We have a client that did not keep a copy of their filed 5558. They filed their 5500, checking the extension box, but did not provide a copy of the 5558. Now they have received the standard letter requesting a copy of the 5558 within the next 30 days.

Any suggestions on how to respond? The client wants to be truthful in telling DOL that they filed it and did not keep a copy.

In cross testing DC plans, the mortality table factor is applied to all allocations in determining EBARS. Hence, the choice of table, setting aside permitted disparity, makes no difference in the ranking of EBARS or the average benefits test. However, it would seem in the combo scenario with owner(s) accrual rate principally or entirely from the DB plan, that the table with the strongest q's will produce the highest DC EBARS and therefore the most favorable testing? Any comments?

I have a safe harbor 401(k) plan that used the safe harbor match. The only money in the plan other than deferrals and match is the top heavy contributions required for years prior to 2002.

The plan document says that forfeitures are allocated as a discretionary contribution. I have forfeitures to allocated for the 2002 plan year. Will this allocation trigger the top heavy rules again, requiring more top heavy contributions to be made?

These forfeitures aren't from a discretionary source, they were required top heavy minimums.

I have a participant who's hardship withdrawal request includes enough to cover his withholding and his 10% penalty. Is anyone aware of any reason that he cannot include that 10% penalty amount with the deposit of the federal withholding for the distribution? He works for a small company so they are flexible if this is allowed.

Here is the scenario.

Company A sponsors a DB plan and a DC plan. Initially no one participates in both plans and 404(a)(7) does not apply.

Then, due to turnover and the requirements of 401(a)(26), one of the DC participants becomes a participant in the DB plan but on the condition that she will not recieve any further annual additions in the DC plan.

404(a)(7) mentions "beneficiaries" and since the employee in question would still have an account balance in the DC plan it seems to me that she would be a beneficiary in the DC plan even though she will no longer recieve annual additions in the DC plan 404(a)(7) will now apply to limit the overall deductions of the DB and DC plan.

I have spoken to a collegue who disagrees with me. Does anyone else have an opinion (and hopefully something else to back it up)?

I did find PLR 8252162 where two employees terminate membership in a DC plan, enter a DB plan, AND transfer their vested account balances from the DC plan to the new DB plan. In this case, the IRS opined that 404(a)(7) would not apply to the new DB plan and the existing DC plan. I suspect that the transfer is the key issue here.

I was looking for the rule that limits FICA to the first 6 months of sick pay or disability payments. I think I found what I need in the definition of wages and the exclusions therefrom in Code section 3121(a)(4). Does anyone know if there is any guidance on how employers must handle this? A company is continuing to withhold FICA from sick leave pay and then eventually refunding the amounts over what is due for the first 6 months. I'm wondering if this is a violation of a specific rule. Thanks for any help or thoughts on this.

My profile reads "Terminated with a break in service".

What does this mean and how does it affect the distribution.

My plan defines compensation as W-2 income. If one of my employees receives a W-2 from me and a W-2 from a third party for "sick pay" do I combine the W-2 totals for purposes of doing ADP and ACP testing? The document does not specify.

Haven't run into this yet, but undoubtedly will soon. Line 3C on the 5310 says that if you don't have a determination letter, you have to submit initial plan, all amendments, etc....

Under IRS Announcement 2001-77, there will be batches of Prototype and Volume Submitter plans where adopters no longer file for determination letters, and instead use the document sponsor's Opinion or Advisory letter as a determination letter.

My question is this: has anyone talked to the powers that be in the Plan Termination unit at IRS to determine if such plan adopters can, under Line 3C(1), answer "yes" and submit a copy of the most recent Opinion/Advisory letter plus subsequent amendments, or must they answer "no" and be forced to go back to day one, or at least to the last actual determination letter? It would seem consistent with the spirit of 2001-77 to allow the former rather than to require the latter, but I don't know. Anybody have any information/experience? Thanks!

We have an existing top heavy 401(k) plan that is considering a change to a safe harbor match beginning 1/1/04. The employer will cease to make any further discretionary profit sharing contributions.

Since the plan has accumulated balances in the employer discretionary profit sharing source, can they qualify for the top heavy exception?

Self-employed taxpayer wants to set up an MSA for the remainder of 2003. Under current tax code version of Code Section 220, will taxpayer be allowed to take deductions in subsequent years, or is he only limited to a deduction for 2003.

Thanks.

Is there a good source out there than can help me figure out what information I need to gather to complete discrimination testing on a cafeteria plan?

Owner of company is terminating his 401(k). Calendar year 401(k) terminating in mid-2003. He wants to know if he can make a deductible IRA contribution for 2003. I suspect no since he was eligible for a 401(k) during part of the year (even though participation was poor and he was unable to make any significant contribution due to ADP test). Any thoughts? Any ideas?

Is there a deadline for completing discrimination testing on a cafeteria plan and its underlying benefits?

What is the ability of the plan administrator of the plan (the plan is the covered entity) to sign the business associate agreement with a TPA? Also, if the contract provides for services other than those covered by the Business Associate agreement (e.g., provides for services for the employer to use for its HR function): (1) may Business Associate portions be part of the agreement - one section, (2) may the agreement be structure to have provisions 1-8 (non-BA provisions) binding on the Plan Sponsor (or employer) and the 9th provision (BA provisions) to be binding the plan with the plan administrator signing along with the TPA, and (3) then make the employer/plan sponsor, plan administrator and the TPA all sign the agreement?

Help!

What is the ability of the plan administrator of the plan (the plan is the covered entity) to sign the business associate agreement with a TPA? Also, if the contract provides for services other than those covered by the Business Associate agreement (e.g., provides for services for the employer to use for its HR function): (1) may Business Associate portions be part of the agreement - one section, (2) may the agreement be structure to have provisions 1-8 (non-BA provisions) binding on the Plan Sponsor (or employer) and the 9th provision (BA provisions) to be binding the plan with the plan administrator signing along with the TPA, and (3) then make the employer/plan sponsor, plan administrator and the TPA all sign the agreement?

Help!

we have a client with an overfunded DB Plan that is terminating. he is the only participant and has reached the 415 limit. he is no longer in business. does anyone have any ideas as to how to reduce the 50% excise tax on the reversion? someone suggested the amount of the reversion is based upon the assets as of the date of the plan termination and does not include earnings since that date. can anyone comment on this point or offer suggestions?

A participant takes out a three year loan for $5,000 and begins making payments through payroll. The Plan Administrator sets the loan schedule up through their payroll system which is preset to stop payments when a specified amount is paid back, presumably the total amount of principal and interest. The Plan Administrator inadvertantly sets the max payback to only the $5,000 principal amount so payments stop once that cap is met. Since loans are reconciled only once a year the mistake is not found out until after the loan is in default.

What are the options for correction, and please let me know if additional info is needed to determine.

Thanks so much.

I HAVE A 401(K) PLAN WHERE A PARTICIPANT WAS TERMINATED IN 2001 WITH NO BREAK IN SERVICE AND WAS REHIRED IN 2002. THIS PARTICIPANTS VESTED BALANCES WERE IN EXCESS OF $5,000 AND DISTRIBUTED BEFORE BEING NOTIFIED THAT THIS FORMER PARTICIPANT WAS REHIRED AND A PARTICIPANT AGAIN. THE PARTICIPANT WAS 100% VESTED. THE DISTRIBUTION WAS RECENTLY DISTRIBUTED IN MAY AND THE PARTICIPANT HAS NOT CASHED THE NET PROCEEDS CHECK. THE FEDERAL TAX CHECK HAS BEEN DEPOSITED INTO THE COMPANY'S FEDERAL TAX WITHHOLDING ACCOUNT.

WHAT IMPACT WILL THIS HAVE ON THE PLAN AND PARTICIPANT???

SHOULD WE HAVE THE PARTICIPANT REDEPOSIT THE CHECK BACK INTO THE 401K PLAN AS A ROLLOVER???

PLEASE ADVISE!!!!!

tHANKS.....

Does anyone have or know where I may locate a summary of ESOPs, less involved than John Utz' ASPA presentation materials from a few months ago, but more detailed than a simple outline?