Excuse me for this mundane question, but my knowledge on SEP's is a little weak. I have a client that set up a SEP for himself only. Can this client maintain his own SEP and adopt our 401(k) plan for his employees?

Thanks for your assistance.

Y is a subsidiary of X. Both X and Y maintain 401(k) plans. Y's operations were shut down and all of its employees were eventually terminated from employment. The Y 401(k) plan is being terminated. A small number of Y employees have been hired by X. X will not accept plan-to-plan transfers of the Y plan account balances of former Y employees until the IRS issues a favorable determination letter on the plan's termination. Some of these employees requested distributions from the Y plan to rollover to an IRA maintained by mutual fund company M (which also provided the investments for the Y 401(k) plan.) Since the Y employees who became X employees did not have a "severance from employment," they could not take distributions, and thus could not effect rollovers into an IRA. In one case, an employee who initially elected a rollover told M to stop and leave it in Y's plan. However, M proceeded with the rollover.

How should this be corrected? (1) Should Y go to affected former employees, tell them that they could not make rollovers and ask them to pay back their balances plus earnings to the Y plan? (2) Should Y go after M for effectuating rollovers they were instructed to stop? Or should some combination of the above be done?

I have an employer that has several store locations and maintains separate payrolls. All employees are in the same 401k plan. (yes, its a nightmare but that's another post).

The employer sold one store and all those employees went with the new owner. Are they 100% vested?? I'm pretty sure YES but want to double check.

With respect to submission for a GUST determination letter, Corbel indicates that evidence is required if a plan is amended for GUST after the end of the 2001 plan year (the GUST remedial amendment period). Corbel goes on further to say that a plan sponsor should include either evidence of adoption, before the expiration of the GUST remedial amendment period, of an M&P or volume submitter specimen plan OR a copy of the certificate, executed before the end of the GUST remedial amendment period, of the employer's intent to restate its plan by adopting a GUST approved M&P or volume submitter specimen plan.

I thought that the GUST remedial amendment period (not the extended GUST remedial amendment period) was February 28, 2002. My understanding is that the extended GUST RAP deadline was September 30, 2003. Does an employer need to submit evidence if it amended and restated its plan for GUST on February 28, 2002 (and the prior plan was a volume submitter plan)? If the answer is yes, is a copy of the amended and restated plan document sufficient "evidence"?

When a former participant re-hires does he enter the plan on his re-hire date?

Situation: I have a

Top heavy / safe harbor ( 3%) 401k plan with dual entry dates of July 1 and Jan 1.

Employee enters plan on 7/1/03.

I am getting mixed answers from TPA's.

Some say the 3% is due on comp while a participant ( July 1 to Dec 31) while others say it is due on full year comp because it is top heavy.

There are no other employer profit sharing contributions made to the plan other than the 3% safe harbor.

Thank you

what are the requirements for taxes on RMDs? Is it considered an installment and the participant has to fill out a W-4p? Can the participant elect not to withhold 10% at the time of the distribution?

As usual, now that the year is practically over we have a whole slew of employers that are coming out of the woodwork to sign adoption agreements to establish plans for 2003. But included in the mix are plans that include the 401(k) Safe Harbor feature.

Notice 98-52, section X states: "A plan will fail to satisfy the ADP test safe harbor or the ACP test safe harbor for a plan year unless (i) the plan year is 12 months long or (ii) in the case of the first plan year of a newly established plan (other than a successor plan), the plan year is at least 3 months long (or any shorter period in the case of a newly established employer that establishes the plan as soon as administratively feasible after the employer comes into existence)."

In each of the cases that our marketing department is presenting me with, the plan year is indeed 12 months long.

Can an employer start a 401(k) Safe Harbor plan for 2003 now, at the tail end of 2003? It just doesn't seem right, somehow, but I can't support a "no" answer to marketing.

Please comment?

Is the SAR form still required with the final (last) filing of the 5500?

I have always applied for an EIN on behalf of any plan that I establish. I was told today that that is not necessary. That on the Schedule P where it asks for the Trust's EIN I would simply put in the corporate EIN.... Have I been adding a step to my plan establishing process? My feeling was that the trust needed it's own separate EIN in the event of a distribution and taxes were withheld.

Has the IRS or DOL commented on the "ERSOP" device that is promoted for acquiring a franchise or other business with rollover proceeds? It appears at first glance that there could be 401(a)(4) and 4975 issues.

Are there any special provisions that must be included in a corporate resolution for a plan merger (assets of one 401(k) plan merging into another) re the resolutions for the surviving plan? I imagine it would have to say that the assets of one plan will be merged in to the assets of the surviving plan, that the surviving plan agrees to accept those assets and that the merged out plan will cease any benefits accured after the merger date. I think a direction to the plan administration to take "necessary action" to effectuate the amendment would be a good idea as well-Anything else?

I remember reading that the Service was considering another extension to the January 31, 2004 deadline for submitting for a determination letter speaking to GUST. Anybody see anything about this?

I know that you can not tie a defined benefit accrual to participation in a 401(k) plan (1.401-1(e)(6)), but I couldn't find anything specifically precluding it with a 403(b) Plan.

In other words, can a cash balance plan be used to provide the match for a 403(b) plan?

When a 403(b) plan has an employer contribution added, does the pension codes in Section 8 need to be changed. I have always used 2L, but this plan has never had Employer contributions until now.

To the best of my knowledge, we are near the deadline for submitting suggestions for the 2004 Gray Book. Any other information? If time left, when and where should they be submitted?

We are debating whether to add a commitment clause in our document (e.g., you must remain employed 1 year after receiving tuition reimbursement, otherwise you will have have to repay the tuition you were reimbursed over the last 12 months). This seems to be a very common practice. My question is whether it is permissible under Section 127 to do so. Any comments?

Thanks!

I am filing 5500's under the DFVC program for a 403(b) plan for the last two years. An employer contribution had been made for those two years. Do I indicate in Section 8 of the 5500 Under Pension codes along with Code 2L a code to indicate the employer contribution? And if so, what code?

Does anyone know of a source for obtaining information relating to employee benefit communication legislative requirements?....in plain English? I am not an attorney and would appreciate an easy-to-decipher source for figuring out what information needs to be disclosed to employees and when. All recommendations would be appreciated.

Is the AGI still applicable to the deduction of an IRA? If so, what is the scale for a single person?