We have been waiting patiently for the final release of our 5500 software to go through. As it turns out, the very piece we have been waiting for will not be updated for 2003 on the software we use(!)

It is my understanding that the Summary Annual Report for small plans now needs to include the name of each institution holding plan assets, and the amount of the assets reported at each financial institution at the end of the plan year if the small plan is going to meet the requirements for an audit waiver.

Can anyone share a sample of the language in this statement as it appears on their 2003 SAR? I am going to have to input it manually on each of our clients' SARs. What fun.

Thanks.

An attorney called today with this problem looking for ideas.

Participant is in prison and both father and wife have gone to employer with a power of attorney to withdraw full account balance. The father than came back with a letter from the Participant stating that he had cancelled his wife's power-of-Attorney. No divorce is in progress that we know of.

Does anyone have any suggestions for him?

Patient has had a gastric bypass, and has submitted a letter from Cleveland Clinic requiring certain vitamins and minerals. Would anyone have any problem approving them?

Recently someone in my office attended a 5500 preparers seminar and the speaker said that the DOL's position is that for Form 5500 Schedule C purposes a rotation of actuaries within an actuarial firm is a reportable termination.

Upon further checking this is a subject of a Gray Book Q&A 1992-36 which says essentially the same thing.

We've never done this and are considering changing policy. Can anybody add anything to this, either pro or con? Is there any justification for not reporting a change in actuary within the same firm as a termination?

Hello:

I have a dilemma and have searched the posts for something directly on point. A plan has a large number of terminated "missing" participants with small balances (<$5000), a large majority of those being under $100.

The issue is that there are many with bad addresses and have failed to keep the plan updated as to new addresses. The plan is trying to come to grips with what 'reasonable efforts" truly means with regard to trying to locate these participants before forfeiting their accounts under the provision of the Plan Document that affords this process.

We have seen references that support that only a search that includes either the IRS Letter Forwarding Program or SSA program will consitute "reasonable efforts".

The problem with this is not only cost but the fact that the IRS program does confirm whether Participants actually received the packet to act upon, and even if they did, and no contact is made by Participant, Plan still does not know a good address to cash out the small balance.

Does anyone have a comfort level that the use of a commercial locator program can satisfy the reasonable efforts test, before forfeiting account balances without using IRS Progam (with the understanding that balances are required to be reinstated if Participant steps forward)?

Thanks for any feedback in this regard.

Andmik

We offer a plan in which medical and dental coverages are offered to members as a package only. The medical and dental are through different carriers.

When a Cobra Qualifying Event occurs, do we have to offer the member the right to take medical only or dental only? Do we have the option of allowing the member to only take the packaged plan instead?

Does anyone have any information regarding trading directly with NSCC? What administrative hurdles should we expect if we are approved to trade with them? Everyone has said it's a nightmare, but no one gives any specific reasons other than building and maintaining the links (we will purchase Gail Weiss' software interface to use in conjunction with Relius).

Governmental 403(b) plan solely provides for 403(b) deferrals. One of the vendors provides mutual funds as an option, and the other vendors provide annuity contracts. The 403(b) program does not have a plan document. I know that with annuity contracts, there is enough language in the contract to describe the 403(b) restrictions, but what about the mutual funds? How do the mutual funds describe the 403(b) restrictions? Am I forced into writing a plan document just for the mutual funds?

Participant elected to defer 4% of compensation per payroll period starting March 1st. Due to error in inputting amount by Payroll, participant only had $4 per payroll withheld (vs. 4%). Match is 50% up to 4% per payroll period. Error was caught during reconciliation processes at end of the month.

Previous posts on this site seem to indicate that Employer would be responsible for the difference between the $4 and the 4%, as well as the related match differential.

Company has proposed to contact affected employees (2 of them) and ask if they wish to make additional contributions in April - December to make up for the under withholding. Is this an acceptable correction? Rev Proc 2003-44 seems to focus on improper exclusion from participation, not necessarily underwithholding. However, the "Brief Exclusion Rule" (Appendix B Section 2.02(1)(a)(ii)(E)) seems to support a principal that if the employee has time or the option to make themselves whole, the employer does not have to make up the deferral differential.

Any thoughts on this correction? Also, would the answer be any different if the issue is that a bonus run or manual check improperly did not have withholding, but employees were contacted shortly thereafter and could make up the amount through increased future deferrals?

I'm receiving tuition benefits for coures at the University of Rochester. The tuition benefits form says that the value of the course received as a benefit may be taxable, if the course is a graduate level course. The courses I'm taking are graduate level courses. Under what circumstances are they taxed?

401(k) is a 3/31 Plan Year end. In determining the HCE's for the new Plan Year (4/1), is it the look back year definition that makes the determination. So if look back year is the Plan Year, then any Participant who earned over $90K as of 3/31 is an HCE. If Look Back is Calander year then anyone who had comp of $90K or more as of 12/31. In addition to owners etc.

Thanks.

Employer's current 401(k) plan provides for dual entry dates and compensation is counted from a participant's date of participation. Employer constantly has a top-heavy contribution issue every year and is considering going the safe harbor route (3% nonelective contribution) to remedy the top heavy issue. It appears to me that recognized compensation under the plan will need to be amended to include full plan year compensation instead of just compensation from effective date of participation. Otherwise, employer will still be dealing with a top-heavy issue at year end, albeit half of the top-heavy contribution will already have been satisfied by virtue of the 3% safe harbor contribution on compensation from the effective date of participation assuming the participant enters the plan mid-year, ie., 7/1..... End result would be to amend the definition of compensation to full year compensation in order for top-heavy issue to completely go away, correct?? Thanks.

I am 27 and have had a Roth begining in 01'. I would like to take a third of my balance and pay off my debt. What is the penalty for this? Does it make sense to do it? Am i able to write checks from a Roth like I am able to do with mutual funds? Thanks for any help!

My company has an upcoming change of control which will require us to distribute the assets accumulated under our deferred compensation plans. What federal and state tax withholding should be applied to this money?

I just recently picked up a defined benefit pension plan that is sponsored by a sole proprietor.

Upon inspection of the records, I have discovered that some of the checks written to fund the plan were not written from the business account, but rather from the sponsor's personal checking account and from the personal checking account of his wife.

If the plan sponsor were a corporation, I know that there would be a problem, but due to the manner in which a sole prop takes the deduction for contributions to a qualified plan, is this a problem? Any citations for me to look at?

Does anyone know of an example where an S corp distribution can be considered compensation for benefit calculation?

A profit sharing plan was restated as a safe-harbor 401k plan 1/1/04. Participant terminated 3/04. She never received or was entitled to any other contributions or made any deferrals after 12/31/03. The restated 401k safe-harbor plan is not subject to a vesting schedule and the old PSP has a 7-year graduated vesting schedule. Is she subject to the vesting schedule or because the plan was restated, there is no vesting schedule that needs to be applied?

We have a situation where a former employee's physician called during the "election period" to see if former employee was covered, provider said yes, however, election period ended, without the former employee electing COBRA coverage, 4 days prior to the service provided by physician. Does anybody know of any case on point? Any guidance will be appreciated.

I currently handle administration and assets for non-electing church pension and 401k plans for a national (small but growing) denomination. I have recently had several inquiries about information distributed by a firm in CO claiming that their plan design allows for all clergy distributions upon retirement to be classified as "housing expense" and therefore will be non-taxable income. This firm specializes in clergy finances, says that the large denomination plans do this and that they are the only place to get such a deal outside of the big churches. I've spoken with their retirement plan contact at the firm and he doesn't know any of the "legal stuff" that allows them to do this.

Can anyone give me direction in regard to case law, regulations, ltr rulings, anything that would allow this? I can find nothing at this point. I'm looking for any resource, including attorney, that would allow me to make design change recommendations if possible, or to find out if this a loophole not worth messing with.

Thanks!

Please help out one confused person. These are the particulars:

I am 48 and single. My 2004 income will be below $95,000, albeit I do not know what "modified AGI" means. I have four retirement accounts. One is an old traditional deductible IRA at Vanguard that currently has a value of approximately $100,000. The second is a non-deductible IRA with Schwab with a current value of approximately $42,000. The third is an old IRA Rollover (from a past employers 401k) with a current value of approximately $295,000. The fourth is a current Keogh PSP with a current value of approximately $225,000. These assets are approximately 45% of my total financial assets.

I have a few questions. Which accounts can I convert to a Roth IRA so not to pay taxes on withdrawl at retirement? Should I convert the accounts I can to a Roth? If so, should I do so now or wait until the end of 2004? With income below $95,000 in 2004, can I open a Roth (in the recent past I did a non-deductible IRA) and at the same time contribute to my Keogh PSP? Thank you very much.