I have a plan that is going to make the Top Heavy minimum as a Profit Sharing contribution--3% of comp for the eligibles. The person who prepared the allocation for me merely took 3% of the eligible comp. The plan is integrated w/ social security. There was no contribution listed for the ecess comp. is that correct--it's just a straight 3% even if it's integrated?

Your thought are appreciated.

We are a TPA firm. Late last year we issued checks to plan participants whose company had gone out of business. We still have quite a number of uncashed checks where funds were paid to participanst & IRS withholding remitted. Rather than re-issue checks to participants we are looking at issuing stop payments & sending funds to an investment account. I don't believe we can set up IRA's since we've already issued a 1099-R for 2002 using code 1 & have sent 20% to IRS. Is anyone aware of situations where a TAXABLE account can be established without an individual participant signature? We reallly need to get these funds cleared as the financial institution holding them is now assesing monthly fees due to the remaining balance being below a set minimum. Any guidance here woule be appreciated.

An employee who has "an old" 403(b) account wants to roll the account into his current employer's 401(k) plan. This can now be done, correct?

An ongoing defined contribution plan purchases and distributes an individual annuity contract in full settlement of the participant's benefit under the plan.

1. On the 5500, does the plan check off box 9(b)(1) (insurance as a plan benefit arrangement)? Proposed answer: No. The instructions say "Insurance" means "the Plan" has an account, policy, or contract with an insurance company..." Here the plan is not a party to the contract.

2. Is Schedule A required? Proposed answer: No? The contract is not a plan asset, and no participants are covered by the contract at year end. (The employee ceases to be a participant by virtue of the annuity purchase).

3. On Schedule H, is Line 2(e)(2) completed for the annuity purchase? Proposed answer: Yes.

4. On Schedule R, is Line 2 completed for the annuity purchase? Proposed answer: Yes, for the year the contract is purchased only.

Thanks for any assistance...

card

(I hate 5500's...)

A man died with all assets in a land portion of a retiment plan. Just prior to his death the land sold for about 4 times the value it was on the books. The land was sold on contract with about 1/4 paid in cash and the balance on contract with the land for security.

3 questions?

All the land in the plan is now sold. Is the fund value equal to the amount of the sale or a percent of that to insure against default of the loan?

In the event of the death what is the time frame of value. The death took place prior to the plan recieving a value for the plan year.

When can the death benifit be distributed and is it taxable?

A teacher participated in his employer's 403(b) plan until he separated from service. It was 1996, and the teacher was age 70 then. The teacher then went to work for another employer who also sponsored a 403(b) plan. The teacher did not participate in the new employer's 403(b), nor did he do anything with the previous 403(b) plan. Are the existing 403(b) assets subject to RMD since the teacher severed employment with the employer that sponsored the plan? Or since the teacher has continued to work with a new employer that sponsors a 403(b) (even though he is not participating in it), can he delay RMD until severence of employment with his current employer. I think the former is the case but wanted to get other opinions. Thanks.

i do not believe this would be considered a controlled group, however i would appreciate a second opinion. employer 1 sponsors a trad. 401(k)

ownership% ownership%

person or entity employer 1 employer 2

A 25% 24.4%

B(family investment trust of owner A) 24% 24%

C 15% 14.9%

D 2% 2%

E 2% 2%

F 2% 2%

G 20% 0%

H 4% 3.96%

I 6% 5.94%

J(grandchildrens trust of owner H) 0% 19.8%

K(employer 1) 0% 1%

owners c,d,e are related. as are owners g and i.

do i have enough information to determine controlled group status?

many thanks.

We have a client, age 68, who has $1,000,000 + in his PS balance. Approximately $950,000 of this balance is from a rollover.

The client takes random taxable distributions each year from his PS balance, usually amounting to around $50,000 to $75,000 yearly.

His plan is held with a brokerage firm and they process his distributions. The brokerage firm has never withheld 20% Federal tax or 4% required state tax from these distributions. The broker says it is optional for the client, and the client always says no tax.

Even though these distributions are coming from Rollover money inside a PS plan, are they not still subject to the mandatory 20% Federal tax?

Here is my scenario...XYZ Corp, for tax purposes, made application in 2003 to change from a C-Corp to an S-Corp. Letter from the IRS, dated May 19, 2003, received by XYZ approving change effective January 1, 2003. Owners were participating in the plan during the first part of the year (as C-Corp) but now will not be able to because of the S-Corp prohibition. My question is this: Must the contributions prior to May 19, 2003 be recharacterized as after tax since the "effective date" issued by the IRS was January 1, 2003 or can the contributions through the date the notice was issued (May 19, 2003) stand and just subsequent contributions be reclassified.

Any help in this matter would be greatly appreciated.

I have been asked to bid on a plan that is

outside of the state in which I am currently

licensed. While the issues that arise under

these plans are primarily under ERISA or

the Code, I am hesitant to provide advice

in a state where I am not licensed.

How do others handle this? Does it

depend entirely upon the PR code in

the state where I will be traveling?

I'm trying to get a CPA firm to change it's PVAB reconciliation from 1/1/2002 to 1/1/2003 to 1/1/2001 to 1/1/2002 for a report accompanying a 2002 Form 5500.

My experience is that years ago all CPAs reported a reconciliation to the valuation date ocurring 1 day after the audit year, but that over the years most changed to a reconciliation to the valuation date falling within the audit year.

I have an auditor balking at such change, asking for a legal or regulatory cite or justification for such a change. Does anybody know these rules or how they are found?

Has anyone encountered a model document for Health Reimbursement Arrangements?

I'm confused... I've been reading all about the 410(b) minimum coverage, 401(a)(26) Minimum Participation and nondiscrimination testing under 401(a) (4).

Is it true that if your plan is not a defined benefit plan, you do not run the 401(a)(26) minimum participation test (unless before 1996)? Am I understanding this right?

Who can you exclude for coverage testing? I read that you can exlude anyone who did not meet the age and service of the plan. If a plan has immediate eligibility for 401(k) portion, you can use one year of service (otherwise exludible employees). Can you also exclude terminated participants that did not work more that 501 hours? I'm confused because Relius is putting the terms with less than 501 hrs in the exludable group. I didn't read anywhere where these ees can be exluded.

Is it true that basically 410(B) deals with minimum coverge while 401(a)(4) deals with nondiscrimination in terms of benefits? At least that's what I think I'm reading...my brain is mush...

We have a plan that only has 401(k) deferral money in it. the document allows for match and profit sharing, but there never has (or probably never will) been any employer match of profit sharing contributions.

The document is a standardized protoype, so all NHCE benefit under the plan. I've always filed the Schedule T reporting that all NHCE benefit.

Now, the sponsor wants to try to separate one of the "divisions" into it's own plan. The attorney is asking for Total EEs, Total HCE, Total exludable NHCE, Total excludable HCE. This seems like data for coverage testing. Is there some other test he will be running to see if we can have a separate plan? His request asked us to exclude ees that have not met the age and year of service requirement. Don't we need to also exlude those who have terminated with less that 501 hours?

Any guidance on this matter would be appreciated.

thank you

A participant in a Money Purchase Pension Plan has been on disability for almost 1 year. He was officially terminated 6 months after he went out on disability. He has made a request for a lump sum payout.

According to the collective bargaining agreement covering this participant, he is entitled to receive 1 year of health and prescription benefits while on disability. The 1st 6 months of contributions are made by the employer and the remaing 6 months of contributions are made by the union.

Should the date the waiting period begins be the date he was officially terminated or should it be the date the employer stops making contributions or the date the union stops making contributions? Or some other date.

If anyone has any answers, please reply ASAP as I am under a strict deadline here.

For Top Heavy Calculation for 11/30/2002, should the $30,000 receivable contribution for 11/30/2001, which was deposited on 4/16/2003, be included?

The contribution was included in the 11/30/2001 valuation and 2001 Form 5500. There was no contribution for PYE 11/30/2002.

I was wondering if anyone would have an opinion on the following....If a plan sponsor has both a DB plan and a comparability plan and the DB plan is intergrated with social security, should I not use imputed disparity results in the general test for the comparability plan?

And, would the same apply for an average benefits test? For example, let's say the employer has a DC profit sharing plan with an integrated formula but they are not covering enough people to pass the ratio percentage test. When the ABT is completed, should I not use imputed disparity?

Thanks!

I seem to have read somewhere that if a 501c3 organization has a 401k plan with a ADP problem for the HCEs, the company can sponsor a 403(b) plan just for the HCEs and doesn't have coverage or ADP problems. Thoughts?

404(a)(7)©(i) mentions that 404(a)(7) does not apply "if no employee is a beneficiary under more than 1 trust or under a trust and an annuity plan." 404(a)(7)©(ii) contains the exemption for 402(g) deferrals.

PLR 8743096 toward the end says: "..section 404(a)(7) would apply even though no contributions are currently being credited to the employee's profit-sharing account. An employee does not cease to be a beneficiary under the profit-sharing plan because contributions are not currently credited to his/her account."

Here is the situation, Plan A is a defined benefit plan, Plan B is a profit sharing plan. A participant of Plan B who has an account balance ceases participation (i.e. no more contributions) and moves to Plan A (both plan documents allow this).

I think that 404(a)(7) will apply and now limit the deductioin to both Plans A and B.

However, I have been told my an attorney that he heard Jim Holland say at a 1997 ASPA convention (and this may be pure unsubstantiated gossip) that 404(a)(7) only applies if the common participant(s) in question are currently benefiting, i.e., receiving an allocation and/or an increase in accruals.

Can anyone shed some informed light on this?

I have a client that wants to discontinue allowing their employees to contribute to the plan. I've never had this situation before. Would it be ok to just amend the plan to change the max deferral % to 0% or should all reference to 401(k) in the plan be removed? In the future, they may want to allow the employees to contribute again.

A quick look at the Conference brochure tells me that Board regulars Tom Poje, Mike Preston, and MGB are all doing sessions this October. Any other regulars, perhaps disguised, also doing a session?