Can participant loans be limited to participants who are actively employed by the employer at the time the loan is requested? Client does not want to make loans to terminated employees, alternate payees andor beneficiaries. Loan is payable in full at terminatin of employment and payments must be made by payroll withholding.

Thanks

An employee terminates employment and chooses 15 year installment payments from a 401(k) plan. The employee can choose to receive an additional payment (or cash out the remaining balance) at any time.

1. Are these substantially equal periodic payments rendering them ineligible for rollover?

2. If so, are they periodic payments subject to wage withholding, or nonperiodic payments subject to 10% withholding?

I believe the answers are (1) yes and (2) nonperiodic, but I'm having trouble finding conclusive guidance with respect to (2), other than a 2000 private letter ruling which says that, because of the "on demand" feature of the installment method, these are "amounts not received as an annuity." Therefore wage withholding would not apply.

I researched this several years ago, and had concluded then, based on the section 72 regs, that installment payments for a fixed period were amounts received as an annuity, and payments of this type would be subject to wage withholding.

Anyone know of any official guidance?

Thanks.

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Can I test on SSRA and have a different NRA in the plan?

We have a control group that consists of several partnerships. The partners are constent through the companies. For compensation puporses for the plan, do I start with the NET of all K-1s, some are negative - or do I disregard the negatives like it was zero?

Working on IPSP. Can someone explain definitions/differences of the following roles: Investment Manager, ERISA Investment Manager, Investment Advisor. Also, what would be the "role" of the Recordkeeper who is providing investment performance, etc. at the quarterly investment review?

The plan only allows those employees that have satisfied the age and service requirements (21 and one year) to make rollover contributions into the Plan. However, there were two employees that made rollover contributions into the Plan shortly prior to meeting the one year service requirement - - the rollovers were made a couple months prior to meeting their entry date. Both employees have now met the service requirement and are currently participating in the Plan.

Although a strict interpretation might lead one to distribute the improper rollover contribution, it would seem counter-intuitive to distribute it now since both employees are now eligble to make rollover contributions. Any suggestions?

Does anyone have a weighted average formula (or any other formula) you use when determining earnings for a QDRO split?

An ER has had a SIMPLE IRA operating for 5 years. He has made contributions to it for January 2004. He notified all his EEs that he was terminating the plan after January 2004. He wants to establish a 401k profit sharing plan for 2004. Can he do this? If he can, what is the effect of the 401k psp's implementation on the SIMPLE's January contribution?

Here I go again....

I have a plan where the investment company does not do the 1099's, 945 or 1096. Can the federal withholding checks be sent directly to the United States Treasury, or do we have to go through the EFTPS bull? This client hasn't had any distributions for 8 years (since the plan's existence) and probably won't for another 8 years.

I read that the EFTPS is not required....what are my alternatives? I don't want to have to tell the client that they have to set up a special account just for this. What steps need to be taken?

Thank you so much for all your help!

We have a participant that was terminated, and then rehired 6 months later. Does he have to wait until the next entry date or does he come in to the plan right away?

Are the rules different for a terminated participant that has already taken a distribution and then months later be rehired?

Have a situation with a client that has a PS plan and still maintains a Money Purchase. PS plan has a Hardship provision that allows distribution on all vested balance. By a great mistake, participant was given more money for the hardship then actually has as an account balance. Approx. 2,000 to much.

Any suggestions on what to do would be appreciated. FYI, participants Money Purchase balance has plenty of money, not that this will help?

Document provides for forfeitures to occur after 5 breaks in service and distributions to occur during the 6th break in service. If a participant is rehired, forfeitures are to be reinstated if participant pays back the distribution. Prebreak service was to be recognized as long as the participant did not have 5 breaks in service. A participant was rehired after 5 breaks in service but had not received a distribution of her vested interest but had forfeited the non-vested portion of her account in the previous plan year. The document isn't clear how to handle this situation but it would seem that the forfeitures would not be reinstated since she had more than 5 breaks in service and also we would not recognize her pre-break service. Is this correct?

Now that we have gotten thru another Administrative Assistant's Day, it is clear that Hallmark needs another ocassion for selling cards. The obvious candidate must be Actuary's Day. I propose October 16 (when most of our 5500 filings are done).

Any other suggestions?

P.S. Some in my office think everyday is Actuary's Day. I don't understand.

Any answer to this question, from an administrator at the Univ. Rochester MC:

I just found out through an employee (who's on bi-weekly pay) that the PTO dollars are taxed at a higher rate than normal weekday hours. He's decided that because of this, he's going to have his PTO deferred to his tax shelter at the end of the year. He had heard about this and I told him he should confirm this with HR, which he did. What do you think?

Are they taxed higher when they're paid out at the end of the year, or as the hours are used during the year?

I was asked about this, and would venture that when they're used during the regular year, they are used in place of normal hours pay, for time-frames when you go to the doctor, etc; thus, during the regular year, they are not taxed extra. However, if you don't use any PTO, and take it at the end of the year (unless you put it in the 403b), it would be extra hours, and probably taxed like a higher rate.

Is this correct? If anyone has the details on this (I did a Google search, but it was non-informative), please provide some refs.

A participant defers $12,000 during the 2003 plan year, 12/31/2003 year end. The participant is eligible for catch-up, also allowed in the plan doc. Now that the plan year has ended we are working on the profit sharing contribution. Can the participant be provided a $30,000 ps contribution and have $2,000 of deferrals recharectorized as catch-up? Assuming of course that all of this passes non-discrimination testing.

To add a twist, suppose the plan year ended on 2/29/2004. Assuming again that the partipant deferred $12,000 during the calendar year ending 12/31/2003. The 415 limit is now $41,000. Assume also that the participant defers the same amount each month so that the amount of deferrals for the 2/29/2004 plan year is also $12,000. If the answer above is "yes", that additional ps can be made with the deferrals being recharectorized, what is the amount of catch-up available now that we are in a new calendar year? $2,000, $3,000, $5,000?

Thanks!

The VEBA is administered by a teacher's association at a public school. It's a funding vehicle for paying participants' out-of-pocket medical expenses. I understand that they are required to file a Form 990, but is a 5500 also required?

Is year-to-year change in ben and comp limits other than from specific law change a plan amendment for funding purposes and be amortized over 30year?

Any comments would be appreciated. Partnership (12 partners) considering establishing cross tested 401(k) plan. Classes by ownership or age include more than one partner. I don't think this raises a deemed coda issue. However, a couple of partners would like even more flexibility in contributing. Naming them individually in a class I think rasies the deemed coda issue. Identifying them based on ownership and/or age where it is essentially identifying only one partner seems to raise the deemed coda issue as if the plan was specifically naming them. Agree? Disagree? Any suggestions regarding describing classes?

The bottom of the article reads:

"Other Automatic Enrollment Issues

The general information letter does not address the ERISA fiduciary issues raised by automatic enrollment arrangements. Nor does it address questions about whether such arrangements violate certain states' wage garnishment laws. Those issues are under the jurisdiction of the Department of Labor and the relevant states, respectively. "

Does anyone know where there is a list of which states require written consent (for 401(k) salary deferrals)?

Currently, e/er's plans provide for distribution to terminated participants on or after plan's anniversary date coinciding with or next following termination of employment. E/er would like to change this to as soon as administratively feasible after termination of employment due to recent employee layoff's. Terminated e/ee's want their money and E/er doesn't want to hold it any longer than it has to. Regarding an amendment to the plans is there any problem with having the amendment effective for all participants who terminated on or after the first day of the current plan year, ie, January 1, 2004? Thanks.