ER files registration statement for current plan. 10 years later adopts a second top hat plan. Must the ER file a new registration statement?

In a 401(k)/PSP where deferral and rollovers are self-directed and ER contributions are Trustee directed, a terminated participant, whose vested benefit exceeds $5,000, elects not to take her distribution. The PSP account is valued annually. 1) Should the participant's vested benefit be automatically (plan administrator decides) "segregated" (which I interpret as placed in an interest bearing, insured account), or 2) should the participant be allowed to choose segregation vs. keeping benefit in employer investment account? There has never been an occasion where a participant has elected to postpone the distribution, so no accounts have ever been segregated. The document refers to segregated accounts in conjunction with the election of installment payments, and refers to segregated accounts in the allocation of earnings section. Comments on any aspect of this situation are appreciated.

Until now I thought it was received wisdom that a 401(k) automatically passed top-heavy for all contributions if a safe harbor NEC (or also, now, safe harbor match) is made to the plan. But I've read some things recently hinting that such a plan might be top-heavy if contributions other than deferrals and safe harbor contributions are allocated.

Can anyone clarify this? Thanks!

We will now have an opportunity to save for medical expenses in a completely tax-free manner. Contributions to the Health Savings Account will be tax-deductable up to $2,250 per individuals or $4,500 per family. [unfortunately, the HSA is the only good part of the new Medicare bill, which (big surprise) greatly increases government-spending.]

If you want more information on HSA's, MSA Bank's website provides an excellent resource center on HSA's -- with the latest news, and a summary of HSA's.

If you just want the low-down on HSA's, this summary provides a quick chart comparing them to MSA's and enumerating their features.

HSA's should provide an excellent way to save for possible medical expenses, and should provide a contingency plan -- if not another plan entirely -- to save for retirement.

Plan provides for eligibility in accordance with IRC 105(h)(3)(B)....ie can exclude part-time e/ee's defined as customarily not more than 35 hours per week. E/er wants to amend plan and provide that e/ee must work at least 35 hours each week in order to remain eligible. IN other words e/er wants to track actual hours worked instead of relying on the "customarily works" language in the Regs. under IRC 105 (1.105-11©(2)(iii)©). Seems to me this isn't doable b/c you'd have to wait until year end to see if anyone was/was not eligible. For example, you could have an employee who works 36 hours every week except for the last week in December who was reimbursed for med. exp's during the year who now becomes ineligible......... Any comments or suggestions??? Thanks in advance.

I have a participant who has a whirlpool spa at home that is used to treat a specific medical condition. He wants to submit the chemicals & supplies he uses for the upkeep of the spa. If this an eligible expense to put through a FSA? Does anyone know where I can find this in the regs.

Will a non-owner employee newly hired in the current year ever be a HCE for the current year? Given the wording of the statute (requires compensation in the preceding year) I don't think so, but thought I'd ask the experts.

Thanks,

Ken Davis

Univ. of South Alabama

In the spirit of the season...

http://www.investopedia.com/articles/00/xmas.asp

Calendar year Plan requires one year of service with 1,000 hours of service for eligibility, and 1,000 hours each plan year for an allocation. There is no last day requirement. Entry Date is retroactive to first day of plan year in which eligibility requirements are satisfied.

Hire Date = November 15, 2002.

Termination Date = September 30, 2003

Employee works more than 1,000 hours total for the employer (and so during the 12 consecutive month period beginning on his hire date). Am I threfore correct in saying that the employee became a participant on January 1, 2003?

Also, the employee worked more than 1,000 of his total hours during calendar 2003, and so he should therefore get an allocation?

Am I mistaken anywhere?

I'm very pleased that we will now have an opportunity to save for medical expenses in a completely tax-free manner. Contributions to the Health Savings Account will be tax-deductable up to $2,250 per individuals or $4,500 per family. [unfortunately, the HSA is the only good part of the new Medicare bill, which (big surprise) greatly increases government-spending.]

If you want more information on HSA's, MSA Bank's website provides an excellent resource center on HSA's -- with the latest news, and a summary of HSA's.

If you just want the low-down on HSA's, this summary provides a quick chart comparing them to MSA's and enumerating their features.

HSA's should provide an excellent way to save for possible medical expenses, and should provide a contingency plan -- if not another plan entirely -- to save for retirement.

I've forgotten how I worked around this in the past: When printing to the Hewlett Packard printer (HP LJ 4/4m) one of my reports (ADP Correction methods, both Portrait and Landscape) is exiting out in mid-print. The printer then spits out another page saying there was a memory error, this in addition to the first half of the report.

I went in and ran the verify database, cleaned up the margins on the subreports, and brought all fields within the borders as specified by left/right margins.

I fixed this once before on one of the RW comp summary reports, but can't seem to recall how to fix this particular report.

Any help would be greatly appreciated.

Adpacpcl.rpt & Adpacpcr.rpt on ver 8.0 SP0

Bill

I need to contact the Service's Retirement Plans department with a qualified plan question. I seem to recall a more direct line than the 1-800-829-1040 or the 1-800-829-4933 numbers, where you have wade through a seemingly endless stream of options. Anyone have a more direct route?

I have a client who has an existing IRA. He is over 70 1/2 and began taking his RMD last year. However, his wife died this year, he was the beneficiary of her profit sharing account, therefore, he rolled over his wife's account into his existing IRA. He needs to still take a RMD for 2003. Since RMD's are calculated from the beginning balances, how does this rollover effect what he receives in 2003. The rollover into his account occurred in August, 2003.

Thanks.

I have a question for you QDRO experts out there:

The following excerpt is from a news blurb on benefitslink today.

"This case involved a divorce that occurred in June 2000. In November 2000, an order was entered granting the wife, Mrs. Singleton, an interest in her husband's two pensions, and designating her as the surviving spouse for his retirement benefits. However, when Mrs. Singleton (or more likely, her attorney) presented the two domestic relations orders to the plan administrator in February 2001, the copies presented were not signed by the parties, the judge, or the attorneys. The plan administrator notified her that the orders would be qualified (in other words, that they met all the requirements for a QDRO) if they were properly signed. Mrs. Singleton did not respond."

My question is this - I find nothing in ERISA which requires the signatures of the parties involved. However, a state authority must issue a judgement, order, decree, or otherwise approve a property settlement agreement before it can be considered a "domestic relations order" under ERISA. Can a plan administrator require both parties to sign before considering it a QDRO? Or maybe if the state of domicile requires both parties to sign in order for it to be a "DRO" then no judge would approve it in the first place if unsigned... This is one more reason why we always require the client to consult their legal counsel as to the validity of a QDRO!

I have a client that is an employee in a company and he defers the max in the 401K there. He also works for himself and wants to defer another $12K... Possible?

A plan is top heavy for the first time in 2002 and the employer is refusing to make the required contribution. In fact, he wants to terminate the plan and be done with it. I understand that failure to make the top heavy contribution is a disqualifying event, but what sanctions could be employer be facing?

What type of notice do I have to give for a discretionary profit sharing plan which is currently integrated and we are changing to a cross-tested plan? What is the deadline if any for this?

I have a client who has a piece of property held in his self-directed Profit Sharing account. If he sells the property to an unrelated party, can the closing costs and other fees related to the sale be paid with his personal assets? Or does these fees have to come out of his plan assets?

Thanks.

Hi,

If I make a maximum ROTH contribution and later need to withdraw the contribution, in the same tax year, am I prohibited from funding my IRA for the remainder of the year?

TIA

A company is starting a brand new plan. Want to do profit sharing only for 2003 and then start 401k piece 1/1/04. The prototype I am using does not offer to add a different effective date for the 401k piece. Are there any problems with making everything effective 1/1/03 if no one in the plan is given the opportunity to defer?