I have an issue where the IRA holder named a trust as the beneficiary of the IRA. Form my understanding of the final RMD regs, specifically treas 1.408-8 Q&A 5, this designation cannot be passed on to the underlying beneficiaries of the trust. This means that all post death distributions must be reported under the name and tax ID number of the trust beneficiary. The trustee may then pay the funds to the underlying beneficiaries of the trust.

However, I am being challenged. I am being told by the trustee of the trust that the effect that the underlying beneficiaries of the trust can be treated as the direct beneficiary of the IRA, and not just for purposes of calculating RMDs as provided in the regs, but that we should ignore the trust altogether and treat the underlying beneficiaries of the trust as if they were the direct designated beneficiaries ( i.e. , instead of naming the trust, the IRA Holder named the individuals as the beneficiaries)

What is the right approach or permissible allowances.

Thanks for your help.

Can a participant (age 61) of a Sec 403(B) plan with substantial accumulated sick pay, make sick pay contributions to the plan in the form of elective deferrals? I believe he can based on the 401(k) definition of elective deferrals as being amounts not currently available to the employee.

Also, in the post-EGTRRA environment, the maximum this participant can receive in annual additions for 2003 are $12,000 elective deferrals, $2000 regular catch-up, $3000 special catch-up for 403(b) plans, $28000 employer totaling $45000. Is my analysis corrrect?

Is anyone aware of a time limit for the filing of a QDRO in PA? I have been researching this issue and have not be able to come up with an answer.

Here's the scenario:

An employee is looking to retire and start drawing on his pension. He was divorced twelve years ago and his ex never sought entry of a QDRO. I believe the settlement agreement addresses division of his pension, however, I am not certain because a copy of the settlement agreement cannot be located. Any thoughts on what course of action he should take or not take?

Thank you in advance for your input.

I believe under 404(a), the maximum a company can deduct is 25% of covered compensation. What would happen if everyone who was eligible was putting away 30% of their comp? (far-fetched I know, but stuff like this keeps me up at nite)

I am also under the assumption that non-deductable contribs (ie over 25% of covered comp)are not allowed.

I'm probably wrong somewhere, I'm just wondering where.

Does the company just deduct the 25% and ignotre the additional 5%?

We have a client that had continued to sponsor a SARSEP through 2002. Late in 2002, they decided to install a 401(k) Profit Sharing Plan, with the Profit Sharing Plan effective in 2002 and the 401(k) effective in 2003. So, they no longer sponsor the SARSEP, but some of the employees contributed to the SARSEP in 2002. The company made a profit sharing contribution for 2002 in lieu of the SEP contribution. The profit sharing structure is "new comparability" with different group contributions. The question is, would you count the 2002 SARSEP salary deferrals in the average benefits percentage test along with the profit sharing contributions?

I have a plan that failed to do ADP refunds for the 2001 plan year by the statutory due date of 12/31/2002. They have corrected this by using the one-to-one correction method. Should the refunds and the QNEC be shown on the 2003 5500 or should they be reported on an amended 2001 5500?

Has anyone had any experience with setting up an Adoption Assistance Plan under your current cafeteria plan? Where's a good place to start? I have IRS regs, but I need to be pointed in the right direction to start the plan. Thanks!

I have a client that wants to get rid of his SIMPLE plan and adopt a regular 401k plan. He wants to establish a 401(k)PSP as part of a floor/offset arrangement with a new DB plan. He currently participates in the SIMPle plan but does not want to participate in the 401(k)PSP. He wants to do this by august of this year. Can't he just terminate the Simple plan and start a new 401k plan?

Also, no contributions have been made yet for any of the SIMPLe participants this year. I've seen posts relating to amending the plan, but I really need to know what the proper procedure is here.

Thanks...

Hello, folks:

I have a plan that contributed over the maximum in 2002, and has a carryover contribution for 2003 of $5 million. I am now calculating the maximum deductible contribution for 2003. When I calculate the alternative maximum deductible contribution that is equal to the unfunded RPA Current Liability, do I include the entire 2002 contribution, including the $5 million dollar carryover, in the asset value at 1-1-2003?

Thanks for any help you can provide......

We have a take-over plan that, in past years, allowed participants to have loans amortized at 3%, with the exception of one participant who had 6%. There was not a loan policy on file.

First question: If all participants are allowed loans at less than prime, is that O.K? Can that be written into a loan policy?

Second queston: How to correct the person with 6%? Assumably, should be at 3% which is what everyone else got. Refinance balance, or redo schedule completely and apply payments already made?

My understanding is that the rate of interest must be comparable with area practice (banks, etc.). Does anyone have a reference that provides guidance on this issue?

Thanks so much for your help!

In this current plan year the Employer has enrolled 3 employees prior to their meeting the 1 year of service and age 21 eligibility requirements. Plan is a prototype 401(k) using the Safe Harbor Match contribution and a Profit Sharing contribution. Employer wants to keep the 1 year of service and age 21 requirement. Can the Employer amend the plan for only this year to a shorten the eligibility period (90 days of service) for only the deferral and safe harbor match to allow these employees to be eligible this year for deferrals and the safe harbor match only. These employees would still be required to meet the 1 year of service requirement to receive a profit sharing or discretionary match. Then could the employer amend the plan prior to the beginning of the new plan year to revert back to the 1 year of service for entry into the plan for all employees hired during or after this plan year. Is the employer required to go through one of the DOL correction programs for these amendments to its prototype plan.

I've made quite a mess. Took 14,000 out of my Roth IRA for a down payment on a new home, that went fine. Now I can't rent out my townhome, and I am selling it.

How can I protect my capitol gains from the sale of the townhome, and avoid the 28% tax?

Where can I put the money?

Married with two month old twins, living in Florida.

Got a client that has pooled separate accounts as their investments.

On Schedule D, one line item is reported for all of the sepate investments options in the aggregate, because there are apparently "sub" pooled separate accounts.

What should I do on the schedule of assets held? Should I list out each of the different investment options, or just list the same line item that is reported on the Schedule D?

Plan uses prior year testing. Plan is passing ADP but failing ACP. Plan can pass ACP if it shifts some HCE matching contributions satisfying the definition of QMACs (i.e., 100% vested, subject to distribution restrictions), to the ADP test. Normally, the shift of QMACs is made to correct ADP problems, but here the shift would be used to fix ACP problems. Is that a problem? Is it a problem shifting only HCE QMACs? The regs (specifically 1.401(k)-1(b)(5)), appear to allow shifting HCE QMACs into the ADP test for any reason, without needing to pass any nondiscrimination requirements. I would appreciate any insights you can give me on shifting HCE QMACs to the ADP to correct ACP problems.

Whether you are pro or anti 412(i) plans, the business is coming in the door and a number of issues and questions have arisen that we would appreciate your input on:

1. The advantages / disadvantages of beginning or end of year valuations?

2. Can a 412(i) be established in mid year, i.e. 7/1, and if so, can you utilize compensation for the entire year as opposed to 1/2 year?

3. Can the annuity and or life insurance premiums be paid quarterly?

4. Is anyone aware of a procedural checklist that could be followed in the implementation of a 412(i) plan, i.e. time table of events leading to the completion of the plan's establishment? In essence we are looking for a master checklist that incorporates some of the possible nuances in 412(i) plans for a sales force closing on these cases.

Our objective is to efficiently complete the process of implementation of a plan from beginning to end.

Thanks,

Richard

Can a SIMPLE 401(k) be amended to a 401(k) plan in the middle of the simple's plan year?

Gary Lesser has commented that such an amendment cannot take effect any earlier than the first day of the next plan year. But the citation is for Rev. Proc. 97-9 (the model amendment for incorporating a 401(k)SIMPLE).

I have also seen commentary approving of such a mid-year amendment and that contributions existing under the SIMPLE for the plan year until the time of amendment are accounted for separately (b/c of 100% vesting) from the subsequent 401(k) contributions.

I'd appreciate any guidance with this matter.

We have a take-over plan that requires the participant to be active on the last day of the plan year to receive a match. We also have a lot of employees not participating. When we do the coverage testing for the plan year, do we count the non-participating terminated employees as benefitting or do we need to count them as non-benefitting because of the last day requirement? Thanks for your help, we have disagreeing opinions in our office and just wanted to verify with someone else.

Anybody used this software?

<a href='http://www.divorcesoftware.com/products/product_pro_pension.htm'>http://www.divorcesoftware.com/products/pr...pro_pension.htm</a>

This is a continuation of the discussion at

http://www.benefitslink.com/boards/index.p...&f=4&t=19623&s=

In completing Sec. 129 discrimination testing, particularly the benefits test, what pool of employees to you base the testing on? Is it only employees who participate in the plan, all eligible employees, or all employees? The statute isn't clear on this and I can't find any guidance.