Although FICA and FUTA are normally withheld from salary deferrals under a 403(b) arrangement I have heard that employees of a tax-exempt 501©(3) organization are exempt from FUTA withhloding. Is this true and if so, is there a cite you could refer me to. Thanks !!

Cool!

http://soa2.syn.net/Stats/stats_employee.html

Thanks, MGB

Our client is a government instrumentality and maintains an eligible 457 plan. They have also received a 501©(3) designation as a non-profit organization. They would like to take advantage of the EGTRRA amendment to 457© and permit participants to maximize contributions under 457 and another plan.

As a governmental instrumentality with a 501©(3) designation, can they sponsor a new 401(k) plan?

If 401(k) is not available, may they offer a 403(b)?

A company sponsors a 401(k) Plan that includes Matching Contribtions which vest under a three year cliff schedule. The company wants to amend the plan to include a profit sharing feature which provides for two year eligibility and 100% vesting.

Under this design, can the plan ignore service pursuant to Code Section 410(a)(5)(B) (for rehired employees who had a one year break in service before they initially completed 2 years of service), or does the existence of Matching Contributions mean that that Section cannot be incorporated into the plan document?

(In other words, does the word "plan" in that Code Section really mean "portion of a plan"?)

Thanks.

Our office has a takeover medical practice who has a calendar year 401k plan in 2002. Dr. A, who was part owner, deferred $12,000 in 2002. Dr. A also stole big bucks from the practice and there is a lawsuit in the works. Due to Dr. A's theft of company money, Dr. B refused to fund Dr. A's $12,000 deferral for 2002.

Our position is that the $12,000 must be funded to the plan no matter what is happening within the company. Any other thoughts?

I have an employee who is due an ADP refund, but is deceased. Should his bene be forced to take the distribution? I am thinking so, since these dollars cannot stay in the plan because of the testing failure, but wanted to pose the question.

Thanks.

A broker brought us an "owner only" client in 2002. She funded the plan with $41,000 prior to year end and then failed to show any income (a net loss on Sched. C). An ERISA attorney advised us, verbally, that this plan basically never existed - that you must have some compensation to fund the plan with some sort of contribution in order to create a valid plan/trust.

No plan, no penalties - all good news until the broker informed us that the contribution was commingled with a rollover that she'd also put in the plan in 2002.

Legal dep't of the brokerage firm says that our "plan is non-existent" theory is no longer valid because the plan was funded (and therefore established) with a rollover deposit. They do not want to "undo" the rollover.

Question is: Can you establish a plan with nothing but a rollover in the first year?

And I'm happy to hear any thoughts on the overfunding problem. We had this happen with a few owner only's (showing net loss after already funding) and have heard a variety of opinions on how to handle.

My husband swears that he had a "401(a) Plan" at his prior company. I tried to explain to him that this just covers the qualified status of the plan. He has been told repeatedly that "401(a)" is the plan type. The plan consisted of his after-tax contributions and the 6% company match on those. When he terminated, it was not permissable at the time to roll over his after-tax contributions (he was told that the rules have now changed). So, he rolled over the company match portion & earnings and withdrew his after-tax amount and now is being faced with the 10% penalty.

Has anyone heard of such a plan?

What is the effect of permitting a nonchurch entity to participate in a church plan and merge existing monies into the church plan? Will the entire plan's church status be jeopardized? Any cites/guidance will be appreciated.

I have an off calendar plan year that end 6/30/03. There is a participant that is supposed to be refunded $1800. He is old enough for catch-up contributions, but I am concerned about how to classify them. Does $1000 count as catch-up for 2002 and $800 for 2003, or is all of it counted as 2003 catch-up?

Any help on this matter would be appreciated.

Carson

We have a situation where an employee was terminated and is not currently entitled to a distribution from the plan. Therefore, the employee is submitted medical claims for hardship distributions. The employee also wants a distribution in the amount of 3 months worth of COBRA premiums. Is this OK? Would this qualify as a "necessary for these persons to obtain medical care described in section 213(d)"? 1.401(k)-1(d)(2). Section 123(d) does not specifically state that premiums for COBRA are within the definition of medical care.

We have a controlled group client who kept the profit sharing plans for his three companies separate until mid-2002.

In 2002 he chose to merge the plans for document and filing simplification.

The SAR our system produces pulls data from the various schedules and has a "pat" format. Because of that, there is no language in the SAR that says something along the lines of "the assets were transferred to Plan B," it says "the ending balance was 0."

Should we modify the SAR to be more specific?

Any advice or counsel- PL or IRB or case?

Is a school district any more responsibile financially (Even with a "Hold Harmless"..) for mistakes in their participants contributions or distributions..... for their 403bs or their 457bs ??

Thankx

Any advice or counsel- PLR or IRB or cases?

Is a school district any more responsibile financially (Even with a "Hold Harmless"..) for mistakes in their participants contributions or distributions.....then for their 403bs or their 457bs ??

Thankx

It was just discovered a refund was made for the 2002 plan year in error. Incorrect data was given in census and the error was discovered when performing trust accounting(unfortunately after the refund has been made).

What is the corrective measure in this case? With the correction, the plan is now passing adp! Thanks.

Linda Michals

Will an alternate payee maintain the right to withdrawal monies without early withdrawal penaltys, having rolled over to a conduit IRA ?

Scenario:

Employer does not offer group health insurance. ER does offer a 125 plan for ee's to pre-tax ins. premiums. EE is still on COBRA and is pre-taxing that premium. Can the election amount be changed upon the end of COBRA coverage or if EE chooses to find a private insurance policy before that time (even if it's during the middle of the plan year)?

Can someone give me a good def'n of the Additional Minimum LIaibility added to the accrued (pre-paid) pension cost at the end of the FASB 87/132 report ? Can I think of it as an adjustment to recognize the unfunded accumulated benefit obligation in situations where combined events would otherwise show both an unfunded ABO and a "pre-paid" pension cost ? Perhaps because of this apparent conflict (unfunded benefits but pre-paid cost) it is then triggered ? I know, that's pretty rough and maybe not accurate.

ERISA 502(d)(1) says "in a case where a plan has not designated in the [sPD] of the plan an individual as agent for the service of legal process, service upon the Secretary shall constitute such service."

I see many SPDs that designate a non-individual (e.g., the corporation or partnership/LLC plan sponsor) as the Plan Administrator, and then say the agent for process is the Plan Administrator.

Does that mean I have to serve Ms. Chao? "Individual" is not a "person", and usually means human being.

Also, when the first sentence says service is on the Plan Administrator or Trustee, does that mean you can serve either one? Or, the plan/SPD can specify which one, meaning service on teh other is invalid?

Can a plan QDRO policy require that the QDRO specify the amount or percent that is to be distributed. The regs add a provision " ...or how the percent or amount is to be determined". Some of the formulas are complicated with premarriage benefits, post seperation deferrals, proration of income, and the qdro is frequently prepared two years after separation, etc. They will take a lot of work and are subject to complaints by both parties.

If you can't require a specific amount or % by policy-we can scare 'em with fees and maybe they'll come up with the number? Do you provide copies of the calculations and require the participant and alt payee to sign off along with their resqective attorneys?