I inherited two ESOPs from an attorney who left our firm and have never dealt with them. Do they have to be restated for GUST? They are both prototypes. Does the 9/30 deadline apply to them?

I realize this is probably a dumb question, but I have to ask it.

I am not very educated on insurance in retirement plans so please pardon my ignorance but I have a few questions:

What do you do when the premiums paid on an employees life insurance policy for any given year exceed his annual contribution allocation in a profit sharing plan? (the employer pays the premiums)

Also, what exaclty is the incidental benefit limit and how do you calculate it?

I have a plan that terminated and all assets were disbursed in early 2003. Do I need to provide SARs for the 2002 plan year? All participants received notice that the plan was terminating in 2002 (i.e., NOIT and NOPB).

Technically, the DOL regulations do not provide for this exception, but from a practical stand-point it does not make sense to provide the SSA for 2002 or 2003.

If the EGTRRA amendment has been executed, is it required that the Employer adopt the POST EGTRRA amendment prior to the GUST rap? If so, is it best to adopt on the Sponsor level or the Employer level?

Thanks!

I just don't do much work with prototype plans, so any help here would be greatly appreciated.

A client has adopted a non-standardized prototype 401(k) plan that has received a favorable opinion letter. My client elected "W-2 wages" as the definition of compensation, but also elected the following adjustments to the definition: (i) include amounts that are not includible in gross wages under Code Sections 125, 132(f)(4), 402(e)(3), etc., (ii) exclude reimbursements or other expense allowances, fringe benefits, moving expenses, deferred compensation and welfare benefits, and (iii) exclude bonuses.

I've reviewed the regulations and it appears that adjustments (i) and (ii) preserve safe harbor status, but by excluding bonuses, this definition is not a safe harbor.

Annc. 2001-77 states that, unless otherwise provided, an employer cannot rely on a favorable opinion letter with respect to, among other things, Section 414(s). It also states that if an employer elects a safe harbor allocation formula and a safe harbor compensation definition, it can rely on an opinion letter with respect to 401(a)(4), 401(k) and 401(m). Because the client has not adopted a safe harbor definition of compensation, it apparently cannot rely on the opinion letter for those purposes. Does it therefore make sense to file for a determination letter, or is it not a big deal?

One other question: Annc. 2001-77 states that if the employer maintains or has ever maintained another plan covering some of the same participants, it cannot rely on the opinion letter with respect to Code Sections 415 or 416. My client has a defined benefit plan as well. Same question: Does it make sense to file the 401(k) plan?

Thanks!

Is a Schedule A required for a CCT filing as a DFE if the CCT invests in GICs? (Based on the directions for the Schedule A it does not appear that a CCT is required to file Schedule A.)

For billing purposes I am wanting a report designed with the following:

1. Number of participants deferring.

2. Number of participants not deferring (with a balance).

3. Number of distributions processed in the given time frame.

4. Number of loans processed in the given time frame.

5. Number of loans outstanding.

6. Number of insurance policies.

I talked to Corbel and they said it was possible but it would take too long and wouldn't do it. If there is anyone out there who would be interested in taking on this project for a fee please let me know.

Can a defined benefit plan invest in real estate?

A sole owner of a company has a defined benefit plan. He is the trustee. He wants to invest in pre-construction homes - buy them as they are being built, then turn around and sell them when completed. This is to be done, of course, in the name of the plan.

About 10-20% of the plan's assets would be used to do this.

Does this create a problem under ERISA, DOL, or PT rules?

Could someone please provide me the authority (besides the Form 5500 instruction, I am looking for the DOL Regulation cite) for the requirement that the Realized and Unrealized Gains on Form 5500 Schedule H be prepared on a "current value reporting" basis? I think this basis may also be referred to as "revalued cost reporting."

This FAQ seems to contradict earlier posts re 401(k) participants benefiting re gateway allocation. Might the distinction be between safe-harbor and regular 401(k)?

The Question: "In a cross-tested 401(k) plan, if a participant is eligible to defer and receives a match, but is not entitled to a profit sharing allocation, would he be entitled to receive a gateway allocation?"

The Answer: "No. PS contributions, elective deferrals and matching contributions separately must satisfy the nondiscrimination testing requirements. Treas. Reg. 1.401(a)(4)-2(b)(iii). The PS portion of the plan is the cross-tested portion. A participant eligible to defer or receiving a matching contribution, but not receiving a profit sharing allocation (including a top-heavy minimum contribution), is NOT benefiting from the cross-tested portion of the plan. Therefore the participant is not entitled to receive a gateway allocation."

Your thoughts? Thanks!

I've been told by a broker that Solo 401(k) plans or Uni-(k)s don't have to be updated for GUST. I thought all plans had to be updated for GUST, but since i don't work with many solo 401(k)s (and the ones i do work with are updated for GUST) I would appeal to higher ground. If anyone could confirm that Solo 401(k)s need or don't need to be updated for GUST, i would appreciate it. Thanks.

I'm polling people on their approach to accruing a benefit limited by section 415.

Suppose the participant will have 12 years of participation in a DB plan, retirement age is 62. She has 10 years of service prior to entering the DB plan.

She earns $240,000 per year and the benefit formula produces an unlimited benefit of $240,000 at retirement in 12 years. The benefit will accrue over years of plan participation.

Do you calculate her accrued benefit at the end of year 1 to be $240,000 x 1/12 = $20,000 and then limit this to $16,000 ($160,000 x 1/10) or do you calculate her accrued benefit as $160,000 (the $240,000 benefit limited) accrued over 12 years to arrive at $13,333?

Which way do you think is correct and why?

It is mandatory that all partners participate in the plan- including silent partners? Not addressing salary deferral, I know this is optional

Thanks

It is mandatory that all partners participate in the plan- including silent partners?

I have a question as concerns the issue cited in Rev. Rul. 2003-85 and that which would apply to an overfunded defined benefit plan making a transfer of its excess assets to a qualified replacement defined contribution plan. Excess assets are $250,000, maximum deductible contribution to the profit sharing plan would be limited to 25% of participating compensation for plan year ending in 2003 (i.e. $37,744). There were two participants in the terminated defined benefit plan and the same two individuals are participants in the replacement plan. There is no amendment adopted 60 days prior to the plan termination termination date.

How is the issue cited in Rev. Rul. 2003-85 able to transfer more than 25% of the excess assets to the replacement plan? The issue states that Plan B (the replacement plan) provides for the receipt and immediate allocation of excess assets in the form of a direct transfer from the terminating Plan A. Does this mean that it is allowable for the transfer to exceed 25% of surplus assets if no part of the transfer is forced to be held in suspense in order to comply with Sec. 401(a)(4) and 415? Or does it mean that at least 25% of excess assets must be transferred to the replacement plan?

In other words, is it possible that the terminated Plan is allowed to transfer the entire surplus assets to the replacement plan, therein holding what is necessary and required in suspense for up to 7 years until said amount can be allocated under Sec. 401(a)(4) and 415?

Here is my situation.

I have a Roth IRA account that was opened 4 years ago. I am buying my first house and want to use all of my Roth IRA money for part of a downpayment. I have not made any contributions to the account over the past 3 years, and do not plan to in the future. Therefore, if I take the money out of the Roth, can I subsequently close the account and not pay the money back? Is it treated like a loan in that regard or can I just keep the money and not worry about paying it back?

Thanks for the help!!

Has anyone heard of a limitation on deferrals where once a participant hit the annual compensation limit and they wanted to contribute the maximum deferral amount for that year - the deferrals would have to be contributed by the time the person hit their maximum compensation figure?

Example:

12/31/02 plan year end

Participant's compensation in June was at $200,000.00

Defers $1,000 per month - in June total deferrals were $6,000.00

Is this participant limited to a total of $6,000.00 because they hit the annual comp. limit in June?

Thanks for any input.

is it permissable to allocate PS contribution to HCE's during the PY and NHCE's at the end of the PY? Among other things, it seems discriminatory to me.

Does anybody know or can recommend a plan administration software tool that one can use to track the work load of the pension administrators?

Say Example a pension administrator has 50 plans assigned to him. Is there any software out there that can help with pulling out information such as:

Q1) How many 5500 are due based on plan year end?

Q2) Which plans are top-heavy etc.?

This software would be a good tool for the administrator to see where he is on his workload as well as help the manager keep track of the cases.

Thanks.

Plan sponsor of 403(b) plan is discontinuing and starting a 401(k).

Investment provider is hitting the sponsor with a participant fee. Is there a way to "cash-out" terminated participants with under $5,000 to end this charge?

Could Plan sponsor unilaterally transfer the participant accounts to a new provider? I think they can only control new money, but am not at all versed in 403(b)s.

Thanks for anyone taking the time to respond.