There is an employee who has been out on a leave of absence for almost 2 years due to a worker's comp. related injury. The employee has not ben oficially terminated by the Employer because of fear of a lawsuit. The question is, is this employee considered a participant that needs to be included in the ADP test for 2003? My sense is that they would not have to be included, but I would like some feedback from others who might be more sure of what to do in a case like this.

Facts:

DB Plan offers option of single-life or J&S benefit

Participant retires, then participant and spouse elect out of J&S

At some point in future, Participant dies in pay status

At time of participant's death, Plan owes participant retro check for accrued but unpaid benefits

Plan does not have beneficiary (designated or otherwise) rules (i.e., there is no express provision indicating what to do in the event of an unpaid accrued benefit)

As matter of course, Plan typically pays retro check to surviving spouse.

Question: Does payment to surv. sp. violate anti-assignment and alienation rule of IRC 401(a)(13)? This would seem to be the case based on fact that only participant (really, his estate) has a right to this payment since spouse opted out. If it is a violation, could plan get around it by adopting a rule or policy to allow such payments (assuming the Plan so allows)?

Thanks in advance...

If a participant retires and leaves his account balance in the plan and also has a whole life insurance policy. Is it okay to leave the policy in the plan as well and deduct premiums from his account balance? Or should the policy be turned over to him in which case he would be subject to the taxes. Also, would he have to be given a 1099 for the PS 58 costs each year?

Standard 401(k) plan.

Eligible HCE elected to defer in 2002, but the Sponsor's payroll department never set up his payroll deductions. This is discovered by RK in early 2003. Together, the RK and Sponsor come up with the following correction method:

1. HCE funds the 2002 deferrals to the plan via personal check; the Sponsor then revises his 2002 W2.

2. Sponsor makes up the match and earnings on the two sources.

The correspondence I have includes references such as "...in accordance with Revenue Ruling 2002-47". Although I think they mean "Revenue Procedure...".

I've researched the Rev Proc but can't find anything that allows this type of correction (ie., making up a deferral with ATAX contribution, then recharacterizing).

Would really like some comments. Thx.

A union health plan, as of 1/1/04, changed to self insured from fully insured. As a result, COBRA premiums increased. What is required with respect to notifying the members on COBRA of this increase? How much notice?

A participant has requested an "itemized accounting and valuation" of his individual account balance. All plan assets are held in the general trust and the participant has no segregated account. Wouldn't it be sufficient to provide an SAR along with the participant's benefit statement for the current year? Thanks.

A participant has requested an "itemized accounting and valuation" of his individual account balance. All plan assets are held in the general trust and the participant has no segregated account. Wouldn't it be sufficient to provide an SAR along with the participant's benefit statement for the current year? Thanks.

Several of our health plasn, HMO's etc.. are sending us EOC's, i.e. evidence of coverage to distribute to our employees. Will these staisfy our SPD requirements?

I'm sure the following has been addressed on these boards before, but I didn't find an applicable thread in the 15+ pages of search results.

Semi-hypothetical scenario:

1) Participant has an account balance of $9,000.

2) Under QDRO, 50% of account is segregated for Alternate Payee.

3) Plan allows cashout of benefits under $5,000.

4) Plan allows distributions to Alternate Payees prior to Participant's termination.

5) Alternate Payee wants to defer receipt of account balance.

Can the Plan force the cashout?

Why or why not?

Thanks in advance.

I have a MPP and PSP that use a master trust. The MPP is merging into the PSP effective 1/1/04. A contribution is required for 2003 in the MPP. Will the final 5500 for the MPP be as of 12/31/03 or 1/1/04? Please let me know if there is a site or reference I can use. Thanks

In the past the notice must have been given no later than 7 days before the application was submitted. Recently I saw that this has changed to 10 days as of 1/1/2003. Is this correct? I also heard rumors that it is 14 days. Anyone know the current answer as of right now?

Thanks,

Ronnie

A Plan was submitted for a GUST letter. I have now realized (after a fax from the IRS) that the 401(a)(31) amendment was not signed on time (it was signed in 1997 before I took over the plan). Does anyone know what sanction they will impose on this?

Does anyone have a good catch-up election form

Our 401k provider doesn't track catch-up separately but our ADP software stops someoen when they reach the 13K limit which means an employee over age 50 has to also elect a catch-up % in addition to regular 410k % or they won't rech the full 16K entitled to

How are you administering the catch-up?

We have a 5K health FSA and annual %K dependent care limit

If someone is hired say 7/1/2004 would you prorate the 5K limits or they could they do 5K in each FSA spread over remaining pay periods?

Rather than providing that Compensation will be adjusted each year for cost of living increases, may a plan state that Compensation will be limited to a certain amount (e.g., $200,000) and that such amount may be amended in the discretion of the benefits committee? (Of course, such amount could never exceed the maximum limit established by the Internal Revenue Code.)

If this is permissible, would a simple amendment of the plan suffice - simply saying that this definition of Compensation will apply for all purposes of the plan? Or is it necessary to address the different sections that could be affected by the definition (e.g., employee deferrals, employer matching and profit sharing contributions, discrimination testing, etc.).

Thank you very much for any suggestions.

A law firm client brought in three attorneys as employees/shareholders to corporation "A" on 4/1/03. Secretarial staff may have been brought over also. The new employees all worked at firm "B" where the attorneys were owners. There was no amendment of A's plan to recognize service with "B" for any plan purpose. So, the new employees are subject to the terms of the plan-one year, age 21, 1,000 hours and dual entry = 7-1-04 entry.

The name of A corporation was also changed 4/1/03 and no change was made to the plan for this either.

OK. Apparently they didn't even consider the plan in this.

Can the plan be amended now, after the close of the 12/31/03 year, for recognition of service with B. Does it matter whether or not staff employees are involved as opposed to only HCEs?

Where is it written that shows what you can amend a plan for after the end of the year?

Thanks for any help.

Several medical practices have been set up that are affiliated with a local university. Some have 403(b) plans and are wondering if they can be considered a qualified employer (educational organization, hospital, etc.) for purposes of using the "15 year rule." Your thoughts would be appreciated.

When mp assets are rolled into an existing profit sharing plan, do the assets assume the characteristics of the psp?; as an example, no annuities option?

Employer has a 12/31 401(k) Plan. Can they amend their existing 401(k) Plan during 2004 for Safe Harbor Nonelective for 12/31/2004 plan year end or will that amendment have to be effective for 2005?

On preparing a Form 1099-R, what is the code for a hardship distribution? 2? Thanks.