For some time now the DOL has been sending letters to some of our clients saying that Part II of the Schedule B needs to be completed. However, Box F on the first page of the form is checked indicating that there were 100 or less participants in the prior plan year, and the instructions clearly state for Line 12 that Part II does not need to be completed if there 100 or less participants in the prior plan year. The DOL thinks Part II should be completed since there are more than 100 participants for the current plan year Schedule B. We sometimes encounter resistance from DOL officials even when we point out this exemption to them. I was wondering if other people are getting these notices, and if you received any indication from DOL that they are fixing their software. It is definitely annoying and time consuming to have to respond to these inquiries on behalf of our clients, not to mention the fact the client sometimes gets heated up about these letters (thinking we are at fault and not the government). Has anyone else experienced this?

I have a traditional IRA account at a brokerage firm. I want to move some of the funds (not all) to a new firm (new IRA account). The new firm is telling me they can transfer all or none. They told me to withdraw what I want out of the old firm, and wire the funds to the new account.

The old firm will allow me to select whether I want them to withhold any funds withdrawn for taxes. If I select "No", withdraw the amount I want, and wire it to the new firm within 60 days, is this allowed so as not to trigger an early withdrawl of the IRA account?

Carl C

A client has discovered that it has inadvertantly paid SERP administrative expenses from it's DB plan's assets. The amount involved is small- $2,500.

Clearly, the client should reimburse the plan. But how?

This would not seem eligible for EPCRS, because it is probably a reversion of assets.

It would not seem eligible for correction under VFC because it is not a "loan."

It is also presumably a prohibited transaction.

Is the simplest correction methodology to reimburse the plan, with lost earnings, and pay the excise tax?

Thanks for any ideas.

card

My client is a self-insured group health plan and is very hands-on. They have contracted with an insurance company for a network and administrative services. This insurance company is EDI compliant and has told us that the plan sponsor/employer can "log on" to their system to send e-mails containing PHI about employee/participants (instead of the employer using its own e-mail system). Is this enough for the group health plan to be EDI complaint or must it have its own separate system that is EDI complaint?

DESPITE TRYING TO CONVINCE THEM NOT TO(FOR NUMEROUS REASONS), A CLIENT, WHOSE ASSETS HAVE BEEN DISTRIBUTED SINCE DEC 2001, INSISTS ON FILING FOR DETERMINATION FOR TERMINATION. COULD THE FACT THAT THE PLAN IS LIQUIDATED PRESENT A REAL ISSUE FOR THE IRS/CLIENT? IT'S ALMOST BEEN TWO YEARS AND WE HAD A DELAY IN GETTING THE NEW 5310'S ON TOP OF GUST RESTATEMENTS. I ADVISED THE CLIENT THE FILING DOES NOT PREVENT THE IRS FROM POSSIBLE FUTURE EXAMS. ALSO, THE COST INVOLVED AND THE FACT THAT THE IRS JUST DOES NOT HAVE THE STAFF TO EXAM ALL THE PLANS THAT TERMINATE. STILL, THEY INSIST.

Has anyone revised their plan doc/QDRO admin procedures to incorporate the now permissable charge to participants? We recently (October 1) implemented a $500 charge -- is this in the ballpark of what others are charging?

We are filing intial and final forms 5500-EZ for MP and PS plans that terminated this year as of August 2003. They are inital because they had never had combined assets of over $100,000 and final because the plans are terminating.

Question - can we complete the 5500-EZ on the approved 2002 returns or do we have to wait until next spring when the 2003 forms are released?

Thanks.

it seems to me an investment advisor could be responsible for a portion of the trust fund (certain investments) and not be responsible for other assets. If this is the case does it logically follow that an investment advisor can exclude employer stock from the assets for which he renders advice? if an IA did this and subsequent problems arrose with the stock and failure to diversify, could the IA be held liable for this failure to diversify?

Person is employed by two unrelated employers and potentially will be a participant in each employer's retirement plans (possibly PSP and 401(k)). It appears that the 415 limit and the catch-up contributions limit( see example in Sal Tripodi's ERISA Outline Book at 11.257 regarding situation where catch-up limit is exceeded where individual is participant in two separate 401(k) plans maintained by two unrelated employers where failed ADP results in refund of deferrals) are plan limits and the 402(g) limit on elective deferrals is the only individual limit. Thus, assuming sufficient compensation from each employer, it would be possible for a participant in two unrelated employers' PSP/401(k) plans to receive 40,000 in the PSP(Employer 1) and 42,000 (28,000 PSP contribution, 12,000 deferral, and 2,000 catch-up) in the 401(k)(Employer 2)???

Have a situation where an employer is paying some of it's employees (bus charter company) by the hour and some of it's employees (drivers) by the miles they drive. How would they determine when an individual has met the 1,000 hour eligibility when they are being paid by miles driven vs. hours worked?

I am aware of the elapsed time method but these employees are not full time so not sure this would work.

Any thoughts would be appreciated.

Thanks,

Diane

I currently have a Personal Pension Scheme with a company in the UK. It is losing value tremendously and I would like to move it to the US. I am 46 and have been told that the money is not movable until 50. At this rate the Scheme will be worth half of its value by then. The tax person I spoke to in the UK told me that I could transfer the money to a substantially similar fund in the US. What does that mean and would an IRA meet that requirement?

For purposes of calculating a participant's required minimum distribution from more than one 403(b) plan, I seem to recall that a participant can total the minimum amount from each 403(b) and take the total minimum distribution from any one of the 403(b) plans (rather than taking a minimum distribution from each plan). I think that I am correct but I could not find the cite - I think it is in the 401(a)(9) regs but I could not locate it. Does anyone know the cite?

Thank you.

Company A, B and C were merged into a controlled group in 2003. A, B and C all have Simples. Company D has 401k plan. Do we have any controlled group issues regarding the Simple plans? Can we leave them as is until 1/1/04 when all employees will participate in Company D 401k plan?

I am reading the instructions but am still unclear. Is a Form 5500-EZ required for the year if the beginning of year assets are $70k and the end of year assets are $110k?? It seems to be based on prior year end of year assets, so, no for this year, but yes for next year.

Can anyone confirm?

Please let me know.

thanks

It's been a while since I experienced a DB plan termination with excess assets, but it is my understanding that when excess assets are allocated the formula must meet nondiscrimination under 401(a)(4) as it relates to the DB plan.

My experience has been limited to effectively reallocating assets pro rata to participants on their PVAB. Although, in reality the formula is just being increased from X% of pay to (X+y)% of pay, still satisfying a safe harbor formula.

What I am considering is looking for possible alternatives to the pro rata approach, and it seems to me that any method can used so long as it passes 401(a)(4) and is not contrary to the document. If so, when testing is performed (assuming the annual method), would you say I test the total accruals for the year or just the allocation of the excess amount? I don't see any justification for the latter, including my reading of Rev. Rul. 80-229.

Client would like to start up a 401(k) plan for he and his wife (only employees) that also allows PS contributions. They both have account balances from an old SEP-IRA that they would like to rollover into the new plan. Can these rollover amounts be used to pay for insurance premiums in years where they do not make any contributions?

Although every year the premiums cannot exceed 50% of the contributions (they want whole life), would the elective deferrals count as the contribution in addition to the profit sharing?

The document can be drafted to allow for withdrawals pursuant to the IRS 2-year rule. The doc also states that such amounts can be used in addition to the incidental benefit limit to pay premiums. That would seem like an easy way to circumvent the incidental benefit limit by using plan assets to pay for the premiums (at least partly) as opposed to the employer paying the whole amount. Are there any other aspects to this that should be considered?

Can the son of the IRA holder ( who is a liscensed real eatate agent) receive a commsssion normally paid (on real estate sales), on out right purchase of lot in IRA without triggering self dealing rules?

I know this has been discussed but I am still confused. An employee takes a premature distribution from an IRA. He wants to roll this into the 401(k) Plan. Is this rollover "cleansed" of all IRA characteristics? Is there any reason that the IRA rollover must be segregated from other rollovers? Is a deemed IRA only applicable to new IRS money? I found guidance on deemed IRSs, but none on rollove IRAs. Can you direct me?

Thanks (I am very confused)

I'm having an unusually hard time confirming this but do SIMPLE IRA salary deferrals count towards the 402(g) limit? Does it matter SIMPLA IRA vs 401(k)/

Thanks for the guidance.

We have a ps plan for period ending 12/31/02. The contribution allocation is 25% of comp. The deduction will be the same. There is a forfeiture of appx $20,000. I can allocate it and no one will hit their 100% of comp value.

Can I reallocate the forfeiture without a problem? I have a mental block about the 25% limit. In other words, with contribution along with the forfeiture will give everyone about 27% of comp, ok? Naturally, the employer would only deduct the 25% because he has already deducted the forfeiture once.

Thanks.