The third condition of the exemption from annual examinations by an IQPA states that the administrator must make available for examination, at the participants request, copies of each financial institutions statements and evidence of any required bond.

I interpret this to mean that if a Plan does not have a fidelity bond (even though they have been advised to purchase one many times) they cannot claim the exemption from an IQPA examination on line 4k of Schedule I because they would not be able to furnish proof of a bond that doesn't exist. Others in my office disagree. Wanted to see what others thought about this.

Do I have this right? A db plan that permits continued participation after normal retirement date must provide participants with a benefit equal to the greater of: (1) the age/service benefit or (2) the actuarially increased value of the normal retirement benefit when the participant ultimately retires, unless the plan provides participants a suspension of benefits notice at age 65, in which case the plan need only provide the age/service benefit. Also, if a plan opts to provide the notice, does the plan need to contain a statement that such a notice will be issued?

Can someone help me? I have a safe harbor 401k plan that has a safe harbor match as well as a discretionary match. The employer fully utilizes both matches; however with a last day and 1,000 hour requirement for the discretionary match - they fail ACP testing for the discretionary. To alleviate this problem we amended the plan to remove the accrual requirement for 2003, before the end of the year. Since this was a nonstandardized plan, with last day 1,000 hour requirement we could do this because we were not taking away a benefit from anyone.

My question is since we removed the accrual requirements for the discretionary match (anyone who defers receives a match), do we have to give a discretionary match contribution to any participant who deferred and were paid out prior to the date we amended the plan for 2003?

Since the amendment was not executed until late in the plan year, do I need to give a match to someone who terminated in January?

A healthcare employee is in the process of being terminated for " time theft" - Facts are as follows:

Employee X was working the nightshift at a Nursing Facility with three different locations A,B. and C. - Each night this employee would clock in at location "A", immediately leave "A"'s premises, drive over to, and clock in at location "B", then immediately leave "B", and do the same at location "C". The employee ended up collecting three times his true salary as a result of this fraudulent no show shuffle.

Criminal charges have been filed and are pending with the District Attorney. Question is as follows:

Assuming that the employee winds up convicted (which is certain), Can the Nursing Facility employer attach any employer monies that were contributed into a Qualified plan on behalf of this former employee - or does ERISA preempt any attachments whatsoever?

A Plan requires last day employment to receive matching contributions (no hour requirement). A number of participants terminate during the year so that the match now does not pass coverage. The Plan uses a Fail Safe to correct coverage. None of the participants added back under the Fail Safe rules made salary deferrals.

Is it just the number of participants added back that matters, or would a contribution (QNEC?) need to be made for the added back participants?

As always thanks for any insight.

Group has FSA with Premiums, Medical Reimbursement & Dependent Care Reimbursement categories.

If I do the discrimination test individually for each category they only pass 2 of 3

But, if I do TOTAL pre-tax benefit amounts then the the test passes.

(ex)

Premiums - Pass

Medical - Pass

DC - Fail

Total plan key ee amounts = $900.00

Total plan pre-tax amounts (all ee's including key) = $3800.00

900 / 3800 = 24%

Is it ok to use TOTAL BENEFITS OF THE PLAN???

Thanks!!!

I have a situation where a consulting firm was bought by another consulting firm. The buyer bought the business and the employees. As a result, it is business as usual since the same Enrolled Actuaries will be signing the Schedule B for teh same clients regardless of who they work for. The enrolled actuaries would include the new firm's name on the B.

Does this change necessitate disclosure on Schedule C where the entity that employs the Enrolled Actuaries has now changed? The sold consulting firm would no longer exist.

Thanks

We have a Plan on a prototype document. A participant insists that he is allowed to rollover his monies to an IRA. He said that his accountant told him that he could. Is there ever any circumstance in which a participant who is not disabled, terminated, age 59 1/2 or passed away, that this would be correct??? Thanks for the info!

A small employer is entiitled to a tax credit equal to 50% of the first $1,000 in expenses for plan administration and retirement education. A "small employer" is an employer whose plan covers at least one NHCE and has 100 or fewer ee's earning more than $5,000 each.

With that said, are co-employers of a PEO eligible for the credit? I would think that they would not because the "plan" has more than 100 ee's due to the other co-employers that have adopted into it.

Any thoughts/guidance is appreciated.

Client failed to make 2002 3% safe harbor or Profit sharing contributions. Of coarse he made his $11,000 401k!

Obviously the 2002 tax return is wrong and the 5500.

However, is the safe harbor a required contribution for 2002 and subject to penalities for failure to fund? My reaction is "no" this is still a profit sharing plan!

However, can we make the safe harbor contribution now and allow us to skip the ADP test for 2002?

Thoughts,comments and resources are appreciate.

ED

I am Canadian who just left the US for another position in Canada. I am becoming a US non-resident at the end of 2003. I am probably paying US income tax for the last time for the year 2003, never to earn a dime again in the US.

I am considering making a one-time $3000 contribution to a Roth (for 2003) and leave it there until I reach the age of 60, so that it grows tax-free. Is it legal? What are the possible implications since I am likely never to file for US income tax again?

Frank

I think this may be a stupid question, but here goes...

I have a client with a plan that matches 100% of the first 3% of deferrals and 50% of the next 3% of deferrals. Forfeitures are to be used as a discretionary matching contribution.

In this situation, would the forfeiture allocation be based on all deferrals or should it be based only on deferrals over 3% since the first 3% has already been matched at 100%?

Can contributions under a prototype SEP be considered in the testing of a 412(i) plan for 410(b)/401(a)(4) DC/DB aggregation when carving out employees using the 7.5% gateway? If so, must the DC(SEP) be adopted by 12.31.03 to be considered with a 2003 412(i) plan, or can it be installed by tax filing due date?

My gut says "no," but does anybody have any cites, logic, or reasoning, one way or another?

THX.

Can contributions under a prototype SEP be considered in the testing of a 412(i) plan for 410(b)/401(a)(4) DC/DB aggregation when carving out employees using the 7.5% gateway? If so, must the DC(SEP) be adopted by 12.31.03 to be considered with a 2003 412(i) plan, or can it be installed by tax filing due date?

My gut says "no," but does anybody have any cites, logic, or reasoning, one way or another? THX.

On this link, http://www.irs.gov/retirement/article/0,,id=96450,00.html, I think the 2004 columns have been reversed from prior years (2001 and before).

I just had a client fax me a page from what appears to be the DB Answer Book.

QA 28:19 states that for plan years beginning after 1/1/2003 that GAR 1994 is REQUIRED for RPA calculations. This is per Revenue Ruling 2001-62.

I do not believe this is true based on my reading but am interested in other's opinions. I thought the ruling applied to lump sums for 415 purposes. We are still using the GAM 83 sex distinct tables (pending IRS issuance of regulations)

I've just read Rev. Rul. 2004-13 and there is a sentence in it that has me cunfused. The sentence is in the 4th paragraph under LAW AND ANALYSIS. It states "Also, a plan does not meet the requirements of 401(k)(12) if, under the terms of the plan, a nonhighly compensated employee is eligible to make elective contributions but is not eligible to receive either a safe harbor nonelective contribution or a safe harbor matching contribution".

I've always thought that a safe harbor 401(k) plan could have a more liberal eligibility period than one year for deferral purposes, yet require a one year wait to be eligible for the safe harbor contribution. The sentence in the Rev. Rul. seems to be saying something different. Has anyone noticed this or have any comments?

A plan administrator is required, under Section 402(f) of the Code, to provide each distributee with a written explanation of the plan's distribution options, including the direct rollover provisions and the mandatory withholding requirements. Must this notice contain the value of the distributee's total account balance?

I have an interpretation question. I've always just assumed the 410(b)(6)© exception to coverage testing was taken literally - so if you don't amend or change your plan during the transition period, you'd automatically pass. However, after reading 2004-11, I'm not so sure. It repeatedly refers to a "significant change in the plan or in the coverage of the plan."

Take the following example: Corp A sponsors plan B. Corp. A, in 2003, purchases Corp C, but does nothing to its plan, relying on the "free pass" for coverage during the entire transition period. However, let's look at this census scenario in plan A - 1 HC, 20 NHC. You need 14 NHC to pass 70% test, which you do before the acquisition/merger. Then in the plan year 2004 following the merger, you drop to 8 NHC covered, because the plan has a 1000 hour/last day requirement, and several folks go part time. I do not think the free pass applies. But it might be argued that if you drop to 13, this isn't "significant."

But maybe I'm looking for trouble where none exists, and the free pass still applies. It just seems wrong. Any opinions? Thanks.

How does vesting work for USERRA for hours counting plans for vesting?

For example, say:

2001 works full year 1000+ hrs

2002 works 1000+ hrs, gets called up in Oct

2003 comes back in May and works 900 hrs thru Dec

1 yr vesting = 1000 hrs

Does this person get credit for 2003?