It has been proposed that our client, a government plan, enter into a custodial account and recordkeeping agreement in order to permit the participants to invest in mutual funds. (The plan's assets are currently held under 401(f) contracts.) The custodial account calls for a trustee. We have been advised by the custodian, however, that a trustee is not required. We are a little confused as to how the custodial account could function properly without a trustee.

If there is no trustee, in whose name would the plan assets stand? Would the Plan Administrator stand in the shoes of the trustee and instruct the custodian? Is anyone aware of an arrangement such as this and, if so, are there any disadvantages to this type of arrangement?

Plan administrators are elgibile to use the DFVC Program if the required filings are made prior to written notification by the DOL of a falure to file a timely annual report.

Suppose that a timely filing is made, but it is incomplete/incorrect in that the plan was not exempt from the audit requirement as originally thought. Can DFVCP be used?

Non-integrated safe harbor unit accrual DB plan is being amended to provide a second tier solely to 10 HCEs.

Plan might change from

1.50% x all YOS to

1.50% x all YOS plus (1.25% of comp exceeding $90,000) x YOS on or after 1/1/2004

Plan has been around for 40 years or so. Is there anything we're overlooking that would prohibit testing the entire benefit over all years of benefit service, i.e. taking advantage of all the safe harbor years now? And I mean anything other than the 35 year cumulative permitted disparity limit.

I think this is fine but would prefer second and third opinions just in case. Thanks.

We have a client with a custom plan document that limits compensation for purposes of determining contributions and benefits under the plan to $170,000 for the 2003 plan year, not to be indexed with 401(a)(17). Client did this to contain the costs of their annual 5% profit sharing contribution. For ADP testing purposes, can we abandon this restrictive compensation limit and open it up to the statutory $200,000 for the 2003 plan year? You can probably guess that the testing passes using $200,000 and fails with $170,000. Two attorneys have now confirmed that the statutory limit can be invoked for testing purposes even though the document limits compensation to something else for contributions and benefits.

Can anyone give me a citing to this effect? Has anyone actually done this? Tripodi's books have not helped me confirm this.

Please help !!!

Are annual and per pay period the only options available. I read that in Sal's 2003 guide and am wondering if it has been updated and if quarterly is available.

If so, is the funding also due by the end of the quarter following the date of accrual, like per pay period.

Thanks

Let me preface this by saying that we try our best to steer clear of ESOP's... but this one sort of dropped in our lap. If there are problems here, I would just like a general idea of what they are and will likely use that information to convince them that an attorney is necessary.

An S-Corp established a non-leveraged ESOP at the end of 2001, the ESOP still owns less than 50% of the shares. From 2002 to date, the S Corp has extended loans totalling $16,000 to the ESOP cash account for purposes of paying participant distributions and paying the stock valuation fees. The accountant does not want to consider these as contributions to the plan - not sure why since their share allocations have not come close to the deductible limit.

1. Do these loans mean that the plan is now leveraged? If so, does there need to be a formal repayment schedule, etc. No payments have been made and it does not appear that any are planned in the foreseeable future. 2. Company by-laws restrict the ownership of stock to employees so all distributions were made in cash. It is my understanding that the ESOP cannot sell these shares back to the company because it owns less than 50% and the share reconciliation I received shows that the shares remain in the plan. Can they remain in the plan as "unallocated". If they must be allocated, but the money used to pay for them was a loan and not a contribution, what is the basis for the allocation? 3. Is it appropriate for the ESOP to pay for the stock valuation fees? 4. The ESOP received a distribution(dividend) of $2,300 in 2003 which was not reflected on the participants statements because the right hand was not talking to the left. Is there any other way to use the money.. like as a loan payment? The plan is of good size so this would not amount to much for anyone.

I would greatly appreciate any thoughts on my questions as well as any other areas of concern that I may be overlooking. Never again will I say "it's not leveraged... how complicated can it be?".

FSA plan year Jan to Dec. Changed Rx to three tier plan from 2 tier as of 6/1. Been told that we can allow any employee who is NOT in the FSA now to elect coverage under the FSA. For those who are IN the FSA now, they must wait to 1/1 to increase their contribution. Thoughts?

My client is in the process of closing down a profit sharing plan. The plan had several accounts for employees who terminated employment during the past three years without becoming vested ( they have 5 year cliff vesting).

These ex-employees were removed from the plan and their balances were transferred to a forfeiture account.

Will the forfeitures be distributed to the remaining active participants at the termination of the plan?

OR

Will these ex-employee/ participants be restored at 100 % vesting and their forfeited balances be restored?

A non-govermental employer sponsors a money purchase plan and requires employees to contribute 6% of their salary to the plan through salary reduction. There is no written salary reduction agreement. The plan document refers to this as an "additional employer contribution", which is 100% vested at all times. Still, I believe it should be treated as an employee contribution subject to FICA tax and income tax withholding. Does anyone know if that is the case?

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I am looking toobtain a copy of the Act itself. Does anyone have access to such?

At this point my question is related to maximum lump sum payments.

I am not clear if in 2004 the lump sum is based on the 30-yr rate, this new corporate rate or a rate of 5.5%.

Thanks.

I have a Plan which was effective 1/1/03. Eligibility to defer is immediate upon date of hire. In the 2003 ADP test there is 1 HC who is the owner and 9 NHCs. The test fails! This is a new Company in which the hire date of the owner is 10/1/02. One ee was hired on 11/1/02 and the other 8 ees were all hired on various dates in 2003.

Can I disaggregate the otherwise excludable NHCs from the ADP test in accordance with the early participation rule under 401(k)(3)(F)? If I do this, the only satatutory employees left in the ADP test will be the one HCE (the owner) and therefore the ADP test will pass. This seems to be ok, yet I feel a little uncomfortable doing it.........am I missing something?

assume there is a fee charged to participants for distrubutions and the money is netted from the distribution. eg. $5000 - $75 = 4925. what is the correct amount of the distribution that should be reported on the 1099. i belive it is still 5000 even though the participant only receives 4925 because he has dominion and control over the entire amount. any one agree or disagee?

Can anyone point me to information on the delivery of participant statements in an electronic format? Do you have to give at least one paper statement per year, or can you communicate all statements electronically?

Also, I am not sure where to locate the DOL's safe harbor guidelines regarding electronic communciation. Can anyone help?

Client has a 401(k) plan with a cross-tested profit sharing contribution feature. In 2003, the owner makes excess deferrals (total deferrals of $18,000 - don't ask how), but these excess deferrals are returned prior to 4/15/04. The owner then contributes a profit sharing contribution for 2003 to max himself out under 415. When running the 401(a)(4) non-discrimination testing, are the excess deferrals that were returned considered in the test? As this seems to result in a maximum annual addition of $34,000 ($40,000 - $6,000), it doesn't seem fair.

A Company with an ESOP wants to redeem all of the ESOP's stock and also all the stock held by 17 outside shareholders. The total redemption will be less than $5,000,000. Is there an exemption that applies?

I am looking to see if there are any significant changes to the NIP before an IRS filing. My current form was originally authored in 1996 when we still filed with each local Key District Office, and when the advance dates were 7 to 21 days.

Any format (text, WordPerfect, or MS Word) would be fine.

Can a terminated participant "contribute" his life insurance premiums into a qualified plan? In the past, the premiums were paid from his existing account in the trust, be this year, he deposited his premiums into the trust.

We have a design-based safe harbor with a 3% employer contribution to all employees. We have no matching contributions. OUr profit-sharing contribution is 100% vested. We are a partnership.

If our plan is top-heavy, will we automatically meet the remedy (of a 3% employer contribution to non-key employees) due to the 3% safe harbor contribution? This contribution appears to go only to non-keys because the partners do not get a 3% contribution and I think only partners could be considered keys.

I assume we will not meet the remedy due to the profit-sharing contribution because that goes to everyone (including partners).

THANKS!

Divorce decree awards wife 50% of IRA assets to wife.

Husband refuses to sign instructions to transfer assets to wife’s IRA.

Is husband’s signature required? Or can wife sign instructions?

We need signature for instructions on how to breakdown the sharing of the assets .

Thanks in advance for your assistance

403(b) custodian document defines a “participant” as someone who is currently employed by the employer and says that a “participant” may take a loan from the 403(b). Does this exclude former employees from taking a loan from the 403(b)? I know that some 403(b)s allow former employees to take loans .

Thanks in advance for your help.