I have a 74-year-old 403b participant that is currently taking RMD from an IRA. He is currently working and contributing to his 403(b). He would like to roll his money from the IRA to the 403b and cease taking RMD.

There should be no problem with this considering that EGTRRA allows for pension portability and money rolled takes on the characteristics of the new plan.

Where does it say that?

The IRA company will not roll the money until it is proven.

Any help would be great!

We have a situation where an employer would like to increase the max coverage for organ transplans from 100K to 1 million, but wants to limit it in that employees who have had a transplant or who are on the list to receive a transplant fall under the 100K limit. This seems to violate Regulation 54.9802-1T(b)(2)(i)©. Does it? Or is this acceptable? Thoughts?

If I have several more than 5% owners who earned less than the HCE dollar threshold in the lookback year, and I want to apply the top paid group election, I believe the owners are still HCEs. If I have nine HCEs by ownership and compensation, and I have 23 total employees, what is the # I include in the top paid group?

A plan that uses the EAN method for funding is amended to enhance everyone's accrued benefit to date by giving an extra year of servce - this type of amendment is utilized frequently with "window" programs for a targeted subset.

Question : we are accustomed to defining the amendment base as the difference of a "before" vs "after" EAN Accrued Liability where the Accrued Liability is defined in terms of the projected benefit ; but where the amendment deals with an accrued benefit, I'm not sure how the base should be defined ?

Any thoughts are appreciated !!

We currently give our field reps auto allowance checks ranging from $400 - $600 per month depending on the size of their territory. With the increasing cost of gas, they are asking for an increase. Does anyone know of a website which compares company allowances or a method of calculating allowances fairly? I understand the reps concerns, however, I also don't want to be paying more than I have to.

For all you QDRO experts, this may be old hat, but I found it interesting. ( I believe it was by someone named Tony Novak but I'm not positive about that. However, I'm unable to access this PLR, and when I do web searches, I come up with this one and another with the same # (the other one supposedly deals with minimum distributions.)

First, is the number listed correct, and if so, do you know where I can access a copy? Second, if not correct, do you know the correct number? And finally, do you have any experience with this type of QDRO, and are you aware of more people using it? Thanks!

The IRS recently approved a qualified domestic relations order (QDRO) in a divorce settlement that surprised tax planners and was previously thought to be not possible. Typically a QDRO is used to divide a retirement account between divorcing spouses without having the retirement plan lose its tax-advantaged status. A retirement plan can normally not be used as security for a debt. If this happens, the amount of assets in the retirement plan could be disqualified and become subject to immediate taxation plus additional tax penalties.

But in this case, a spouse wanted absolute security for money that was owed to her by her spouse, but the couple did not wish to liquidate his retirement plan. The local court issued a QDRO securing the debt with the retirement plan and the IRS approved of the arrangement. (Letter Ruling 200252097). The IRS reasoning that was the QDRO allowed under Section 401(a)(13)(B) override and satisfies the anti-alienation restrictions that normally prevent a retirement plan from being used to secure a debt.

The implications for tax planning are significant. Frequently a divorce settlement necessitates the liquidation of assets like a house and other investments. Even in situations where one spouse has a strong likelihood of high future earnings, these future earnings normally are not usually useful in negotiating a secure divorce settlement. The letter ruling allows a spouse to say "Instead of liquidating our (pre-tax or tax deferred) investment assets that we prefer to continue to use and keep intact, I will pay you $xx dollars per month from my (after-tax) earnings and my promise to pay will be secured by a court-issued lien on my retirement plan account." From a tax planning perspective, this strategy allows the couple to postpone otherwise taxable events and continue to benefit from tax-free compounding of internal value of assets. There are numerous other planning possibilities. The ultimate effectiveness of this tool will be determined by divorce attorneys' willingness to complete non-cash settlements that are based on secured promissory notes between spouses.

An old PS plan that has had no contributions for years is going to terminate. The client has another plan (I think DB plan). Does he have to offer the participants the option to roll their $ into the remaining plan if they want?

Plan has a prototype document from a major brokerage firm. The brokerage firm is the "custodian." The plan sponsor missed the GUST deadline and has filed under VCP to get approval for the late-adopted document. Meanwhile, the brokerge firm has "frozen" all plan assets and will not make any distributions to the participants until the plan sponsor receives IRS approval of the document. What authority does the brokerage firm have in this matter? The letter of understanding betweenthe plan sponsor and the brokerage firm states that the brokerage firm has no administrative responsibilities.

401(k) Plan established in 2001 with a discretionary profit sharing component. The Board of Directors voted to make a profit sharing contribution for 2001. No employees made 401(k) contributions in 2001. When the plan was amended and restated for GUST the TPA used a plan effective date of January 1, 2002 (they say because there were no contributions for 2001). (the search for a new TPA will be done soon)

Problems with CFO, CFO leaves in late 2003 and new CFO in early 2004 finds that the 2001 contribution was not made, the plan amendment was never signed (no Board votes authorizing the amendment and restatement) and there was no 2001 5500 because the TPA says there was no plan in 2001 although we do have a signed document.....( we will use DFVC to address the 5500 issues)

Company wants to make the missed contributions plus earnings. Any thoughts on using EPCRS to get the IRS to bless the profit sharing contribution issue since we have to go in to address the failure to timely amend.

Plan is a standardized prototype. Company is a small 501© that wants to do the right thing. Thank you in advance for comments.

When designing a plan, do many of you use a match formula more often than others? Recommend one over another? (I realize there are certain variables that dictate what a plan's formula should or could be) Have you found certain formulas (besides SH formulas) are better with regards to passing non discrimination testing? Finally, what is a good source for plan design?

Thanks!

I am relatively new to 401(k) plans and had the following question, please excuse my overall lack of knowledge.

A 401(k) plan defines compensation as W-2 wages increased by elective contributions. John Doe employee receives $30k compensation of which $5k is bonus pay. The $5k of bonus is not deferred against. Is this a violation of plan provisions? I am having trouble finding any guidance, thanks in advance for any assistance.

The insurance company sent a certification as an attachment to schedule A. Has anyone ever included an attachedment with the schedule A?

Someone in my office asked me about this document this morning and I wasn't familiar with it so I told them I would try to locate it. I'm not even sure who produced it. All that they can remember is it being called "27 Reasons to Use Current Year Testing." Does this sound familiar to anyone?

Thanks,

Tim

my client has a ps plan-he is 100% owner. his two sons are in school to become dentists and also working at the practice. they just became age 21 in and are eligible to participate in the plan. they are considered hce's because of attribution and are completely throwing off my testing (super integrated plan). i don't necessarily want to do an election not to participate because one or both may come to work at father's practice once they graduate. what to do?

thanks for any help...

Do I include the o/s loan balance in Line 2e when a participant terminates, takes a distribution and does not pay the loan balance off?

Also, is interest paid on participant loans included as part of the gains on 2c?

Thanks

Much was swept into s. 1637 Tuesday, except any provisions directly impacting COLI. My highlights or lowlights of the proposed JOBS Act added provisions pertaining to deferred comp plans include the following: [nitpicking welcome]

-- Deferred compensation elections must be made in the year before services are first performed, though the proposed bill retains the 30 day grace period provided for new plan participants & their subsequent service.

-- If "financial health of the employer" triggers are utilized in the rabbi trust a 10% penalty will be applied to those assets not fully subject to creditor risk as a result of the trigger.

-- Investment options in the deferred compensation plan must be "comparable" to those offered in the employer's qualified plan with the fewest number of investment options.

-- Accelerated payments are only allowable for reasons of severe financial hardship or change of control. One "second election" by a partiicpant is allowed to change a scheduled distribution date if made 12 months prior to the original payment date and the distribution is postponed for an additional five years

-- Change in control payments to corporate insiders are delayed for one year, and are treated as "excess parachute payments" subject to the limitations of Code Section 280G.

-- Current taxation is imposed on any exchange of options or other forms of compensation based in employer securities for the right to receive deferred compensation.

-- Generally, these new rules will be effective for deferrals made in taxable years after December 31, 2004.

-- Deferrals made prior to 1/01/2005 (and earnings thereon) would be eligible for grandfathering under the current DCP rules.

Tom

A plan uses balance forward accounting, end of plan year sole valuation date, no interest credit after valuation date, and provides for distribution of accounts as soon as administratively feasible following a one year break in service.

Accounting and other information necessary to complete the prior year valuation provided very late in the year resulting in filing of return at extended deadline. Valuation report, participant statements, and distribution packages sent shortly after 10/15 to plan sponsor for distribution.

People, particularly terminated participants move around and don't always leave their forwarding address with prior employers. Some participants are reluctant to pick up Certified mail not knowing there is money for them thinking it is a collection effort by a creditor. Mail time from the administrator to the client, more mail time from the client to the participant, Thanksgiving, then Christmas and it is year end again and another valuation date goes by, so the amount reported in the distribution package as of the prior valuation date is now incorrect and the participant has not completed all necessary election forms assuming the balance was in excess of $ 5,000. In previous years with constant market value increases, it usually meant the participants would be paid out on the prior year valuation and then the additional gain would be paid out the following year. That is until the market fell into full retreat. Asking a termianted participant who was paid out on the prior year balance to repay 20% to 50% of his distribution because he was paid after the next valuation date is a waste of time and effort. There is no discrimination in favor of HCE's and none of the effected participants are at NRA under the plan.

Since the plan distribution date provision reads: "Designated distribution. As soon as administratively practicable in the first plan year after participant incurs a one year break in service following the Participant's Separation from Service" does it seem reasonable the Regulators would claim the Plan Sponsor/Trustee failed to timely distribute assets to participants who had terminated and has breached his Fiduciary duty? Where does one find guidance on exactly what in included in "as soon as administratively practicable"? The Regulators are claiming subsequent distributions were based on an incorrect valuation date.

The problem lies in that the initial distribution election forms were for 12/31/2001 and unfortunately for the terminees, there was a significant decline in the value of plan assets between 12/31/2001 and 12/31/2002.

The Catch 22 is the terminated participants who were not paid before 12/31/2001 and were paid on 12/31/2002 account balances are complaining and calling the Regulators. If this group was paid after 12/31/2002 using 12/31/2001 balances, active employees would be complaining and calling the Regulators.

I have a client that is a controlled group of companies. A new company will soon be added to the controlled group. Currently all companies are covered by one plan document with immediate entry. The plan is also cross-tested. They are wanting to exclude the new company from the plan. However, it looks like they may have a hard time passing 401(a)(4) non-discrim if they do so. I am thinking of suggesting they implement a year of service for plan entry just for the new company. Due to the expected turnover in this new company this would eliminate any testing issues.

I would appreciate any other comments or suggestions on plan design for this situation.

is there anyone out there that discloses asset based fees in the spd? i am referring to fees for admininstration, record keeping or even investment advisory fees.

I have a fully insured group health plan. The group health plan currently only receives summary health information, enrollment and disenrollment information. With this arrangement HIPAA Privacy rules exempt a group health plan from administration requirements.

If an employee comes to the plan administrator requesting help with a claims issue and the plan administrator receives protected health information, the group health plan will be subject to the administration requirements. Can the group health plan get out of these requirements by requesting the employee to sign an authorization form to use and disclose the employee's PHI to resolve the claims issue?

Thanks.