It is allowable to use Universal Life products which have a minimum interest rate guarantee in a 412(i) arrangement?

http://benefitslink.com/IRS/revrul2003-83.shtml

Huh? What am I missing? Where is the accrued liability "used to determined plan costs"? Where does it pass condition (2) of Rev. Rul. 81-13?

We have a client that has not adopted any EGTRRA provisons. They intend on making the EGTRRA amendments along with the GUST restatement this year. A prior carrier calculated the 2002 top heavy test (12/31/01 Determination Date) using the changes to top heavy plans under EGTRRA. Namely, they only included distributions in 2002 and not the prior 4 years. The plan was determined to be top heavy in 2002 for the first time. However, in the past few years the plan has had numerous distributions to non-keys, enough such that the plan would not be top heavy if they used the old rules and included the prior four years distributions to non-keys. I am wondering if we can still use the old rules for top heavy distributions in 2002 because the client never adopted the EGTRRA amendments?

We have a client that has not adopted any EGTRRA provisons. They intend on making the EGTRRA amendments along with the GUST restatement this year. A prior carrier calculated the 2002 top heavy test (12/31/01 Determination Date) using the changes to top heavy plans under EGTRRA. Namely, they only included distributions in 2002 and not the prior 4 years. The plan was determined to be top heavy in 2002 for the first time. However, in the past few years the plan has had numerous distributions to non-keys, enough such that the plan would not be top heavy if they used the old rules and included the prior four years distributions to non-keys. I am wondering if we can still use the old rules for top heavy distributions in 2002 because the client never adopted the EGTRRA amendments?

Can an ESOP company ammend its plan summary regarding distributions? If so, what are the requirments?

Example: Current plan summary states an employee can receive distributions after terminating employment starting the year after the termination. Employee terminates employment Dec 22, 2002.(14yrs in the plan and 40 years old). According to the summary he can start receiving distributions over 5 years starting in June of 2003. The company changes its policy on distributions in June of 2003 stating the employee must wait for 5 years to start receiving distributions. When the employee quit the plan had not been ammended.

Is this legal? Is there a time frame a company must go by when ammending a plan summary?

The reason was that the company was strapped for money. or in financial trouble.

RCR

If a pension plan resolved an issue, that takes them 8 1/2 years to make a decision, all the while withholding thousands of dollar from ones pension, Can the pension plan be sued for gross negligence or some other tort, outside of ERISA. In this case, repeated request for a review fell on deaf ears, until the pensioner produced document edidence, which the committee did not think the pensioner had in his possession, although the evidence was in the hand of the pension committee.

I have a multiplemployer plan sponsored by a PEO. The PEO handles most of the employee benefits for all participating companies. Some of the sponsoring companies have the cafeteria deductions come straight to them and other have the cafeteria deductions go straight to the insurance companies. Is it okay to file one form 5500 for this plan or does this issue cause multiple 5500s to be filed?

Employee with a green card was working here in the U.S. and was a participant in his employer’s retirement plan. He terminated employment and is back in the UK. His account balance is less than $5,000 and he plans on taking a lump sum distribution. He claims that the 20% mandatory withholding does not apply since he lives in the UK. Is this correct?

An employer makes an excess matching contribution to employee who has been terminated.

The contribution is subject to 10 % penalty for non-deductible contribution.

Is the employee subject to a 6% penalty on an excess IRA contribution and how is the contribution returned to the employer as all SIMPLE IRA contributions vest 100% to employee.

My opinion is that the employer reports the contribution as income to the employee and deals with the employee directly and the employee is the only one that can request the distribution from the plan.

Am I on the right track?

Thanks

The regs state that a multiple employer plan has to have the same eligibility and vesting requirements for each participating employer. Does anyone know of a design or loophole or other reg that would allow participating employers to have different eligibility and/or vesting requirements?

I have a plan that is going to replace their DB plan with a DC plan. They are going to freeze benefit accruals in the DB plan. Is it possible to freeze the accruals at different dates for different employees. I have combed through the regs. and found nothing that says they can't do it (other than a possible 401(a)(26) problem).

Also, I assume they can design the freeze where new employees will participate in the DC plan only and the current DB plan participants can opt-out of the DB plan to participate in the DC plan. Any design issues here? Does anyone have Code sites that can direct me to any opt-out rules?

Thanks!

We have been manually filling out 8109-B coupons for our clients when they have 945 tax deposits due, but the IRS will no longer provide the blank coupons. They want our clients to order the pre-printed coupons.

The problem is, if we can get our clients to request the coupons, then they eventually (if they're lucky) get what looks like payroll tax coupons addressed just to the corp., and of course they would discard them because someone else handles they payroll taxes or they transmit electronically.

We are thinking about setting up our non interest-bearing trust account, with its own EIN and processing all deposits and 1099-Rs through it, similar to what the institutional custodians do. Of course, this may raise issues with funds flowing through an account that is not part of original retirement plan trust, and being commingled with other funds. However, if this is just a conduit and there is no interest paid, the feds may not be too concerned about it.

Does anyone have any experience or advice with doing what I have described?

Thanks

I have a client who is wondering if her shoe inserts that she has had specially made for her rotating heel are eligible for reimbursement. She has a doctor's note to back it up showing that he has prescribed them for her to help correct her heel from rotating when she walks.

Is this an eligible expense for reimbursement???

Here is the scenario:

2003 is the first year of a new defined benefit and profit sharing for the plan sponsor (plan effective dates are 1/1/2003).

The defined benefit plan credits a maximum of 5 years of service prior to 1/1/2003 to calculate accrued and projected benefits.

The PS plan only covers 3 HCEs and the DB plan covers 3 different HCEs and 10 NHCEs. Both plans have safe harbor formulas under 401(a)(4). No one participants in both plans.

My questions are:

1. Is there any need to test the combined accruals and allocation under the general test of 401(a)(4)? I don't think there is since each plan is a safe harbor plan.

2. When testing the aggregated plans for coverage under the Average Benefit Percentage test of 410(b) for 2003 (using 2003 as the measurement period) what do I use as the increase in accrued benefit in the DB plan since everyone enters with an accrued benefit as of 1/1/2003 (as a result of counting pre-participation service)?

It makes sense to me to use the total DB accrued benefit as of 12/31/2003 instead of just the increment from 1/1/2003 to 12/31/2003. This especially makes sense to me since accruals to the HCEs in the DB plan are limited to 1/10 of the 415 dollar limit at 1/1/2003 and 12/31/2003 and would have no increment during 2003.

Thanks.

We are about to launch a web site to allow participants to access data about their benefits. Does anyone have a consent form they have used to document that the plan sponsor agrees to its data being posted on the Web? We know that they have asked for this service, and are paying a premium for it, but are concerned that if there should be some unforseen consequences to the data being on the Web, we want written authorization from the plan sponsors.

We just acquired a takeover plan where I'm questioning how the match had been calculated. This is a 401k plan with a 100% match up to 5% of compensation. The definition of comp used in the plan is W-2 wages.

One employee gets two checks each pay period. One is for her regular salary of $999.35 and the other check is $99.29 for office cleaning. Both checks are subject to taxes and will appear as W-2 wages. This employee has elected for a 7% deferral ($69.95) to come out of her regular check only.

When I calculate her deferral percentage I get a total deferral of 6.37% ($69.95 / total comp of $1,098.64). I figured the Match as $54.93 or 5% of $1,098.64.

The previous TPA calculated the match as $49.97 or 5% of $999.35.

Which is correct?

Thanks.

In designing a cash balance plan for a professional partnership, one challenge is accommodating the desire of some partners for substantial contributions and the desire of other partners for smaller or no contributions without creating an impermissible cash or deferred arrangement. The two techniques that I have seen advanced to solve this problem are (1) to allow partners to make a nonbinding expression of their individual preferences that the employer "just happens" to incorporate into the design of the plan; or (2) to require after-tax contributions of varying amounts as a condition of participating at various contribution levels, thereby in effect letting partners control their contribution level by agreeing to the appropriate level of voluntary contribution.

Does anyone have an opinion as to just how aggessive these approaches are, or, better still, actual experience with the IRS regarding either of these approaches?

Also, any better ideas of how to skin this cat are most welcome. Thanks for your input.

First Question: If a plan allows rollovers and an employee rolls into the plan assets formerly in a deductible IRA, this would be considered just a plain old rollover -- not a "deemed IRA" -- correct? My understanding is that owner-trustees must have a custodian to hold a "deemed IRA" but that has not been the case for rollovers. Do rollovers from IRA's need to be looked at differently than other non-related rollovers from qualified plans?

Second Question: Employees who are not 5% owners may be exempted from the RMD rules under qualified plans. What if that individual rolls his deductible IRA's into the plan -- are they now also exempt from the RMD rules until the individual retires?

Can a FICA plan allow inservice distributions? Can QDROs apply to FICA money?

My wife is employed at a not for profit health care employer. Her retirement plan is a "profit sharing plan"

I would like to know upon tremination of employment can she roll 100% of the profit sharing plan fund balance into a roll over IRA? Can her employer "hold back" part of the balance? My wife was told, by her employer, that she could roll over 70% of her balance with the remaining 30% to be roll over at a unspecified later date. Thank you for your responce.