We just took a money purchase plan from another TPA who allowed hardship distributions. The Plans legal council is advising a retroactive amendment of the MPP to a profit sharing plan allowing hardships. I don't think this smells quite right...opinions???

I am an employee of a company with some managerial duties. My employer is having an IPO that I wish to invest in. It would be a sizeable investment, but wouldn't approach 50% ownership (more like 3 or 4%).

I am generally familiar with the prohibited transaction rules, and it doesn't seem to violate any, but my IRA custodian wants me to sign a form removing all of their liability if it turns out to be a prohibited transaction. This is because it is a disqualified person is "an employer, an of whose employees are covered by the Plan." But the IPO should meet the definition of qualified employer securities in the exceptions.

Can anyone see any (other) problems with this investment?

Must employer contributions to a 403(b) plan be combined with employee salary-deferral contributions to a 403(b) contract for purposes of the $40K limit? The employer is a public university, so no employee controls the employer. Would your answer change if the employer plan was a 401(a) money-purchase plan?

Thanks,

Ken Davis

I'm doing the 5500s for a profit sharing plan for a doctor's office. He added a 412(i) plan for 2003 that someone else is administering and doing the wrap work, testing, 5500s, etc. My question -- on the pension plan 5500, for question 8a (pension benefits characteristics) do I need to use code 2D (Offset Plan) because of the 412(i) plan? Thank you.

but my notes indicate this amendment must be made prior to the end of the year you are testing? Can someone confirm?

Thanks

Jim

A self insured ERISA plan received an order from the local domestic relations court which requires it to cover a legally separated spouse as a dependent for purposes of eligibility. No minor children are involved.

The plan says legal separation is a COBRA event. Can the court trump the plan language? My belief is that the state order would be preempted and we should send the participant a COBRA notice. Any thoughts?

Can governmental 403(b)s accept contributions which are designated as severance pay?

If so, would they be considered employee or employer contributions?

If employee contributions, would they be subject to the 402(g) limits?

If possible, please include cites in response.

Thanks.

What are 410(b)(1)(B) ratio percentage fail-safe provisions?

Sorry if this is something so clear that I should know. Trying to determine on a individually designed document, if we should check yes that they should be included/

Thanks

Are earnings on contributions in a governmental 457 plan eligible for withdrawal for an unforeseeable emergency?

We would like to provide individual savings need statements for our 401k clients' participants. We want to estimate each employee's saving need using their salary, dob, current balance, employer match, other certain employer contributions if applicable, estimate of Social Security, etc. We are looking for a source to help us with this. Any ideas?

I re-read Notice 98-1, but it doesn't address this situation directly:

A 50%/50% S-Corp had a traditional 401(k) plan (owners are unrelated). The plan terminated 2/27/2004 and the corporation dissolved. One of the 50% owners then established a new S-Corp in 2004 and began a new traditional 401(k) plan for 2004. For his new plan, can he use prior year testing with a 3% assumed NHCE ADP? It seems to me that he can.

I have a client who wants to implement a safe harbor 401k NOW. They have a 9/30 existing ps plan. I don't think they can do safe harbor until 10/1/04 due to 3 month rule. This is my question: If I they do 401k for the next two months and I use prior year adp, can I use the assumed nhce adp of 3% for last year and then add a qnec of 3% to the nhce for this year for a total nhce percentage 6%? Thanks K

A piece of real estate is sold. The proceeds are placed in an irrevocable trust and the trustees (beneficiaries and buyers) of the trust pay the sellers of the real estate a private annuity.

I need help in valuing the annuity.

I have seen information pertaining to private annuities and valuation assumptions in 20.2031-7; Valuation of annuities,... (of the regulations) and I also see information about annuities in IRC section 72 and regulations thereunder.

What should apply? Specifically what interest and mortality table, from which set of information? What is the scope of applicability of each of the above code and regulations?

Thank you.

Gary

A piece of real estate is sold. The proceeds are placed in an irrevocable trust and the trustees (beneficiaries and buyers) of the trust pay the sellers of the real estate a private annuity.

I need help in valuing the annuity.

I have seen information pertaining to private annuities and valuation assumptions in 20.2031-7; Valuation of annuities,... (of the regulations) and I also see information about annuities in IRC section 72 and regulations thereunder.

What should apply? Specifically what interest and mortality table, from which set of information? What is the scope of applicability of each of the above code and regulations?

Thank you.

Gary

A client paid a lump sum from a DB plan to a 25 highest paid employee when the funding ratio was not suffcient to allow this. Getting the distribution back will not be easy - employee left on bad terms.

Is there anything the company can do to force the employee to return the money? Anything in the employee's interest that would make him want to return the money?

I assume we have to go to the IRS - is this CAP, VCR - which one?

The 5500 is due - does this get reported anywhere? Is there an excise tax payable now or do we wait to talk to the IRS?

I called the EFAST hotline and got connected to the DOL - the guy I talked to said it was reportable on the 5500 but would not tell me where -

Facts: HCE1 is the original founder of a company. He is over 70. He is an HCE based on ownership through stock attribution (i.e., his son now owns the company). The plan is a 401(k) plan. This is a balance-forward plan with one large pool of investments for all participants. The pool consists of cash and various stocks. For purposes of this question, the stocks are referred to as A, B,C,D,E, and F (all of the stocks are “normal” publicly traded stocks … all household names). HCE1 decides to take a large in-service distribution in the amount of $200,000. He elects to receive an in-kind distribution, which is allowed under the plan document. This is where it gets interesting. On his election form, he requests that he receive 500 shares of A, 800 shares of D and 1,250 shares of F. He is then paid-out in this manner.

We discovered this transaction after-the-fact and realized that we had an effective availability issues with a BRF. While any participant in the plan could elect to receive an in-kind distribution, there was no way that the owners would allow Johnny Lunchbucket to pick and choose the stocks he would receive. While this is the only in-kind distribution that was ever done, it is assumed that if a NHCE would ever make such a request, the investment committee (i.e., the owners) would determine which stocks would need to be liquidated to pay the participant and then those shares would be distributed to the participant. Because of the date of the transaction and the fact that it was not insignificant, we cannot self-correct. We are looking to use VCP (or whatever they call it now).

Questions: (1) How do you correct this under VCP? Its been over two years, does the participant return the shares and then have the company re-distribute to the participant? (2) How do you calculate the correction amount? The participant received the correct amount. Do you have to look at whether he picked winners or losers? And what if he would have received some of the same shares if he had not been allowed to pick and choose? What if the plan actually did better without the shares that were distributed? (3) Would it just be best to make a John Doe submission and let the IRS determine what they want us to do?

Extra Credit: How much wood could a wood chuck chuck if a wood chuck could chuck wood?

Co. A maintains a SARSEP (5305A-SEP) and contributions have been made for this year (2004). They are in the process of purchasing Co. B this year, after which Co. B will no longer exist as a separate entity. Co. B has a 401(k).

Co. A would like to terminate the SARSEP this year and assume sponsorship of former Co. B's plan as of the purchase date so all their eligible employees are covered under the 401(k).

Issue I see is 5305 indicates can't use this form if the employer "currently maintains" another plan during the same year. As of the establishment of the 5305A-SEP Co. A did NOT "urrently maintain"any other plan. Does that matter?

Or if they assume Co. B's plan does that essentially negate the 5305 and they MUST move to a Prototype SEP?

What alternatives does Co. A have?

Is there any transition relief in these type of situations?

Would Co. A have to "freeze" the former Co. B's plan as of the purchase not allowing any more contributions for the remainder of this year, terminate the SEP as of the end of the year and then "unfreeze" the 401(k) beginning next year for all?

What would happen to the former Co. B employees. Could they participate in the SARSEP?

The solution wouldn't be that Co. B should terminate their plan before the purchase date would it?

Appreciate any suggestions.

Have the 2005 deductibles and out of pocket limits been determined for

HDHPs to use in conjunction with HSAs?

Does a qualified plan have to specifically allow for loan rollovers? Is it acceptable if the plan is written to allow "rollovers from other qualified retirement plans" without a specific reference to loans?

For some reason I have it stuck in my head that the plan had to specifically allow for it, but I can't find a reference for it.

Thanks

Situation: Participant's spouse is deployed overseas for military duty. Participant would like to take a distribution from a plan with a QJSA requirement. Participant has POA for spouse (not sure yet if it is durable, limited, etc).

Is there any POA that would allow the participant to sign off on the QJSA waiver as the spouse to take a total distribution from the retirement plan? Does the POA specifically have to address the retirement plan?

Has anyone run into this issue?