Any thoughts on whether Amish Aid would count as creditable coverage for purposes of reducing a pre-ex period? We've counted Mennonite Mutual as creditable coverage. I don't know enough about Amish Aid to know if it would fit the definition of previous coverage.

I'd appreciate any thoughts.

Can I take money out of a regular IRA for higher education purposes for my children?

I'm trying to figure out the role of a disclaimer when a trust is involved.

Assume following:

Descedent IRA has "look through" trust T as sole bene of IRA. Trust T has 3 bene's: A,B,C (A eldest, then B, etc.)

Questions:

1.Who's lifetime do we use if "A" signs qualified disclaimer to descedent's IRA?

2.Would it matter if A also disclaims trust T?

3.Assume no disclaimer was signed, but assume under the terms of the trust trust bene A is NOT a bene of the IRA (ie trust says B and C 50/50)? Who's lifetime then? Would it matter if the trustee has NO discretion as to the allocation of IRA assets? Is this different under new final regs from old regs?

4. Assume A,B,C were on the actual IRA bene form (not trust T). Assume A disclaims. who's lifetime now?

5. Same as #4 but no disclaimer and A's bene share on bene form shows zero % due to A. Lifetime to be used?

Thanks in advance!

A trustee paid a participant his fully vested account balance from their PSP even though the participant is still employed, hasn't yet attained NRA and in-service distributions are not allowed. This occurred because the participant is trying to buy his first house and his accountant informed him that if he transfers the money first to an IRA he could pull the money out of there and avoid the premature distribution excise penalty.

I seem to recall hearing about the IRA/first home thing but I'm not sure how to report this on the PS side. Looking at 412©(4), an eligible rollover distribution is defined as all distributions except the several that are listed. I have to think that the section is only discussing distributions due to valid distributable events and a distribution that should never have been made could not be allowed to be rolled over. If this is true and a 1099-R is needed for the distribution, it should be shown as a taxable distribution even if it somehow ended up in an IRA. I'm also guessing that a schedule R would be needed for the Form 5500 (there were no other distributions).

Is this the best way to handle this? All help is appreciated.

In my *native* state of New Jersey, contributions to a 125 plan are not exempt from state income taxes; a participant will still enjoy, however, the pre-tax status regarding federal income taxes & FICA. Do any other states have this non-exempt rule? What are the rules in Texas?

Thanks in advance!

Employee eligible to participate in 401(k) completed all appropriate enrollment forms to defer 5%. However, employer never set up in payroll and employee deferrals were never withheld/deposited.

What are the correction issues if the employee refuses to "pay back" lost deferrals? If the employees pays back lost deferrals?

If possible, please provide reference. Thanks.

I have an employee who wants to "quit" in order to get his 401K Profit Sharing account balance out because he desperately needs to buy a car. The intention is that he will be hired back immediately after. However, this does not seem right to me and I'm thinking there are rules that would apply. Can anyone get me headed in the right direction as to where I would find information about this kind of situation.

We have offered to do a loan and he states it's not enough so we also have offered a hardship distribution (since it allows for employer discretion). This employee seems convinced that terminating, receiving his balance and then being rehired is the way to go. I would rather not allow this practice but can't seem to find information to back me up.

Any help is appreciated!

Thanks,

Rachel

Company A and Company B have had some common ownership, but were not a controlled group. They operate two separate 401(k) plans with different eligibility, matching formulas, and other provisions. Effective January 1, 2002, A and B became a controlled group. Under my reading of the 410(b)(6)© transition period rules, and Ferenczy's excellent book on mergers and acquisitions, these two plans can continue to operate separately until the plan year beginning January 1, 2004, when they will be merged into a single plan.

Is my analysis correct? Thank you.

We are in need of providing defined benefit plan documents for governmental employers. We contacted Corbel and they don't supply or support such documents. Are there any prototype or volume submitter plan documents for governmental entities out there?

Democrats Flee Pension Markup and Thomas Calls the Constabularies

By Siobhan Hughes and Liriel Higa, CQ Staff

Capitol Hill police were called Friday morning to a Ways and Means

Committee markup after Democrats stormed out and locked themselves in a

nearby library room to protest the GOP's handling of a pension bill. Committee Chairman Bill Thomas, R-Calif., called the police and ordered

them to remove the Democrats from a Ways and Means library located

behind the hearing room in 1100 Longworth, according to a Democratic

staff aide. The Democrats were still encamped there this morning.

Democrats said they were furious that Thomas had unveiled his draft of

the Portman-Cardin bill (HR 1776) shortly after midnight, leaving them

little time to analyze its contents. The bill would revise pension

accounting rules and expand individual retirement savings options.

In a procedural protest, Democrats demanded that the entire bill be

read aloud, and then left the room. After all Democrats except a stunned Pete Stark of California had

departed, Thomas ordered an end to the reading of the bill, and passed

it on a voice vote.

Before leading the walkout, Charles B. Rangel of New York, the top

Democrat on the committee, fumed, "To do this to us is really just

totally disrespectful."

Thomas boasted, "In the House, the minority can delay, they cannot

deny."

(The substitute bill that was passed is at:

http://waysandmeans.house.gov/legis.asp?fo...item&number=100

A sole proprietor has incoporated for the plan year, which coincides with the calendar year. I have searched prior posts and have seen two different approaches suggested for handling of the plan document/5500:

1-simple plan amendment to change the sponsor

2- new corporation executes new adoption agreement, final 5500 for sole, new 5500 for corporation

What are everyone's thoughts on this? What have you done historically in this instance?

Thanks in advance to all who respond.

A company has a 401(k) profit sharing plan and elects the 3% non-elective safe harbor contribution. The plan allows for after tax contributions. Now, the HCEs can contribute up to 4% for after tax contribution and still maintain a free pass on the ACP test correct?

The maximum deduction of the unfunded current liability is now generally available to all plans (with the additional stipulation that benefit amendments during the last 2 years may not be recognized).

The general definition of the unfunded current liability is the current liability minus assets as defined under 412©(2).

Assuming that I am using an asset smoothing method which produces an asset value less than the market value of assets but still within the corridor of 80% - can I get my client a deduction using the lower asset number. It would appear that I can but it just seems too good!

Any comments are greatly appreciated as usual!!

Here's a "letter to the editor" received by BenefitsLink:

---------------

July 15, 2003

Dear Editor:

Hate to be picky, but the [July 14, 2003 BenefitsLink welfare plans] newsletter description of the 5th Cir. opinion in the Schlumberger case is very misleading.

Far from adopting the "serious consideration" test, the court rejected that test as a bright-line test for determining whether the employer had breached its fiduciary duties. Instead, the court adopted a fact-specific analysis of whether the information, or lack of it, was material to the employee's decision.

In addition, the court held that employer's do not have a fiduciary duty to affirmatively disclose that they are considering a plan amendment.

Hope you find this useful. Overall, your newsletters are a great source of info on a wide variety of topics. I find them very useful!

Bill Brown

wbrown6@wi.rr.com

http://www.techrepublic.com/download_item....m&fromtm=e103-1

"Don't wait for users to ask for advice; be proactive and help them improve their Word skills with this compilation of Word tips. This download contains over 100 pages of invaluable Word advice."

"[M]embers of Congress, don't ever apologize for your values."

http://www.opinionjournal.com/extra/?id=110003758

A company restated a qualified plan by adopting a non-standardized prototype 401(k) plan in 2002. In 2003, before applying for a determination letter with Form 5307, the company adopted an amendment that takes the plan out of prototype status and makes it an individually-designed plan. Is the plan now a non-amender that must go under EPCRS, or can it still take advantage of the September 30, 2003 deadline for filing for a determination letter?

A company restated a qualified plan by adopting a non-standardized prototype 401(k) plan in 2002. In 2003, before applying for a determination letter with Form 5307, the company adopted an amendment that takes the plan out of prototype status and makes it an individually-designed plan. Is the plan now a non-amender that must go under EPCRS, or can it still take advantage of the September 30, 2003 deadline for filing for a determination letter?

We represent a nonprofit that has operated a 403(b) plan since 1987. A major brokerage house is custodian and offers mutual fund investment options. The nonprofit makes employer contributions and the plan is an ERISA plan. The nonprofit has never been able to obtain plan level information from the custodian, such as number of participants remaining in the plan, etc. The custodian indicates records are not kept on a plan level basis and they are not able to determine how many of the individual participant accounts are part of the nonprofit's 403(b) plan. Is this normal? The nonprofit would like to switch to a new custodian. How can this be accomplished when the custodian does not keep records on a plan level basis? The nonprofit can account for the current employees that it knows are participating, but it does not know what happened to the accounts of numerous employees who have terminated employment since 1987. Are those former employees left behind with the old custodian? Help!

While reviewing the instructions closely for line 4j of Schedule H, I noticed the following statement: "If the Schedule H is attached to a Form 5500 filed for a plan with all plan funds held in a master trust, check "No" on line 4j." I would love not to have to compile this info but am not sure if "master trust" applies to this plan.

What exactly is a Master Trust?

This particular plan has all assets with Wells Fargo, who directs what amounts are invested where (without any input from the employer). They also sign the Schedule P.

Thanks,

Rachel