I'm fairly certain that actuarial increases need not be provided while a participant is in suspension service (unless he/she has attained age 70-1/2), but I cannot find this in the regulations.

Any help out there?

401 k is top heavy; and employees may participate immediately in the salary deferral: but must wait for a year of service for the profit sharing; there is no match or safe harbor contribution.

Are the short time employees with less than a year of service entitled to the 3% top heavy minimum? I thought they were but am being challanged.

Thanks for your help.

ED

If the employer is a government agency (a city) and they have a cafeteria plan can the city manager participate? I would think that he would be considered a highly compensated employee as a result of his job responsibilities and duties, however, his wages are not in excess of $130,000. Are there other items I need to consider in determining whether he can particpate? Must he be excluded from participation altogether?

If the employer is a government agency (a city) and they have a cafeteria plan can the city manager participate? I would think that he would be considered a highly compensated employee as a result of his job responsibilities and duties, however, his wages are not in excess of $130,000. Are there other items I need to consider in determining whether he can particpate? Must he be excluded from participation altogether?

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?