In the 5500 audit report the auditor reported that deferrals from payrolls on the 15th of the month weren't deposited until the final payroll of the month. They reported this as late deposits and calculated a representative amount of interest that the employer was to deposit for their "use of the funds". This was reported on Schedule H along with a 5330 filing.

Since we are 8 months into the new year do they have to make up the interest on the interest calculated to be deposited as well?

is anyone aware of an exemption to the 100 participant rule for simple plans if the sponsor is dissolving or winding down?

I am looking for survey data when a sponsor offers both a DC and a DB plan.

I am looking for:

What is the average match (in the DC plan) when a company also provides a DB benefit?

What is the average participation in a DC plan if the company also provides a DB benefit?

Anyone have any ideas where I can locate this data?

Thanks in advance........

I have a client that adopted a plan in 2001. The maximum tax-deductible contribution was $50,000. They contributed and deducted $60,000 for 2001. How does this effect the 2002 deductible amount. I am using Individual aggregate.

I think the extra $10,000 was a non-deductible contribution and they must pay a 10% excise tax. The 2002 asset value for 404 must be offset by the $10,000 non-deductible amount. The maximum tax-deductible contribution for 2002 will be reduced by the non-deductible carryover amount. Finally, they should amend their tax return for 2001.

Is this the way others handle this situation?

Has anyone had any experience--sounds good but would like some input

thanks -Karen

I am a little confused on how EGTRRA has changed the rules for rolling over IRA money into a qualified plan.

If a Plan uses the good faith EGTRRA amendment and allows rollovers from IRAs into the Plan this means that any traditional IRA can be rolled over, meaning that the IRA may consist of taxable earnings and previously taxed contributions? Does the Plan then have to account for these amounts separately?

If yes, let's say the Plan decides they do not want this extra administration, so they choose not to allow IRA rollovers, does this then negate the possibility of any type of conduit IRA rollover?

Also, if a Plan allows traditional IRA contributions to be rolled into the Plan, does the IRA money retain its IRA charectoristics, or does it take on the charactoristics of a qualified plan. For example, does the traditional IRA money lose the home buyer and education expense exceptions for distributions; can minimum distributions from the IRA money be delayed until after retirement; can loans be made against the rollover money?

Any insight into IRA rollovers would be appreciated.

Can I have 2 457 plans...a 457(b) and a 457(f) tophat plan? The participants in the 457(f) would not participate in the 457(b). Where can I find this in the regulations?

I've recently learned from a reliable source that the Service is backtracking somewhat on previous liberal rulings on employee elections to participate in pick-up arrangements.

The Service is now taking the position that a mandatory employee contribution that is picked up by the employer will not be valid under section 414(h)(2) if employees have a continuing right to elect participation in the plan receiving the pick-ups. Previous PLRs had approved pick-ups under plans that offered employees an election to participate as long as the election to participate was irrevocable. However, these rulings permitted employees who didn't at first elect to participate to make that election in future years.

Now it appears that failure to elect participation will be treated as an irrevocable election not to participate, although an employer may give employees 24 months to make a decision.

Perhaps this isn't news to others, but I was taken aback. Anyone else have experience with this issue?

I have a safe harbor plan that makes an additional profit sharing contribution. They are also top heavy. Can I have a 5 year cliff vesting schedule for the profit sharing piece, or do I need to have the graded vesting schedule?

Thanks

Company A has a 401(k) plan. Roughly 1/2 of the participants are being spun-off to form a new Company B, that also wants to establish a 401(k) plan.

Since these participants have separated from service of Company A, is Company A's plan "required" to permit them to take a distribution? Or can the trustees of each plan affect a plan to plan transfer, without giving these participants the option of receiving a distribution?

And with the significant drop in the number of participants in Company A's plan, could it be considered a partial plan termination, even though the "separation" may be voluntary and Company B is establishing its own plan that would accept the transfer of account balances?

After a participant retires with, say, a JS50% pension and had a marriage breakdown years later, do QDROs have any applicability? In other words, is this no longer the plan's problem if divorce occurs after pension commencement and the concept of QDRO doesn't come into play? I presume the JS50% option applies to the spouse at time of retirement so that upon the participant's death the now former spouse will be entitled to the usual benefits under the JS50% option.

Please see IRA topics for details

Problem with IRA custodian rolling over funds to a 401(k) Plan.

I am from a TPA. We have an Employer/client that is the Sponsor & Trustee of a 401(k) Plan. The asset are invested in Pooled Separate Account with an Insurance Company. A Participant wants to rollover her funds from a conduit IRA into the 401(k) Plan. The IRA Institution does not know how to accomplish this.

The IRA institution can "transfer" to another IRA custodian but the Pooled Separate Account would't accept fiduciary liability for the IRA therefore the IRA institution won't distribute.

The IRA institution can payout without withholding taxes, but the Participant is under 59 1/2 & the IRA institution would issue 1099 coded that 10% penalty apply. The IRA institution suggsted the Pooled Separate Account issue a 5498 showing the money was actually contributed thus negating the 10% penalty, but because the Pooled Separate Account ia a 401(k) Plan NOT an IRA they do not issue 5498.

Anyone have any suggestions? Both the IRA institution & the Pooled Separate Acct are big name companies & I'm astounded that neither's legal department has a solution especially now that most IRAs, not just conduits, may be rolled into qualified Plan. So I figure either the legal departments are out to lunch or I am not phrasing things properly. Any guidance?

Hi, I have a plan and the owner of the main corp that maintains the 401(k) also is the owner of 7 different car dealerships. Each of the 7 divisions participate in the 401(k) as one plan (approx 450 EE's). However as of 10/31/03 one of the divisions will be sold to one of the participants of the plan (approx 30 EE's). As the new owner he would like to set up a 401(k) with the exact same features and include all prior yrs of service with original employer. I am not sure in this case what I need to file and with whom. We want to notify employees of the sale of that store and the transfer of plan assets (for that division) to new plan. I am just not sure of all the requirements to get this completed correctly. Any help would be appreciated.

Thanks

I know generally disability benefits paid from a qualified retirement plan are taxable, but I believe in some circumstances certain extreme disabilities may be exempt from taxation (e.g., loss of eyesight, limbs). If this is correct, does anyone know the code or reg cite that discusses non-taxation eligibility ?

Also, does the plan need to specifically include special language to support a potential non-taxable disability benefit or is the normal disability langauge found in most plans sufficient ?

Anybody know of a good reference for learning more about plans for PEO's?

Can a traditional defined benefit plan be converted to a 412(i)? This assumes the money from the traditional DB would be placed in qualifying insurance annuities.

I am reviewing a 401(k) plan document and noticed that the IRS issued a favorable letter of determination dated 08/06/03. Upon further review, the letter says that this letter cannot be relied on with respect to EGTRRA legislation changes. The plan document that was submitted contained an amendment adopting provisions related to EGTRRA.

Here comes the dumb question. Is the IRS only issuing letters of determination up to EGTRRA, or did something get overlooked during the submission process?

Thanks for any responses.

I am really struggling with ERISA Reg. sec. 2530.203-3(a). Our plan allows suspension of benefits and we have a defined benefit plan with no voluntary employee contributions. NRA under our plan is 65 and we send suspension of benefit notices if anybody works past NRA. We suspend the whole benefit. According to our company "expert" we don't have to provide an actuarial increase once the reemployed retiree stops working and commences benefits again.

I am reading the ERISA reg. and I am just not sure not sure what it is saying: "... A plan may provide for the suspension of pension benefits which commence prior to the attainment of normal retirement age, or for the suspension of that portion of pension benefits which exceeds the normal retirement benefit, or both, for any reemployment and without regard to the provision of sec. 203(a)(3)(B) and this regulation to the extent (but only to the extent) that suspension of such benefits does not affect a retiree's entitlement to normal retirement benefits payabe after attainment of normal retirement age, or the actuarial equivalent thereof."

We'd really like to comply with the law if we can figure out what it really says. Is there a portion of the benefit that cannot be suspended? I gather from previous posts that there is a divergence of thought re the actuarial increase issue. Thanks!

Does anyone know if the Cash Value of individual life insurance policies in a 401(k) Plan needs to be reported as an asset on the 5500? If it does, how is it reported - what lines on the Schedule H?