What recourse does an employee have upon discovering that her 401k account is being charged significant fees that were not explained or disclosed by her employer when the employer implemented the 401k plan 6 years ago. She formally requested that the employer (Plan Administrator) furnish a complete disclosure and explanation of all employee-paid fees over 3 months ago, however the Plan Administrator has failed to respond to her request.

About 6 years ago, my friend's employer abolished its pension plan and established a 401k plan. She decided to participate in the new plan, however recently discovered that she is being charged numerous and significant fees that were not disclosed by her employer before she decided to participate in the 401k plan. In fact, to date the employer has failed to fully disclose or explain all employee-paid fees. She is 56 years old, strongly feels that her employer provided incomplete and misleading fee information when the plan was established, and would like to withdraw all her assets from the 401k plan and "roll them over" into an IRA. Two questions: 1) Can she do this without incurring an IRS tax penalty? 2) If so, how??

Sole proprietor will claim SEP deduction on 1040 to be filed before 4/15, but will need the refund and additional time to raise the money to fund the SEP. Second extension at 8/15 will need a reason. How does the following sound?

"Additional time needed to fund SEP under IRC 404(h)(1)(B) and Rev. Rul. 84-18"

Does the IRS even read these things?

Thank you.

Assume an employee worked during 2001, 2002 and 2003. Does the 3-year qualification requirement mean that they do not participate in a SEP until 2004 (i.e. they had to work 3 out of 5 "preceding" years), or do they participate in 2003--the 3rd year of employment? Thanks!

The SPD regs say that the SPD must accurately reflect the provisions of the plan as of a date not earlier than 120 days prior to the date the SPD is disclosed. As long as there are no intervening plan amendments, is it acceptable to put an "effective date" in the SPD that's more than 120 days prior to distribution?

Example: Healthcare plan last amended effective January 1, 2004. Revised SPD in progress, to be distributed July 2004. Language on front page says, "This booklet reflects plan provisions as of ____." Can blank be completed as "January 1, 2004" or does it have to be a date within 4 months of July?

I have a 401(k) Safe Harbor Match (Basic) with non-standardized integrated profit sharing (1000 hour/employed requirement) plan. There are 7 ees, all have been participants for at least 2 years. Two Key/HCEs (owner-spouse) and 5 NHCEs. All 7 deferred more than 4% of salary, hence match >4%.

However, only owner worked 1000 hours, rest over 500.

Owner wants to "max-out" in Profit Sharing. Since the PS contrib negates the use of the SHMatch towards Top Heavy, I must 1st allocate 3% to the Non-keys, then the rest towards the PS (in this case, the owner only).

Does the top heavy PS contrib qualify as "benefitting" in the 410(b) test for the Non-Keys, or must they receive the regular PS allocation formula to be considered "benefitting"?

Thank you,

Dana Regan

I see within a very short time you will hit 90,000 posts on the website! Wow! Who'd of ever thunk it!

Except for problems with attaching files, the site has certainly helped increase my knowledge, and made some friends (even if one of them is a 3-eyed fish).

keep up the good work!

I am preparing forms of model DROs to give to my state bar to use as a form for family law attorneys. Since you all are the experts and since you may have to deal with these, I was wondering if anyone would like to provide any input.

Does anyone else think the Service totally ignored the last part of Code Section 223©(1)(A), reading "and which provides coverage for any benefit which is covered under the high deductible health plan", in the revenue ruling concerning prescription drug coverage with HSAs?

I could buy the description of the legislative history, but the plain language of the statute would allow prescription drugs to be reimbursed in a non High Deductible Health Plan as long as the eligible individual's HDHP didn't cover prescription drugs.

Am I missing something?

If not, any suggestions for responding to the revenue ruling? (At least we've got transitional relief until Jan 2006.)

A sole proprietor wants to establish a qualifed plan, one which he can eventually takes loans from (for daughter's education). While he will fund the plan regularly, the more pressing objective is to roll his (pre-tax) IRA money into this plan and eventually takes loan(s) from this money, as well as from the funded assets as well. Do you see any problems with this gameplan? Thanks

In a 401(k) plan, I have the following situation:

Mother owns 4% (works at the company).

Father owns 4% (does not work at the company).

Son works for the company.

Is the son considered a 5% owner due to the stock attribution of both his parents (4% + 4%)?

I am changing jobs in the near future and I was wanting to know if I can transfer my 401k into a roth ira. Also, if I was going to purchase my 1st home down the road if I could use money from the roth ira and if i did how much of a penalty would I receive. Any advise would be appreciated. THANKS

The subject plan provides that forfeitures of profit sharing contributions shall be allocated to eligible participants as of the last day of the plan year.

Participant A, who is partially vested in his profit sharing account, separates from service, receives a cash out distribution and forfeits the unvested portion of his account. Prior to his separation, participant A had satisfied the requirements for allocation of the company profit sharing contribution.

At plan year end, participant A is allocated his pro rata share of of the company profit sharing contribution. However, since he is only partially vested, he immediately forfeits the unvested portion of this contribution. This forfeiture, in turn, increases the amount available for allocation to ALL participants, including (presumably) participant A.

We are now in a "chicken and egg" loop. We can't determine the total company contribution until we determine the total forfeitures which we can't determine until we know the total company contribution etc., etc. etc. Is there a way (short of differential calculus) to resolve this issue? May we simply decline to allocate any portion of participant A's forfiture to him? May we carry over this forfeiture to the following plan year?

All suggestions will be gratefully received.

What is everyone telling their clients as it relates to the pending (but anticipated) deferred compensation rule changes? I am doing a chat next week to give my views. You can sign up at www.retirementcapital.com.

My employer promised to reimburse me for portion of health insurance premiums I pay to a private insurer, agreed before employment as an agreed benefit. After meeting the 90 day requirement, I approached my employer about starting the $130 per month reimbursement. He said he needed to talk to the accountant and we'd start the next pay period. At the next pay period he said the same thing, hadn't had a chance to talk to the accountant. When asked again, he said the accountant was on vacation for two weeks and we'd look into it when he got back. It is now approxiamately 9 months since being eligible and no reimbursement has been made. Other employees are getting their health premiums paid on private insurance. I recently photocopied the checks that have cleared my bank account which were paid to the insurance provider along with a claim for the unpaid, agreed upon reimbursement. I work for a small employer who has less than 15 employees, actually there are about 9 employees.

My question is: does the employer have a legal obligation to pay these unpaid monthly amounts or am I just out of luck? I'd like to present him with laws or statutes that say he does have to pay, but I have not been able to find any laws or rulings regarding this other than a vague claim that employers do have to pay the benefits they promise to pay.

Also, if anyone in Phoenix, AZ, needs a detail oriented administrative assistant, please let me know...

Thanks for any help,

-Rick

A 401(k)/new comp PS has 1 YOS requirement for the K, 2 YOS for the PS, semi-annual entry dates. Plan defines compensation as date of entry compensation in each portion of the plan. Plan is top heavy. Favored group gets PS contribution >20%.

A new participant (A) enters the PS plan on 7/1/03, gets a 6% contribution based on comp from 7/1-12/31/03. Contribution is just over 3% of 415 comp.

Particpant B is in the 401(k), but not eligible for the PS, gets a top heavy minimum contribution boosted by gateway to 5% of 415 comp.

Do you agree that I don't have to boost A's contribution to meet Gateway because it is over 5% of his DOE Comp, but I do have to boost B's because his comp for the PS is $0?

I have come across a company that is launching an ETF 403(b)7 and I am not sure if this can be done - can it? ETF's technically are not stocks, they are mutual funds with daily liquidity and are registered with the SEC - I would love to hear if any of you know if they can be included in a 403(b)7 product and how I would go about identifying proof that they can be included.

ScottyD

Plan states that forfeitures will be used to 1. reduce plan expenses; 2. restire benefits; 3. reduce matching contributions; and 4. reduce profit sharing contributions. The plan does not state when it has to use the forfeitures for these purposes.

Question #1: Without any specific language in the plan, can the plan sponsor hold on to forfeitures by paying plan expenses from the company and making full matching and profit sharing contributions in plan years that it has the cash, or does the plan sponsor have to use the money in the forfeiture account first?

Question #2: If the answer to question #1 is that the forfeiture has to be used first, then can the plan be amended to allow forfeitures to be used at a date in the future that the plan sponsor decides?

Thanks.

Note: This is a profit sharing plan

Generally, an employer may not exercise discretion over the timing or form of a distribution. However, Treas. Reg. section 1.411(d)-4 Q&A 2(d)(1)(i) permits an employer to retain discretion to eliminate lump sum or installment payment options for benefits that are subject to the put option requirement of Code section 409(h)(1)(B). Does this mean that an employer simply has the right to amend an ESOP to eliminate these forms of distribution, or does this mean that the employer can exercise discretion regarding whether a specific participant can receive a lump sum or installments?

Stated differently, can the plan provide for lump sum distribuitons, but then reserve to the employer the right to make distribution via installments?

HCE received a refund due to a failed ADP test. The refund was made prior to the 2 and a half month period so it's taxed in 2003.

The problem is that the HCE already filed their 2003 taxes and they don't want to amend them. They've already cashed the refund check.

Anyone know if there are any other options to have this taxed in 2004 for this HCE? Can they return the money to the recordkeeper and have them reprocess it using a date after the 2 and a half month period?