According to the latest ASPA ASAP

The IRS and the Social Security Admin has decided NOT (I repeat) NOT to to impose the requirement to use multiple page 2 of schedule SSA for 2002!!!!!!!

I'm trying to determine if there are any specific ERISA restrictions/guidelines that prevent sponsors from allowing participants to purchase options (including covered calls); in this case within self-directed brokerage accounts.

A little confused here about taking into account a terminated DB plan for top heavy testing purposes after 2001. From looking at the new Code 416, we have a decrease in the look-back time from 5 to 1 year period ending on Determination Date.

(3) Distributions during last year before determination date taken into account.

(A) In general. For purposes of determining—

(i) the present value of the cumulative accrued benefit for any employee, or

(ii) the amount of the account of any employee,

such present value or amount shall be increased by the aggregate distributions made with respect to such employee under the plan during the 1-year period ending on the determination date. The preceding sentence shall also apply to distributions under a terminated plan which if it had not been terminated would have been required to be included in an aggregation group.

(B) 5-year period in case of in-service distribution. In the case of any distribution made for a reason other than separation from service, death, or disability, subparagraph (A) shall be applied by substituting “5-year period” for “1-year period”.

However, when I look at (B) immediately above, would you deem distributions to currently active participants as falling under "in-service distributions" (hence you keep around for 5 years, but delete out distributions to terminated participants falling out of the 1 year window), or do all distributions disappear for testing purposes after 1 year?

Thanks for any help, insight here. I'm leaning to keeping active participant distributions for testing purposes around for 5 years, but maybe I'm reading this wrong.

I was hoping someone may have input regarding the following. A local govt. had an arbitration decided against them and must now repay employees for health insurance premiums that were previously deducted through their 125 plan. The govt. was obliged to pay health insurance premiums as cost of living increased. The shortfall (premiums increased faster than the cost of living) was deducted through the employee's 125 plans. According to an arbitration judgment, the govt. must now pay the employees for those amounts deducted through the 125 plan. Any thoughts?

1) Must the 125 plan returns be amended?

2)Should prior W-2s be amended? Will the repayment be subject to FICA?

3)How will this affect their 125 plan?

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Must an employer report SEP contributions to the IRS ( not salary deferral contributons).

How does the employer explain the discrepancy that arise when the custodian reports a SEP contribution received in 2003 for 2002 and is reported on the 5498 for 2002?

when converting a mp plan to a profit sharing plan, are you required to give a new plan number to the plan? example: if the xyz mp pension plan was plan 002, if that plan is now the xyz ps plan, is it plan 003? also, am i required to file a final 5500 for the mp plan? i am inclined to say no since there was no termination and the assets were not necessarily merged....but i'm not sure. can anyone help? anything else i could be missing?

thanks....

If a Schedule C filer wants to open a SEP plan and files jointly with a spouse who participated in a qualified plan, are there any special concerns with the SEP deduction on the 1040? What if the spouse does not participate in the qualified plan?

Under a volume submitter document, can anyone see any reason why the exclusion of an HCE that is a participant in another defined contribution plan (not maintained by the plan sponsor) from the plan would raise any red flags? This individual maximizes their contributions under another plan (unrelated employer).

Sorry for the basic question, but when does an annual P/S contribution have to be made to a 401(k) plan? The resources that I've found say that it has to be posted by the due date of the company's corporate tax filing, usually 3/15 for a calendar year plan.

Any other cites would be appreciated!

We've just taken over as TPA for a company with target benefit and 401(k) plans. They want to restate the 401(k) and terminate the target immediately. The company and plans are on a 9/30 fiscal.

Question: Can the target be terminated at this point in the plan year? The plan requires 1,000 hours and last day employment to accrue a benefit, so I believe it can be since no one has accrued a benefit. One of my associates disagrees, claiming that anyone with over 1,000 hours has already accrued a benefit and a contribution must be made for the partial year.

I know I'm right (LOL), but can't find a citation. Can you help? Thanks.

Most of the Section 125 software I have reviewed includes testing capabilities for the 25% Key Employee Concentration Test, the 55% Average Benefits Test, and the 5% owner concentration test. However, there are several other tests required (contributions and benefits test, eligibility test, etc.). Is anyone out there running these tests? If so, how do you obtain the necessary information to perform overall discrimination testing. It appears that most TPAs I have researched are providing the 25%, 55%, and 5% tests only. Do these TPAs put the responsibility of the additional tests off on the client?

Thanks!

A participant was layed off from a major steel company in December of 2001. In 2002, the PBGC paid him retirement payments monthly from the DB plan (he's age 52 and had over 32 years in the company). The 1099Rs for 2002 were prepared using Code 2 (which triggers that a 10% penalty does not apply for pre-retirement distributions).

I'm not certain, since he's under age 55, if the 72(t) exception applies and that the 1099Rs are correct. Would you happen to know if the 10% tax penalty should not be applied in this case? He's under age 55.

I appreciate your help in this matter.

Forfeitures are used to reduce administrative expenses. There are remaining forfeitures after expenses are paid. These will be carried to the following year for reducing the employer contribution because no one met the accrual requirements to receive an employer contribution in the current year. No employees meet the accrual requirements to receive an employer contribution the following year - what happens to the forfeitures?

According to the ERISA Outline, the forfeitures are allocated in proportion to how the expenses are paid (pro rata based on account balances) rather than in proportion to how an employer contribution would be allocated (pro rata based on compensation). It appears that the basic document is silent regarding this situation.

Does anyone have a defined benefit plan sample RFP that they could e mail me?

Does any one have a sample RFP for a defined benefit plan that they could e mail me?

Hi,

A client's TPA is advising them to limit/deny plan loans where the repayment amount would exceed a stated percentage of the participant's paycheck. I believe they were recommending 25-30%.

TPA says lot of plan's doing this.

Concern - Is this now the norm, and if so, what is the motivation, legally

- Is there a new piece of guidance indicating this is a requirement?

I can see it as a factor the plan MAY consider, as it is a factor which "would be considered in a normal commercial setting by an entity in the business of making similar types of loans" (DOL reg.) But is it a MUST do?

Thanks in advance for your thoughts!

Casey

Hi,

We have some loans in default for failure to remit loan payments. The grace period for deeming the loans has not yet occurred.

One question asked was could we just refinance the loan to increase the payments so that it is still paid off by the original due date and ignore the fact that 2-3 payments were missed. I'm a bit concerned about whether this truly cures the default on the loan especially if the payments under the reamortized loan for the quarter are less than what the payments under the original loan should have been for the quarter in which the original loan defaulted.

Do other practioners allow refinancings to cure defaults? Just curious. Any input is greatly appreciated as, of course, I cannot find guidance in the regs.

Thanks

Company A incorporates in 2001. No employees. No plan.

In 2002, Company A buys Company B. Company B has an existing 401(k) plan which Company A adopts.

For 2002 adp/acp test - are employees who earned more than $85,000 in Company A in 2001 HCEs for the 2002 test?

If the plan uses prior year testing, do they have to use the results from Company A for 2001?

Thanks.