Ok, I have a cross-tested profit sharing plan. Group 1 is shareholders and their spouses. Group 2 are HCE's not in Group 1, and Group 3 are all other participants. In Group 1, the goal is to maximize the 2 employees at $40,000. However employee #1 has $200,000 in comp. and employee #2 has $160,000 in comp. Don't they both have to receive the same percentage of allocation, even though that does not get employee #2 to maximize at $40,000???? I cannot have them both receive $40,000 right?

Employee #1 = $200,000 x 20% = 40,000

Employee #1 = $160,000 x 20% = 32,000

Isn't that what they should receive? I can't give employee #2 $40,000 b/c it would violate the same percentage allocation right?

Thanks.

Can someone tell me exactly how accrued interest is calculated for purposes of reporting a defaulted loan on the 1099-R.

A plan sponsor timely adopted for GUST but failed to adopt the RMD final reg amendment by 12/31/03. Where are we now? Non-amender? Help!!

We have a 5,000 annual health FSA limit. Employee's spouse also has an health FSA with 5K limit. It is my understanding that unlike the depednent care fSA which limits to 5K between both of them , that the healthcare FSA is a plan limit adn employee can do 5K in our plan and his posue can do 5K in her employer's plan, correct?

At this point, my wife and I are under the "salary cap" for contributing to a Roth IRA, and we both are actively contributing to our accounts. What must we do with our existing accounts if our incomes exceed this value in the future, and we are no longer eligible to contribute? Do we need to somehow convert these accounts, or are we allowed to have them, just not to make any further contributions?

Thanks!

We have a client, here in California, who is interested in adding automatic enrollments to his Plan. I remember reading that there is an issue in California regarding the legality of automatic enrollments and whether the state law is preempted by ERISA.

Has there been any further guidance in this area?

Is there any one here in California with automatic enrollments in their plans?

As always, thanks for any suggestions.

I have a 401(k) Plan that is a 4/30 year-end and each year has laid-off several employees. They have required an audit (over 120 Parts) every year since 1980. During this plan year (03/04) the number of actual participants (including terms w/balances) has now dropped below 80. Will this plan still require an independant audit? Thanks for the help.

I am reviewing 6 years of past filings for a company's medical welfare plan. I would like to know if a SAR is required to be prepared and distributed to each participant for each filing. Any opinions/guidance/reference would be appreciated.

Thanks.

We have a situation in which a participant who was eligible in the prior plan year was granted an unpaid leave in the prior plan year. This person was not "officially" terminated until after the start of the new plan year. The census received from the client indicates the EE's term date with $0 comp earned for the plan year.

Without modification of some type Relius will include this person in the testing. Reading up a bit on a participant with $0 comp it appears the most conservative approach is to not include this person in testing, especially if they are an HCE.

Has anyone run across a similar situation, and what is the best method in Relius for removing this person from testing.

Thanks for your help.

Hi,

I have had to research church plans for the first time and I have read through every thread since 1999. I was hoping to get clarification on these items.

1. Do the nondiscrimination rules apply to church 401(k) plans? I see a thread that says, yes, now these rules do apply (maybe after SBJPA??).

2. It looks like there is no submission required to be a nonelecting church plan. So, if you're relatively confident you're a church (i.e. a jewish temple) then you don't need to file for church status.

3. Non-electing church plans have no Form 5500 requirements.

4. Can a non-electing church plan use a prototype document that has ERISA language and still not be considered an ERISA plan. I think this is yes, but want to confirm.

Any help is greatly appreciated!!

I was wondering if there are any regulations on the timing of switching 401(k) testing methods? Is it possible to amend the tetsing option after the plan year is over? I have a new plan - effective 01-01-03, which which stated they wanted prior year testing when being set up - they fail 401(k) testing using prior -3%- but would pass using current. Can I change to current after 12-31-2003 (the plan anniversary)?

I have a plan asking that the invoice for their 2004 Defined Benefit Pension Answer Book be paid from the trust.

Would this be considered a legitimate administrative expense? The EBSA site addresses a lot of expenses, but I could not find this one.

Does anyone know of any alternatives for a more than 2% Sub-S owner to pay unreimbursed medical expenses pre-tax other than under a Sec 125 plan?

Employer has made contributions to a profit sharing plan in 2003 which caused three participants to exceed their 415 limit. I understand that we can either reallocate the excess among the other participants or hold in suspense to be allocated to three participants next year (2004). My question is: if we hold in a suspense account versus reallocating, can the employer still take a tax deduction on the excess for 2003? Or is it deductible in 2004. Will it be subject to excise tax? Based on the research I have done, it is not clear to me. Thanks for any and all input.

There is a disagreement in our office regarding the calculation of a participant's maximum lump sum.

With the increase in benefits up to a maximum of 13,750 a month what is the new maximum maximum lump sum? Obviously it depends on compensation, motality, and attained age and retirement age (monthly benefit provided) as well as the current 30 year Treasury bill interest rate.

Does anyone have a formula? Our software that we are using doesn't seem to be correct.

Is there software or some other type of service that can provide me with the rate of return for a handful of mutual funds for a specific period of time. I have the ticker symbols of the funds involved and need to get what the fund returns were during the period in which the plan had late contributions. The contributions have been deposited already. I intend to use the highest rate of return in order to complete the PT correction. Thanks.

PAL

I have a client with two plans, a 401(k) with a 3/31 plan year and a PS with a 6/30 plan year. The plans need to be aggregated for the top heavy test. The plans are top heavy.

To calculate the minimum top heavy contribution, should we use the compensation for the 3/31 plan year or the 6/30 or something else.

Upon termination of employment, a client paid out his son from a plan more than his vested balance ($7k more). The client wants to stick to the amount distributed and suggests that the payout amount be determined by the current end of year value which would bring the sons account up to the amount paid (and a little extra, $300+/-). I indicated he couldn't.

Can the client calculate the amount of the distribution on a trust valuation which is not an end of year date? and if so would he be setting a precedence for future distributions? (small company, 2-3 EEs at best including owner)

A Company has a money purchase pension plan with a 5-year cliff vesting schedule. The plan will be frozen effective March 1, 2004. The Company also has delayed forfeitures, (i.e. no forfeiture until 5 one-year breaks in service). The Company knows that it will have to fully vest those participants who have terminated employment but not yet forfeited, but the issue is how to compute the accrued benefit/account balance. Specifically, must the account balance of the inactive participant be adjusted for investment gains and losses for the time period after their termination of employment?

Couple filed as self employed and funded their individual SEPs. As of 1/1/03, they became an LLC and hired an employee. Do they need to change their SEP documents, etc.?