Buying and holding real estate in a IRA. What are rules?

My client is a PEO. The PEO has a new client organization (CO) that is adopting the PEO's 401(k) plan. The CO has an existing 401(k) plan with another PEO. It is a safe harbor plan. They are merging the "prior" plan into the current PEO's (my client) plan.

Questions:

For purposes of safe harbor and the notice requirement, is there a notice requirement in the "new" plan?

assuming the notice requirement was satisfied in the "prior" plan, is this sufficient for purposes of the "new" plan?

if not, and there IS a notice requirement for the "new" plan, then what is it? i've read the ERISA Outline Book and it just doesn't hit home with me. something about by the effective date of the new plan? meaning the date the participation agreement was signed or the date deferrals begin?

I hope someone can offer some help!

I am in the process of developing a RFP for 401(k) recordkeeping services and Investment Vehicles. Any suggestions on resources providing free samples, preferably via the internet? To date SPARKS and some consultants have been helpful.

We have an employee who is requesting a hardship distribution to build a house. What kind of documentation do we need?

Business owner and spouse have been taking RMDs for several years. Owner's RMD for 2003 is $75,000. Owner took RMD of $10,000 in January 03. Owner died in March 03. Financial institution says spouse must take remainder of owner's 2003 RMD distribution by 12/31/03 ($65,000).

Financial institution says the balance of owner's IRA can be transferred to spouse, but spouse's RMD for 2003 must be recalculated including rollover value from owner. I thought 2003 RMD was based on 12/31/02 value. This looks like double dipping if spouse has to recalculate her 2003 RMD.

I need advice please.

My prior employer withheld my 401k contribution from my 2/14/03 paycheck and has not invested it yet. Before, we have always invested funds on the exact date of payroll, i.e. 2/14's would have been invested on 2/14.

I've contacted the HR Manager but she keeps saying it will be any day. Other employees are getting concerned too.

My question is: how long is it before they legally must invest that $? (I had thought it was to done as soon as administratively possible but no later than the 15th business day in the month following the month of deduction from payroll?)

What ramifications could they face if they do not invest by required dates?

Since I no longer work there, I'd like to move my $, but I can't do so until final $ is in there, so any input is appreciated very much.

A plan limits the circumstances under which participants may receive a loan. An error by the TPA allowed a participant who did not meet the loan requirements to receive a loan. What is the proper correction for this error?

The New York Times recently reported that Charles Schwab, Goodyear Tire and Rubber Great, Northern Paper, Tech Data, the El Paso Corporation and the CMS Energy Company plan to stop making matching contributions to employee 401(k) plans.

I'd be interested in your observations on whether you are seeing this among your clients?

Do you know of other major Fortune 1000 companies that have done so?

Anything of importance to report to us non-attendees?

Have a 401(k) safe harbor plan that uses a SHNEC. There is a former participant (terminated in mid-2001) that received a W-2 in 2002 for worked performed in early 2001. Is this person entitled to the SHNEC?

These are the only facts I currently have.

An employer pays a dividend in stock to a leveraged KSOP. The dividend attributable to allocated shares is allocated to the participant's account balances. What about the dividend attributable to the encumbered shares? I understand that if the dividend were paid in cash, it could be used to service the loan or pay expenses. Should this stock dividend be treated as a net gain to the trust and allocated to all participants based on total account balances?

How do you calculate the experience (gain) or loss for an immediate gain funding method if both the Expected Unfunded Accrued Liability and the Actual Unfunded Accrued Liability are negative?

For example:

EUAL = -500

AUAL = -250

Do you limit either or both UAL's to zero?

In doing year accounting I discover ineligible employee was allowed to make contributions. He was ineligible as he had not satisified a year of service.

I believe we can choose to give the money back or the employer can give a QNEC to each simularly situated employee. ( ie all with less than a year of service)

Here is my question: If we give the money back do we need to redo the employe's w-2 for 2002 and tell him to redo his tax return, or is there another alternative?

thanks for your input

Ed

Client needs 2001 5500 forms - ordered from IRS, never received, filing deadline next week. I sent him blank EFAST forms and am now wondering if they may be completed by hand (he does their 5500). If not, would the best approach be to complete the EFAST and wait for the DOL to reject it, thereby providing him with the forms for handwritten cases? Please advise...Thanks in advance.

You have to be careful with this one as it can only be used under the Relius reports and not custom.

Thus it will overwrite the landscape version of the correction report. so if you are going to try this make sure to save Relius' report if you don't care for this report.

This report will show the testing results under the pre-SBJPA Rules (thus the proof the plan passes) as well as the results under the new rules.

There is a Totals row at the bottom. It works fine as long as there is both an ADP refund and ACP refund. Otherwise if there is only an ADP refund it doubles the numbers. That doesn't effect anything else, but I haven't figured out how to control it. (Actually I added fields to divide by 2, but they are supressed)

But someone asked once how do you prove the plan passes with the refunds, so here it is.

Is it me or is taking over a 403(B) nearly impossible? I am not an expert in the 403(B) arena, but have taken over 100's of 401(k) plans and have never found any problems like we are having with this plan.

In my opinion, 403(B) plans were designed to never give participants the freedom of investment choices. The only one who benefits from these arrangements are the insurance companies who service them. You can't get answers, they most don't know a thing about the product, they are extremely expensive from all the crap they put into these annuity contracts and more importantly they prohibit you from leaving.

Is there anyone out there who knows how to actually go about taking over a 403(B) plan? My conclusion is to start a 401(k) and avoid all these pitfalls. I would like to be able to speak directly if possible.

Thanks.

Partner in a law firm went to "Of Counsel" status as of 01/01/03, essentially becoming an independent contractor (at least that's my very limited understanding of the change).

Does this individual need to establish his own 401(k) Plan, or could the Partnership Plan be amended to cover former partners who become "of counsel"? If the Plan is amended to extend coverage to this individual, would that make the plan a "multiple employer" plan?

Any and all responses most welcome - especially from those of you who might have encountered such a situation in your own Plan or practice.

401(k) plan has issue re late deferrals for a number of pay periods. Apparently, company would write one check per quarter for e/ee deferrals, e.g., company would wait until Apr. 1 to write check for e/ee deferrals for Jan/Feb/March. Is it worth it to go through the DOL's VFCP filing or better off just computing the requisite interest and self-correcting it?

A participant in a qualified retirement plan died in September 2002. Since 1999, he had been receiving an annual required minimum distribution (a "MINDI"). His sole designated beneficiary is his surviving spouse (who is currently 74).

No MINDI was made to the participant (in fact no distribution was made to the participant) between January 1, 2002, and the date of his death in September 2002. In addition, relying on the advice of our TPA, no distribution, MINDI or otherwise, was made to the participant's designated beneficiary between the date of his death in September 2002 and December 31, 2002. In fact, no distribution has been made from the participant's account balance since November 2001 (when the participant drew-out his 2001 MINDI).

What rules, if any, govern a surviving spouse's distribution options under the scenario described above? May the surviving spouse simply stop all MINDIs (and, in fact, all distributions) for some period of time following the participant's death? Is it OK that no 2002 MINDI was made? Does the surviving spouse simply have to take a full distribution of the participant's account balance within 5 years of the participant's date of death (this is what the TPA says is the case)?

Our accountant believes, but is not sure, that the TPA was not correct in advising our plan not to make a 2002 MINDI and believes that the surviving spouse may now have to pay a 50% excise tax on the amount that should have been distributed as a MINDI in 2002. These rules seem too confusing, so I need your help in figuring out whether my accountant or TPA is correct. Thanks so much for any comments or suggestions.

A company's 401(k) plan has always filed its Forms 5500 on a timely basis. It was discovered, however, that it has almost never filed a Schedule SSA. The reasons given is that the software indicated a 0 for the number of participants who terminated employment with a partially vested benefit.

My question is: how do you correct this? I looked at the instructions for the Schedule and they mention that you can correct information previously reported (or even newly reported). Should this problem be corrected by filing a current Schedule SSA with all past terminated vested participants or should the plan go to the DOL under the Delinquent Filer Voluntary Correction program. I would like to have your thoughts on this.