annual payment = hours (average of 3 highest consecutive years prior to year of withdrawal) x contribution rate (highest in 10 year period ending with year of withdrawal). I assume hours and contribution rate are based on the entire control group.

Assume the partial withdrawal is due to partial cessation of employer's obligation to contribute and occurs in 2002. To determine the partial liability, need 2003 hours.

For the hours do you consider 1992 through 2001 and for contributions do you consider 1993 through 2002?

Or do you look at hours from 1994 through 2003 and contributions from 1995 through 2004?

We have an employee applying for a primary residence loan -- to be paid over a 10year period. Her husband is going to be the contractor. The only documentation she provided was an excel spreadsheet with a breakdown of the work, who was going to complete the task, and an estimate of the work. She also provided several estimates, one from the local lumber company, a cabinet maker, etc., but they were dated in February and March 2004 -- it's almost November! One thing that bothers me is that none of the estimates were signed as being accepted by either parties.

I am not doubting that her and her husband are building a house. I'm concerned about the documentation provided. I'd really like to know what the IRS will look for in documentation if they came knocking on our door. I've searched the web for answers, but couldn't find anything concrete. In fact, now I'm beginning to wonder if she can even take a primary residence loan since everything I've read refers to "purchase of a primary residence" not building one. Help!!!

I am able to find guidance with respect to reducing or discontinuing a safe harbor match contribution; however, I am having a hard time locating information about discontinuing a 3% non-elective safe harbor contribution. I would assume that the document can be amended to remove the feature and current testing would be required.

Any information you can share on this matter would be appreciated!

who exactly has to get an SAR? the regs just say participants and beneficiaries. does 'participant' in this case mean anyone who had a balance at any time during the year? or does 'participant' also include people who were eligible but did not participate? i searched the other threads on this message board, but didn't find anything exactly on point.

I have an 85 year old client who retired in 1984 and has never taken distributions from her 403(b). She has been advised by her 403(b) representative that her account is not subject the current minimum distribution rules and that she will not be subject to the 50% excise tax on amounts which she failed to take after age 75. Can anyone give me some guidance on the rules applicable to distribution of pre-1897 accruals?

Can someone please point me in the direction of the sample exam for DC2? Thank you.

When processing a loan we, the tpa, charge a loan originating fee. Should that fee be part of the principal that is being paid back or not. For example the Participant would like a loan for $1000 we will put $1150 on the truth in lending. The principal on the amort is $1150 interest being paid on the whole amount. We send the participant a check for 1000 and 150 to us. So they are paying the fee back to themselves. Is this correct or should the amort be for $1000?

I understand after-tax amounts can be rolled to a 401(a) plan is the plan separately accounts for the assets.

Can after-tax amount from a 401(a) plan be rolled over to a 403(b)? If so, what is the plan does not separately account for the after-tax assets?

Thanks in advance

In my 401k plan (which is not Safe Harbor), my company currently matches 50% of pre-tax and after-tax contributions up to 6% of base pay. For example, if I make $100k and contribute $6k pre-tax, I get a match of $3k. Likewise, if I make $100k and contribute $5k pre-tax and $1k after-tax, I get a total match of $3k.

If the plan converts to a Safe Harbor arrangement and the match changes to 100% up to 4% or 100% on 3% plus 50% on 4-5%, can we still match after-tax contributions?

Can the Safe Harbor formula be applied in the same way as our current formula and satisfy the ADP and ACP tests?

If the answers to these questions are YES, do we need to test the match on after-tax or just the after-tax itself?

Fiscal year 10/31

Member defers a total of $2,000 in Nov & Dec 2003 - All catch-up under 402(g) limit.

Member defers $16,000 from 1/1/04 thru 10/31/04 - $13,000 reg deferral plus $3,000 catch-up. Makes no further deferrals in 2004.

Company contribution for member for the year end 10/31/04 is $28,000 to max the 415 limit.

Question - What is the proper amount to be reflected on the member's K-1 at 10/31/04 for deduction on their 2004 return?

Is it $46,000? If so can this generate an audit situation for the individual?

When are the catch-up contributions properly deductible by the individual - flow thru from plan year or is it based on the calendar year it was deferred?

Ok Tom - Sorry to be off topic - I wanted to be sure you saw this so I'm using your forum! How was the ASPA conference?

I have a group where we are planning to offer a high deductible health plan in addition to their regular PPO plan. We plan to offer the HDHP effective Jan. 1. We want to offer HSAs at that time also. The group currently has a section 125 plan with medical and dependent care FSAs. The 125 plan is set up with a Oct. 1st start date (concurrent with the group's medical anniversary date).

I know we have to amend the 125 plan to allow employer contributions via the 125 plan to the HSA accounts. I also understand the employees cannot have both a FSA and HSA. Am I right in assuming that the creation of the new HDHP and HSAs will be a qualifying event allowing those employees who were enrolled in the FSAs to drop them effective Jan. 1? Will only expenses from 10/1 to 12/31 be eligible for reimbursement under the FSA? If these expenses exceed their 10/1 to 12/31 election, could the employer be on the hook for an employee's entire annual election due to the uniform benefit rule? Ie., employee had $100/month election, will have paid $300 from 10/1 to 12/31, but has between $301 and $1200 in expenses.

Thanks

Could a business travel accident insurance plan that provides benefits for only non-employee directors be exempt from the ERISA reporting and disclosure requirements (e.g. top hat welfare benefit plan)?

An LLC previously sponsored a DB plan when it had 3 owners (33%-33%-33%) but then terminated the DB plan when close to maximizing their 415 limits. A few years have passed and now 2 partners bought out the 3rd partner so the LLC is owned between the 2 partners 50%-50%. They've inquired recently about sponsoring another DB plan. Does the ownership change afford them a fresh-start on the 415 limits ? (i.e., is it the same entity). Nothing about the entity has changed except the ownership percentages.

What federal agency has regulatory authority over section 457(b) plans of government and non-government employers?

Thanks,

Joel L. Frank

Dual eligibility provisions allow an HCE (and others) to enter the plan by virtue of having been employed by the Effective Date. Employees hired after the Effective Date must meet 1 Year, 1,000 Hours service requirements. The HCE does not meet the more restrictive eligibility requirements until the 2nd year of the Plan.

In the first Plan Year, all employees regardless of hire date are considered part of the coverage group because of the no-service requirement of the early-entry, Dual Eligibility provision (the least restrictive requirement.) Given the particulars of who was in the plan as of the Effective Date vs. those hired later, the Plan fails coverage. So what is the impact of failed coverage if the Plan is a Safe Harbor 401(k)?

If a 3% SHNEC was elected, do all employees receive the 3%? Or just enough to past coverage?

What if the Safe Harbor was a Basic Match? Who is entitled to a Match and how would it be calculated since all those hired after the Effective Date were not offered the chance to defer?

I am sure to have follow-up questions based on your answers.

Thank you.

I have done numerous searches for "overpayment" in different forums and keep coming across three court cases:

Primary CareNet of Texas v. Scott, SA-99-CA-0427 OG (W.D. Tex. 2001)

and

AmSouth Bank v. Carr, 2001 U.S. Dist. LEXIS 6436 (S.D. Ala. 2001)

and

Great West-Life.

I am not an attorney, nor do I play one on T.V. so I will not pretend to know what I am doing and apoligize now for my silly questions. Can someone help me decipher all of the abbreviations? (I did figure out Ala is Alabama and W.D. is Western District) What are the other numbers and letters? Also, what courts are these cases presented in?

Is there anywhere on the internet the I can go to look at these cases? I have done numerous Google searches and have had no luck (as all of you attorneys probably already knew!) Does anyone have a link to a summary of these cases?

Thanks!

Client corrected an untimely remittance of elective deferrals/loan repayments by contributing late amounts plus earnings (determined by using the earnings methodology under the VFCP), filing IRS Form 5330, paying the applicable excise tax, and indicating the prohibited transaction on Form 5500. Now, the DOL has come in and told them that they must file under VFCP (never mind that the "V" stands for voluntary)...we've just suggested that client send a letter describing the correction, enclosing a copy of the Form 5330 filing and politely telling them "no thanks."

Any thoughts?

I am trying to find this ruling on the irs website and I am coming across nothing...does anyone know how I can get it??? Its regarding the health and welfare of non-discrimination.

Thanks and much appreciated!

Recently I was asked the following questions by a former participant in one of the plans we do pension administration for, "Can my previous employer cancell my COBRA insurance without notifying me?" The way this came about was, the employee needed to cut back on some of his hours worked, so he asked the owner if this was ok. The owner was fine with it for about a month and then told the employee that he held prime shifts that should be offered to new employees and that he either had to give up the shifts or quit. The employee had been there for 8 years and felt he had earned those shifts and that it would be as if he was starting over if he gave them up so he decided to quit. Upon resigning, the ee joined the COBRA Plan. Everything was fine for about 5 months. The ee recently received a letter in the mail from the health insurance company letting him know that his insurance was cancelled a month ago. Upon calling his prior employer, he was told by the owner that he never received his payment so they dropped him. The ee informed me that the check was sent. The owner advised him that he would call the insurance company to see if he could be reinstated. The ee also called the insurance company. The insurance company advised him that it was not a problem and that this happens often and that he could be reinstated. However, upon following up with the employer, he was told that the insurance company denied the reinstatement. It was not until the ee told the employer that he also talked to the insurance company and that they said there was no problem getting him back on the plan that the employer agreed to get him reinstated for the remaining remedial time.

He is being reinstated but he is afraid the employer might not be honest in the future since he was not honest about contacting the insurance company. I personally only do DB administration, so any advice would help. Thanks!