Plan sponsor is a publicly traded, Fortune 500 company with corporate audit performed by a big 4 company. There are roughly a dozen plans that require an audit, including four that hold company stock in employee directed accounts and therefore require full scope audits. Each year, the plan audits and corporate audit have been done by the same firm. (That is, if in 2002 A did the corporate audit, A also did the plan audits. It does not mean that A has done the plan audits every year.)

Question: Is there a downside to splitting the providers so that A does the corporate audit but B (a smaller and cheaper regional firm) does the plan audits?

Thanks for your thoughts.

RCK

A non-401(k) Profit Sharing Plan allows rollovers from IRAs into the Plan. This Plan also allows for in-service distributions (using the 2 year/ 5 year rule.) Are the IRA rollover balances subject to the same distribution rules?

I just started working for a smaller company and was given the retirement plan to take care of. The first thing that I have to do is to file the GUST/EGTRRA determination letter application (Form 5307 for M&P - nonstandardized profit sharing plan wiht 401(k) and (m)). I was talking with our administrator and found out that the plan had never received a determination letter before and because of this we have to submitt all of our prior plans. The problem is that I gathered all that documentation and noticed that first plan (1996) says that it is a "standardized" plan. This is different than our currently plan that is a "nonstandardized" plan, so I did a little research on this wonderful web site.

Anyway, it seems that we have a problem because of this standardized plan (from our past) because we have four other members in our "controlled group" (one parent that owns 100% of three subsidiaries) and none of the other members was allowed to participate in our plan when it was in "standardized" form.

Is this really a problem or am I reading too much into this standardized v. nonstandardized problem? It seems to me that the IRS would catch this problem (if it is a problem) when we submit all these doucments with our GUST/EGTRRA determination letter application. Am I nuts? What do I do-the administrator is not giving me any options.

A client has a new solo 401(k) plan effective 1/1/03. There was a prior PS plan that terminated in 2002. Some of the 2002 admin fees of the old plan were actually paid from the new plan in 2003. Is that kosher??

May a participant, age 60, take out an in-service withdrawal from a 401(k) plan and roll it over to an IRA while they are still employed? The Plan document provides for rollovers and for in-svc withdrawals at age-59.5, but is silent on this point.

Any thoughts?

The plan sponsor has been out of business for several years now; however, they are still a registered corporation in the state. The PSP sponsored by the company is still in place after all these years without contributions. Participants cannot get their benefits since the plan does not allow for rollovers or distributions until participants reach normal retirement age. This is not an abandoned or orphan plan, the trustees do pay individuals out when they reach normal retirement age. My question is: Should a Plan be terminated once the Plan Sponsor ceases doing business? It is evident that the trustees do not wish to terminate the plan because their accounts are invested in real estate holdings....

Foreign company with a US subsidiary. NRA worked outside US for over a year and has transferred to US subsidiary and is now no longer excluded (plan excludes NRA's with no US income). I don't see anything in the code or regs. that allows the US Plan to exclude time worked for foreign subsidiary. Am I blind?

A plan document states "Only Participants who have completed a Year of Service during the Plan Year and are actively employed on the last day of the Plan Year shall be eligible to share..." in the contribution allocation. If a participant is laid off as of the last day of the plan year, should they share in the contribution allocation?

Have any of you had success, or frustration, in obtaining databases or files of Form 5500 for companies in your region? For example, let's say I want to download a file, or purchase a CD-ROM, containing all the Maryland companies and what they entered for every field of the form and its appendices?

The more specific you can be, the better.

Thank you!!!

An employee was out on disability for most of 2003. The disability pay was paid by an insurance company (premiums paid by the employer) and those payments do not appear on the employer's W-2. Is the employee entitled to a retirement plan contribution based on the disability pay?

Does anyone know whether a company can contribute a promissory note or its stock to fund a VEBA and, if it can, whether such a contribution is deductible? Also, if you could include any cites (to the law, regs, etc) I would appreciate it.

Thank you for any comments. I appreciate it.

D.L.

Does anyone know whether a company can contribute a promissory note or its stock to fund a VEBA and, if it can, whether such a contribution is deductible? Also, if you could include any cites (to the law, regs, etc) I would appreciate it.

Thank you for any comments. I appreciate it.

D.L.

I am using 2003 limits for my example because the numbers are easier for my little brain to work with.

Assume that the plan matches, on a payroll basis, 100% of the first 3% of compensation deferred and 50% of the next 2% of compensation deferred. (and the plan uses identical language to describe the deferral and the match as a percentage of compensation)

Assume an employee earning $300,000 wants defers 4% of pay each pay period ($12,000 total). It is clear that a plan may permit that deferral and not limit the deferral to $8,000 (4% of the first $200,000 of compensation).

A reputable TPA agrees that this is allowed. However, they insist that a payroll based match may only consider the first $200,000 of compensation when calculating the match. Therefore, they insist that the employee referenced above would not be eligible for an $8,000 match (the lesser of 4% of 200,000 and 3.5% of 300,000) but a $7,019 match.

(For those interested, the 7,019 is calculated by calculating each pay period's match as the elected deferral percentage multiplied by limited pay and divided by the total pay for that pay period. For the first 17 pay periods, the employee would receive a 3.5% match on 11,538 of compensation and for the 18th pay period a 1.33% match on 3,846 of comp.)

They argue that this is required to avoid discriminating in favor of HCEs.

Anybody else dealt with this question.

I THINK I'm groping toward a proper understanding of this, but since there are lots of 401(k) experts on these boards, thought I'd check. Have I got this right:

Suppose the HC deferred 6,000. There's a 50% match, so there's a 3,000 match.

Once the ADP test is run, it is determined that 1,000 must be distributed to the HC. (Assume no catch-up, no earnings, and that the correction method will be distribution)

This leaves 500 in match that must also be corrected. If I'm reading the regs correctly, this CANNOT remain unallocated and placed in suspense to be used as an advance - it must be used as a forfeiture.

Have I got this right? Or is there an alternative, assuming the distribution correction method was used. That is how I read the regs - seems rather foolish to me, but I haven't bothered to consider whether there is a good reason for it or not. Maybe there is! Thanks in advance.

We have a client that terminated a SIMPLE IRA Dec. 31, and started up a 401(k) Jan. 1. The SIMPLE IRA was started with the employer 4 years ago. There are a couple of people that have started deferring into the SIMPLE the last couple of years.

Does the 25% penalty apply to each individual account when they first opened their account or does it go back to when the company adopted the SIMPLE IRA.

They are looking to roll money into their new 401(k) Plan.

Thank you

An employee has been out on disability for most of 2003. He was being paid by the employer's disability plan, not through regular payroll. The employer uses a 5305 SEP document. Must the employer make a SEP contribution based on the disability pay, even though the disability pay will not show up on the employee's W-2?

OK, I'm new to the Relius Proposal System. I understand that you can't use Classes in Relius Proposal if the entity is a sole proprietorship or partnership. So, if the sole-prop's income is less than 205,00, what is the simplest work-around for this?

Can someone please clarify for me?.... This is a general question, I do not have a plan in mind when asking the questions.

Say we have a DC plan subject to QJSA/QPSA requirements.

Would a participant only need to sign the waiver if he is choosing to name someone other than his spouse as the beneficiary, at which point the spouse would have to consent?

Why would he sign the waiver if his spouse is the beneficiary?

Thanks!

Editing to clarify question.

Say a one person plan has 100,000 rolled into the plan from a prior company 401-k plan at its inception. Clearly the DB funding req. would not incorporate the rolled over amount as part of plan assets.

The question is in future years how might you determine what the value of that rolled over amount is for val purposes if such amount is integrated with all investments?

Any guidance out there?

Thanks.

Could someone please direct me to the most recent guidance on the extension of time for amending DB plans for compliance with the required minimum distribution rules? I was not sure if Rev Proc 2003-10 was the most recent guidance.

Many thanks.