I have a plan that is failing the ADP test. The client wants to know the refund amount. I was about to calculate the refund and the earnings, but after a discussion with a colleague, I now have the following question: Are the earnings to be calculated on the 401(k) monies only or each particpants total account balance including other money types. My opinion is to use only the 401(k) money type. My colleague think it should be total account balance. I checked the ERISA outline (Good Old Chapter 11) and it says that there is no definite answer, just be consistent. I still do not know which method to use.

Any help would be greatly appreciated.

Hypothetical: Joe Schmo is in two different 401(k) plans with two different recordkeepers. He exceeds his ED limit. Are there any rules or guidelines on where the excess deferral refund should come from? He is active in both plans.

I've printed off the PBGC website material about distress terminations. The material includes a note that the contributing sponsor(s) are liable to the PBGC under ERISA section 4062(b) for the total amount of unfunded benefit liabilities under the plan. It was my understanding that if the company has a negative net worth, the sponsor would not be liable for the unfunded liability. Is that correct?

The employer will be demonstating that the distress termination is necessary because otherwise it would not be able to stay in business due to the financial strain caused by the DB plan. Any pointers anyone can offer would be appreciated.

Has anybody had a situation where a CPA filed a client's tax return in March, but the cleint won't have the money to fund the retirement plan until the extension date? Apparently, the CPA didn't realize that the client didn't have the funds available now, so the return was filed. How would you fix that?

Has anyone experienced a situation where no test was done for 2002 because the plan had no highly compensated employees eligible? In 2003 the plan was amended to allow highly compensated employees to participate. Since no test was run during 2002, as the plan was deemed to pass, how should we handle the non-highly average for the 2003 test using the prior year testing method?

Okay - obviously this is a medical practice.

Plan Sponsor has pre-funded the contribution for the plan year for 6 groups and has specified the allocation for each group (it was specified by the plan sponsor on the check stub each time a deposit was made). Plan fails nondiscrimination testing based upon this specified allocation.

Is it permissible to reduce the allocation for a specific group or groups until the nondiscrimination testing passes and hold the amount of contribution not allocated for that specific group in suspense to be used for the next plan year?

415 and 404 are ok. I'm just concerned with the fact that each time a deposit was made, it was specified for each group.

Thanks!

Any way to log in anonymously to post a question? "Paranoia runs deep"

A 401(k) plan with self-directed accounts is switching from a corporate bank trustee to self-trusteeship, with a corporate custodian of assets. The custodian refuses to take on one of the participant's investment interest in a real estate limited partnership (RELP), due to the fact that the liability of the limited partners can exceed their contributions to the partnership.

The RELP is essentially defunct and the participant's interest has no value.

Can he roll the investment out of the plan to an IRA? He is not yet 59 1/2 but wouldn't the "tax" on the transfer be equal to 20% + 10% x zero?

Any comments welcome.

a hotel management firm offers its thousands of employees a 401k with no match. its kind of a "its there if you want it" plan. of the 1400 plus eligible NHCEs only 96 are actually participating. so obviously the miserable participation rate forces the sole participating HCE refunds each year. last year he was only able to defer 3282.19 and that includes the 2000 catch up. his comp was 97000 and he receives a refund each year. obviously he is not real happy about it. his refund for 2003 was 2030. anyone have any suggestions for this poor guy. he is 64 years old this year and i am real sympathetic towards his situation, but im strapped by the Nondiscrimination rules. outside his IRA does he have any options? would a private letter ruling be a waste of time? could Portman-Cardin savers match legislation benefit him if it is passed? on behalf of this lonely HCE in a 401(k) filled with non participating NHCEs, i thank you.

US Company w/ a 401k that allows rollovers by participants from prior employer plans recently hired X. X previously lived and worked in the United Kingdom for a UK company and particpated in that company's "qualified plan." X would like to rollover his plan balance from the UK plan to the US company 401k. (I do not have details of UK plan re: distributions/rollovers but assume that is not a deal breaker) Is there a "simple" answer or useful resource available on this situation??? Would the answer be any different if X established an IRA to receive the UK rollover?? THANKS for any guidance.

Can a governmental employer have a Cash Balance plan? The employer currently maintains a DB plan with mandatory ee contributions. They want to convert to a CB plan and also start a 457 plan.

Is there any reason that a government employer could not set up a Cash Balance plan? The employer currently maintains a traditional DB plan with mandatory employee contributions. They would like to consider switching to a CB plan for employer contributions and a 457 plan for employee contributions.

Hello All,

I have been confused the last couple of weeks in administering DC plans where participants/owners made catch-up contributions and also wanted to maximize their annual addition limit.

For example, if a participant/owner is age 50 or over, and the participant deferred $14,000 for the year ($12,000 + $2,000 catch-up), could the participant get $28,000 PS or $26,000, assuming he/she meets the cross-testing, safe-harbor and other legal requirements. I was under the impression that even though a catch-up contribution could be made, the annual addition was still $40,000, not $42,000, as some have suggested to me.

Can someone please help me?

Thank you.

Don R. Levy, is looking for an individual or firm to write a chapter on Code Section 529 plans (about 20 pages).

If interested, please contact Don directly at (914) 723-7552 or e-mail Don at DONRLEVY@aol.com.

Spouse of employee is incompetent but no legal guardian has been appointed. Employee wants a distribution from defined benefit plan (electing out of QJSA). Can the plan allow for this distribution without spousal consent?

I'm not sure if this has already been posted somewhere, but can someone please shed some light on the difference b/w ERISA and Non-ERISA 403b plans? Also can a Non ERISA plan be converted into a ERISA plan? what would be the draw backs if any?

An employer sets up a rabbi trust for purposes of a SERP they have in place.

Can this employer, when calculating their NPPC for Fas87 take an expected return on assets for this rabbi trust they have set up?

Thanks!

I just took on a new client and I'm trying to determine the filing requirement for 2002. It is a 401(k) profit sharing plan and the original document was effective 1/1/2002. The sponsor did nothing in 2002. He never established an investment account. He never gave the participants any notices or spd's. There was literally nothing done. Finally in July of 2003, he established an investment account and rollovers for 5 participants were deposited. There will be no other activity for 2003.

My question is, does he have a 5500 filing requirement for 2002?

Tim

A plan failed the ACP test for the 2003 plan year. The test was completed by 3/15 and the employer would like to make refunds by 3/15. However, the employer will not be making the matching contribution until sometime later in 2004. How is the ACP test corrected. For continuing participants who already have a match balance as of 12/31/03, there is money from which refunds can be made. But for participants who are receiving a match for the first time, there is no money from which refunds can be made. Any suggestions on how we handle this?

I've searched the forum and can't find the answer to this question.

We are amending our COBRA notices and SPD and have reviewed the

DOL's model notices. In that notice, the term "enrolled" is used in relationship to Medicare and qualifying events. The law uses the term "entitled".

Can anyone explain the difference between enrolled, entitled and eligible?

If a person is on COBRA and becomes "eligible" for Medicare but does not

actually "enroll", can COBRA coverage be terminated? Or does the person

have to actually have the Medicare benefit?

Thanks for your help.