A person was in a 457b plan then moved to a 401k with another employer. the $12k limit still applies under 402g, right?

A client wishes to terminate its 401(k) plan and make distributions. However, the client also permits employees to defer income to annuity contracts through a non-ERISA 403(b) arrangement. My concern is that the 403(b) arrangement might be considered a successor plan under 1.401(k)-1(d)(3) - a defined contribution plan maintained by the same employer. I'd like to argue that it is not a successor plan as it is not a plan maintained by the employer (at least for ERISA purposes). Clearly, for 415 purposes, the employee is generally deemed to maintain the annuity contract, not the employer.

Interestingly, the proposed 401(k) regulations add 403(b) plans and contracts to the list of plans, which currently includes ESOPs and SEPs, not considered to be successor plans. The preamble does not specify whether this is a change in position or simply a clarificiation of the existing rule.

Anyone have any thoughts on whether a non-ERISA 403(b) program should be considered a successor plan under the existing guidance?

We have a client (Corporation X) that sold their business to Corporation Y (unrelated). Both Corporations maintained 401(k) plans with similar provisions (eligibility, etc.).

Corporation Y amended its plan to permit Corporation X to merge its assets into their plan. The effective date of the merger was 12/23/02. I looked at 410(b)(6)©. If I am reading this correctly, it appears that Corporation X does not have to perform coverage testing for pye 12/23/02 (short plan year). They can rely on prior year coverage test information. Is that correct?

If so, how do we report this on the 5500? Do we complete question 10a(2) on Form 5500 and not file Schedule T for 2002?

I would appreciate any and all feedback!! Thanks.

Can prevailing wage benefit amounts be contributed to a DB plan? Currently plan sponsor has a DC plan, owners would benefit from DB but not sure they could "switch" plans.

Is merging a target benefit plan into a 401(k)/PS plan similar to merging a money purchase plan into a 401(k)/PS plan? Are there any additional pitfalls to watch for?

Thanks in advance for any help-

We have recently encountered this issue with two separate insurance/annuity providers and are not sure what to do. We are trying to find out if the insurance companies are in fact handling this properly.

Scenario: Employee should have been paid out 80% of account balance in 2000. An error was made and he was only paid 60%. The insurance company will only pay the additional 20% as of the original date of distribution. No allowance to be made for gains and/or losses. In our case, it is the participant's favor because the account balance not paid out in 2000 actually lost money from 2000 to now. Is this correct? What is the reasoning and/or legal basis for not paying gains (if any exist) or not taking into account losses (if any exist) for such a distribution.

Client with cross tested 401(k) 12/31 plan year acquired a company on 10/1 with a 401(k) 12/31 plan year. Both plans will continue through 12/31/03. Using the coverage transition rule under 410(b)(6) each plan passes coverage for 2003. The ADP and ACP tests for each plan will be completed using only the participants under each plan. I also understand that for the 401(a)(4) rate group testing that the employees of the acquired employer can be disregarded for 2002. Correct? Thank you for your response.

what is the loan limit if any for qualified plans?

cannot find guidance on IRS site

Let me preface: This is not a joke. If a receipt for K-Y Jelly has a handwritten note that says 'itching', should we accept it? The provider, date of service, product name and amount are all clear. Is everyone asking for physician notes on questionable calls, or taking a participant statement self-diagnosing the reason for purchase?

Just curious.....

A D.C.-based employer has an office in California. Firm is subject to federal COBRA, wonders if it needs to offer the Cal-COBRA extension to the CA-based employees. Insurance contract was issued in D.C. so carrier says no. I can't tell from the assembly bill. Has anyone else researched? Thanks.

Client's broker told him that 1998 Roth conversion could be recharacterized on his 2002 tax return if done before 10/15/2003 (2 days from now.) We cannot verify this information. We assume the broker is wrong. Please let us know if we are correct.

I have a client who wants to change the plan year end from 12/30 to 12/31. For one day, do I have to:

1. Do testing for 1 day?

2. File a form 5500 for 1 day?

3. Give everyone a year of vesting for 1 day?

4. Anything else?

Your thoughts, as always, are appreciated.

...bg

A DB plan’s Plan Year & Sponsor’s Tax Year are Calendar Year.

Sponsor is on extension (2nd extension) for tax returns until 10/15 for the years considered below - so deadline for filing tax returns & to make the contributions to the plan for S404 deduction purposes is 10/15.

Year 2000:

Deductible Contributions made Amount

S412 Min S404 Cost Amount Amount Date Deducted

50,000 50,000 50,000 20,000 08/17/01 50,000

10,000 09/10/01

20,000 09/28/01=> goes to next yr Sch B.

2000 Sch B shows a deficiency of 20,000.

--------------------------------

Year 2001

S404 Deductible Contributions made Amount

S412 Min Computed Cost Amount Amount Date Deducted

76,000 55,000 76,000?? 35,000 06/15/02 76,000

21,000 08/27/02

20,000 10/05/02=> goes to next yr Sch B.

S412 Min = NC ($55,000) plus Prior Yr Deficiency + interest (=21,000).

2001 Sch B shows a deficiency of 20,000.

---------------------------------

Year 2002

S404 Deductible Contributions made Amount

S412 Min Computed Cost Amount Amount Date Deducted

76,000 55,000 76,000?? 35,000 05/27/03 76,000

21,000 06/25/03

20,000 08/10/03

S412 Min = Prior Yr Deficiency + interest (=21,000) plus NC (=$55,000)

2002 Sch B: Total charges = $76k; Total credits (all contributions) = $96k (20k made on 10/05/02 & 76k made during 2003 by 9/15/03). Sch B shows a credit balance of 20k!!?

Since the total of S412 Min for 2000, 2001 & 2002 equals the total amounts contributed, common sense tells me there is something wrong with having a Credit Balance of $ 21k!!??

Numbers are rounded to make the math easier to follow.

Just wondering before I set out post 10/15 on a database coding quest: does anyone have any recommendations out there for canned packages to monitor

Client contact info

Plan details

Processing data (last valuation, key provisions, asset size, characteristics, etc.)

Fee data for historical and projected purposes

How and what do you all use to manage about 600-1000 plans out there for business/tracking purposes? Don't expect I can walk out to CompUSA to buy it, but if there is something out there that is killer a recommendation would be great before I start scrubbing a bunch of disparate spreadsheets and databases.

Any comments, recommendations would be greatly appreciated!

Many near to retirerment (wanting lump sum distributions from their pension plans vs. annuity) are fearful that Congress will suddenly change the rules of the "game" on lump sum conversions by raising the interest rates on which they are calculated (allowing a corporate bond rate)- we have all heard this.

The question is CAN they do so without a faze in period. It's so that many have planned their retirements for many years (finances) around the knowledge of their current understanding of how much they will receive as a lump sum distribution under the present structure when they eventually retire. It seems incredible to think that with one quick vote Congress could hurt so many of those who have done so and have it happen "overnight". If there were a faze in period then at least those who are on the cusp of reaching retirerment might have a chance to decide to leave under the current structure of using the 30 yr. bond.

Does anyone have any idea from a reliable source that an immediate act by Congress could in fact happen on this matter or that there might be some kind of "cut off age" at which any new rules ( using the corporate bond rate) would kick in thus protecting current older employees waiting to get what they have been expecting and planned on for many years? Thx in advance for your response.

Is anyone familiar with or have any comments about the courses offered by Infre (http://www.infre.org/) ? Good? Not good? Recommended?

Thanks in advance

Jane

Sorry in advance if these seems too elementary - as I haven't dealt too much with cash balance plans. Is the prevailing actuarial practice to change the funding assumption for investment return to match the gatt rate each year, or do most people allow it to remain more steady (as one would for a non CB plan?)

Thanks in advance!

Apparently, Carol Gold issued a memorandum dated 3/13/98 that said in order to use new comp. without designating the contribution rates in the plan document, the Employer must issue an annual Trustee notification each year, stating the rates. (See ASPA ASAP # 98-10)

Is this still applicable? (I thought I had heard it no longer was?) If no longer applicable, we could finally stop with these silly notices. Are we the only ones still doing them?

David

Retiree is receiving a monthly benefit in the amount of $2,183.78. The form of the benefit is a 100% QJSA. Retiree dies in October 2003, HOWEVER, the death is not reported to the employer/plan until July 2003. In effect, 21 payments were made to the deceased participant and not the spouse. Obviosly we have tax liability issues, overpayment issues, spousal benefit, issues, etc. This situation of continuing payments to a deceased retiree can occur with any form of life annuity, regardless of whether there is a beneficiary or survivor. The survivor benefit only complicates the issue. In the past I usually handled these kinds of situations on an "independent" event basis I would consider the "facts and circumstances" of each particular situation. I was wondering how other people handle such situations. Does anyone know of any guidance that has been issued, what would be considered "best practices," etc.? I want to turn over all stones, and truly value the opinions and experiences of others.

A 401(k) plan is subject to the QJSA rules. Thus, spousal consent is required for loans. The sponsor has discovered that a number of loans have been made without the requisite spousal consent. What is the correction for this? Rev. Proc. 2003-44 addresses the failure to obtain spousal consent, but provides that the correction is to give the participant a choice between providing consent for the distribution or receiving a QJSA. That doesn't seem to fit in the loan context. Any thoughts?