We are a TPA firm. In 2000, we instructed a Trustee to distribute appx $24,000 to a terminated participant and withhold $6000 for taxes. The $24,000 was paid out. The $6000 was transferred from the Trust to the Corporation (the Trust does not have a checking account and the intent was for the Corporation to in turn deposit the $6000 w/h). We just found out that the $6000 is still sitting in the Corp account.

We prepared and the Trustee sent in the 2000 1099R showing the total dist of $30,000 with $6000 withheld. No one has heard anything from anyone.

I don't know what the penalties are but I guess the proper approach would be to send the $6000 into IRS with a letter of explanation from the Plan's trustee. Are there special procedures or can someone direct me where to go to check out the late penalties. I thought maybe if the Trustee is just honest the penalties might be waived. This is a long time client and I truly think it was an innocent mistake.

Any thoughts would be appreciated.

Let's say an individually designed plan has been timely restated for GUST and a good-faith EGTRRA amendment has been adopted.

What additional amendments need to be adopted in 2003? deemed 125 compensation amendment, 401(a)(9) amendment, etc.

Thanks.

Can a controlled group make automatic enrollment applicable only to selected members (companies) of the group in a single master plan? If so how?

Does Relius perform the function of not imputing disparity on SHNECs when running 401(a)(4) general non-discrimination test?

I'm a new Datair user and I've just completed my first conversion....well, almost. I have an issue I've been unable to resolve. My PVB, NC, CL all look fine. However, the PVAB on my "Schedule of Benefits/Current" screen (actuarial equivalence basis) is $0 for all deferred vesteds (status "D"). I checked the help function and the manual and I've gone to screens 30 and 31 and input the "prior year vesting percentage" and "prior year accrued benefit", but it didn't help. Any ideas what I'm doing wrong?

Thanks in advance.

How do you handle the documentation of qualifying events for 125 Plans/Medical Insurance Plans? Typically we have not requested anything in writing (marriage certificate, birth certificate, spouse's verification of employment, etc.) unless it had to do with a legal matter such as a QMCSO. Our plan has around 500 participants and we currently accept the employee's word that they are giving us legit information.

How are other Administrators handling this?

Also, do you have them bring in tax returns if you are questioning a dependent status? Our plan defines dependent as someone claimed on your tax return.

I know that the Safe Harbor notivce needs to be sent before the plan year to all participants. But what about people who become eligible in the middle of the year? Do they have to get one, and what is the timing of that one?

For example, I have a plan that has immediate eligibility and monthly entry. If someone is hired in April, and can start in May, obviously, she wouldn't get a notice. Is one required for her for that year?

We converted our plan to a new TPA and a daily valuation platform in late 2002.

At that time, we had employer-directed profit sharing money with one investment broker, and individual 401k accounts with American Funds. The 2 partners had legacy 401k FBO accounts with the same third party as holds the profit sharing.

The TPA seems to have correctly allocated the American Funds FBOs to the participants.

Our choice was not not convert the partner's 401k accounts and leave them as outside investments.

The profit sharing investments were liquidated. The TPA mistook these funds for the partner's 401k FBO funds and split the amount between the 2 partners. However, it was actually the proceeds of the employees profit sharing funds.

Since then, one of the partners with the erroneous conversion $ in his account left the firm and took a full distribution, including the $ that is not his.

The TPA wants to partially restore the profit sharing accounts of employees with erroneous $ in the account of partner #1 who is still the owner. They want to pursue getting the $ back from the terminated partner before restoring the remaining $ to participants. There is 23K in the active owner's account that is wrong, and 28K in the terminated partner's account that he has taken out of the plan.

Is this the right way to clear this up? We suggested the TPA use their Errors & Omissions insurance to fully restore the part that the terminated partner took, and then use their own resources to get the $ back from him to repay the TPA. They said no. They said our alternative was to pony up with more employer's money.

This just does not seem right? I hope I am making sense.

Has anyone heard about a new ruling for DB Cash Balance plans? I don't have any experience with DB or Cash Balance plans but we are looking for alternatives for some of our clients.

Any information would be helpful.........

Our Health plan is governed by the 125 rules so the birth of a child is considered a qualifying event. However, if the baby is born and then the employee wants to have the baby covered under the spouse's insurance, is this request consistent with the event? The employee would then drop her child's coverage with us. Obviously it would be a qualifying event on the spouse's side as well. Is this okay to do?

a client became a safe harbor plan effective 1/1/99. Didn't separate pre-safe harbor PS contributions, and declared all participants 100% vested. Now, the client is complaining that people who left prior to 1999 should not be 100% vested.

If a terminated participant left an account balace in the plan, and the plan was amended to safe harbor status, and the amendment does not specifically mention the vesting schedule, are those participants 100% vested or not?

An employee has legal guardianship over a sibling who is diabled and over age 25. Is this dependent eligible to be covered under the employees medical and dental coverage?

I have a small manufacturing client with a 401k Plan. The plan has a discretionary match which has never been funded. No last day rule.

There are 16 employees: 1 HCE, 10 hourly employees, and 5 salaried employees.

Due to the economy, the company recently laid off all their hourly employees. They are wanting to make a discretionary match for 2003 where the hourly employees get a higher rate of match than the salaried employees. Also the HCE does not want to receive a match.

I plugged in the numbers and all ADP/ACP tests pass. Am I overlooking anything with the two rates of match between the salaried and hourly employees?

When a MPPP is merged into a PSP, those former MPPP assets then become owned by the PSP.

I had heard in the past that the PSP still has to continue to maintain a separate accounting (by participant) of those merged MPPP assets. So that someday if a participant terminates employment and wants a lump sum distribution from the PSP, the PSP must be able to tell how musch of his distribution is from the former MPPP assets.

Can any one justify why such extra recording keeping is necessary? Is the PSP really required by law to be able to know how much of a distribution is from former MPPP assets?

Can someone direct me to messages concerning this ?

thanks

An employee has a child with severe medical problems. There have been times where the child is absent from the day care for up to 4 weeks due to illness. The day care is requiring the family pay for this missed time and calling it a fee to hold the child's space.

Is this reimbursable under a Dependent Care Reimbursement Account?

We have an employee who enrolled in the health FSA with the intention of having surgery sometime during the year.

Now she has found out that she is pregnant, and can no longer have the surgery.

This is not a valid status to change to allow her to reduce her election, correct? Would it be advisable for the employer to make an exception in this case anyway, and allow her to reduce?

Corporation A, Corporation B, and Corporation C are equal partners in partnership ABC. I do not think this is a controlled group. However, it is an affiliated service group. If ABC has a plan and A, B, and C adopt it, do I have a multiple employer plan, have to file the 5300, and pay the increased user fee?

Corporation A, Corporation B, and Corporation C are equal partners in partnership ABC. I do not think this is a controlled group. However, it is an affiliated service group. If ABC has a plan and A, B, and C adopt it, do I have a multiple employer plan, have to file the 5300, and pay the increased user fee?

Company A operates a safe harbor 401(k) plan under a standardized adoption agreement with no service or age requirements. In 2002, Company B was created which is owned 80% by Company A. Since Company A is on a standardized plan, is it correct to say that Company B's employees would have had to be covered under A's plan and given the chance to defer along with a safe harbor contribution since there is no entry requirements and they are a controlled group?

If so, and this was not done, is the plan still considered safe harbor with the mix-up?

Any ideas on how to fix?

I have read a number of responses to questions regarding coverage testing for controlled groups and I am not understanding the term "passes on its own" with relation to the entities involved.

Please help me understand by example with the following data:

Company A - 14 Non-excl. NHCE, 14 benefitting NHCE, 6 Non-ecl. HCE,6 benefitting HCE

Company B - 5 Non-excl. NHCE, 5 benefitting NHCE, 1 Non-excl. HCE, 1 benefitting HCE.

Would the results for Company A's coverage look like:

14/19 divided by 5/6 = 85%?????????????????????????

If the employers are under two separate plans and they each have different allocation rates and contribution types (e.g. one matches and one doesn't) and they pass coverage using the ratio test do I still need to test the contribution rates for non-discrimination?

One more question - can you have two employers of a controlled group each adopt a separate standardized plan or do they need to be non-standard?