One of the plans that I TPA is going to terminate. I found this out Monday. They got bought out on 3/26, and want this done yesterday.

The plan sent in their last contribution already (I found this out yesterday). They have about $1300 in forfeitures from a distribution done last week, and one done about three weeks ago. The plan document says that match forfs are used to reduce; but no more contribuitons are going to be made. It is ok to spread these to the 25 remaining participants (who will become 100% vested) prior to the termination distributions?

While I am on the topic:

The plan has three trustees. One retired in February and the other two have resigned their "posts" at the company. The plan doc was not changed yet for teh first one, probably b/c they knew this buy out was going to happen. They have elected to amend the doc for the termination instead of waiting for a determination letter (I know, against our advice). Do all three trustees have to sign the amendment & resolution? As far as I know, only the one who has retired is willing to offer her services (so to speak) and sign all the papers & checks. The other two feel that since they no longer work at the co, they no longer have fiduciary duties. We told them that this is not so, but it sounds like they don't care. The CFo is hounding me for the resolution & amendment before he goes on vaction on the 14th, and I don't know who needs to sign! Help!

Hi, we have C corp with Sep to Aug financial year. The corp can contribute to our calenday year 2003 SEP IRA till Nov 15th (or extension) but my W2 shows NO Retirement plan. Also, I put in $3000 into my 2003 regular IRA account which I can take deduction on since the company has not yet contributed to SEP.

What is the correction process if the corp contributes to SEP IRA:

1) Before I file my taxes on April 15th

2) After I file my taxes

Thanks. I have been looking for more info in SEP IRA and all I could find so far was information on setting up the SEP. This is a wonderful site with its interactive forum.

Can loans be transfered over from the former employer plan.

Initial plan year is from 10/1/2003 thru 12/31/2003. I know that the 415 $limit is not prorated, but what about 401(a)(17) and the integration level? From my understanding, the compensation limit under 401(a)(17) and the maximum permitted disparity level are to be prorated if contributions within a dc plan are based on compensation during this short period.

Is this a correct assessment?

thanks for any replies

An employer has a medical expense reimbursement VEBA that is funded with only employer dollars pursuant to a collective bargaining agreement. It is not the actual health plan, but only a funding vehicle so that participants can be reimbursed for any out-of-pocket medical expenses.

I'm wondering if this plan must be updated for the HIPAA privacy regulations since claims and medical receipts are submitted that probably include personal information.

Also, since this is only a funding arrangement, does it need to have any language included that addresses COBRA or FMLA?

I'd very much appreciate the group's thoughts on the following. I've worked mostly with qualified plans and I'm not terribly familiar with SEPs. Here goes:

Facts:

A very small (4 employee) organization offered a SEP-IRA, completely funded by employer contributions.

In terms of payroll reporting and W-2s, the amount of the SEP-IRA contribution was characterized as an "employee contribution," on the theory that the company would gross employees up for the amount of the SEP-IRA contribution and then characterize it as a pre-tax employee contribution (not sure if this is the correct or appropriate way to do that).

Head of the company decided that the company could not afford to make SEP-IRA contributions. No further contributions were made to anyone's SEP-IRA. There is no documentation of this decision--no Board action, no memo, no change to the SEP-IRA form document, nothing but a decision by the president. The other employees were apparently not notified of the change.

Through a miscommunication, however, the company's payroll vendor continued to reflect "deductions" for the "employee contributions" to the SEP-IRAs even though no money was going into those accounts.

One of the four employees has left the company and has now complained to the Department of Labor that her SEP-IRA never received the approximately $9000 that her W-2 says was withheld from her pay as employee contributions to the SEP-IRA (the $9000 related to the period of time after the contributions were stopped).

The Department of Labor is now demanding that the company make the contribution with interest to the former employee's IRA.

My questions:

Can anyone see an argument that they may be able to make to the DOL since they never intended to make this contribution? Is the fact that they did not document the discontinuance of employer contributions a problem in light of the requirement that a SEP have a "written allocation formula"?

My (tentative) conclusion:

It may be in the company's best interest to make the contribution, rather than try to establish that the contributions were stopped and payroll errors were made.

Any thoughts or suggestions are appreciated--many thanks.

I am a marketing grad in the process of looking for a job. Many of the copies I've met with mention they offer health insurance but don't give any specifics. Others don't mention it at all. As a result, I realize I don't really understand what is considered "Standard Practice" and have some questions, I hope you might help answer.

Do most companies offer health insurance? (what %)

Does it generally include dental? What about vision?

What kind of coverage is considered average? Is it an HMO?

If a company says they offer a pre-tax savings plan and catastrophic coverage are they being cheap or is that pretty common?

I apologize if I sound uninformed. I'm hoping you can help me change that. Thanks SO much for your advice.

Lorrie

A DB plan's benefit is offset by the equivalent benefit from DC nonelective contributions. The top heavy minimums are provided in the DC plan rather than the DB. However, when someone works 1,000 hours but terminates before the last day, then they meet the DB but don't meet the DC requirement. In that case the TH is provided in the DB plan, but the same offset provisions apply.

Often the case is that when a person has the 1,000 hours and terminates during the year is that they get the 2% DB accrual, but the value of their DC balance is enough to completely offset this accrual and those earned in prior years in the DB, leaving their net benefit at $0 in the DB.

So what ends up happening is that they get no true benefit in the year they terminate (no DC and no increase in net DB). I see the logic in it because of how the TH rules work in DB plans but I just want to see if anyone disagrees with this result.

One other note - this person would be considered benefiting for gateway purposes and need to receive that minimum amount, agreed?

When taking a hardship withdraw from a 401(K) plan for the purchase of a primary residence can the participant elect not to have 20% withheld?

If an ERISA 403(b) plan, funded through custodial account, terminates, can the employees take a distribution of the employer contributions as a result of the plan termination and roll over if they choose?

403(b)(11) doesn't allow distribuitions of "salary reduction amounts" as a result of plan termination from annuity contracts. Distribution of employer contributions as a result of plan termination if held in an annuity contract would be permitted.

403(b(7)(A) indicates no "amounts paid by the employer" under the custodial account may be distributed unless 59 1/2, death, disability, severance, hardship (salary reduction amounts).

Does this mean no employer contributions under a custodial account may be distributed due to plan termination? If so, why the difference?

When running a 402g test, are you testing contributions with payroll dates for the testing year?

For example, I have a 2003 deferral (12/23/03 payroll date) that wasn't processed until March 2004. Should this deferral be included in my 2003 402g test?

Thanks.

Let's say you have a 401(k) plan where the ADP fails. The owner takes a refund of contributions/earnings before March 15th and reports it on his 2003 return. Ok, same plan has a cross-tested ps allocation formula. Can this owner/participant still get to $40,000 using the "net" deferral amount (after refund)? Or must the entire amount he deferred prior to the refund be included toward his individual limit? Cites are appreciated. Thanks in advance.

Can a participant pay overnight charges to have a loan check sent Fed Ex or UPS from their retirement plan assets? It would, of course, be up to the participant to choose this option.

I have a small profit sharing plan with the owner and 2 other participants in the plan. The owner has about 95% of the $225,000 of plan assets. The owner argues that since he is the trustee and has no one else handling assets (other than the broker who should be bonded himself), the fidelity bond should only need to cover the assets of the participants other than himself. The plan has a fidelity bond of $10,000, which is plenty to cover 10% of plan assets that doesn't belong to the owner. This seems to me to be a logical arguement, but I can't find anything in the reg's that would allow it. Does anyone know of such a reduction to the fidelity bond requirement?

If the first year of a new plan is a short plan year, say 2/1/04 - 12/31/04, should you prorate the normal cost for that year?

The DB answer book indicates that for a short plan year, the charges and credits (in this case, the NC only) are adjusted, similar to a terminating plan.

However, a full year's benefit accruals will be earned for 2004 (1,000 hour rule). If you prorate the NC you will get a year-end expected liability less than the actual liability if all assumptions are realized. This will create a loss and I do not believe this is a reasonable funding method.

Thoughts?

My client maintains both a 401(k) plan and an ESOP as separate plans. Participants wanting to diversify must transfer their amounts to the 401(k) plan. They cannot elected to recieve a distribution from the plan. I was thinking that a 1099-R is not required for these transfers since the participant could not recieve a distribution. Does anyone know?

My wife and I are a few thousand above a certain tax bracket. I figure if I can get another $2,000 in deductibles, we can get $500 more in tax refunds. We are eligible for either Roth or traditional IRA contributions. We haven't contributed to our 2003+2004 IRA accounts yet which I fully intend to soon with a maximum contributions in mind. All things being equal, I prefer Roth IRA contributions but I realize if I make $2,000 contributions to an deductible IRA traditional account, I can lower our tax bracket and get another $500 back from the IRS. Now I've done some rough calculations to see whether or not this is worthwhile for me or not and I like to get some opinions around here. If I'm correct, my choice really boils down to comparing A $2,000 investment in a Roth IRA account vs a $2,500 investment in a traditional IRA account (assuming that I plow the $500 savings into the same investment vehicle (non-IRA though). I found that if I'm assuming anything less than 20% tax bracket when I'm in retirement around 20 yrs from now, the traditional IRA account with the extra $500 will do better than the $2,000 Roth IRA account. Now can I also avoid all of this if I can rollover traditional IRA account to a Roth account in the future? and essentially take a $500 extra tax refund this tax season? Is that another feasible option for me to take?

Thanks for any response

I have an employer that currently has a profit sharing plan and a SARSEP. If they implement a 401(k) feature, can the participants contribute to both plans if all contributions are aggregated for testing?

If the answer to that is no and they cannot maintain both plans, my guess is they would have to wait until 1/1/05 to implement the 401(k) feature?

Also, am I correct in my conviction that SARSEP accounts can now be rolled into qualified plans?

Who is responsible for holding or tracking employee payroll deductions relating to an employers FSA plan? Can an employer remit employee FSA payroll deductions to a TPA for holding and payment of reimbursment requests?

Assume 1/1/02 to 12/31/02 plan year.

ADP failed, resulting in refunds to some HCE's.

Refunds were not made by the 12/31/03 deadline.

Plan Sponsor is correcting the operational defect by the one to one method -distributing the excess contribution to the HCE's and contributing to the NHCE's an amount equal to that distributed to the HCE's.

The plan has a provision for catch up contributions and one of the HCE was age 50 by 12/31/02. Should their refund be recharacterized as a catch up contribution? Will the amount of the QNEC made to the NHCE's be before or after the recharacterization of the catch up monies?

Thanks for any help.