Effective 2003, we merged a MP plan into an exisiting PS plan. Both plans had plan year ends of 9/30/2002. When the plans were merged the plan year was also changed to a calendar yer. I am doing 5500 filing for a short plan year from 10/1/2002 to 12/31/2002. This will not be the final filing for the MP plan as the money did not officially transfer to the PS plan until March 2003 so I believe I will have to complete the final filing in 2003. Am I correct?

Also, for the money purchase plan that was merged into the PS plan, how do I complete Schedule R for the short plan year as well as the final return regarding minimum contributions as there were none. The 10% contribution that was being made to the MP plan in the past will not be made to the PS plan.

If you have a frozen DB plan, is the top heavy requirement in the DC plan 3% or 5%?

Who is authorized to sign the Form 5558 for an extension?

Are loans available from 401(a) plans that are not 401(k)s?

Does it matter if the employer is a private entity or a governmental entity? If so, how?

Cites would be helpful.

Thanks.

We're getting lots of clients wanting to "add on" DBs to their 401(k) plans.

We have a hub/wife 401(k). The are both over 50 and have each deferred $14,000 for the 2003 year from payroll. No match or employer contribution has been made. They each will earn a high salary this year. There are no employees.

If a DB was established 2003, and let's say the funding requirement was $50,000 each for the two of them (100,000 total - wild guess), I know they can deduct the funding requirement for the DB but is it kosher in the eyes of IRS?

My question is-- are they not over the 415 limit? They really cannot have both or am I missing something?

Can someone please explain what a "cash-out option" is in relation to a Cafeteria Plan?

New adoption agreement for existing PSP says that the existing MPPP will be merged into PSP on 01/01/02. Participants are provided with an ERISA 204(h) notice on a timely basis.

However, the MPPP assets are not transferred out of the name of the MPPP ... and into the name of the PSP until July 2003.

I realize that a Form 5500 (for year 2002 & 2003) has to be prepared for the MPPP .... because assets still existed in the name of the MPPP during 2002 & 2003.

MY QUESTION:

Does the employer still have to make MPPP contribution for" full year 2002" and "partial year (Jan -July) 2003" ?

(Any ERISA or IRC literature you can direct me to as support will be appreciated. I have a board meeting in two days and I have to present this matter). THANKS!

I am trying to prepare a DB & PS combo where no participant participates in both plans. The DB is a safe harbor formula, the PS is cross-tested. By testing both plans on an aggregate basis, both the midpoint rate group test and the average benefits test pass. Does the PS plan still need to pass the 70% coverage test?? Thanks.

I understand that a corporate return extension extends the Form 5500 filing. With that in mind, I have a client where fiscal year is different from plan year. Does that have any implications regarding the extension of time fo file Form 5500 if a Form 5558 has not been filed??

Stupid, I know. I'm a little frazzled.

Prior to 2002 there was enough separate ownernship that the plan sponsor and adopting employer were not sufficiently related to create a controlled group. Therefore we always filed 2 Forms 5500. One plan, 2 unrelated employers, 2 forms 5500.

Well, in 2002 everything changed. They are now a controlled group. So, one plan, one employer, one 5500 - right?

How do I do that? There was no merger of plans, no termination, no distributions. Just a little sharing of some stock. Oh please help! So won't the IRS still be looking for 2 returns? I can't figure out how to tell them there just shouldn't be 2 this year!

If a company pays for health insurance for a board member (not part of a group plan), can they deduct it as an insurance expense the same as for other employees, or must it be 1099'd to the board member as income?

What do I do if an employer mailed their 5500 without the audit attached?

Do I get a copy of the audit and mail with 5500 ASAP or do I file an amended return (there actually was one error on the Sch. H as well)?

I'm not sure what is the best way to get the DOL to recognize the correct 5500!

Thanks,

Rachel

I hope I haven't ask this before.

In years prior to 12/31/2001, were refund of excess deferrals added back to the ending balance like distributuions.

I have been involved in designing defined contribution plans but I have never worked with ESOPS. I ran into an old friend at a class reunion and he contacted me when he returned home for my opinion.

Bottom line is he has $200,000 in retirement accounts he wants to use for the purchase of his own business and does not want to pay income taxes on this money.

He has been approached by an ERSOP promoter with this concept.

He establishes a C Corp. C Corp. then establishes an ESOP. Once the ESOP is established, he rolls his $200,000 into the new plan. Then, the ESOP purchases the stock of his C Corp. for $200,000.

The C Corp. now has $200,000 in cash to go to the bank and use as a down payment to purchase a new operating business.

I told him I smelled something funny as this would be too good to be true. He has some M and A experience so he knows the operating business he buys would become participating under his ESOP. And the fees for annual financials may add up to making all of the gyrations he going to go through not worth it.

The company that administers these plans for sponsors files and receives for letters of approvals with the Service. But, where I see a problem is how can an ESOP buy employer securities that are worthless on the purchase date but the day the check clears the business is then worth $200,000?

Has anyone else heard of this or help me shoot arrows at it to help my buddy stay out of trouble?

We have an apprenticeship plan that underwent a DOL investigation.

Some of the findings were legitimate, but others are questionable. I would

appreciate input on the following:

1. Apprentices regularly compete in regional and national competitions. Attendees (instructors, commitee persons, etc.) to apprenticeship competitions are paid a low stipend ($35 per day). The stipend is not

meant to cover every conceivable expense, but to subsidize parking, meals, etc. In addition to the stipend, attendees are treated to a recognition dinner hosted by the Fund.

The EBSA investigator has deemed the dinner expense to be unreasonable. Her theory is that the Fund

cannot pay a stipend AND supply a meal to the attendees. Our argument is that the stipend is so nominal it is not unreasonable to pay for a recognition dinner. Even when the stipend and the dinner are combined, the average cost per person ranges anywhere from $60-$100. (Keep in mind that the competitions are often held in locales such as Boston, Chicago, Philadelphia, etc., where 35 bucks doesn't go too far.)

2. Guests are invited to the dinner. Typically this includes the spouses of the competitors and instructors.

The EBSA has demanded the costs of the guests meals be repaid as it is "unreasonable" to provide a meal

to a spouse, etc. Our belief is that it is entirely appropriate (and very common) for apprenticeship funds

to host recognition dinners or banquets. It is also common for spouses and family to be invited to these dinners.

Input is appreciated.

If your plan has a debit card, how are you handling the transaction fee charge? Do you pay extra higher administration fees to cover? Are you deducting from the participants account at the time the card is swiped? Are you covering the charge from unused funds left at the end of the plan year? Thanks.

A couple who had divorced and obtained a QDRO dividing the husband's retirement plan account decide to remarry.

The wife's share of the husband's account was segregated within the plan but never transferred out of the plan.

My understanding is that it is possible to get a court order declaring a QDRO null and void, but that un-segregating the segregated account may constitute a breach of fiduciary duty under ERISA. Does anyone know of legal authority to this effect?

Is anyone aware of authority (IRS, etc.) that permits the transferring of assets between an employer's qualified and nonqualified plans based upon the results of the qualified plan's discrimination testing? Thanks, SF

Is anyone aware of authority (IRS, etc.) that permits the transferring of assets between an employer's qualified and nonqualified plans based upon the results of the qualified plan's discrimination testing? Thanks, SF

i received the press release from sunguard corbel about their form 5500 filing guide. i wonder if anyone has used either their print or electronic versions, and if so do you have a reaction/ recommendation to share?