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

A Defined Contribution Plan has chosen Prior Year Ratios for Nondiscrimination testing. The plan gives a discretionary match. The prior year, the plan, because of economic conditions, did not give a match. Now, in the current year, the plan is able to give a match to all eligible participants. Since no ratios were created in the prior year, there is no prior year ACP NHCE ratio. The plan has given a discretionary match in other years so the 3% start up ratio is not correct, what ratio can be used to substitute for the prior year ACP NHCE ratio.

I just received the year-end info from a client and there was a re-hire that I hadn't shown in the ADP test during the year.

Of course now the test does not pass! I think that I remember reading that I can combine the deferrals and match to test them combined, can't I? Kind of like a QNEC? The match is fully vested and goes to all who defer, regardless of hours or termination.

Thanks.

It would appear that because the 401k plan had not had tax withholdings (due to no taxable distributions) for over 3 years...well the IRS took away the EIN for the plan. I was just told the EIN is now "unassigned" and I can't have it back. (If I can come up with the original mailed IRS notice of the EIN assignment from many years ago, then I could get it back.) This is despite the fact that the annual 5500's have always (and will) use this EIN. I have gone around in circles with 3 people at IRS and all came to the same conclusion; the 5500's are handled by a different group at the IRS and there is no communication between the two so I now have to get a new EIN for the plan so I can record future Form 945 withholdings from distributions.

Well this sounds fine from within the tax-deposit section of the IRS, but I'd like to keep this job and I'm very worried about this "solution". Does anyone know what to do about the pending confusion with the 5500? What is the DOL's take on this?

Oh, and of course the 2nd quarter 2002 distribution withholding/945 we sent in was not recorded with the plan or even under the plan sponsor EIN. It is floating around somewhere and to get credited to the plan I will have to get a new EIN assigned... So I need to know either how to get this corrected, or if it really is ok to have different EIN's for same plan.

(For the record, their advice is if you have no activity during a year, still send in an annual 945 with $ 0.00, just to let them know you're still alive. Why don't they tell us these things when we got the EIN?)

Thanks for any encouraging words.

I am trying to figure out a non-spouse beneficiary's options regarding an inherited IRA. It looks like the beneficiary can defer distributions under December 31 of the year following death and then may be able to (if the document allows) take periodic distributions over his/her own life expectancy to avoid a one-time taxable distribution of the full IRA amount.

Also, I understand the IRA document may not allow this and could require the entire amount be distributed to the beneficiary within 5 years of death. But, in any event, the beneficiary could have done nothing for at least a year following death.

Can someone confirm my understanding is correct?

Many thanks

If a participant has taken distributions from a custodial account under 403(b) in violation of 403(b)(7)...what effect on the participant and the plan as a whole? Here, the plan is employer-money only (and is therefore an ERISA plan). Does the participant have income inclusion with respect to contributions only for the year of the violation? Or is the custodial account "tainted" until correction is made? Are there any negative effects on the plan as a whole (including taxability of custodial accounts with respect to participants who did not receive impermissible distributions), or are only the custodial accounts at issue affected?

Also, violations of 403(b)(7) are considered operational failures under Rev. Proc. 2003-44 (EPCRS). But what would be an acceptable correction method? Ask the participant for the money back?

Is anyone aware of any resource materials or guidance on the administration of Stretch IRAs?

My organization is looking at adding it as part of our overall retirement planning product line.

I am finding very little in terms of guidance on administering these types of IRAs in terms of annual tax reporting, etc.

Are you aware of any resource which specifically addresses the nuts & bolts of administering these types of arrangements?