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.

Fiscal Year employer (3/31). Has had a SIMPLE Plan for a few years, wants to start a DB Plan for this year end, 3/31/04.

As I understand it a SIMPLE plan has to be a calendar year plan. The ER contributions made for the year ending December 31, 2003 should not be an issue - could remain in the SIMPLE. Would they count against the 404 limit for the year ending 03/31/04?

Would plan have to be effective 01/01/04 for this to be true? And thus short year issues arise...

Otherwise, deferrals & ER contributions since 4/1/03 would be invalidated? Or since 01/01/03?

If the SIMPLE is "invalidated" I think I read that the deferrals and ER contribs are included in Box 1 of W-2. So new 2003 W-2s are needed? Grossed up by the 2003 ER contributions...

And 2003 contribs must be withdrawn by April 15, 2004? (408(d)(4)) And the Jan/Feb/March 2004 contributions would have to be withdrawn by the employees as under 408(d)(4) by April 15, 2005. If done so there would be no 6%, 10% or 25% penalty. (No penalty). Correct?

As the SIMPLE is "invalidated" so does that mean that the ER would not be required to make the ER contribution for 2004? Although at one time there was an announcement commiting him to the contris.

Thanks for wading through this and any comments...

Search did yield: COMMENTS

Suppose you have a new non-safe harbor DB that is offset by a new profit sharing plan. The DB will provide 5% of pay per year of partic for shareholders and 2% of pay per year of partic for non-shareholders. All benefits are offset by the act equiv of profit sharing balances. The employer will make contributions of at least 7.5% in the profit sharing plan. However, they wish to provide no profit sharing contributions to the two shareholder employees in the profit sharing plan. The plan easily passes the general test and they will have no problems with 404(a).

1.401(a)(26)-5(2)(iii)(A)(2) states that an employee whose benefits are offset is deemed as benefiting but only if he/she benefit in the other plan on a uniform and reasonable basis.

Does this mean that we simply do not count the two shareholder employees for 401(a)(26) purposes because their benefits (in the DB) are not being offset? Or does this mean that we cannot count any participants because two HCE's did not receive the same contribution as every other eligible participant in the profit sharing plan?

Thanks much!

just want to confirm the tax treatment. the distribution is from a DC plan, the participant had not started RMD's and the beneficiary is taking the entire amount. i think you would withhold 20% even though it is going to a guardianship on behalf of the kids. anyone disagree or agree?

Deceased participant was in a same-sex marriage. Participant's enrollment form indicated he was married. Spouse is the designated beneficiary.

Should we allow a rollover? I assume the designated beneficiary's tax return will indicate single. Wouldn't a rollover of a death benefit by a single person or "non-spouse" trigger some kind of flag with the IRS?

I have set up a rollover IRA (traditional) and I am going to use a financial advisor to trade in the account. The financial advisor is not affiliated with the brokerage firm that hosts the IRA. If I let the manager withdaw her fee from the IRA, is this a taxable event? (I am over 59.5 so there is no 10% penalty problem) The brokagage firm I am using says it is taxable, but another firm says it is not.

I would like confirmation that I am interpreting correctly the rule that states that a 3% nonelective SH contribution cannot be used to satisfy permitted disparity. A prospect is considering establishing an integrated PS and 401(k). Because of pay levels of the HCEs, I am anticipating that the plan will not satisfy ADP if all the HCEs defer $13,000. To satisfy the nonelective SH, the employer will contribute 3%. If the employer wants to make a PS contribution of 3% on total comp and 3% in excess of TWB, the base 3% is IN ADDITION to the 3% SH -- Yes?

In the 2001 ASPA Q&A the IRS opined that "Participants not employed at the end of the Plan Year" was not a reasonable classification for purposes of the ABT. Has anyone heard anything more on this topic?