client has a 401(k). a distribution was made to an HCE of amounts attributable to his deferrals. he has not attained 59 1/2 and there is no hardship. what would the proper correction method be? i cant find it in the revenu procedure.

If an employee gets married in the middle of the year, and chooses to increase their Health FSA annual election, can that employee be reimbursed for claims incurred prior to their change in status? Does anyone know where I might be able to get some sort of definitive information I could refer to regarding this topic?

Any all replies are greatly appreciated. Thanks.

Under the terms of the plan, a participant reached Normal Retirement Age in 1997, a year in which he was eligible to participate but waived participation. The plan was frozen for the years 1999 through 2002 and restarted effective 1-1-2003. In 2003, he elected to participate in the 457 plan. What is the maximum he can contribute for 2004? Which years are used to determine the 3-year limit? 1994-1996? or 1997,1998,2003?

Hi,

It's been a while since I've done a leveraged ESOP allocation and I was hoping someone could confirm how the allocation is run.

Company makes contribution to the Plan to cover the note payment for the year.

ESOP makes scheduled note payment consisting of principal and interest. Encumbered shares are released based on prin/total principal at the encumbered price.

Participants receive cash contribuition then purchase stock at the encumbered price? The encumbered price is higher than the current market value, so they pay more for the stock then it is currently worth. Is this correct?

The interest payments on the note go out of each participant's account as an interest expense? Is that correct?

No one was paid so there is no stock to buy back from terms.

Any help is greatly appreciated.

In an individual (owner only) 401k plan, is the owner/participant exempt from the required beginning date if he is still employed? Obviously, in solo(k) the participant would be a >5% owner. I can't find specific clarification on this particular type of arrangement. Also, if the owner/participant is exempt from the RBD, if he rolled an IRA account into the solo(k) plan after attaining age 70 1/2, would the IRA distributions no longer be required until the owner retired?

We are being asked to cut a check to pay UBTI tax today. Is it okay to pay this tax with plan assets?

The special Section 402(g)(8) 15 year catch up is available to qualified employees of a qualified organization. Qualified organization is defined as including health and welfare service agencies. Does anyone know if this definition has been interpreted to include ambulance associations or other providers of emergency medical services?

Are there any issues associated with switching from a fiscal plan year (may to may) to another fiscal plan year (july to july) with respect to making a profit sharing contribution. Would you end up with a short may and june plan year before the new july to july kicks in?

You have a safe harbor 401(k) plan effective 10-1-03, so first year is a short plan year. Employees, obviously, are only allowed to defer on income on or after 10-1-03. But what about the sole prop owner? Can he defer based upon entire year schedule C income? Since this income is earned technically on 12-31-03, a literal reading would seem to indicate that he could. But this also produces a result which appears discriminatory, in that rank & file get to defer based upon 1/4 of their income, and the sole prop gets to use 100%. Any thoughts?

Consider the following:

CB = $0

Reconciliation account = $126,000 (due to LY AFC)

PUC NC = $0

412 charges = $12,000

412 credits = $0

AFC = $61,000

ERISA FFL = $0 (UC AL slightly > assets)

90% RPA FFL = $170,000

Min. Req = $73,000 (AFC + 412 charges)

Max Ded = $300,000 (100% of RPA)

Even though I don't get a FF credit, should I wipe my bases out next year due to the application of the ERISA FFL?

If not, assuming all other assumptions are met, wouldn't I need to force a loss bases each year to keep the balancing equation = $0 (since my UAL will be negative?) I guess that once the plan was well funded the AFC would no longer apply and I would get my ffc and all would be wiped out, but the process would look pretty strange to the sponsor.

Or just let the balancing equation go out of balance since my UAL is < $0.

Does anyone know of any companies that may offer some basic fiduciary training or any good articles that address fiduciary responsibilities?

Since there seems to be no reason to have the two plans anymore, I wanted to simplify life and merge the two plans into one profit sharing plan. However, I didn't set up the plan and have no idea about where the original documents are.

What steps would one need to take to: (1) Get plan origination information, if it ever existed; (2) Since it probably didn't, are there remedial steps to take ala communicating with the IRS, etc.; and (3) go merge the two plans once I'm confident they both are above board?

Any help would be greatly appreciated!

Ottrose

Are Employers required to allow for suspension of participant loan payments during military or non-military leaves of absence? Much of the language I have read refers to “if a plan permits” so does this imply that the suspension may be an optional provision in the loan policy? The final loan regulations stipulate that re-payments may be suspended without violating 72(p) but what if an employer's intent is for a person on LOA to continue making the payments while they're out?

Our loan policy addresses both types of leaves and allows an employer to choose whether or not payments can be suspended in either situation. I haven't been able to locate any specific language in the Regs. that says it must be done or if it is clearly optional.

Thanks!

We use the FDP document and in the prototype plan under the 4-step integration section it states, "the first step is 3% of a participants total compensation" whereas the remaining 3 steps use "included compensation". The problem it has created is that we have a number of plans that use the 4 step integration but also use compensation since entry date. So if a participant entered the plan mid-year, can you think of anyway to get Relius to calculate the 1st step on the participant's total compensation and the remainder on compensation since their entry date?

Tim

I will be 59 I/2 0n dec. 30 2005.I started 72t distrib. in Aug. 1999.Will I have to take a full distrib. between 8/05 and 8/06 since my fiscal year ended before dec.?

My head is swimming from all the HIPAA lately... I should know these things but I just can't think anymore...

Does the SPD for a self-insured plan need to be changed to reflect the plan amendment? Or is sending the NPP all you need to do? Can you incorporate the NPP into the SPD, instead of sending both?

Thanks!

We are terminating an underfunded DB plan (< 100 ees) which the ER will make sufficient. Under IRC 404(a)(1)(D)(i), we can deduct up to the unfunded current liability.

My question is whether the deluxe option under 404(a)(1)(D)(iv), where the entire unfunded amount, can be applied if the plan is not subject to the PBGC.

On the surface, the code seems to indicate that a plan must be covered by the PBGC for this to be allowed. However, a co-worker clearly recalls some post-EGTRRA discussion where people felt that a plan need not be PBGC-covered for (iv) to apply.

Any ideas w/b appreciated!!

If a participant takes a distribution for an unforseen emergency, is there any law that says he is obligated to suspend contributions for a certain period? If so, please advise where it can be found. Also, please advise how long the suspension period should be. Thanks.

I have a client that allows employees to opt out of their health coverage if their spouse covers them under another plan.

If an employee opts out, they receive $150/mo.

The TPA administering this plan provided the individuals who opted out of the plan with a 1099-misc indicating the amount they received for opting out in box 6, medical and healthcare payments.

Is this in anyway correct?

Shouldn't the client have included these amounts in box 1 of form w-2 as earned income?

Any enlightenment would be greatly appreciated.

Thanks.

Can anyone provide a cite or a reference that would detail how to handle a error where the participant's # of outstanding loans exceed the terms of the loan policy? For example, loan policy allows 2 loans, participant recevies 3.

I am trying to type up acceptable correction methods for various scenarios, but would like to provide cites and/or PLR or something to support my policies.

I have posted about this issue in a prior post and in that situation decided to deem the third loan. Would you view each scenario differently and either consolidate, allow the participant to pay off the extra loan, or deem the loan? Or, is there one correction method that should apply in all circumstances?