I am looking for a plan document provider who has a document for a government plan - preferrably a Prototype, on a per document basis. I have a inherited a small Govt. plan for which the prior TPA used a regular prototype DB by overriding certain non-applicable sections, such S417(e)(3).

Someone, please confirm my thoughts on this senario:

I converted a traditional IRA to a Roth IRA, over 5 years ago at $10,000.

Today, the Roth is worth only $8,000.

May I withdraw the $8K without owing any penalty, or taxes?

Thanks for your help.

I understand that there are two "reasonable" ways to calculate earnings on refunds for ADP test failure. I understand the "gap" method where you just take 10% of the earnings rate for the plan year times the number of months in the gap period, where before the 15th of the month you can essentially round down the number of months and after the 15th you must include the current month when counting. The second method, we call the fractional method, where you calculate the earnings for the gap period up to the time you do the distribution. We have also used the 15th as the break point so before the 15th we use the earnings to the end of the last month. Is there any real guidance when using the fractional method? Can you just calculate the earnings rates up to the day before you do the distribution, and use that as the earnings for the gap period?

Does anyone have a form that they use in the event that someone who was receiving minimum distributions can fill out to stop receiving them? Or one where they can elect either way?

Thanks so much!

A new plan effective January 1, 2003 is adopted December 15, 2003.

According to PBGC instructions, the first premium is due 90 days after the plan is adopted.

What is the premium?

Since this plan does not have an initial liability, there is no unfunded vested liability at 1/1/03 - so the variable premium is $0.

Is there a flat rate premium? Since all employees became participants on 1/1/03 (there were 0 participants in the prior year), can they be excluded from the flat rate premium?

If a participant is due only $15 as her vested interest, is this distribution subject to the same consent rules as a $3,000 distribution? I realize it is exempt from withholding, but it seems bizarre to have all that paperwork for such a tiny amount. Is there any exception here? What is the normal TPA practice in this case? Thanks for all input!

5500 was filed with a contribution amount that was higher than what was deducted on tax return. Please tell me this is a simple amended return issue. Will the IRS/DOL levy any penalties or fines in this case? The accountant's provided me an amount than changed it just prior to filing becuase the client didn't have the cash flow to support it. Didn't tell me of course. One person plan so redoing allocation is not an issue...

Is a stepchild considered the same as a child when it comes to ownership attribution rules (Code section 318)?

We're wondering if a stepchild of an owner would be eligible to participate in the cafeteria plan (they are also employed at this company). It clearly states that a "child" could not but is a stepchild the same?

Thanks,

Rachel

I have a client that had a 401(k) Simple plan for 3 years, then amended it to a 401(k) safe harbor plan for the next 2 years. Now, the plan is no longer safe harbor and is subject to the ADP test. Regulations say that a safe harbor plan uses the current year testing method. The client wants to now use the prior year testing method. A plan cannot be amended to use the prior year method until it has used the current year method for 5 years. Could the 3 years the plan was a Simple 401(k) (and not subject to testing) count towards the 5 years?

Hello-

I had a traditional IRA (say about $5k) that I converted to a Roth in 1998. I did the conversion where you can split up the cost over a number of years(4-5 years I think). At the time, the IRA was with Invesco. A few years ago, I moved the Roth IRA from Invesco to my current brokerage firm (TDWaterhouse). So, now I have a Roth IRA account at TD Waterhouse. I’ve added about $1K to it in 2002 but I have not added much to it other than that (preferring to focus on my 401k).

Here is my question: I’d like to get my hands on the money I contributed to the Roth IRA. Does the fact that I did the conversion complicate this? How do I determine how much of the $ I can take out without any type of penalty? Is it just the exact amount I contributed (even pre roth-conversion) or is there some other way to figure it out?

Thanks for any help you can provide…

Clocker

An employee elected to opt-out of the plan a few years ago. Not sure why, but for 2003 this same employee attended an enrollment meeting and decided to make an elective deferral agreement and started participating. This went on for a few pay periods (until employer noticed) and deferrals were stopped.

I'm not finding a lot on this subject. Could this be classified as a true mistake of fact? I'm looking for a way to get the money out of the plan.

Stan P/S Plan. Corp has 4/25 fiscal year. Plan is 12/31. Corp makes deduction for corp fiscal year 4/25/04 in July, 2004 for the Plan Yr ending 12-31 04 (per Code Sec. 404(a)(3)).

Plan uses fiscal year for compensation. May a date other than 12/31/04 be used as the allocation date (such as corp fiscal year-end of 4/25/04, or 12/31/03)?

The question arises because the client does not want to wait for 6 months to make the allocation.

In a partnership where the % ownership is different for Profit and Capital which % do you use for determining your key employee status?

May a qualified beneficiary (the mother) who had family coverage under an employer health plan elect COBRA coverage as a result of the employee's (the father) termination of employment and add a dependent (a baby born in November, 2003) that the father forgot to add either during the HIPAA special enrollment period or during the open enrollment period? The mother currently is covered under the employee's family coverage, as is the couple's first child. The second child (unfortunately) is not currently covered.

I think the answer is NO, until the next open enrollment comes around.

The plan permits enrollment of a new child (retroactive to the date of birth) in accordance with HIPAA and permits change of status elections within 30 days of the change of status. The question is whether the employee's voluntary termination of employment constitutes a change of status that would permit the mother to elect family coverage for everyone (no difference in cost and no difference in family coverage for three or more family members).

We are considering items like free cholesterol screening, free programs like weight loss, smoking cessation, perhaps premium discounts for trying these programs. Is this covered by ERISA? Do we need a 5500?

Besides the usual answer "Because its the IRS"

under what conditions does the following instruction apply:

This is for the 5500 count, lines 6 and 7 definition of participant

1. Active participants.....the last line says

(b) former employees who have received a "cash-out" distribution...

now, much less why a former employee would be considered an active employee is beyond me.

item 3 is for 'other retired or seperated employees entitled to future benefits'

a cashed out ee is not entitled to future benefits

so under what condition would someone even try to include someone who was cashed out?

I retired on 1/2/04 from the federal government on an early-out, buy-out. Can I contribute to an IRA in 2004 using the buy-out money? Can I use that money to contribute to future years' IRAs? Can I use the money I received for my annual leave payment for IRAs? Thanks

If a client sets up a Safe Harbor 401(k) using the 4% match formula for 2005, both the acp/adp tests are passed, correct? Example- 2 owners 10 particpants. Owners defer and one participant defers. If the 4% match is given, auto passage of both the adp and acp test, right?

Let's say that the employer has been rolling FSA forfeitures from year to year, and now has a significant amount in the account ($100,000 +).

Can the employer take those funds, and move them into general assets, even though the Plan has not been terminated?

I know the reason behind sending 2004 1099's for excesses done before 3/15 for the 2003 plan year.

But does anyone have anything wriiten they might send to their clients explaining this? I've explained it to the Plan Administrators and a few HCE's, but I'm having trouble composing a written answer. My letters are either too lengthy and technical or too short and vague. I'm trying to find a happy medium.

Any help would be appreciated.