I have a prospective client that is a law firm with the following scenario:

1 Plan for Associate Attorneys only-Plan only has Elective Deferrals

1 Plan for everyone else-Plan has Deferrals, Match, Profit Sharing and QNEC because they always fail the ADP Test.

They want to amend the non-Associate Plan for cross testing. My questions are:

1. Since I would have to aggregate the Plans for coverage and 401(a)(4), would I also have to aggregate for top heavy testing?

2. Would I still be able to test the 401(k) Plans separately?

One other question: There are two Associates who became Partners and then opted out of the Plan. When I determine the Top Paid Group are they excluded from all consideration or are they still considered HCE's. I know I would not include them in the ADP Test but should I include them for the HCE count?

Thanks

Can a plan sponsor exclude employees in an affiliated company (in a different state) from the plan and/or specific benefits in the plan?

I see from 403(b)(1)(D) that the non-discrimination requirements of 403(b)(12) do not apply to church plans. Does this mean that I can require employees to participate in a contributory DB plan before they are permitted to make salary deferrals to the TDA?

This question is an oddball, so be gentle! Suppose you have a corrective distribution from a 401(k) plan - calendar year 2003 plan. Let's say excess contributions under an ADP failure. These are not eligible rollover distributions. Let's further suppose that the distribution is made in January of 2004 - within 2-1/2 months after the correction period, so it isn't taxable in 2004.

My interpretation is that 10% withholding does not apply.

First, do you agree? And assuming you do, the question was - MUST the Plan Administrator allow the participant the option to elect withholding at 10% or even more than 10% if the participant wants to? My interpretation would be no.

Moving on to a somewhat related question - suppose you have a non-periodic IRA distribution, to which 10% withholding applies unless the participant elects out of it. Is an IRA custodian REQUIRED to allow the participant to elect additional withholding? I don't find anything in the regs to require this, although I may have missed it, and I know that many custodians do allow this - of course if required, then they probably all do! The W4-P has a line to elect additional withholding, but I'm not sure if additional withholding option is required for all IRA distributions.

Appreciate all opinions. I just hate these fiddling little questions.

Does anyone have any experience in obtaining a refund of FICA taxes in light of the CSX decision? Thanks in advance for your response!

Back in the 1980's, possibly early 1990s, there was a lawsuit by college professors against CREF over the restrictions that were placed on invested funds. Does any one remember the case and can any give me a cite etc?

Is there an MRD in the following situation:

A new DB plan is established for 03/04 with PYE 01/31/04. The valuation date is EOY and is 01/31/04. The principal is 75 in 2004.

Under the 401(a)(9) regs, for computing the MRD, the account balance (PVAB in this case) to use is the balance @ the valuation date in the year preceeding the year of distribution.

The year of distribution is 2004 and the year preceeding is 2003 but there was no valuation in 2003!

Thanks.

Has anybody seen anything from the IRS (or otherwise) providing guidelines for what constitutes a significant cost increase? A certain percentage? Or a minimum dollar amount? Any direction / guidance is greatly appreciated.

Plan is a Safe Harbor 401(k).

Employer makes the Safe Harbor match contribution.

The only conts to the plan are deferrrals and Safe Harbor match contribution.

Client wants to know if top heavy is satisfied by the Safe Harbor match contribution?

Is an additional contribution necessary for those participants who do not contribute and, therefore, do not receive the match contribution?

Any help is greatly appreciated.

How is a party in interest defined? I have a prospect, the company has an investment committee to decide what to trade. The owner of the company and his son are members of the investment committee. The plan is invested in a mutual fund where another son of the owner is the "fund manager" --- does this make the son that is the "fund manager" a party in interest?

The rules changed few years back to allow you to disregard the rollover balance in a plan when deciding if balance was less than $5,000.

The new automatic rollover cap is $5,000. Can someone confirm my understanding that if person has 3,000 in current company funds and 3,000 in funds rolled from previous employer a mandatory distribution can not be made.

Guess my problem is that the "safe harbor" applies to only distributions of 5,000 or less.

It is my understanding per the most recent HSA guidance, employers who are offering HSA + HDHP to active employees do not have to offer an HSA account to COBRA participants.

However, I read that if an employer is offering an HSA and is contributing to an enrolled employees' HSA account, the employer has to also fund COBRA participants account. Employer is also allowing employees to contribute to their HSA via pre-tax payroll deductions.

Does anyone out there have any info on this subject?

Thank you.

One of our participants passed away on 9/10. His wife works at the same employer & also has an Flexible Spending account. She recently received a bill from the hospital for her husband. Can she submit this claim through his FSA? Or should it be processed under her? There is still an available balance in her husband's FSA account. This is the first time I have encountered this, so I am not sure how to handle it. Any input would be great.

Thanks!

In a cross-tested, bells and whistles 401(k) plan for a law firm, 1 participant had about $5,000 too much deposited in her account for the profit sharing contribution for the PYE 1/31/04. The company partially pre-funds the contribution and inadvertently overfunded for her. I advised the employer that they should withdraw the excess contribution on the basis that errors should be corrected when discovered. The participant, however, would like to have the money remain in her account as a credit toward the contribution for the PYE 1/31/05. The participant was a new employee in PYE 1/31/04 and was not highly compensated; she will be highly compensated, however, for PYE 1/31/05. I believe that the company deducted the excess contribution in their FYE 1/31/04, but I'm not positive about that. If it affects the answer, I can find out.

I'd appreciate any opinions on how this should properly be handled. The participant is looking for regulations that require the excess amount to be refunded.

Can an employer charge an employee more premium (pre-tax) if the employee's spouse has access to other health care coverage (through their employer, for example) and the spouse chooses NOT to enroll in their employers health plan? I have seen this practice before, where one employer will require an employee's spouse drop p/u other coverage if it is available, however, I am concerned about the excess premium and discrimination as to 'access'.....

A daughter inherits her mother's IRA. She was notified by the investment company that she had 60 days to request a rollover, etc. She was not aware that if she didn't respond, she would be paid out as a lump sum distribution. She would the opportunity to have the money redeposited and a rollover check issued to her instead.

What's the distribution timeline for IRAs? 5 years? Deceased life expectancy?

Can someone clear things up for me?

Scenario: Participant's loan fell behind in payments, and is past the cure period. Loan has not been "deemed" on the recordkeeping system. The participant would like to payoff the loan, without paying it back as an after tax payment. The employer does not want the participant to face the tax consequences, so asks that the pre tax loan payment be accepted. In most cases like this that I encounter, the employer made an error and stopped the payments too early, or stopped payments in the middle of the loan.

What is the risk in accepting a loan payoff (pre-tax) for a loan that should have been deemed? I realize that it is an operational failure, but what position do you think the IRS/DOL would take? They do want participant's balances to remain pre-tax don't they? Especially if it is the fault of the employer?

Thanks

I've read a couple of articles that say plans MUST be amended by March 25, 2005, for the automatic rollover rules. I know plans must operate in compliance, but is there any definite word from the IRS that a written amendment is required?

It seems logical that since this is part of EGTRRA, it might fall into the staggered restatement system that is proposed.

Thanks.

We have a self-insured health plan. We currently do not charge employees for coverage, not even family coverage. We would like to encourage employees to not elect family coverage. Instead of giving those employees with family coverage money in lieu of coverage, we would like to make 401(k) contributions on their behalf as an incentive to not elect family coverage. For some reason, this just does not seem right to me. Would this violate some sort of discrimination requirements? The idea is to not offer individuals with single coverage anything. We would give individuals an opportunity once per year to elect to receive a 401(k) contribution in lieu of family coverage. It is my understanding that this would have to be done through a cafeteria plan to avoid constructive receipt issues.

If it is acceptable, our 401(k) plan has a vesting schedule for employer contributions, would this also be subject to the vesting schedule? It doesn't seem like it should be?

If anybody can guide me to any authority, articles, etc., I would greatly appreciate it.

Is an insurance company, for a general account based contract (i.e., not a separate account), required to automatically provide information for the contract to be used on the Schedule A or does the information only need to be provided upon request? Statutory language (ERISA 103(a)(2)) and DOL 5500 instructions, etc. seem to indicate that it must be done automatically. But, DOL reg. 2520.103-5 seems to indicate that it only has to be provided upon request of the plan administrator. This language in the rules has been around for many years. Which approach is correct?