For the last 4 years our company contracted with an employee leasing plan. Technically, we were employees of the employee leasing company. The leasing company offered a 401K plan, of which I contributed through payroll deductions.

Now the company I report to work for is cutting ties with the employee leasing company, taking the employees and payroll back in house. We've been told that technically, we'll be working for a "new" employer. The company is negotiating with the current TPA (third party administrator) to either continue the existing 401K after the anniversary date lapses at the end of the year, switch to a new plan with the current TPA, or change TPA/plans all together. I'll probably continue contributing to the 401K when the details are worked out, primarily for the matching contributions and profit sharing. But overall, I'm not happy with the investment options and fees of the 401K offered by the TPA. (I't still up in the air whether we'll stick with that administrator or look for another with better investment choices).

That being said, is there an opportuinity to move (roll over?) the existing balance to my current traditional IRA, where I'm free to invest in individual stocks or ETF's? Some of us believe the opportunity exists, because (again, technically) we are changing employers. I'll still participate in the 401K, but would rather have the current balance in a more flexible investment vehicle.

As always I value your opinions and comments.

Carl C

I had this question posed to me and am stumped by it. I need to know if an inmate can make a contribution to an IRA if their only compensation is wages earned while in a correctional facility. If anyone can help with this I would appreciate it.

Is a Blackout notice required when a fund closes, and mapped to a like fund?

I thought I've seen the last of the combo Money Purchase Plan and Profit Sharing plans.... it is almost 2005...

I am consulting with a possible new client ( I might not want) whereby in 2003 they had a MPP and PS plan. The problem arises in that the TPA termed the PS plan and not the MPP plan and filed a FINAL 5500 for the PS as well.

The termed PS money was moved into IRA's as the MPP still exists and is obligated to fund for 2004. Making things more complicated, this year is not a "banner year" and the plan sponsor lost any discretionary ability keeping the MPP. I am sure it is his own fault, I am sure he signed away, terminating that plan... but come on... the TPA should have been raising flags...

What would be the best method for getting the PS back and the MPP out?

Any thoughts... posible pitfalls?

I'd like to confirm some information I've heard about HSAs. It was my understanding that the employee contributions to an HSA could be taken directly out of payroll, but would not be pre-tax. The contributions to the HSA would come out of the employee's pay post tax, but then the employee would be able to deduct their contribution on their individual tax return.

My co-worker was told that contributions could be handled either way - the employer can either treat them as pre-tax deductions on the payroll, or treat them as post tax and then the employee can take the deduction. In such a situation, sounds to me like it would be up to the employer as to how to handle these.

Could someone please help clear this up for me?

Thanks in advance for your help!

in determining the participant count for the highest number of participants in the previous plan year, we have a situation with three plans within a controlled group, and some people are participants in two of the plans, e.g., transfer with frozen benefit in one plan, active and accruing in the other - do they count as 1 or two participants for the count?

I have an existing 401(k) Plan that terminated in 2003. Last Distirbution occured in January 2004. We are putting in a new 401(k) Plan for 2005. Can I start the Plan in January 2005, or do I have to use a Feburary 2005 effective date so I don't run afoul of the 12 month rule?

In other words, does the 12 months exclusion rule run from the date of the Plan Termination, or the date of the last distribution from that terminated Plan?

Unmarried participant names Son (B) as beneficiary.

Participant dies when B is age 50.

B elects payments over his lifetime (i.e., 34.2 years).

B receives minimum distribution each year (i.e., 1/34.2; 1/33.2; 1/32.2, etc.).

B dies in 2004 after receiving the third distribution (1/32.2).

What is the minimum distribution in 2005 for C, who is B’s beneficiary?

Is it?

a) 1/31.2? If yes, will minimum distributions then continue based on B’s life expectancy (i.e., 1/30.2; 1/29.2, etc.) until all assets have been distributed?

b) 100% of the account balance payable in the year after B’s death (2005)?

c) 100% payable within 5 years of B’s death, which can be taken in any manner as long as all of the assets have been distributed from the account before December 31, 2009?

Does anyone know what the implications are if a COBRA enrollment notice/form is sent to an individual who is not eligible for COBRA coverage? Is the company still responsible for providing coverage since they informed the individual they were eligible for coverage?

Do the proposed phased retirement program regulations under Notice 2002-43, that provide for prorata distributions at normal retirement from a defined benefit plan or money purchase plan, supercede the provisions of a Deferred Option Retirement Program (DROP) that provide the accrual of the of the monthly retiremnet benefit and usually paid out in a lump sum benefit after the end of the DROP period (usually 1-5 years)? In addition, the proposed regualtions provide for the employee to maintain a dual status (i.e., partially retired and partially in service). This appears to conflict with a DROP where employees are still actively performing full time service for the employer. Finally, would the benefits payable under the phased retirement program be considerd an eligible rollover distribution?

I have searched old posts for an answer, but have come up empty....

Under USERRA, compensation used to determine make-up benefits for the military service period is the amount the employee would have received during his/her absence under the rate of pay in effect at the time the period of military service began.

So someone that earns $50,000 in a given plan year, but who otherwise would have earned a total of $100,000 if not for six months of military service, receives a total allocation of employer contributions based on the $100,000.

My question is whether the determination of HCE status for the following plan year is based on the $50,000 actually earned or the $100,000 inferred? I'm inclined to think that it is based on the $50,000 actually earned, making the employee a NHCE for the next plan year, since I can find no documentation to the contrary. Can anyone confirm this as fact? Thanks.

We handle a safe harbor 401(K) with the non-elective contribution. The principals have not deferred any amounts and probably will not for 2004.

There are 4 other participants, all NHCEs but only one is deferring salary.

Client does not want to make any contribution if he does not have to.

Under what circumstances is the client NOT obligated to make a 3% contribution.

Thanks,

Steve

If two companies are part of a controlled group and both have separate 401(k) plans, in determining the coverage test for each, it may be beneficial to limit the number of HCEs to the top 20 percent. Does the plan have to have this limit for me to do so, or is coverage testing a separate issue, and the top 20 percent limit elected administratively for coverage purposes.

Would anything prohibit an employer with a self-insured health plan from having its employees answer a health questionnaire and charging a higher deductible to those who refuse?

For a nonqualified deferred compensation program, to what degree is spousal consent required prior to a distribution?

Hi folks, my problem is that my wife has a fair amount of company stock(~170k) in her profit sharing plan at work. The company is being bought out and it sounds like we need to liquidate the money. I assume we can move it over to an IRA without tax consequences? Please advise if this isn't enough information and I'll get additional details as needed. Appreciate your help.

Just an interesting note. According to the latest news I've heard, the average national savings rate is actually zero or negative (which means that people have an enormous amount of debt). This is really unbelievable. Don't people realize they're consuming their capital and that such can't continue forever?

Five participants in 401(k) plan, four are highly compensated and over 50. For the HCE for 2004, we have deferred 16,000 each and matched 4,320 ($108,000 x 4%). Question: Can we make deductible contributions to a DB plan and still deduct the ee and er contributions? What is the maximum DB contribution we can deduct? Thank you.

EGTRRA got got rid of the four year look back as to who is a key.

Do you know whether the IRS takes the position that this also eliminates the four year look back for aggregating any plan in which the "key employee participate in the plan year containing the determination date and any of the four preceding plan years?"

We have an employer with a Simple plan and just found out from their accountant that they contributed significantly more than the 3% match for 2003 and 2004. They have actually matched the exact dollar amount that each employee contributed, which is much higher than 3% of pay for most of them. How do they go about correcting this (especially for 2003 since it was not found until now) and what type of penalties might they incur? Also, what is the effect on this if an employee has quit and taken a full disbursement?

Thank you for any help....