i say there is nothing in the code that prohibits company's from terminating one 401(k) plan and starting another 401(k) plan in the same year. i have some "old timers" in my office that seem to recall something that may have prohibited this in the past. i have told them the only restrictions are the successor plan rules which place restrictions on distributions. can anyone confirm that my opinion is correct?

We have a flex plan where the ER contributes to each eligible employee $150 per month to select any flex plan benefits, along with EE contributions. A participant is going on maternity leave in April, will be gone approx 6 weeks. The plan document does address the timing of the $150 contrib to be contributed monthly, but does not address this, or any, leave. The firm is not subject to FMLA. There is no EE handbook or policy. The ERwants to know if they are required to contribute their contribution in the EE's absence. I know what the "right" thing to do is, but what is required?

I want to start a new business, but I need the funds in my Company 401K to use as collateral. Is there a fund that I can rollover my 401K into so that my lender can use it as collateral (i.e. Roth or CD) Please help. Blaser

With U.S. Bank (Firstar at the time), I had a traditional IRA and a Roth IRA. I transferred these two IRAs to a different bank into two accounts in order to get more interest. A year later, I decided to let an investment representative manage these funds, and they were transferred a third time in April 2003. In August 2003, I discovered that the very first transfer from U.S. Bank was in error as they had marked the wrong box indicating that the Roth was a "traditional" IRA.

When the investment representative received proceeds from both IRAs last April, he combined the funds into one account. I have been trying to get this straightened out since September. I have letters from each of the first two banks indicating their acknowledgment of the error. The investment manager is hesitant to divide the fund back into a Roth and traditional IRA because, he says that it will flag the IRS that I have made another conversion. In the mean time, I can't move my funds.

Does anyone know of a precedent or an IRS guideline to fix this problem?

Looking to learn more about cross-tested plans. Can anyone suggest a seminar, book, etc that is specific as to cross-tested plans that someone in plan adminstration could use. Looking for something that would enable me to understand and offer these plans. Corbel has a workshop, but is not offering it in 2004.

Thanks

TCP

I have a new client with 500 people in a Group Term Life Plan that has never filed a Form 5500. The plan has been around since '95. At first I thought they had a problem, but it seems to me that Notice 90-24 provides an exemption.

Does anyone think they should be filing? If so, why?

Does anyone think they are exempt?

One cannot change the Funding Method if the filing deadline has past.

Is there such a restriction on changing the assumptions?

What if Form 5500 was filed but the Sch B was not?

A not for profit has an ERISA Plan that it froze a few years back and then started a NON-ERISA 403(b) with a different vendor. I'm trying to research a few issues and am not finding a lot:

1. The ERISA Plan document did not permit hardships, but in practice, the employer allowed 4 of them through the years. I noted in this topic's discussions below (Sept. 30, 2003), that 403(b) plans are required to be administered in accordance with the Code and Regs. (and ERISA), but not the plan document and that there are no prototype 403(b) plans. Do we need to be concerned with the fact that the 403(b) was not administered in compliance with the document, or should we just be concerned as to whether the hardship was OK under the Code?

2. Can the document be retroactively amended to the hardships? It has been 3 to 5 years since the hardships.

3. It seems to me that if the ERISA Plan and the NON-ERISA Plan were combined (which is proposed by a vendor), that the merged thing would be an ERISA Plan because old employer matches would be in the new, combined Plan. AGREE??? DISAGREE?

4. It looks like you can update the documents for GUST and EGTRRA whenever, as long as they are administered properly. AGREE or NOT?????

5. Can you ever terminate an ERISA 403(b) Plan that has employer match and employee deferrals in it? Is it possible to require the employer match to be distributed even though the person is still employed, and then either require, or try to convince the employees, to directly transfer the remaining salary deferral amounts to an NON-ERISA 403(b) plan?

Like everyone else, we have a gang of DC plans, and only one or two 403(b)'s, so finding this stuff is tough.

I have a Simple 401(k) plan that was designed with a 1-year eligibility requirement and one entry date, the first day of the plan year in which the employee met the eligibility requirement (not the best plan design by any standard.)

Now, say a participant was hired in December 2002. His one year of service is in December 2003 and therefore is entry date is 01/01/2003. He didn't have the opportunity to defer as he quit shortly after his one year anniversary.

Should the employer be obligated to contribute a QNEC for him (in the amount of the NHCEs average?)

What if if was hired in June and did not quit, would that make a difference?

Plan document is written to require a Profit Sharing Contribution of 10% of compensation. Employer elects Safe Harbor Non-Elective of 3%. Must the Employer contribute the 3% PLUS the 10% or may part of the 10% be used to fund the SH Contribution??

I'm fairly new to administrating a 401k plan for my company and have learned through trial and error what I'm supposed to do. It's been quite frustrating because I didn't have any formal training. I got the basics to get me by and then was left to fly on my own.

Now, almost a year later, I'm trying to learn all the things I should know, procedural and compliance wise. Can anyone direct me to some reputable training sites that would help me to be more proficient at being an administrator?

Thank you.

Elisa

Can anyone tell me why (if ever) you would test a safe harbor match using the 401(a) test when there is no profit sharing contribution? Would there be any purpose? Supposedly the IRS mentioned that "if the match allocation passes under 401(a), no true-up is necessary."

Thank you

We have a number of plans in our office with investments at places like ING, Nationwide, Manulife, etc. Unless they have participant loans, all the assets are in pooled separate accounts reported on the schedules A and D, or in the general account reported on the schedule A, or both.

We report the assets in pooled separate accounts in Item 1c(10) on the Sch H, and the general account assets in item 1c(1).

We are having a discussion in the office regarding how to answer Item 4i on the Schedule H. My interpretation of the instructions is that 4i should be answered "Yes", and a schedule of assets should be attached. Others think that the exception noted for assets held in insurance company pooled separate accounts means that these assets need not be reported at all and answer 4i "No", even if assets are also held in the general account.

We received an audit letter from EBSA saying that if something is being reported in Item 1c(10), item 4i must be answered "yes" and a schedule must be attached, which supports my position, but I am interested in how others complete this question. They aren't always right after all.

Employer has been operating med. exp. reimb. plan in a manner that e/ee's can accumulate expense dollars? from year to year. E/er now wants to make such amounts non-cumulative. E/er proposes to tell all plan participants that as of Jan. 1 next year, amounts will no longer be cumulative and that prior accumulated amounts will be lost unless reimbursements submitted before that date. Employer has had no written plan in place, but plans to get one in place setting forth the "new" rules as of Jan 1. Issues??? Thanks.

What is the ERISA documentation/record retention requirements? Six years I thought. What what needs to be kept, and by whom (the recordkeeper vs. plan sponsor)?

As of January 1, 2003, taxpayer “Smith” is a member of an LLC – “Smith, Jones & Co.” The LLC is classified for federal income tax purposes as a partnership, and Mr. Smith as a partner. Mr. Smith’s “earnings” (made up of “draw” or “guaranteed payments” and his share of LLC profits) constitutes self-employment income.

On February 28, 2003, Smith, Jones & Co. files Form 8832 (Entity Classification Election), electing to be treated as an association taxable as a corporation, and on March 1, 2003, Smith, Jones & Co. files Form 2553 ( Election by a Small Business Corporation). Both of these elections are to be effective retroactively to January 1, 2003.

For calendar year 2003, Mr. Smith expects to make $120,000 ($10,000 per month), and wants to contribute $12,000 ($1,000 per month) to their 401-K plan. During January and February, Mr. Smith took a total “draw” of $24,000, and wrote his personal checks to the 401-K plan totaling $2,000.

Beginning March 1, 2003, Mr. Smith receives a salary of $10,000 per month, and has $1,000 per month withheld and paid into the 401-K plan. At December 31, 2003, Mr. Smith’s total wages are $100,000, and the total 401-K contribution on his W-2 Form is $10,000. Mr. Smith also receives a Schedule K-1 (Form 1120S) for 2003, showing the $20,000 of “draw” for January and February, as well as any additional profits for the year. None of these K-1 profits are self-employment income, since Smith, Jones & Co. is retroactively treated as an S corporation for the entire year.

How can Mr. Smith qualify the $2,000 paid into the 401-K plan during January and February for deductible 401-K contribution treatment? Is there any support for “grossing-up” his Form W-2 to include either the $20,000 paid to him during January and February, or the $2,000 paid into the 401-K period out of this January/February income? Does Mr. Smith need to withdraw this $2,000 (plus earnings), and recontribute it out of March – December wages, in order to perfect the 2003 contribution deduction/deferral?

1.Can I roll a SEP account(or part of the account) to a ROTH IRA?

2. Can I still make a contribution into a roth IRA for 2003?

thanks so much!

dbuckner@bellsouth.net

Have an existing 401(k) plan and wish to convert it to a Safe Harbor 401(k). If the employer wishes to make the basic match safe harbor (100% match up to 3% of pay plus 50% up to 5% of pay), do existing match accounts need to be 100% vested?

Clearly, future match contributions must be 100% vested, but what about existing match contribution accounts?

Thanks much

Client failed the ADP test. We calculated how much money needs to be returned to the HCEs. Unfortunately one of the HCEs left the company in 2003 and received a full distribution in February of 2004. He rolled the money to an IRA.

We must return money to him to pass the ADP test.

The financial institution holding the 401(k) money has said that they must issue a 1099 showing the rollover to his IRA. They have suggested that I contact the receiving institution and get them to disburse the the appropriate amount.

What is the appropriate course of action?

Thanks in advance.

Assume a defined contribution plan that allows loans. If a domestic relations order provides that the plan will loan the alternate payee $200,000, can this be a QDRO? The main issue is, I believe, whether this arrangement violates the requirement of Code section 414(p)(3) that the order not require a "type or form of benefit . . . that is not otherwise permitted by the plan." The plan would permit a loan to the participant, but obviously couldn't do so for more than $50,000.

I don't think this works, but am interested in the opinion of others. Thanks.