A physicians practice (corporation) has a profit sharing plan and each physician wants the discretion each year to receive in their plan account all or part of the maximum allowed profit sharing contribution each year. Is this allowable? In other words, can HCEs determine what amount of profit sharing contribution they receive?

Is there a website that explains how to administer an ESOP and complete the IRS 5500 for them as well. I have the 5500 instruction booklet, and I know what schedules I need, however I am just not familiar with ESOPs in general.

Help!!!

A plan goes over the limit for the first time in 2001 and does the audit as required. Then the plan terminates in 2002 and all assets are out by 12/31/02. We're doing the final 5500 and hate to force a financially strapped client to pay for an audit for a terminated plan. Is there any relief from this requirement for terminated plans?

If we file the final 5500 without an audit, does the client risk a penalty? If so, how much?

Would it be reasonable for an ESOP sponsor to have signed a certification to adopt a volume submitter plan?

Controlled group has three companies, A, B, and C, each of which have a 401(k) plan with a match and profit sharing contribution.

Anything preventing aggregating the profit sharing components of A and B for 410(b) and 401(a)(4) purposes, while aggregating the 401(k) and 401(m) components of B and C for 410(b), ADP and ACP testing?

I think this is fine. Anybody disagree?

If a minimum distribution was made to a participant from an ESOP that only provided for lump sum distributions - can the minimum distribution be viewed as a "erroneous" distribution? Can the participant return the distribution to the ESOP and then receive a lump sum distribution? Could the participant then request a lump sum rollover into an IRA? Does the original "erroneous" distribution prevent the ability for the participant to make a rollover distribution? Lots of questions.

Can someone refer me to what was either an IRS Notice or PLR that discusses when an employer buys out surrender charges on annuities when a transfer of assets is made, that the IRS considers the buyout an employer contribution not only for testing purposes but also for deductibility? I know this is vague but hopefully someone here has a far better memory than I in locating this. Thank you.

I work for a Trust Company and we complete 5500's for clients that have Master Trusts. Thus, we must complete schedule D's.

The Schedule D that is filed with each plan must have Part I completed. My question is this:

Part 1 (a) is the name of MTIA (ie. client name Master Trust).

Part 1 (b) asks for the sponsor of entity listed in (a). We've been putting the trust company name in the past but have been told it's incorrect and we should use client name (employer sponsoring plan).

Which is correct? The instructions are not clear and I've found in the 1999 instructions you should use a financial institution, etc.

Please help and provide a source. Thanks!

I have a 401(k) Safe Harbor Plan, that is effective 4/1/02. If the plan document doesn't say to use plan year or participation wages, what do I have to use in this instance. Participants began deferring 4/1/02, do I use wages from 4/1/02 or from 1/1/02, its a calendar year plan?

Thanks.

I posted this on the cross-testing board but it applies to DB plans only. I would like to know if any one is using this in real life situations.

1.401(a)(4)-3©(3).

This is what it says.

(3) Certain violations disregarded. A plan is deemed to satisfy paragraph ©(1) of this section if the plan would satisfy that paragraph by treating as not benefiting no more than five percent of the HCEs in the plan, and the Commissioner determines that, on the basis of all of the relevant facts and circumstances, the plan does not discriminate with respect to the amount of employer-provided benefits. For this purpose, five percent of the number of HCEs may be determined by rounding to the nearest whole number (e.g., 1.4 rounds to 1 and 1.5 rounds to 2). Among the relevant factors that the Commissioner may consider in making this determination are--

(i) The extent to which the plan has failed the test in paragraph ©(1) of this section;

(ii) The extent to which the failure is for reasons other than the design of the plan;

(iii) Whether the HCEs causing the failure are five-percent owners or are among the highest paid nonexcludable employees;

(iv) Whether the failure is attributable to an event that is not expected to recur (e.g., a plant closing); and

(v) The extent to which the failure is attributable to benefits accrued under a prior benefit structure or to benefits accrued when a participant was not a HCE.

Anybody ever used this in testing?

Thanks

I was wondering if anybody is familiar with, or uses in real life 1.401(a)(4)-3©(3).

This is what it says.

(3) Certain violations disregarded. A plan is deemed to satisfy paragraph ©(1) of this section if the plan would satisfy that paragraph by treating as not benefiting no more than five percent of the HCEs in the plan, and the Commissioner determines that, on the basis of all of the relevant facts and circumstances, the plan does not discriminate with respect to the amount of employer-provided benefits. For this purpose, five percent of the number of HCEs may be determined by rounding to the nearest whole number (e.g., 1.4 rounds to 1 and 1.5 rounds to 2). Among the relevant factors that the Commissioner may consider in making this determination are--

(i) The extent to which the plan has failed the test in paragraph ©(1) of this section;

(ii) The extent to which the failure is for reasons other than the design of the plan;

(iii) Whether the HCEs causing the failure are five-percent owners or are among the highest paid nonexcludable employees;

(iv) Whether the failure is attributable to an event that is not expected to recur (e.g., a plant closing); and

(v) The extent to which the failure is attributable to benefits accrued under a prior benefit structure or to benefits accrued when a participant was not a HCE.

Anybody ever used this in testing?

Thanks

Suppose client had a plan terminated in the past with > $100,000 in assets. New plan is established and it has < $100,000 in assets. Plans did not ever exist at the same time. The Form 5500EZ instructions state the following condition for the $100,000 exemption:

You have two or more one-participant plans that together

had total plan assets of $100,000 or less at the end of every

plan year beginning on or after January 1, 1994.

Is a Form 5500EZ required for the new plan?

The "have" and "together" seem to indicate that you do not apply the test to plans that never coexisted, so the answer would be NO. Anyone disagree?

A health care provider provides health services to the public, and also provides health services to its own employees under a self-funded group health plan.

In such instances is it recommended to maintain one notice of Privacy Practices ("NOPP") for the hospital to provide to member of the public who become patients there, and a separate notice for employees of the self-funded group health plan who are treated at the hospital or one of its clinics?

I am thinking "yes" is the answer but am not sure of any regulatory support.

I have an account in which we managed a portion of the retirement plan assets for those participants which selected us. (Employer is trustee) The plan has terminated and distributions have been made according to the requests by the Employer. Earnings accumulated since the last evaluation period prior to distribution. Employer has requested these funds be sent to them. I have never had a reversion of earnings before to the Employer. (For me, it just does not pass the smell test) I am aware if this were a 415 violation, then this would be the proper course. Should these earnings follow the distributions or can they be paid to the Employer? Also the employer said their attorney told them to do this.

Hi,

We have a not for profit company that set up a 401(k) plan. Their administrator told them they are a non-ERISA plan and did not need to file Forms 5500.

I just assumed that if a not for profit set up a 401(k) plan in 2002, they were subject to all the same rules as a regular 401(k) plan including testing and reporting.

Does anyone have any insight?

Please advise.

Thanks

Lori

Have a plan that does not allow loans to participants - however, in 2002 the owner decided to take a loan for $50,000 - (less than 50% of his account balance). (He is making payments)

Does anyone know the correction procedure for this operational error (or is it a prohibited transactions)?

I can't find anything that is specific in EPCRS. Closest I found was in relation to Hardships - -

Thanks for your input and expertise!

I am interested in letting our employees use their earned vacation time to offset their contribution costs for health and dental incurance premiums next year.

Does anyone know of potential 'tax' or other problems I may face as vacation time is earned income and health insurance is pre-tax? This is a profit organization.

Help!

Thanks, KimT

Reg 1.401(a)(4)-9(b)(2)(v)(D)(2) provides that when testing an employer with both a defined benefit and defined contribution plan, the minimum aggregate allocation gateway is deemed satisfied if each NHCE in the DC plan receives a minimum allocation of 7.5%. Has anyone tested successfully where the minimum allocation was not used and what were the testing results? Any pitfalls to look out for?

Here is the definition of actuarial equivalence in a plan's document:

1983 Group Annuity Table with Projection H, with mortality rates based on calendar year of birth of 1930 and interest at the rate of 7% per annum

I thought I knew how to apply a projection scale to the underlying mortality rates, but this description confuses me. Is the reference to 1930 somehow limiting the ages of the rates to project -- and how is the number of years to use in the projection determined? An example would be great.

Thanks!

I have two 5300s pending with the IRS, and the IRS agent assigned to these files has, for the first time in my experience, requested that I remove the ADP and ACP language from the plan document because I have another provision that allows the employer to utilize the safe harbor methods of 401(k) and (m) to satisfy discrimination. I don't understand why the ADP and ACP language cannot co-exist in the document with the safe harbor language. The client may want to use safe harbor in year one, and rely on the general ADP/ACP test in later years.

Has anyone had this experience with the IRS?