I received a message from a plan participant/trustee this morning in regards to his possibly taking out another loan from the plan. The plan allows for up to 2 o/s loans at a time, and has no limitations on the purpose. He was asking about the terms of a loan for the purchase of a primary residence, so I am assuming that this would be the reason for the new loan. The problem is, the loan he took out in 2000 was for 15 years and the purpose listed is "real estate expenses." Since the lengh of the loan was for more than 5 years, I would assume that this is for a home purchase.

Could he take out another loan to purchase a primary residence, even though his first loan is for same? My concern is that he has two loans of the same "type" o/s.

Thanks for your help!

I have heard a number of times that a 403(b) is more preferable to a 457. Can anyone list the top reasons why (or even why not?) Thanks in advance.

I know this has been discussed here before, however every search failed.

Is there a web site that ranks SIMPLE IRA/401(k) providers? For example, which of the big mutual fund companies are the most highly rated?

Topic pretty much says it all....

Former participant in Puerto Rico 1165(a) Plan received a rollover distribution from the plan (in accordance with Puerto Rico Income Tax rules) and wants to roll over into a US 401(k) Plan.

Any guidance out there?

A man and his wife are the only 2 participants (and the only ee's) in a DB Plan. The wife dies leaving the PVAB (the death benefit in the Plan) to her husband. The husband essentially freezes the plan by amending it with a cap on benefits equal to his accrued benefit. No further contributions have been required since he froze the Plan due to good asset performance.

Now the assets have dropped and there is a funding requirement. The two liabilities pieces are his PVAB and the death benefit. He doesn't want to fund. Can he waive the death benefit for funding purposes? That would negate the need for funding. Can he waive any of his AB?

Generally, the YOP for S415 is the same as the YOP defined for a plan.

Is there a problem with defining a YOP >= 100 hours of credited service in a PY?

What's the minimum hours one can use - is 1 hour ok?

A plan has excess assets which are increasing by leaps and bound by the week, so the plan needs to be terminated ASAP. Termination will take place within less than 2 months into the new plan yr.

All participants have <= 5 YOP and increasing the participation, even by 1 yr, would obviously would be very beneficial. Currently a YOP is >=1000 hrs during a PY.

A is a 1% owner. A's comp in 2002 is 200k+, A's comp in 2003 is 140k.

For top heavy determination, A is a key employee for determination 12/31/02. A is a former key employee for determination date 12/31/03.

Is A entitled to a top heavy minimum contribution for the 2003 plan year?

A week ago I transferred $3,000 into a Roth account between mutual funds in the same family. Working out my taxes I realized that this year I did not qualify for the investment because I've spent my time as a student and do not have $3,000 earned income. Now I'd like to remedy the situation with as little trouble (and penalties) as possible. I think the best way to go is to switch it over to stand as a 2004 contribution, but the fund rep said that penalties may still be incurred if there have been any earnings on the account in the last week.

Any thoughts?

One of our HCEs wants to roll his previous 401(k) to our 401(k) plan. Is his rollover account taken into consideration for the top heavy test?

I working my way throug IRC 514 on debt-financed property but not sure if I'm understanding it correctly. Ignoring other reasons why a trustee should not invest in real property, if a qualified trust (plan) purchases real property (improved) and obtains a mortgage that meets the structural requirements of 514©(9) (i.e., fixed price, not depedent on future revenues, no lease-back, reasonable terms..etc..) is the rental income earned on the property subject to UBIT ? There are so many exclusions and exceptions in this code section I'm doubting if I understand it right.

Individual owns 100% of a business, is a sole prop, has no employees, and wants to know the max contribution to make to his profit sharing plan. I have a copy of the Schedule C for 2003, which shows on line 31 net profits. PS contribution not yet entered in the form.

Is the figure shown on line 31 before the reduction for 1/2 of the self employment taxes?

Thanks

I'm interested in hearing from other service providers on the average number of plan sponsor initiated amendments that are completed per plan/per year. I'm also interested in knowing the common reasons for plan amedments that your companies see.

The basic safe harbor match is 100% of the first three percent and 50% of the next two. It is my understanding you can have an enhanced safe harbor match of 100% of the first 4%.

I am reviewing a plan document that is giving a safe harbor match of dollar for dollar up to 5% of covered compensation.

It is my understanding that you cannot have a safe harbor match oformula that goes above 4% of compensation and 6% of deferrals. Is that correct?

Can rental income be used as 'earned income' from self-employment to establish a retirment plan for a sole proprietorship?

Thanks

Jane

CAn Rental income be used as 'earned income' for a sole proprietir to establish and contribute to a SEP?

Thanks

Jane

If an employee begins an FMLA leave, can the employee reduce his/her benefits and/or benefits coverage level (but not drop it completely) during the leave?

If yes to #1, when the employee returns to work, are the benefits reinstated at the same type and coverage level that the employee had before the leave or must he/she continue with the "reduced" benefits for the remainder of the plan year?

I know the FMLA has a pretty clear rule with regards to allowing an employee to drop his/her entire benefits package during the leave, but not sure about simply reducing.

Thanks!!

Employer has 2 locations, City 1 and City 2. Employer wants to implement a 401(k) Plan for City 2 employees only and exclude City 1 employees. Plan will pass the participation/coverage requirments. For ADP testing purposes, do the City 1 employees need to be included in the ADP tests if they have satisfied the statutory eligibility requirements? If the employer decides to implement a safe harbor 401(k) plan, would the City 1 employees be excluded from receiving the safe harbor nonelective contributions?

How long can an inactive participant defer 401k / profit sharing plan loans without making payments or receiving taxable distributions?

Will the loan keep accruing interest until the loan (principal and interest) reaches the market value of the account?

Participant left employer in 1999 with a 19K loan balance (4 loans total).

2 participant loans on the Money Purchase Plan*

2 participant loans on the Savings Plan*

Participant was not in default at termination as loan payments were deducted from pay.

* PDF (partial plan documents attached for both plans)

Participant has never made a payment since 1999.

Participant has never received a distribution from plan.

Participant has never received cummunication from plan indicating a loan default (deemed or offset).

Its reasonable to expect that a distributable event should have occured after termination - but nothing happened.

To this very day, the participant's 401k statement only shows the principal loan balance of 19k (and does not indicate that interest rate nor the amount of accrued interest). Participant never saw interest accruing on the 401(k) statement and therefore did not take action to pay off 19k loan.

During a phone call today, the participant discovered that the loan interest has been accruing at 8.25% and has accumulated to over $8,000 of interest for a total of $27K due).

The total account value is worth 36K (with 27K representing loan principal and accrued interest).

Participant is upset that the quarterly 401(k) statements failed to disclose this growing debt.

Savings_MMP_Plans.pdf

How do people handle making minimum required distributions (mrd) from qualified plans to participants who are no longer employed by the plan sponsor on their required beginning date (rbd)? Do people just wait for the participant to come and ask for the mrd? (Many plan sponsors I have spoken with take this approach since the excise tax is levied on the participant). This seems to be an incorrect approach since 401(a)(9) of the Code state that the mrd "shall" be distributed... And, the EPCRS program provides for correction of this operational failure...

If plans are making the mrd at the rbd, what do they do when the check is returned because of an out-of-date address? Do they then use a commercial participant locating service? If no luck there, do they use the IRS forwarding service? How far do you have to go to comply with the "shall be distributed" requirement in order to keep the plan qualified?

Any thoughts would be appreciated.

Ron

Facts: Bob and Sue get married. 10 years later, Bob undergoes a gender reassignment process and becomes Mary. Sue comes to work for you and wants to add her spouse, Mary, to your medical plan. Counsel advises that Mary is still the spouse under terms of your plan as the marriage still appears valid under applicable state law, as there is nothing in the trans-gender process that would otherwise invalidate the marriage.

Issue: The Defense of Marriage Act defines "spouse" as a member of the opposite sex.

Question: What are the federal tax implications of the gender reassignment for your 125 plan? Is there imputed income for the employer paid premium? Must employee contributions for dependent coverage be post tax?

Is your analysis different if both spouses work and Sue is the primary income earner, if Mary is the primary income source, or if Mary does not work?

(Your plan permits same sex domestic partners and the tax consequences of this arrangement are known. Your plan permits a continuously disabled adult child dependent to be enrolled, but no other adult who is not a spouse or DP.)

Looking forward to your insights on this situation.