I know that if a NHCE receives an allocation of SHNEC, QNEC, or Top Heavy Mandatory, they will also need to receive the gateway minimum. I can find pleanty of posts that discuss that in detail.

Does the QNEC in turn satisfy the gateway? Let's assume that a plan fails the ADP test for 2003. In order to pass the test, the employer needs to contribute a 5% of comp QNEC to each eligible NHCE. Does this 5% also automatically satisfy the gateway as well or is there some obscure cite that says you can't get the double benefit out of the QNEC?

For simplicity sake, let's assume that all of the employees have met the statutory entry requirements and are all eligible for all contributions...that way we won't get off on an "otherwise excludible" tangent (as fun as that would be...).

Thanks in advance!

In 1997 I rolled my company 401K into an IRA and deposited it in a private investment fund. I took withdrawals in 2001 and 2002 and reported them as ordinary income and reported a 10% penalty as I am not yet 59.5.

Late in 2003 I learned that the neither the fund nor the principal were licensed with the SEC and was operating illegally and the principal has now been charged with fraud. The money is gone and myself and many many other retirees are broke.

My questions are: should I refile for 2001 and 2002 to redefine the invested money as a straight withdrawal of the basis rolled over from the 401K and how should I treat the 2003 withdrawals and penalities? Thanks in advance for any assistance with this.

Does anyone have statistics on the number of manufacturing companies with between 1000 and 2000 employees with DB plans? What percentage of those plans are frozen? Are there any suggestions on where to find statistics like these?

Thanks so much.

It appears from my reading the rules on a Simple 401(k) Plan are the same as for a Simple IRA plan in the "exclusive plan" rule (needs to be the only plan of the employer). Is there anything out there that would allow a Simple 401(k) Plan [vs. a Simple IRA Plan] to be amended (restated) into a regular 401(k) plan mid-year and not violate the "exclusive plan" rule ?? It sounds like the def'n of "exclusive plan" for Simple IRAs are no accruals/contributions can be earned in the same calendar year under the qualified plan, and maybe that's "exactly" the same criteria a Simple 401(k) Plan, but I'm hoping that maybe with a plan/trust arrangement a Simple 401(k) Plan might have an amendment option even within the same calendar year. Any thoughts ??

Assume a 401(k) profit sharing plan provides for a 401(k) contribution, a 401(k) safe harbor nonelective contribution (intended to satisfy the 401(k) safe harbor design) and a discretionary employer contribution (allocated under a new comparability formula). Eligibility for the 401(k) contribution is immediate. Eligibility for the safe harbor nonelective and discretionary employer contributions are attainment of age 21 and completion of 1 year of service.

Can the employer provide the safe harbor nonelective contribution and discretionary employer contribution only to those participants who have satisfied the 21 & 1 requirements despite the fact that everyone can make elective deferrals?

Unless I have lost my mind, it has been permissible to divide a plan into the part covering those participants who are 21 and 1 and those that are not. As is usually the case, the part of the plan covering the participants who are not 21 and 1 generally is limited to NHCEs and, as a result, automatically satisfies both coverage and discrimination testing. Suppose the part of the plan covering those participants who are 21 and 1 must be cross-tested. Can the plan provide the gateway contribution and/or the 401(k) safe harbor nonelective contribution just to this universe of participants or must the plan now provide either or both to all participants, even those who have not yet satisified the 21 and 1 conditions?

I thought the answer was an easy "yes, absolutely", but an article recently published by Aspen publishers in their 401(k) Advisor circular suggests that the answer is a definitive "no". The reasoning, as I understand it, goes like this: the 401(k) safe harbor contribution must be provided to anyone who is eligible to make an elective deferral (regardless of the application of the statutory/nonstatutory distinction); since everyone is eligible to make an elective deferral, everyone must receive the 401(k) safe harbor contribution; anyone who receives the 401(k) safe harbor contribution is "benefiting" under the employer contribution component of the plan; anyone who benefits under the employer contribution component of the plan must receive the minimum gateway contribution. Consequently, anyone who is eligible to defer, the argument goes, must receive both the 401(k) safe harbor contribution and the minimum gateway contribution (assuming the employer contribution is subject to cross testing).

Does anyone have any thoughts on this issue? Any guidance or help is appreciated. Thanks.

Does FAS 109 establish the principle that, if a company accrues a SERP liability and expects that the accrual will result in a tax deduction in the future, the company can reduce its current year tax expense and record a deferred tax asset?

If the above is true, can the company effectively deduct its entire annual pension expense in the year accrued?

Does this principle also apply to DC plans, if so, can the company deduct the entire deferral or only interest on the deferrals?

Is GAAP required to apply this principle?

Is there an exemption from PBGC coverage for plans with only relatives of substantial owners? The only two participants for the plan inquestion are the parents of the 100% owner.

In calculating earnings for an ADP refund, I multiply the years actual earnings by the excess contribution/ the beginning of year balance plus the "deferrals" for the year.

In this formula do the "deferrals" include catch-up contributions? In this case I have amounts over 12,000 for 2003.

THANKS

Our client had a 403(b) account. He recently died. He left a beneficiary designation (to spouse and children in separate accounts) but the account has not yet been distributed. Who would be entitled to manage the account assets at this time? His personal representative? The beneficiaries? It is possible that some beneficiaries may disclaim their benefit. Specifically, we would like to see the assets invested in other funds right now (prior to distribution), but we are looking for who has authority to direct the change in investment.

This may be one of those "look at the plan document" answers, but if anyone knows of a general rule, I'd appreciate hearing it.

We have a client with a terminated DB plan for which their ERISA attorney has advised us to delay paying out LSs because pending legislation may allow us to pay lower lump sums. The plan just recently terminated, so we still have time to wait (up to a year following the termination date). The plan is underfunded, so any money that can be saved on EE costs will decrease the amount of benefits the owner has to waive.

I have been researching and is the pending legislation the July 2003 bill to replace the 30 year T-Bill rate with a conservative long term bond rate? Is there a phase- in or will we be able to use the new rate immediately.

I am trying to find a commentary on the proposed bill. Does anyone know where I can find it?

Many thanks

We are trying to reallocate forfeitures for a plan. They have a 501 hour requirement attached to the receiving the allocation. One participant wa on military leave since Feb. 2003 and only reached 200 hours for the 2003 year.

Should he be part of the allocation since he was on military leave, no matter the number of hours he worked?

I'm a bit confused - I'm testing for the year 11/1/02 - 10/31/03.

This would be the 2002 year I'm testing for, with 2001 being the look-back year.

I have a person that, during the plan year 11/1/01 - 10/31/02 had a salary of $89,000.

I know that for 2002 the HCE comp. is $90,000, and for 2001 it was $85,000.

Is this person an HCE for the year 11/1/02 - 10/31/03? I believe he is.

My confusion was that I am testing for the 2002 year, and 2002 is $90,000 for an HCE.

I was then saying to myself, "who in 2001 earned more than $90,000".

I should have said, "2001 is the look-back year, and 2001's HCE comp. is $85,000 - who during the 2001 plan year earned more than $85,000, these people will people HCE's for the 2002 year test"

Thanks in advance!

Does anyone know what the IRS looks for with respect to QDROs when they do an audit? Do they do anything specifically related to QDROs?

I seem to recall a not so recent ruling/case/or something that addressed the question of whether a person who is receiving severance pay is credited with hours of service for benefit accrual, vesting, etc. My recollection is that the decision said no. Does anyone recall anything of the sort? I can't seem to find it.

Thanks.

We have a 401(k) plan where a TPA fills out the 5500 and then sends it to the Company for signature and filing. The Company has undergone a management change and has not been able to find proof of any Form 5500 filings. We checked on freeerisa and could not find anything. Any ideas on how to see if the filing was actually made? We want to use DFVC if they have not been filed. Thanks for any ideas.

A non-ESOP (I know this is the ESOP forum but I am hoping that the question is close enough that you can answer) 401(k) plan permits participants to invest in employer stock. Participants can switch out of employer stock once a month. The employer has a stock buy-back plan for all stockholders, and wants to extend it to all shareholders, including participants in the 401(k) Plan. However, participants in the 401(k) plan really only own an interest in an employer stock fund, and not the stock. Also, since the employer stock is publicly traded, the price of the buy back and the fair market value of the traded stock may be different, and perhaps no prohibited transaction exemption. Any thoughts on whether this is doable are appreciated.

A (nationally marketed) commercial software has an option to use Social Security RA (SSRA) or Normal RA as the testing age (whether or not the plan has uniform NRA).

I looked in 1.401(a)(4)-12 (definitions) and did not see SSRA being an option for testing age.

Is there a statute, regulation or IRS opinion that permits using SSRA as the tesing age?

I have a plan which utilizes a top-paid group election. At the beginning of 2003, they acquired another company (I don't know yet whether by stock or asset acquisition). The existing plan recognizes prior service with that employer (and prior service for pharmacists from other employers) for eligibility, vesting and contributions. What I'm not sure of is whether their prior service should be counted for purposes of determining the number and composition of the top-paid group.

Company A purchased another company and merged the plans effective 1/1/03. Do you look at what the individuals' comp was from the previous employer during 2002 to determine if they are HC or are they treated like a new hire?

Plan goes like this:

Physicians practice

Top Heavy 401(k) Plan

2 year eligibility for Profit Sharing - Integrated with Social Security

Non partner physicians HCE's (call them A) are capped at $18000 in Profit Sharing

Another group of non partner physicians HCE's(call them B) capped at $8000 in Profit Sharing

1.Is this a cross tested plan

2. Are people eligible for 401k counted in 401(a)4 nondiscrim test

3. What if a4 fails, what is the remedy

I am at a loss - this is a takeover plan and sorely in need of a change