I thought I'd seen this question but can't find it...

Participant applies for a plan loan and plan committee declines the loan app -- maybe the spousal consent wasn't there or substantiation of home purchase wasn't provided. Does the Fair Credit Reporting Act requirement that a lender provide borrower with the reasons for the loan denial apply to such situations??

THANKS

Client recently discovered that a rollover done in 2002 from 401k to IRA included after-tax contributions. 401k provider did not code the 1099-R correctly to reflect this. Does client have the option of having the distribution corrected so the after-tax monies go to a taxable account? Guessing thiswould probably create more headaches than it's worth. If funds must stay in the IRA how are they treated with regards to taxation & IRS penalty (client is under 59 1/2)? Client is looking to take a distribution & would like to get out all of the after-tax funds first, if possible.

I am 23 and interested in starting to invest into an IRA. I am still going to school so I am not making alot, but would like to start contributing something. I think I can manage around $50 a month right now.

I am having trouble deciding on whether it would be better to go with a Roth or traditional IRA account.

I was thinking about talking to the bank I have a checking account with to see what they offer. Would this be a good idea? If so, what kind of questions should I ask?

If Company A sold one it its wholly owned subsidiaries (Company B) during the plan year, is there a transition period (for qualified plan purposes) where Company B employees could still be covered under Company A's 401(k) plan?

Could Company A and Company B treated as a controlled group for the entire plan year?

Hi All. I have a prospective client that has a 457 to administer. We only specialize in DC plans. For those of you who administer both, is it a smooth transition, or not worth undertaking? We don't mond new challenges, but you gotta draw the line somewhere!

Thanks for any advice.

We are merging two 401(k) plans on 7/1/04. Both plans are calendar. Firm A acquired Firm B and is now merging B's plan into A's plan. Do we test B's plan over the short plan year?

If an employer fails to pay out an employee before the designated cutoff date (April 1st after the year in which they attain age 70 1/2) what penalties if any are there for the employer and employee?

How are these penalties calculated.

When and how do you report these errors/ommissions?

Thanks,

Fred

If an employer fails to pay out an employee before the designated cutoff date (April 1st after the year in which they attain age 70 1/2) what penalties if any are there for the employer and employee?

How are these penalties calculated.

When and how do you report these errors/ommissions?

Thanks,

Fred

My co-worker has a client that has been turning in claims for the patch for 6 months. Obviously, he is using this product as a crutch and not actually quitting. I s there anything that gives us the right to say enough! I know that we can say it for buying a lot (stocking up at year end to use up funds) but he is turning in claims monthly. Is there any limits on this?

I have only been doing retirement benefit administration for about three years now. The company I work for continues to have problems with participants not cashing their monthly annuity pension checks. We are left wondering if they are deceased, lost the check, etc. It takes a great deal of time to locate each participant (if they are alive) and find out why they are not cashing their check/s? Can we legally stop their pension checks until they contact us? Many of our pension participant refuse to use electronic funds transfers (direct deposit). Any suggestions are welcomed....

One of our post-65 retiree's visited recently and advised they had improved their benefits. They utilize Medicare A&B, then our limited retiree health plan and now an individual supplement they purchased on their own. In order to process a health claim they(their health provider) submits the charges to Medicare, then the balance of the unpaid claim is sent to our insurer for processing under our limited retiree health plan which is a Medicare Supplement. When they receive our EOB they send it to the individual medicare supplement carrier for balance reimbursement. In some instances, they avoid our plan and submit the Medicare EOB directly to their individual carrier for reimbursement. An example, we provide little in the way of Chiropractic benefits - the retiree skips us and goes directly to the individual carrier for reimbursement.

Is this legal? Can the retiree jeopardize their Medicare coverage or can they be dropped from our plan for "duplicate" coverage?

MAT

If a new company takes the EGTRRA Tax Credit, will they still be able to take business deductions or is this tax credit in lieu of business deductions? It is my understanding that the tax credit can not be deducted, but the other plan expenses and other expenses a company incurs can be deducted still.

The 50% of qualifying expenses that are effectively offset by the tax credit are not deductible; the other 50% of the qualifying expenses (and other expenses) are deductible to the extent permitted under present law. However, an employer can elect not to have Code section 45E apply for a taxable year.

My question involves the inter-relationship between 404(a)(7) and the new excise tax exceptions found at 4972©(6) and 4972©(7) that came in with EGTRRA - An example :

Suppose my DB super max is 15% of pay and I have PS contributions of 5% of pay; the way I understand the rules is that an additional 5% into the DB will be non-deductible but the excise tax excepton rules in 4972©(6), ©(7) won't come into play until I exceed the combined limit of 25% of pay - at that point I look at the "stacking" rules in 4972©(6), ©(7) to see if an excise tax applies ??

In other words, the total non-deductible contribution will be the 5% additional plus any more over and above that amount - not just the amount exceeding 25% of pay.

Do I have it right ???

Two corporations in the same controlled group want to merge their two separate cafeteria plans into one plan. The two plans are similar in many respects but I haven't seem them yet. I know we should consider discrimination issues. Any thoughts on discrimination issues or any other issues you can think of?

I know it's the norm to not allow it. By whom? The IRS? Is it the IRS that says "it is against the law to create a 401k plan that allows distribution during employment." ? What publication discusses that? Or is that determination made by the plan sponsor?

Can the company make that decision? If not, why not? Can my company (who will be switching sponsors soon) say to the new sponsor "in creation of our new 401k plan, you will allow distribution of funds to an employee at their request" ?

This all assumes that in doing so, the employees get all the education they need with respect to the penalties, withholding, and roll-over timeframes (and much more) that are not only required, but just plain common sense.

Thank you in advance - Phil

I've perused hundreds of web sites including irs.gov and can't find the answer anywhere. I've read where you can contribute your Trad IRA funds a little at a time to ease the tax consequenses, and I'm fully versed in the pros/cons of Trad vs Roth; "you must mind your personal circumstances, Roth dollars are bigger, you must take into count tax brackets, depends on current age and expected retiring age..." all of this I know.

Here's why I ask. Yearly, I plan to build a Traditional IRA, and at each year's end, roll it over into a Roth. After a reply or two, I'll gladly explain why I would not just contribute all to the Roth in the first place.

You see, for me, a Roth makes the most sense, and it will for many years to come. Therefore I wish to convert each year's newly created Trad IRA money into my Roth. Where can I find sites / publications that cover repeated conversions (over several years and with several subsequent Traditional IRAs)?

Thanks in advance! - Phil

Is there a time requirement, in days, for the administrator to begin processing of a properly documented claim?

Assuming "timely" or "reasonable" are the time limits, have there been any cases where the administrator took 2 months and 3 weeks to begin and that was not "timely"?

Thanks

This issue is in regard to a DB plan. The SSA instructions refer to termination of employment and break in service years, and say to delete a participant when they cease to be entitled to a benefit. The references to employment would seem to refer only to an employee participant, and when someone dies they are no longer entitled to a benefit -- although one or more beneficiaries may be. However, Form 5500 Item 7 asks for a count of deceased participants whose beneficiaries are receiving or are due future benefits.

Upon death of a participant with a beneficiary due to receive future benefits, should we:

1. delete the participant from Schedule SSA if previously reported, and not to add any beneficiary for SSA reporting. So even if death benefits are still payable, the participant has been deleted and no beneficiary added;

2. when a participant dies prior to commencing benefits, if they have been reported previously on Schedule SSA, they are left on, and if they have not been reported they are added. No beneficiaries are added. When the LAST death benefit is paid out to a beneficiary, the participant is deleted from SSA on the next report. Under this process, the deceased participant remains on SSA and SSA "Notices" would be mailed to the deceased participant until ALL death benefits had been paid out. A difficulty with this process is the the beneficiary records have to be linked to the participant's record;

3. delete the participant and add the beneficiaries to SSA. This would allow SSA notices to go out without linkage being required to the deceased beneficiary for each participant. But this method does not seem to be called for by the instructions; or

4. Something else?

Thanks for any guidance.

My company recently acquired another company and assumed the pension administration for the acquired company. The files were transferred to us and we have found many problems:

1. Copy of property settlement agreement in the file which awards an interest in the DB pension plan to the non-employee ex-spouse. The one I found this morning is from a dissolution in 1994. EE claims to have no knowledge of ex-spouse's address. Attorney who handled divorce advised me "I will not draft a DRO". Participant applied for benefit for 9/1/04 commencement.

What do you think we should do? Should we put ourselves in the position of hunting for the ex-spouse/attorney? If we segregate an amount for the ex-spouse for 18-months, then pay it to the employee, have we fulfilled our obligation?

2. Many DROs with defects not corrected. AP is missing in action, attorneys who won't reopen files.

Same questions as above.

We recently added a cash benefit contribution account to our pension plan. In addition to its own terms, the contribution account is also governed by the terms of the pension plan. The pension plan provides for an involuntary cash out of accrued benefits that are $5,000 or less. If an individual has an overall accrued benefit of $7,500, but $1,200 of that amount is in the contribution account, can the trustees involuntarily distribution the $1,200 to the individual?

Does the individual have to been given a benefit election form, either for the pension plan or cash balance plan, if he is the receipient of an involuntary distribution or can the plan simply cut him a check?

Thank you in advance for your help.