Is there a right and wrong way to handle loan fees when they are charged directly to the participant? Most of the providers we work with who prepare amortization schedules for loans include the fee in the loan. Is it also OK to exclude the fee and amortize only the amount the participant receives in cash?

If a participant requests the maximum loan, has a vested account balance of $4000, and the fees, $100, are included in the loan amortization, the participant receives $2000 in cash and pays back $2100. His account balance is $4000 before loan, and $4000 after loan. Is the participant actually paying the fee in this case since he is putting it back in his account?

If the same loan were amortized for $2000 and $2100 were withdrawn from his account, his balance before the loan would be $4000, and after the loan it would be $3900. Is this OK? Assuming the loan is taken from his 401(k) account, does this violate the distribution rules for 401(k) by using the money to pay fees? No 1099-R is issued for this $100 withdrawal-is that OK?

I know you should always look to the document for what to do. Assume the document is a Corbel prototype which has not been amended to provide for individual participant fee payments, but there is an SMM that details to the participants the charges that will be assessed on them directly, including the loan fee of $100. This SMM was prepared based on Corbel's recommendation.

I keep changing my mind on this and would appreciate some input.

I am looking for a source where I can pull articles or any other information on the dangers of self-trusteeing a 401k plan. Can anyone help???

E/er maintains a PSP, MPPP and a 401(k)(safe harbor met by 3% nonelective contribution). There are investments within the MPPP and PSP which are locked in at favorable rates. E/er wants to get rid of the duplicative administrative costs with maintaining three plans. E/er is trustee of PSP and MPPP assets. 401(k) assets are participant directed. E/er would like to end up with just the 401(k) plan and thus be obligated for the safe harbor contribution (but still be able to contrubte more if possible), but keep all investments intact. Freezing the MPPP, i.e., amending to reduce contribution to 0% of compensation as well as not allowing any more participants in, will partially get it done. I am assuming a merger of the frozen MPPP into the 401(k) would be a possible next step regarding trying to consolidate the plans. Merger would allow for the investments to stay intact as well as consolidate everything. Only drawbacks would be tracking vesting and maintaining the separate distribution options once inside the 401(k) . Any others? Alternative would be to terminate the MPPP and distribute out to participants. Termination gets rid of the vesting issue (by requiring 100% vesting) as well as the maintenance of separate distribution options within the 401(k). I would assume the PSP could be merged into the 401(k) with no problems. Any suggestions as to the big picture alternatives? Thanks.

Assume the following fact pattern:

Single participant 401(k) Plan for 2003.

Participant is over age 50.

Employee’s compensation = $16,000

Employee’s 401(k) contribution = $14,000

Employer’s profit sharing contribution = $4,000 (16,000 x 25%)

Total allocation for this employee = $18,000

Is this possible? The regs say you exclude the catch-up contribution for 415 purposes so it appears to be okay. Am I missing something?

Thank you in advance.

Is anyone aware of a SERP plan participant successfully asserting a cause of action as a result of a plan amendment where the only change was to the form of benefit? The plan currently provides for an actuarily adjusted, less 10%, lump-sum payment anytime after retirement. The plan administrator is considering amending the plan, as allowed under the plan provided the change does not adversely affect vested benefits, to remove that form of payment. Thoughts on the subject would be appreciated.

Since the HCE restricted benefit distribution calc uses the IRC 412(l)(7) rates - current liability rates, and I believe these rates were modified (temporarily) for certain funding purposes to use a Corporate Bond Idex rate, can we use these higher Coporate Bond Index rates for the restricted HCE distribution calcs under the (a)(4) regs ? Thanks for any opinions.

Assume an S Corp makes employer contributions to employee HSA accounts. Assume a 2% or more S Corp owner works for the company and receives wages. Can the company make and deduct an HSA contribution for him? Or does he need to make his own contribution individually? (There is no 125 plan. If there was, I realize that the owner could not participate in the 125 plan, and for 125 plan purposes is considered self-employed.)

I believe that the IRS Q&As on HSAs indicate that a "self employed" individual would make contributions for himself. Does the reference in the Q&As to "self-employed" also bring in the working 2% or more S Corp owner for this purpose?

I'm waiting for my copy of Who's the Employer so I'm hoping to get some help with this.

3 owners and 4 companies. Companies A, B and C are incorporated, Company D is Sole Proprietorship. Familial relationships are that Owner 2 is the mother of Owner 1 and Owner 3 is the adult son of Owner 1.

Company A

Owner 1 50%

Owner 2 50%

Company B

Owner 1 50%

Owner 3 50%

Comany C

Owner 2 50%

Owner 3 50%

Company D

Owner 1 100%

Owners 1's wife does not have any ownership in any of the companies. She is the Secretary/Treasurer of Companies A, B, and C. She is also an employee of those 3 companies.

If you attribute ownership to the spouse of Owner 1, you end up with a grid of Companies A and B with Owner 1 and his spouse each owning 50% of Companies A and B, which would give you that those 2 companies are a controlled group while Companies C and D are not. Is this the proper way to constructively attribute Owners 1's shares and are those shares then used to make the spouse an owner for purposes of determining that there is a controlled group?

Grid:

Shareholders A B Row Min

Owner 1 50% 50% 50%

Spouse 50% 50% 50%

Totals 100% 100% 100%

It doesn't seem right to me. A friend told the that it isn't right, but he didn't know she was a officer/employee of the companies. I'm not sure it matters.

Box 13 of the W2 indicates whether or not someone is participating in a retirement plan. From my understanding, if a 401(k) is the only plan offered and the employee is NOT participating but eligible, that box should still be checked. Correct?

if the doc uses the safe harbor definition of what is a hardship and the ee has flood damage (current example -- hurricane if in florida) to their home will this qualify? is there an exception for natural disasters?

It is my understanding that it is perfectly permissible for a participant's accrued benefit to decrease due to a decrease in the participant's compensation. Is this correct? I base this on the fact that under Code Section 411(d)(6), benefits are protected from reduction due to a plan amendment. There is nothing that prohibits a reduction due to simple operation of the plan (i.e. participant's compensation reducing). Is my understanding correct? Does anybody know of any IRS literature that explains this or any other literature anywhere (commentators, articles, etc.)? Any insight will be greatly appreciated.

Thank you!!

This is pretty much over my head, but in general, does the following sound OK?

An individual leaves a company and has $200,000 in his retirement account there. Now he wants to use this money to buy a separate business, but does not want to be taxed on taking the $200,000. So, he establishes a retirement plan for the new business (C-Corp), rolls the money into this new plan, and purchases shares of the new business with this rollover money. Somewhere along the line, I'm told a 501(a) tax exempt trust was established, that makes this whole scenario work (i.e. uses the rollover money to buy the new business with no tax consequence).

This is not something I am trying to design mind you. I was asked about this from someone who has come across it.

Does anyone have any samples on wording for issueing out SARs. Along with retirement plan SARs I will be sending Welfare, LTD and Travel Accident.

What has happened to Mike Preston? I have not seen any posts by him in months.

Has anything changed regarding whether we can use insurance rates to determine PS 58 costs for 2004?

DB plan with maybe 15 retirees receiving monthly payments was amended in 2002 to provide that all retirees who had been retired for 5+ years receive a 7% pension increase. I'll call it a COLA.

Two of the retirees did not qualify for the 5 year rule. One was the former President, the only former HCE who is retired.

Client wants to give a 7% COLA in 2004 to the two who did not qualify in 2002.

Is this discriminatory? Is there some type of coverage problem? How do the testing rules for former employees apply here?

I am really just a cartoon character invented by the Japanese. And you folks have been depending on me for answers.

(Click on my name)

DR Pension Services, LLC is an Albany NY based plan provider / consulting practice / recordkeeper. We are currently looking to continue the expansion of our practice in the Northeast through the aquisition of other similar practices.

DR Pension Services is part of the business and financial consuting practice of The DR Group, which includes DR Finanical Services, LLC and Dorfman-Robbie CPA's. Together our group is made up of approximately 50 professionals including CPA's, CFP's, Attorney's, Investment Advisors, Plan Consultants, and Information Systems Specialists.

Please visit our website to learn more about our company - www.drpension.com

If you are interested in discussing in confidence the possible sale or merger of your practice please feel free to contact Tom Santa Barbara, Managing Director at tsanta@drpension.com or by phone at 518-464-4080.

Is it possible to have a 401(K) plan with discretionary safe harbor matching provisions. The idea here would be that if the company does not want to match from year to year, and wants it to be discretionary each year. It would have to be safe harbor though, b/c they fail ADP testing.

Any thoughts?

I run a non-profit commuter services organization called the Artery Business Committee transportation Management Association (ABC TMA) My Webpage. We provide commuter benefits to companies to reduce the number of drive alone commuters traveling into work in order to improve congestion and air quality.

The programs inlcude:

- Guaranteed Ride Home Program: The Guaranteed Ride Home program allows all employees that take the bus, subway, commuter rail, boat, carpool, vanpool, bike or walk to work to receive a free Guaranteed Ride Home in the event of an emergency or unscheduled overtime.

- Personalized Commuter Assistance and Ridematching: The ABC TMA uses a computerized ridematching system to match member employees with other employees commuting into the Boston area who are interested in sharing a ride.

- Bicycle and Pedestrian Incentive Program: "Work out to Work" is the ABC TMA's program providing incentives and safety training to employees who bike or walk to work. Participants receive a logbook to keep track of their miles each month in the program and receive prizes each month they submit their miles to the ABC TMA.

· Vanpool Seat Subsidy Program: The ABC TMA offers financial assistance to those tenants interested in forming a vanpool or any drive alone commuters who joins a vanpool already serving the downtown area.

· Carpool Subsidy Program: The ABC TMA provides assistance to new carpools by covering the cost of fuel for six months. Participants in the program receive a Wright Express Fuel Card, which allows them to purchase up to $35 in gas each month.

· Express Bus/Commuter Boat Subsidy Program: Provides $100 per month for three months to employees currently driving alone into work, if they agree to use an MBTA Express Bus, Private Bus Carrier, or MBTA Commuter Boat.

I was wondering if other companies currently provide these benefits to their employees and if so how effective you have found them?

Thank you!

dstraus@abctma.com