Thank you in advance for guidance:

Is it permissible for an employer to make non-elective contributions to employees based on seniority, where the employees with the greatest seniority will receive a larger percentage contribution than those employees who are newer to the not-for-profit organization?

The employer wishes to provide appreciation to senior staff members as well as encourage newer employees to remain with the organization, but the employee is concerned about possible discrimination to HCEs.

Currently, there are very few HCEs and a great number of NHCEs, but the HCEs tend to be those with seniority.

Any help or guidance is appreciated.

For example, as a viatical settlement.

When the insured dies would the money just go into the Trust and then be investment gain, taxed as ordinary income when distributed?

I just received a plan that purports to be a 457 (f) plan of deferred compensation. The exhibit to the Coprorate Resolution setting up the Plan states that the Company will set up an account with $1,000,000 in it in order to pay the deferred compensaion of participant P. D.. The company will purchase $1,000,000 in deferred annuities in the company's name and pay P.D. the earnings of the $1,000,000 at the vested intervals of 5 yrs-50% and 10 years-100%. If P.D. quits in less than 10 years, then all is forfeit.

Is this plan funded or unfunded?

A client was just told by his financial institution that he overcontributed to his Roth IRA for 2003. It is past his tax filing date. I understand that he can apply the excess as a contribution for 2004, but is the 6% excise tax still applicable?

Our 401(k) uses safe harbor for hardship withdrawals. For requests made on account of medical reimbursement, is there any timeframe in which the expense must have been previously incurred? For example, can a participant currently (May 2004) submit outstanding bills from services rendered in 2002 and early 2003? The plan document (Corbel non-standardized prototype) appears to be silent as to the timeframe in which expenses must be incurred, and our Administrative policy does not address. Any guidance would be appreciated.

A loan agreement provides that upon termination of employment, the balance of an outstanding loan will be offset. After the offset, if the participant's remaining account balance is $5,000 or less, can this remaining amount be cashed out?

The answer could be "Yes", because the look-back rule for determining cashouts is gone. Do the offset in May and then pay the cashout in June.

The answer could be "No" because under Reg. 1.72(p)-1, Q&A-13(b), an offset is an actual distribution for purposes of the Internal Revenue Code. If that is the case, then the participant can't be forced to take out a distribution which is less than $5,000.

Any thoughts (please!!) on which is the correct answer?

We have a design-based safe harbor 401(k) Profit Sharing. It requires a 3% safe harbor employer contributions and permits an annual discretionary profit sharing contribution. WHat tests do we need to perform? I believe we need to test for Top Heavy status because of the discretionary contribution. What does this entail and is there anything else we need to do?

I'm getting conflicting answers--thanks for the help.

Is the 15 day notice required in the case of an incorporated 1 life DB plan that employs only the owner?

Clearly an "owner-employee" plan is exempt but our legal people are hesitant to extend this to a corporation due to some concern over some part of regulation 2510.3-3(b).

Has anybody looked at this?

I know the EOB says that plans eligible for 5500-EZ are exempt and the EZ instructions clearly allow such filing by a 1 life owner employee corporation so that is one bullet in my gun. I'm looking for more ammunition. Thanks for any help.

Assuming a 401k plan passes 410(b) and 401(m) testing, could you design a plan so that certain groups of employees receive one level of match while other groups receive a different level (i.e. group A - 100% on first 4% of comp. and group B - 100% on the first 2%)?

Plan sponsor is paying out terminated EEs. Broker is going to generate 2 checks for each EE being paid lump sum.... one is vested balance, other is withholding. The client is telling me that his regular bank will not receive the tax deposit. What are his options for making the tax deposit? (this financial institution will not make the deposit for him) Can it be mailed to the IRS with a coupon?

A Registered Investment Advisor performs the buys and sells for retirement plans. Up until now they have been “eating” the charge for mailing out confirmations of trades charged by the broker/dealer back office. They wish to start passing this charge along to the retirement plans.

Does anyone have an idea on how to charge a fee to the specific individual(s) for the transaction(s) as a whole? I do not want to post it as a normal fee to all participants in the plan since only those involved in the transaction should pay the fee.

I have talked with Relius support and they do not know of a way to accomplish this.

Profit Sharing plan had 11 eligible participants at begining of Plan Year. At 12/31, the following occurred.

2 eligible HCE's

2 eligible NHCE's

7 Terminated NHCE's

1 Terminated HCE

Question is regarding vesting. Should the terminated particpants be given 100% vesting?

Thanks.

We have a plan that has over $100,000 in Israeli Bonds as an investment. Does anyone know if these would be classified as "Qualifying Plan Assets".

I have a client interested in a single life DB plan. I am a DC kinda guy and don't have a lot of DB experience. Can anyone provide information on this product?

I am trying to quantify what makes this possible, what could prohibit this type of plan, and generally any information I can gather.

Any help would be appreciated!

Jim

If an employer establishes a wellness program and offers a "reward" in the form of cash or cash equivlency (e.g., a gift certificate) is the reward includable in gross income?

Thanks in advance!

Hospital maintains defined contribution plan and a 457 plan. Both plans constitute governmental plans, as that term is defined in ERISA. We had advised client it was exempt from Title I of ERISA (except for trust requirement), etc. Consultant has now advised client that it should voluntarily ELECT to be covered by ERISA in order to obtain protection of 404©. Can a governmental plan "elect" to be covered by ERISA?

Can anyone point me to recent revenue rulings or other guidance that addresses whether an employee separates from service when he works for years at an agency, terminates employment, and comes back the next week as an independent contractor? I work for a state agency, and our employee is a member in the state's defined benefit plan. We believe there was separation from service and that the employee should be entitled to a distibution from the plan. However, the plan is saying there was no separation from service. Thanks for any information you can provide.

a bank has maintained a psp since 1987 and it was updated in 2003. current assets are right at 1 million, annual contributions are appx. 100,000 and some new HCE's will become eligible this year.

the bank is currently under a "cease and desist" order from the federal examiners and has been in work out mode for about one year. prior management has been released, new management is in place and progress has been made.

a few questions: 1) could the bank make use of the current profit sharing plan to purchase bank stock as a plan asset? would there be any limits to manage these purchases? 2) they are also exploring as an option a leveraged ESOP or KSOP, would the "cease and desist" negatively impact the options under this type of plan, especially since it would be leveraged?

basically the bank officers and the board want to establish a mechanism to issue and control voting rights for the controlling interest shares of the bank. the current number of shares outstanding is 200,000; 16,250 shares are currently owned by the board members; the current share value is $65; book value is $62.25; number of shares needed to maintain control of the bank by the board via the plan is 51% of the 200,000.

thanks.

Situation is this: a DC "plan" (I use this term loosely) was established in the late 90's by a dot-com ER. It does not even have a plan document so obviously no determination letter exists or was applied for, although there is a formal trust document with basic terms for ER contributions. The ER made about a year's worth of contributions to a bank account set up for the trust but then went belly-up soon thereafter. Former EEs recently reappeared and want funds, but the bank won't distribute monies without authorizing resolution.

Any suggestions as to how this debacle should be handled? What would termination procedure be? Would going to the Service to try to straighten this out be more trouble than its worth? As always, any thoughts are welcomed and very much appreciated.

We have a plan that is being sponsored by an S-Corporation and has a participating C-Corp as part of a controlled group of corporations. If the owners of the S-Corp are working and being paid from the participating C-Corp, which is also owned by the same owners, can they participate in the Section 125 Plan? Does the fact that they are more than 2% owners of the S-Corp preclude them from participating anyway regardless of where they are being paid? They will not receive any compensation from the S-Corp.

Any help would be appreciated.