We represent a client who asked us to update his qualified plan for GUST and then terminate the plan. Among other problems, the client does not have a copy of the plan document, as this and all documents relating to the plan were apparently lost at some point. We were able to track down the firm that restated the qualified plan in 1994. Fortunately, that firm was able to provide us with written copies of a Profit Sharing Plan and a Money Purchase Pension Plan. That firm also confirmed that the documents were created by Sungard Corbel. They were uncertain whether the either of the plans had a favorable determination letter.

We also contacted the accountant for the Plan, which last filed a Form 5500 some five years ago. This 5500 reflects that no contribution was made to the plan for the 1999 Plan year. However, this 5500 shows a different plan name (and there is only one, not two 5500s). No 5500s have been filed in the interim, on the basis that the Employer did not pay its sole employee any compensation for the years in question. Accordingly, we cannot tell when the last contribution was made.

Our firm, relying on this limited information, merged the plans and amended and restated the surviving plan for GUST prior to September 30, 2003. We are now in the process of filing Form 5310 with the Service.

Anyone ever encounter a situation like this before? Any advice?

an employer who rescinded safe harbor effective 12/31/03 and for 2004 will be matching 100% up to the first 1 percent deferred is wanting to possibly put in a higher match at the end of the 2004 plan year(12/31) if finances allow for it.

i do not believe that the plan can go back to a safe harbor during the plan year, but is it allowable to make an additional discretionary match at the end of the plan year if the plan was making the 1% match during the course of the year? the trustee's are only wanting to match those participants who are actively deferring so a profit sharing allocation at year end is not an option they want to explore.

they have advised their employees of the safe harbor rescind, the 1% match for the current plan year and the fact that if finances allow for a greater match at years end, they will contribute.

We have several "married couples" working at our company. As long as each are eligible to participate in the plan, can they both elect to make a deferral and consequently run claims through the plan?

What happens to forfeitures left over after a cafeteria plan has terminated and all expenses are paid?

Subject: Catch-up contributions permitted by §414(v)

Assume that a single employer with only one 401(k) plan allows each participant to defer up to the lesser of 25% of pay or the §402(g) limit of $13,000 during 2004; or to $16,000 if age 50 or more. [Note that the 25% limit is not in the plan document, but rather an Administrative Committee decision.]

Assume a 50 year old HCE-owner whose 2004 gross pay is $40,000 who defers $10,000 which is 25% of her pay.

When doing the 401(k) test, how much of her deferrals are included? Is it all $10,000 or just $7,000?

If, based on the above facts, the answer is that $10,000 needs to be included in the test, would it change the result if the Administrative Committee imposed a limit on HCEs only of 17.5%? The authority to impose such a limit is in the plan document, but the actual amount (i.e., 17.5%) is not.

Employee has signed up at open enrollment for dental & vision palns single coverage

She sends me an email that she didn't realize her boyfriend had her covered under his plans

Can she stop coverage under our plans?

If so, what kind of documentation is required?

Must it be a legal spouses' plan that one is covered under?

Anyone care to comment on what Dec 2003 Fas 87 discount rates may be?

I am assuming that 6.25% (maybe lower) to 6.5% (maybe not any higher) may prove to be near the top of the bell curve.

Do the same ERISA guidelines that apply to claim appeals (72 hours, 90 days, etc.) apply to enrollment appeals?

If an employee does not enroll within 31 days of the date of hire, for example, and wants to enroll, does the employer have to adhere to specific guidelines for such an appeal?

We are on 8.3. Although we have the DCM, we have clients who do not wish to use a disk but would like us to e-mail them a census request in an excel format.

We would appreciate any comments, hints, etc. from anyone who has experience in exporting an excel census request and/or importing it back into relius.

Thanks.

I know that a Notice to Interested Parties must be posted for employees at least 10 days before an application for a Determination Letter (in this case a 5307) is filed.

But today I was asked how long the posting must stay up.

I'm *assuming* it can be taking down on the day of the filing.

Anyone know for sure? Thanks for your help.

I have terminated my payroll provider and am doing in house payroll. My company has a 401(k) plan. I know I don't pay federal tax on the 401(k) but what about state (Michigan), local, Unemployment and Social Security? What do I pay tax and what don't I pay tax on for the 401(k) withholdings?

If a company has a SIMPLE IRA and they want to terminate that plan and start up a 401k plan, can that be done at anytime during the year? Or does it have to be done at the end of a plan year?

2nd part - Does the 25% tax penalty occur if they terminate their SIMPLE IRA and some choose to roll into the 401(k) if they are still in the first two years?

Any help would be appreciated.

Thanks.

If I was to set up a Roth IRA, say, in a T. Rowe Price mutual fund, could I pull that out and put it directly into, for example, a Fidelity mutual fund without penalty?

I have been asked by the plan sponsor if they can fund their employer contribution with a company credit card. They want to get the points or miles or whatever from the credit card company. Is there any prohibition against this? I recognize that the mechanics of the transaction would be a challenge.

A DOL audit of a plan revealed several minor problems

with trustee expenses. The DOL claimed the Fund

had paid improper benefits totaling $3,000. The fiduciaries

in question paid the money back to the plan rather than

go to battle over a nominal amount of money.

With the closing letter, the DOL sent a copy of the form

5330 and notified the plan it was referring the case to

the IRS for the possible imposition of the 15% excise tax.

The problem I have is determining whether these

trustees would need to file the form. Many of the issues

cited by the DOL were debatable at best. There also

was no administrative hearing on the issues. Thus, my

question is who decides whether a PT has occurred and

triggered the 5330 filing requirement? What procedure

does the IRS follow when it gets a referral from the DOL?

What is the best course of action for the trustees?

I recall that there used to be a restriction on the type of SEP document that could be used in cases when an employer had a DB plan, even though the DB had been terminated many years ago. Is that still the case, or has that requirement been removed due to the repeal of 415(e)?

Hi,

I am new to the SIMPLE world, so any help is greatly appreciated. An employer is aniticpating selling the assets of his business sometime during 2004 and all employees (except of the owner and wife) will become employees of the buyer. After the sale, the owner hopes to set up a DB plan and accrue a contribution for 2004 for both him and his wife. Problem. The corporation currently has a SIMPLE IRA. So, since a SIMPLE IRA and a DB plan cannot exist in the same calendar year, the SIMPLE must be terminated before any 2004 contributions are made (i.e ASAP) and a 401(k) plan put in immediately to accomodate the former SIMPLE IRA deferrals and match for participants.

Question. Will this logic work? It seems that it will but I may be missing something basic.

Second. Is the termination of the SIMPLE the same as a QP? Just adopt a resolution to terminate and require distribuitions or rollovers within 12 months of the termination date.

Third. Will employees with less than 2 YOP in the SIMPLE be hit with the 25% pre-mature W/D penalty and be precluded form rolling the assets over? This might not sit well with the employees.

Thanks for all the help!!

Not sure what category this may fall under.

If an individual receives a settlement from a lawsuit, invests that money directly into an immediate annuity-the monthly annuity payments will be tax free.

Question: What timeframe does that individual have to establish the "Structured Settlement"? Does the settlement have to be rolled directly into the annuity?

plz e-mail butch@langgroup.com

thank you,

butch

A non-safe harbor plan's projected and accrued benefits are based on Years of Participation (YOP). The plan is tested using the Accrued-to-Date method using all Years of Service (YOS) to date with the employer.

The plan was submitted to the IRS for a determination letter and the reviewer does not agree with the use of YOS for testing citing the general rule of 1.401(a)(4)-3(d)(1)(iv), namely, Testing service means an employee's years of service as defined in the plan for purposes of applying the benefit formula under the plan .....

However, 1.401(a)(4)-3(d)(1)(iv) continues with "Alternatively, testing service means service determined for all employees in a reasonable manner... " and goes on to refer to 1.401(a)(4)-11(d)(3) for additional rules.

1.401(a)(4)-11(d)(3)(i)(B) & © clearly permits taking into account Past & Pre-participation service.

In view of the above, am I OK in using all service as testing service? Are there any other cites/references for using all service that I can give the reviewer?

If this is not true then the formulas of the type "250% for the owner and $100 for others with the fractional accrued based on YOP" I have seen presented at conferences, have no chance of passing the general test!

As an aside, I can easily get the same end result by using non-safe formulas using all service but that can (& does) create past service liability, Unfunded accrued & vested benefits, PBGC's variable premiums and so on! So I rather not do that.

I have looked and looked and looked... Please help...

Where may I find guidance on the timing requirements of the employer to pay eligible FSA expenses? Is it legal for them to have a "repay-as-you-go" method, like that of dependent care expenses?

According to another post I saw from 01/05/04, it appears that it very well may be IF the employer pays terminating employees upon termination their incurred expense amount up to their annual benefit election. However, how will the employees know they have this coming to them and how will other employees know they are operating the plan in compliance - in other words, how would an employee (or anyone for that matter) know whether or not the employer is complying and bearing the risk since the employees are bearing the "use-it-or-loose it" risk?

Thanks!