Is there an exemption from CIP rules for brokerage accounts established for an ERISA plan, just as there is for accounts established for an ERISA plan at banks, savings associations, credit unions and mutual funds? My clients keep getting requests from brokerage firms for CIP information for 401(k) plans with inidividuals as trustees.

We are changing our plan year for our FSA from 1/1-12/31 to 7/1-6/30. What happens with the money that has been deferred? Can this amount be rolled over into the new plan year or for those that spent more than has been contributed can that be deducted from the new plan year?

I am hoping someone can refer me to an IRA expert that I can hire to write an opinion letter. I would like to purchase an asset in my IRA, but my IRA custodian requires that I provide such a letter before they will purchase the asset.

Thanks in advance.

Jeff

We have discovered that, due to an error on our part, we did not deduct the correct amount from an employee's paycheck. As a result, we have processed $600 of Health Care Reimbursement Claims but we only withheld $300 from the employee's salary. This was all for our PY that ended 12/31/2003.

We have asked the employee to pay us back but they are not cooperating. Do we have any recourse? Also, what are the possible consequences to us for not honoring the employees election of $600?

Is there any standard way of correcting this type of administrative error?

I realize the amount is small but it's the principle of the matter.

Any ideas would be appreciated.

Sheri

I've searched but have not found a conclusive cite. Plan is NON-QJSA, employer/plan is headquartered in common law state but has participants in community property state (CA). Does the sole fact that a participant lives in a community property state require spousal consent for a participant loan ?? Assume the loan is for 50% of vested balance (and greater than $5k). I assume ERISA preemption controls, but I've not found any concrete statement.

THANKS

Client just informed us that he understated the amounts of his in-service distributions in 2001, 2002, and 2003. His CPA will file amended 1040s for those years. I assume amended 1009Rs must be filed also. How is this done?

If a Plan has NRA of 62 how is the maximum lump sum calculated as of age 55 assuming participant has average compensation over $200,000?

1. 165,000 times annuity value at 62 (5.5% interest) discounted to age 55 at 5.5% interest; or

2. 165,000 reduced to age 55 (greater of Plan rate or 5%) then multiplied by annuity at 55 (5.5% interest).

The scenario that I have is as follows:

Participant of a profit sharing plan is in "pay status" when he dies. His beneficiary is his wife. She dies in the year following the death of her husband. She took a minimum distribution from the plan in the year of her death. Her beneficiary is her estate.

Is there a timeframe in which the estate must be paid the full remaining account balance (i.e. 5 years)?

Thank you for any input.

Client has a 401(k) plan which provides for deferrals and employer matching contributions. There are no other plans sponsored. In the plan, they exclude a class of participants not covered by the statutory exclusions under the Code.

Question has arisen as to whether the employees in the excluded class who would otherwise satisfy the eligibility requirements and be in the Plan if they weren't excluded should be considered for the ADP and ACP tests. Clearly these folks are included for purposes of 401(a)(4)/410(b) testing; don't see why they would be kept out of ADP/ACP tests or am I all wet here?

I have a potential client who has a SEP and now wants to switch to a PS/401k plan. Apparantly he has several employees who work low hours, yet were eligible to be in the SEP. He now wants to keep them out of the PS. Assuming we go with a 1000 hour requirement/1 year of service to enter the PS plan, is it acceptable therefore that we could have employees who were in the SEP, but not eligible to be in the PS plan? Seems OK to me.

(also posted as a SEP thread)

Under a dependent care assistance plan, participants are eligible to defer up to $5,000 per year. In addition, the employer makes a nonelective contribution for all participants. Does the nonelective contribution count towards the $5,000 limit? My guess is that if the nonelective contribution causes the amount to exceed the limitation of exclusion contained in Section 129(a)(2)(A), this would result in taxable income to the employee for any amounts contributed in excess of $5,000? However, I can't find any authority for this position.

I have a potential client who has a SEP and now wants to switch to a PS plan. Apparantly he has several employees who work low hours, yet were eligible to be in the SEP. He now wants to keep them out of the PS. Assuming we go with a 1000 hour requirement/1 year of service to enter the PS plan, is it acceptable therefore that we could have employees who were in the SEP, but not eligible to be in the PS plan? Seems OK to me.

Tax exempt organization employs disabled individuals (blind persons) to do various types of work. Organization wants to set up a 401(k). Any special issues to be aware of? The only thing that comes to mind is possibly no full vesting upon a participant's becoming disabled (since all participants are such from day one). Any reasons why it wouldn't be possible to set up a 401(k) in this situation? Thanks for the help.

For years I have been blithly ignoring item 5 on the 5500, Optional Preparer informtion. Apparently I now have an alert client who read the form and wants to know why Line 5 is blank.

Having reread the instructions, I see that it is "to designate the person or entity principally responsible for preparation".

I can read that two ways: (1) who is responsible for getting the form done - that would be the Plan Sponsor, yes?. (2) who filled in the boxes on the form - that would be the TPA.

I don't mind admitting that I filled out the form, but I don't think I want to admit that I am responsible for having the form prepared.

I am I getting too paranoid? I wonder why it is worded that way, rather than "Name of paid preparer" or some such thing.

Also says that AP is not to be treated as surviving spouse. It appears to be a shared interest DRO, but how on earth is the plan administrator going to keep track of the AP's marital status?

Anyone seen this before?

Can the ESOP borrow additional funds to purchase the stock of a retiring employee in order to raise the cash to make a distribution? Or do you need to go through the steps of distributing the stock, having the employer sell the stock to the ESOP through a leveraged transaction? This is a nonpubicly traded employer.

I am looking for the precise rule and authority for the requirement that the total benefit paid to a nonspouse beneficiary under a QJSA is not less than 50% of the total benefit being paid (or is it projected to be paid) to the participant.

Can an employer have an arrangement whereby employees pay for their co-pay (not premiums) on a pre-tax salary reduction basis without a cafeteria plan (health FSA) or HRA or MSA? I heard of someone doing this this and I can't find the authority for it.

When I read the Form 5500 instructions, I don't see an exemption for 457 plans, but something in the back of my mind says that they don't need to file a 5500. Can someone confirm that for me?

2 questions:

1) if 457(b) non-gov't plan has NRA of 65 and does not allow election of different retirement age, and employee presently is older than NRA, is employee unable to take advantage of the catch-up?

2) if plan is retroactively amended to increase deferral limit in accordance with EGTRRA for years prior to current plan year, can contributions be made retroactively (in addition to current year deferral amount) to make up for contributions not made in prior years b/c of lower limit? I suspect no, but worth checking.

Thanks.