Due to an ownership change in late 2002 a company is no longer a member of a controlled group. I believe that the rules are that this company can still be considered part of the controlled group for 2002 and 2003. If this is correct who actually gets to decide if they are included?

If I am incorrect is this plan considered a multiple employer plan?

I have a client that is a temporary staffing service and has a profit sharing plan with a decent amount of money. That plan covers all employees including the temps (if they meet the eligibility requirements).

Effective 1/1/04 they are adding a 401(k) Plan which will exclude all of the temps and any HCE’s.

They needed to do a separate plan because they didn’t want the temps to know about the 401(k) Plan. For a multitude of reasons (primarily communication) they really couldn’t roll it out for them.

All of the 401(k) money will be employer directed. They want to invest all of the money in the existing brokerage account (i.e. for the profit sharing plan) to obtain “economies of scale” on the investment side.

Page 36 of the Schedule H instructions reads as follows: “If the assets of two or more plans are maintained in a fund or account that is not a DFE, a registered investment company, or the general account of an insurance company under an unallocated contract, complete parts of I and II of Schedule H by entering the Plan’s allocable part of each line item.”

An ERISA attorney pointed that out to me, and said that doing what we want is okay.

My question is this: The profit sharing plan has an audit requirement while the 401(k) plan does not. The 401(k) Plan will be a very small portion of the assets. Are there any insurmountable complications with respect to the audit? My assumption is that limited procedures would need to be performed on the 401(k) Plan, since the commingling necessarily has implications for both plans. Anyone seen this before? Anyone have any thoughts?

The TPA will be tracking everything as if it was one plan anyway, so all of the information will be segregated at least in total, and then the investments and investment income can be allocated out pro-rata based on ending balances. All other amounts will obviously relate specifically to one of the Plans.

Any help on this would be greatly appreciated!

Here's the situation. We have a former participant of a DB plan that left in 1996 and was given a letter and the calculation details. At the time, he said nothing. He is coming to us now to say, I want to see the details. The problem is, his file has been lost. We know what his benefit amount is, but can't recreate it because it was based on a Career Average formula that used compensation from 1981 through 1996. He has the letter that we sent to him back in 1996 (but no calculation) and it agrees with our stored benefit. We only have comp going back to 1985 so we're missing 4 years. The benefit looks reasonable given assumed (discounted) comp based on 1985 backwards.

The question is, what obligation does the plan trustee have in providing him with the calculation of his benefit? We lost his file and we don't have the comp (even archived) from 1981 to 1984. Does the burden of providing comp for those years now fall on him? Not sure what the regs are on an issue like this.

I think I've gathered the answer to this question from previous posts, but would very much appreciate the group's wisdom on the following scenario:

An employee on LTD applies for and receives a premium waiver under the group-term life insurance policy. While the employee is still on LTD, the employer switches group-term life insurance carriers.

It's my understanding the the carrier which granted the premium waiver ("old carrier") remains responsible for this employee's coverage. Is that correct?

I'm in the process of getting a copy of the contract with the old carrier to confirm, but can anyone confirm that this is generally how it works?

Many, many thanks and happy holidays,

Julie

Besides the SSA, what other methods are available to find missing participants?

how is one allowed to calculate whether a plan provides a meaningful benefit?

looking at a cash balance plan that uses the GATT rate in the calculation to avoid the whipshaw effect at payout time.

when determining if participants receive at least .5% does one also use the same assumptions (e.g. the GAR mortality at the GATT interest) or is one allowed to use any standard mortality table and interest rate?

I have had a Roth IRA sitting in a bank CD account and it is coming due and I want to move it somewhere else where I have the chance of making better interest in the long term (I'm 37). My CD is coming due at the end of december and they say they have a 10 day grace period before it automatically renews.

Can I just contact another firm to have them setup an account, and have them transfer it after the day it is due? or do I have to go to the bank and get a check and mail it to another firm? how much time does the IRS give you to do this before they start saying PENALTY?!?

Thanks.

I work with a school district that has a section 125 POP plan. The 125 administrator is asking them to complete a detailed xcell worksheet in order to do the compliance testing. I think its unnecessary as they meet the eligibility rule (ie. all employees are eligible - whoever participates in the benefit program) and since they are a public employer they do not have any key employees and will automatically pass the "benefits" test. The administrator insists they do the test anyway or they will not be in compliance with IRS (DOL?) regulations. Do the regs require all employers perform the test or simply be in compliance with the non-discrimination rules? Any comments / concerns?

Are there specific guidelines to follow when a company files bankruptcy and there is a 401k plan. Who pays out the participants, submits final deferrals, etc if there is no trustee? Or is the trustee obligated to retain his trustee status until the plan is paid out. What if there is no one in the company to sign for the final 5500? What responsibility, if any, does a TPA firm have to finalize, process paper work, etc? So many questions!!!

Have a client who has had Schwab keogh prototypes (money purchase/profit sharing) since early 1990's. Self-employed,sole participant. Never filed 5500EZ and should have for past 8 years.

In addition to that, he recently (finally) signed (mid-November) adoption agreements to amend through GUST. Because he's a late-amender, does he HAVE to file a 5307 before January 31, 2004 (and pay the additional fee)? Can't get answers from anyone at Schwab. I just can't believe we'd need to get a determination letter for the Schwab prototypes...?

I have a MPP that wants to pay out participants as soon as possible. Most if not all of them are NHCs. The client wants to allocate the 5.7% MPPP contribution if they terminate and submit distribution forms. There is a 1000 hour requirement, no last day provision. This would eliminate having to pay the distribution and then paying a another distribution when the allocation for all other participants is completed after the end of the PY. Please identify a site if you can. Plan doc states time of ER contribution to be "may be paid to the TTEE/Custod in one sum of in several installments on any date or dates. Is there is reg against this? I know it's not conventional, but alleviates participant waiting until after PYE for distribution and also have 2nd distribution to completed.

Please help!

Business owner has multiple IRA's and a profit sharing plan. Her accountant is telling her she does not have to take from the profit sharing as long as her RMD is "covered" with the IRA's. What is the regulation so I can prove to the accountant this is not correct.

I just read in the October issue of the 401(k) Advisor in the article titled "Last opportunity to change 401(k) testing," that "Beginning in years after the date when the GUST remedial amendment period ends, plans are now required to identify the testing period prior to the start of the plan year."

I was under the impression no guidance was issued in the proposed 401(k) regs regarding the timing of the amendment (or in Notice 98-1).

Also, if I remember correctly, it was mentioned at the October ASPA conference, the IRS commented at the summer conference it would be appropriate to amend the testing method by the end of the plan year in which the change would be effective.

Does anyone know if there is anything written which would support either the position in the 401(k) Advisor or the IRS comments at the ASPA summer conference?

Profit Sharing Plan, participant is 100% vested and Age 57. He is no longer an employee and is on disability......does he get special tax treatment because of disability. He will be taking a lump sum distribuiton....is he still penalized 20%??

Thanks!

I have a prospective client I am working with. I've heard from them that the National PEO association is trying to get REV Proc 2002-21 reversed. Have any of you heard about this and if so what the status is?

I'm just curious.

Thanks in advance for any feedback.

Mutual funds are implementing redemption fees (in itself, a HUGE recordkeeping problem). Assume the plan is subject to Reg Z and in order to fund a participant's $50k loan, mutual fund shares are liquidated w/ a resulting $500 redemption fee. Is that redemption fee a cost of the loan requiring Reg Z disclosure? And would you (a) gross up the loan amount (if possible) or (b) net down the actual loan disbursement by the amount of the RedFee or © handle it separate from the loan transaction?? Obviously some MFs and all MMFs will not have RedFees, so the RedFee amount will be unique to each partcipant and each loan.

THANKS for your comments.

I have one employee, I am starting a SEP for 2003.

1. Do I have to open the account by either 12/31/2003 or 3/15/2004.

2. Can i fund account at any time prior to filing of my corp. return

3. My employee would like to have his account at Schwab, I prefer Vanguard can this be accomplished.

Thanx

Are these restricted to NHCEs or can they be made for HCEs too?

Does anyone recall what year the law changed regarding the deposit of after tax contributions in a retirement plan? There were no limits before if I remember correctly.

A cross tested profit sharing plan has a last day requirement to receive an allocation. Based on a couple of participants terminated during the year, cross testing does not work. Can the plan be amended for 2003 only to remove the last day requirement?? or does it have be removed permantly if it is removed?? Thanks.