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.

In a nonqualified deferred comp situation, is termination for cause and voluntary termination by the Employee enough to constitute substantial risk of forfeiture under Code Section 83?

The regulations discuss "the single security type method" to calculate cost basis (1.402(a)-1(b)(2)(ii)©)

Can someone explain when this method is used and provide an example of the calculation?

I specifically don't understand the following:

. When are securities sold to provide liquidity necessary for the trustee to exercise rights under the plan?

. What is the total amount credited to the account of a distributee (or portion that was available for investment in such securities)?

. What is the amount uninvested on the date of distribution?

Thanks

I have a plan who inadvertanly did not send us a payroll deduction file from December 2002. The company will send it this week.

I know it is to be reported on form 5558 which we usually send in along with the 5500. We haven't done the 2002 form for him yet. Sjould that be included in the 2002 5500? The 2003 5500? Can the 5558 be independently filed from the 5500 now?

Thanks for your consideration.

PS: can somone do something "advertantly"? (just a thought)

If the present CBA contains a cap for the payment of health care benefits of retired employees, does that cap apply to all retired employees or only those employees who retire during the term of the present CBA?

Any suggestions as to books, articles and other sources as to what employers can do in formulating and controlling retirement welfare benefits.

Thanks

OK, So i take out 14,000 from my roth IRA in March for a down payment on a home. Now I am selling another home this month.

Question: Can I put that 14,000 back in my Roth IRA now, and avoid penaltys?

Mark

Hi.

I have a client that currently has a 403(b) salary deferral only and a p/s plan that provides a discretionary contribution on a non-integrated basis (and uses a 5 year cliff vesting schedule).

The employer is interested in tying the employer contribution into the form of a match. Can you help me with the following:

1. If the match is added to the 403(b) plan, can these contributions be subject to a vesting schedule?

2. Depending on the answer to 1)., if a 401(k) plan is established, is it still true that 403(b) accounts cannot be rolled over to the 401(k) simply because a 401(k) plan has been added (i.e. is there a way to terminate the 403(b) plan)?

3. Is there somehting I have lest out to assist with these questions, or is there something else I should be considering?

Thanks so much for your feedback.

401K Plan is amending for GUST/EGTRRA and no longer wishes to offer loans to it's participants. Would this be an anticutback violation? It seems as if it would not be since benefits are not being lowered.

Thanks,

Ronnie

We currently are engaged to perform a certified audit for a non-profit organization who sponsors a 401(k) plan. The client has inquired as to whether it would make sense to terminate the 401(k) plan and roll it into a client sponsored 403(b) plan, which is not subject to audit (the investments are in an annuity product, thus allowing limited reporting)

Obviously the audit would have to be performed on the 401(k) plan for the year in which it transfers to the 403(b) plan. Other than that, are there any potential pitfalls?

Thanks for any replies.

Situation : 204(h) notices are sent timely last December (12/13) announcing a proposed plan termination effective 12/31/2002 but the plan is not amended to freeze accruals as of 12/31/31; the 204(h) is also used as the 60 day NOIT with a proposed termination date of 2/15/2003; a Board resolution is also signed on 12/13/2002 resolving to terminate the plan effective 12/31/2002.

The plan is insufficient & I contend that a 1/1/03 valuation needs to be performed w/ costs pro-rated for the period from 1/1 to 2/15.

The consultant for the termination work asserts that the 204(h) and the Board resolution are sufficient to end my company's work as of 12/31/2002.

Who is right ??