I have heard stories about providers who were penalized by the DOL because they took too long to transfer plan assets to a new provider, once sufficient (in whose eyes?) instruction had been received.

Does anyone have any direct experience with such activity? The principals of our company sometimes delay the transfer for a period of time while they try to "save" the case, and while I know there may be fiduciary exposure in theory, I would like some anecdotal reports if there are any.

Our loan policy does not specifically address 'additional payments'. Currently all plan loan payments are made through payroll deduction. The policy indicates it will allow for pre-payments (payment in full). It is our plan administrators opinion that any 'additional' principal loan payments would constitute a violation of the original loan payment agreement & schedule and cannot be accepted.

Any thoughts?

I have a client who maintains a DC 401(k) plan and has asked the following question:

Back in December 2001 the officers of said company took substantial pay cuts due to economic conditions. With the recovery of the business these three officers will be receiving their lost wages, which will be a sizable sum.

The million-dollar question is:

Is there not a three-year window that allows them to put more into their 401(k) when dealing with lost wages?

I unfortunately don't have a copy of the document but thought I would see if anyone had heard of such a window.

Thanks

Jim

I have four sub-S corporations that participate in one 401(k) plan. The plan sponsor (one of the sub-S corps) split from the other three sub-S corps split effective 1/1/2002. The three remaining sub-S corps continue to operate as a group. However, the plan sponsor has moved their portion of the plan assets to another broker.

The questions that surround this situation are numerable, but we basically need to know if this split constitute a distributable event?

I am happy to provide more info, if needed. Thanks for any input!

One of our clients currently maintains a 401K with a safe harbor match; can individual HCEs opt out of receiving this contribution? The reason for the question is the owners are thinking of implementing a Cash Balance plan and if the participants in the 401(k) receiving "Corporate" money and are also in the cash balance plan there are limitations applied to the contribution level attainable in the cash balance plan.

I hope this makes sense!

Thanks for your help!

Since I'm always willing to question myself on this subject, just soliciting opinions:

Suppose you have 2002 calendar year plan. As with many clients, they have just given complete data. We find that as of 12-31-2001, they fail the 95% asset test. And they have NO bond whatsoever. (Ignore for now that this is an ERISA violation in and of itself).

For purposes of qualifying for the waiver, do you interpret the rules as:

A. If they had bonded for a proper amount no later than 12-31-02, they qualify for the waiver.

B. If they bond for the proper amount no later than the time they actually file the 2002 5500 form (in 2003) they still qualify, or is it too late if they didn't do by 12-31-02?

C. If assets had been shifted in 2002, prior to 12-31-02 so that they satisfy the 95% test, is this sufficient, or does the fact that the beginning of year asset test (based on 12-31-01) failed automatically preclude them from satisfying the asset test for 2002?

Any opinions or experience with the DOL accepting (B) above, for instance, even if you are inclined to think this doesn't satisfy the rules?

Thanks.

Parent & Subsidiary with separate plans. I have each plan set up on Relius. I have no problem getting aggregated reports fro general nondiscrim. & top heavy, but I can't get an aggregated ADP test. How do I make that happen?

Thanks in advance for any guidance.

Is anyone aware of health carriers providing different levels of reimbursement for office visits depending upon who provides the service (MD, NP or PA)? An employee addressed this question to us which in turn we relayed to our HMO carrier. Their response was that it was an industry wide practice to compensate at the same rate irrespective of who provided the service and that the CPT code does not differentiate between an MD, NP or PA for office visits. Any comments?

The amount of an employers contribution to a cafetreia plan is based upon one's enrollment status ie single, family etc. If an employee changes their dependent status mid-year and immediately prior to the effective date of this change depletes their account based upon the original enrollment status (which had more $) can the employer limit or recover the excess amount that is withdrawn?

Hi,

We are working on a GUST restatement for a one-person 0% money purchase plan. Because the idea of a 0% MPPP is strange to me, I suggested restating the plan as a discretionary PSP. Of course, we would retain the J&S and withdrawal restrictions associated with the MPPP, but just allow for discretionary profit sharing contributions instead of a 0% MPPP (which seems like a frozen plan to me).

Are there issues I am missing? Any surprises in store? Is anyone has come across any or knows a reason that this is not a good plan, your thoughts are greatly appreciated!

Thanks

I have heard that employees of governmental employers are not subject to FUTA withholding. If a Public Educational Orginazation maintains a 457 do we then withhold for FICA but not for FUTA ?

Although FICA and FUTA are normally withheld from salary deferrals under a 403(b) arrangement I have heard that employees of a tax-exempt 501©(3) organization are exempt from FUTA withhloding. Is this true and if so, is there a cite you could refer me to. Thanks !!

Cool!

http://soa2.syn.net/Stats/stats_employee.html

Thanks, MGB

Our client is a government instrumentality and maintains an eligible 457 plan. They have also received a 501©(3) designation as a non-profit organization. They would like to take advantage of the EGTRRA amendment to 457© and permit participants to maximize contributions under 457 and another plan.

As a governmental instrumentality with a 501©(3) designation, can they sponsor a new 401(k) plan?

If 401(k) is not available, may they offer a 403(b)?

A company sponsors a 401(k) Plan that includes Matching Contribtions which vest under a three year cliff schedule. The company wants to amend the plan to include a profit sharing feature which provides for two year eligibility and 100% vesting.

Under this design, can the plan ignore service pursuant to Code Section 410(a)(5)(B) (for rehired employees who had a one year break in service before they initially completed 2 years of service), or does the existence of Matching Contributions mean that that Section cannot be incorporated into the plan document?

(In other words, does the word "plan" in that Code Section really mean "portion of a plan"?)

Thanks.

Our office has a takeover medical practice who has a calendar year 401k plan in 2002. Dr. A, who was part owner, deferred $12,000 in 2002. Dr. A also stole big bucks from the practice and there is a lawsuit in the works. Due to Dr. A's theft of company money, Dr. B refused to fund Dr. A's $12,000 deferral for 2002.

Our position is that the $12,000 must be funded to the plan no matter what is happening within the company. Any other thoughts?

I have an employee who is due an ADP refund, but is deceased. Should his bene be forced to take the distribution? I am thinking so, since these dollars cannot stay in the plan because of the testing failure, but wanted to pose the question.

Thanks.

A broker brought us an "owner only" client in 2002. She funded the plan with $41,000 prior to year end and then failed to show any income (a net loss on Sched. C). An ERISA attorney advised us, verbally, that this plan basically never existed - that you must have some compensation to fund the plan with some sort of contribution in order to create a valid plan/trust.

No plan, no penalties - all good news until the broker informed us that the contribution was commingled with a rollover that she'd also put in the plan in 2002.

Legal dep't of the brokerage firm says that our "plan is non-existent" theory is no longer valid because the plan was funded (and therefore established) with a rollover deposit. They do not want to "undo" the rollover.

Question is: Can you establish a plan with nothing but a rollover in the first year?

And I'm happy to hear any thoughts on the overfunding problem. We had this happen with a few owner only's (showing net loss after already funding) and have heard a variety of opinions on how to handle.

My husband swears that he had a "401(a) Plan" at his prior company. I tried to explain to him that this just covers the qualified status of the plan. He has been told repeatedly that "401(a)" is the plan type. The plan consisted of his after-tax contributions and the 6% company match on those. When he terminated, it was not permissable at the time to roll over his after-tax contributions (he was told that the rules have now changed). So, he rolled over the company match portion & earnings and withdrew his after-tax amount and now is being faced with the 10% penalty.

Has anyone heard of such a plan?

What is the effect of permitting a nonchurch entity to participate in a church plan and merge existing monies into the church plan? Will the entire plan's church status be jeopardized? Any cites/guidance will be appreciated.