent due to illness to provide proof of illness in order to receive paid sick leave was acceptable. In the other letter dated 10/25/04, the DOL confirmed that an employer can request a drug test for employees returning from FMLA leave.

Thanks.

The Corbel/Relius software uses the HCE EBAR as the upper bound of the range, then calculates the mid point and lower bound accordingly. Any body have a problem with this methodology?

Hello everyone

Just wanted to announced some added features to the TSP Watch blogspot, located at http://tspwatch.blogspot.com/

TSP Watch, dedicated to the federal employee's Thrift Savings Plan, is proud to annouce the addition of an interactive message board feature, allowing members to engage in interactive discussion regarding the TSP plan.

This message board is located at http://tspwatch.forumco.com/

Discussion of 401(k) and state pension plans is also included.

Thanks

Hello everyone

Just wanted to announced some added features to the TSP Watch blogspot, located at http://tspwatch.blogspot.com/

TSP Watch, dedicated to the federal employee's Thrift Savings Plan, is proud to annouce the addition of an interactive message board feature, allowing members to engage in interactive discussion regarding the TSP plan.

This message board is located at http://tspwatch.forumco.com/

Discussion of 401(k) and state pension plans is also included.

Thanks

I’m attempting to understand one specific aspect of Roth 401k plans. Martha Priddy Patterson of Deloitte Consulting has been recently quoted regarding Roth 401k’s saying, "But regardless of the potential advantages, there is a big fly in the ointment," she warns. "The Roth 401k funds must remain in the plan for at least five years to receive the tax-free distribution treatment. But under current law, the Roth provision will sunset at the end of 2010, meaning plan participants can never enjoy the Roth benefits, if Congress does not extend the law!"

I’m not interested in a discussing of whether Congress will extend the law. What I’m interested in is getting a better understanding of how Roth 401k contributions made between 2006 and 2010 would be treated if Congress doesn’t extend.

Does anyone have an opinion on this?

When active employees turn age 65, are group health plans required to have them elect to either stay in the group health plan (with Medicare as secondary payer) or opt out of the group health plan and enroll in Medicare?

Also, I recall that if an individual who is eligible for Medicare but does not enroll in it that they are assessed a Medicare premium penalty (10%??) once they actually enroll. Becuase of this penalty, are there any disclosure rules that apply?

Thanks!

Suppose you have a 2 participant DB plan with individual aggreagate funding. The participants are 50% partners in a partnership. One partner is somewhat older than the other. Both partners have the maximum plan salary for all years. The normal cost for partner A is $100,000 and the normal cost is $50,000 for partner B. Total Contribution $150,000.

The accountant wants to know the contribution breakdown for each partner. We generally provide the normal cost as above. However, it would probably be more equitable if the $150,000 were allocated based on accrued benefits. Is it acceptable to determine the deduction split this way?

Thanks much.

Must the Plan Sponsor's FSA SPD and their self-insured medical plan SPD definition of a dependent be the same as the WFTR 2004 definition of a dependent? We are working on this right now and need to know if they should match or not. The Plan Sponsor would like to keep the definition of a dependent in their medical plan "broader" than the WFTR 2004 definition. Is this ok? They don't want to put the "residency" wording nor the "income" wording in their medical plan definition of a dependent if they don't have to.

If eligible employees are paid additional compensation for not participating in a high-deductible employer health program in lieu of an employer contribution to an HSA, must the additional comp be paid through a 125 plan to avoid taxation on the amount to all employees?

I saw an article once discussing giveaways to encourae enrollemnt. Is it allowed, etc.? I recall the answer is yes, but if someone knows where I read this that would be awesome! I think it came out in the benefitslink daily email.

A participant elected a lump sum distribution in 2002. The distribituion check was made payable to the participant; Federal & State taxes were withheld and remitted to appropriate agencies and a 1099R issued.

It is now mid-2004, the distribution check (still uncashed & in the Plan Sponsor's possession) is endorsed over to the Plan Sponsor by the Participant (to repay a previous loan made by the Employer to the Employee).

In December 2004, the Plan Sponsor learns that this transaction violated the anti-alienation rules and therefore immediately restores the Participant's account to where it was just prior to the 2002 distribution.

How does the Plan Sponsor recover the Federal taxes that were withheld in 2002?

we use IRS Form 5305-SEP - Simplified Employee Pension - Individual Retirement Accounts Contribution Agreement - as our Foundation's formal SEP plan document. In that document, we currently specify that discretionary contributions will be made to employees' IRAs for all employees who are at least 21 years old and have worked for the Foundation at least 0.5 years (or 6 months) of the immediately preceding 5 years. Our SEP plan document specifies that our SEP plan excludes: (a) employees covered under a collective bargaining agreement, (b) certain nonresident aliens, and © employees whose total compensation during the year is less than $450 (subject to annual cost-of-living adjustments).

The Foundation currently contributes 12.5% of each employee's gross salary or wages earned during the calendar year to the SEP-IRA account specified by the employee.

The first question is whether or not SEP Plan benefits provided under the Form 5305-SEP plan document would apply to all employees on the Foundation's payroll, full-time or part-time regardless of how few average hours are worked during a work-week (as long as all criteria in the first paragraph above are met for a particular employee).

Would there be any way to exclude certain part-time employees (e.g., working less than 20 hours/week) and exclude all full-time or part-time college interns from receiving the SEP benefits under the Form 5305-SEP? Or would we have to discontinue the existing Form 5305-SEP document and then create a new SEP plan document? If so, what kind of hassles or employer risks, if any, would using an alternative SEP plan document entail?

Also, when should SEP benefits begin for a new employee (i.e., the begin date defined as the first payroll run to which SEP benefits would be applied): on the specific date an employee reaches his/her 6-month anniversary (within the 5-year span) or on January 1 of the calendar year that includes the employee's 6-month anniversary (within the 5-year span)?

Does anyone know of a calculator, spreadsheet or similar tool for calculating excess parachute payments? Any help/suggestions would be greatly appreciated!

I have read prior posts on this subject but remain unclear as to the conclusion. We have a sole proprietor client with a few long term employees who sponsors a 401k plan. All employee deferrals are timely deposited into the plan. The sole proprietor makes his deferral election by the end of the calendar year.

However, his self employement income can not be accurately calculated until after year end - usually in March or April.

Questions:

1. When does the deferral for the sole proprietor have to be deposited into the plan?

Options:

a. by 12/31 - seems impossible.

b. by 1/15, assuming it was not administratively feasible sooner - seems impossible

c. as soon as administrative feasible after determining his self employment income

d. 3/15 (heard something about a 2 1/2 month rule)

e. 4/15 (1040 due date)

f. 10/15 (extended date of 1040 and 5500)

2. Does the answer change for single person 401k plans?

3. Can you site any regs or rulings which address this point?

Thank you.

Several years ago, an employer used the wrong 415 limit to calculate contributions for two HCEs; it therefore undercontributed to their accounts. It would like to use QNECs to self-correct under EPCRS (under § 6.02(4)(b), such corrective contributions relate back to the yeart they should have been made and therefore aren't annual additions in the year they'reactually contributed).

EPCRS requires the employer to amend the plan to permit such QNECs--but all the guidance I'm finding on such amendments relates to correcting nondiscrimination errors and therefore doesn't apply to these HCE-only contributions. Is there necessary language for such an amendment, or can it just provide that the employer can, at its discretion, correct operational failures with QNECs?

Recently I heard that there was a case where a participant's widow was able to sue the trustees of a plan for losses her husband sustained in his directed brokerage account within his 401(k) Plan. I believe she prevailed. is anyone aware of this case?

Are there any provisions allowing a person called up for military duty to submit claims for a plan year beyond a plan's "run off" period? If so, would you need to extend the "run off" period for participants not out on military leave?

Have a 4/1 - 3/31 plan year. Plan has deferrals and prorata profit sharing. We are running the profit sharing allocation in Quantech and it valued annually not daily.

We are maximizing the top HCE so we need to make a contribution of 19.5% of compensation to do that. However this raises some issues for another HCE.

HCE deferred $16,000 out of bonus at 12/31/04. He has also deferred $2,545.46 between 1/1/05 - 3/31/05. His comp is at the 205,000 limit.

I thought when we went to allocate the 19.5% profit sharing, that the allocation would show $3,000 as catch-up, $15,545.46 as deferrals and then based on the 415 limit of $42,000 for plan year ending in 2005, allocate profit sharing of $26,454.54.

Not the case, it gave him $3,000 as catchup for exceeding 402(g) in 2004 calendar year ending within the plan year and then gave him $4,000 in catchup for reaching the 415 limit for plan year ending 2005. So, it gave him profit sharing of $30,454.54.

My problem with this is that now he has used his $4,000 catchup for 2005, so he can only defer $14,000 in 2005.

Is there a way to say no we don't want to use the $4,000 catchup for the 415 limit ? or since the document has prorata allocation and we are doing 19.5% HCE, do we have to get him as close as possible using the catchup for 415?

Still thinking of catchup as an election of a participant to defer more, it is harder when it is due to plan or statutory limits being hit and you seem to give up the ability to elect to use or not.