I remember that there is a special rule that where an employer has more than one plan it must use the same method for determining HCEs for each plan. I am driving myself nuts trying to find this in the regs. Can ayone point me in the right direction? Thanks!

Does the spouse need to be 100% primary in order to roll into an IRA of their own? I have a spouse who is 50% and son is 50% primary beneficiaries and the spouse wants to roll her 50% into an IRA of her own.

OK...I am very new to this field so please bear with me. I am a Benefits Administrator for a 501©(3) organization. I am having a hard time with the Internal Revenue Code and the 403(b). Here is my issue...

IRS Publication 571, Tax Sheltered Annuity Plans, states that "Maximum Allowable Contribution (MAC): For Tax years beginning after 2001, the maximum exclusion allowance (MEA) has been repealed, therefore your MAC is the lesser of the limit on annual additions or the limit on elective deferrals." I read this to mean that you are no longer limited to a percentage of your salary for a 403(b) and are limited to the lesser of the limit on elective deferrals (currently 12K) or annual additions (40K). I am being told that your 403(b) plan must adopt those changes. This is what does not make sense to me. If the Internal Revenue Code repealed the rule, how can a company limit the contribution to a lesser amount, say for instance 5K ( citing the MEA for example). Wouldn't that company now be in violation of the rules for a 403(b) and therefore, this would not qualify as a 403(b). Please note, we are following the IRC, but I am trying to make sure conceptually that I understand the law. Thanks!

During the course of an audit, it was discovered that the elective contributions were not made for some employees. Specifically, these contributions were not made for employees that terminated employment at the end of the year and received a check for unused vacation. The amounts were withheld from the paycheck, just not deposited. Other than the prohibited transaction tax and filing the Form 5330, is there anything else that must be done? I.e. is this something that we would need to submit to VCP?

We have a client who wants to change their vesting schedule so it applies to each yearly deposit individually. We won't do this and are pretty sure there is a reg that speaks to this but are unsure. Does anyone have any info.

In a floor/offset arrangement, the DB plan's minimum funding requirements are affected by the performance of the PSP. Generally, if the PSP's returns are poor, then the cost to the DB plan will increase to make up the shortfall.

May an ER make an additional PSP contribution to cover the PSP's shortfall instead of tapping the DB plan to cover the difference?

The answer would seem obvious, granted a discretionary PS contribution, but I would still appreciate some guidance with this matter.

If actuarial equivalence assumptions in the plan document are amended, what is the proper way to grandfather the lump-sum benefit? Here are two approaches (assume 12/31/02 as the amendment adoption/effective date):

1) Absolute dollar: Future lump sum cannot be less than the PVAB as of 12/31/02 of the 12/31/02 AB under the old A.E. assumptions.

2) With interest: Future lump sum as of any future date cannot be less than PVAB of the 12/31/02 AB under the old A.E. assumptions.

I always thought #2 was the correct approach, but it never hurts to revisit.

Now, I have a takeover plan where the plan A.E. is defined (prior to GUST restatement) to be 8% pre and GAM83 50/50 as of the Dec preceding the distribution year. 417e assumptions were the usual PBGC interest rates. (I believe this was someone's attempt at early GATT compliance.) Lets ignore 417e for this discussion. Would future lump-sums be grandfathered using the Dec 2001 GATT interest rate for all future calcs, or, would lump sums be grandfathered using whatever Dec interest rate preceded a future year of distribution?

After reviewing the various discussions regarding lost and missing participants on these boards (thanks to whoever did the links) I could't find anything regarding locator services for International participants. We have terminated plans (due to bankruptcy) and are trying to locate missing participants. The IRS and Social Security programs are great for US based employees but not for those whose last known address was a foreign country. Has anyone had success with an International locator service? Thanks.

Company X maintains a 401(k) plan for its employees. Participant A works for Company X and participates in its 401(k) plan. In March, 2003, A's contributions to the X 401(k) plan are suspended for 6 months following his/her hardship withdrawal of elective deferrals. If A terminates employment in May, 2003 and is then reemployed in November, 2003, is A subject to the remaining 4 months of the 6-month suspension period upon reemployment?

Are Simple IRAs able to be rolled over into 401k plans?

Our document says that the Plan is eligible to accept rollovers from "qualified plans" and that the rollover must meet the applicable requirements of Code sec. 402, 403 or 408.

Any help is appreciated!

Just came across a “standardized” adoption agreement, which allows the option of applying the accrual fraction before or after applying S415 to the projected. But it states that if the latter method (applying accrual fraction after applying S415 to projected) is selected then the plan will be discriminatory under section 401(a)(4)!!?

a) Is this true? If so, where does it say in the Code, Regs, IRS opinion letters…?

b) I thought, in a “standardized” adoption agreement, all options were de facto non-discriminatory (as long as they were not inconsistent with other selected options)?

I have been trying to research info on Roth IRAs and investing our money more wisely, but am confused by much of it. My questions on rolling a traditional IRA to a Roth are as follows:

I have $2K in a traditional IRA and want to roll in a Roth - once I roll it over, does that $2K count toward the maximum annual amount that I can put in?

If I roll the traditional into a roth, will I be taxed on the $2K?

If after the 5 year period I want to take out money, will I only pay 10% penalty, or will I be subject to other fees/tax? (i'm younger than 59.5)

What does the 'required beginning date' mean?

Are we able to take out money (in the future of course) to pay for a child's college education without penalty or tax? We've been reading about the 529 plan and don't know if it is a good idea to start one or choose other forms of investing.

I've been reading the information about roth iras on www.rothira.com and lots of the wording is confusing, which is why i have so many questions. Thank you very much for any info you have on the above.

-Sarah

Here's one I haven't seen before. An employer with a large percentage of union workers has a self-insured health plan for its nonunion employees (mostly administrative and managerial personnel). The reinsurance costs have increased dramatically and the union has offered to allow the nonunion employees to participate in the union health plan & trust, under the same conditions that would apply to a union employee (i.e. the employer would contribute x$ per month for coverage for each employee).

Ignoring the union negotiation issues (the union could be in a stronger position if it is providing benefits to those with whom it is negotiating), has anyone seen this kind of arrangement? Could there be withdrawal-type liability if the employer terminates its participation as to the non-union employees? Solvency concerns? What kind of due diligence should they do on the union plan, if any? Any other concerns?

I did notice that under the final regulations issued 4/9/03 (68 Fed Register 17472), a health plan could be treated as a MEWA if less than 85% of the employees covered by the plan are union employees. I do not yet know whether this is the case with the plan at issue. If it did turn out to be a MEWA, are there special concerns there?

Thanks in advance for any thoughts!

Let's say you have a plan that uses a SHNEC. The plan also has an integrated non-elective contribution. Would this plan design lose the 401(a)(4) safe harbor status since it has two different formulas?

Assuming the 402(g) limits are met, is there any problem with an individual's being covered by 2 SIMPLEs where the employers are not part of a controlled group, etc.?

I keep seeing different opinions on whether or not to submit GUST prototype and word-for-word volume submitter plans for a letter. I haven't seen much re why those who favor submission do so. I would like to see some reasoned opinions-anyone?

Thanks

Today is bozo day. Can't find this anywhere, and reading the statute is difficult.

For the purpose of determining whether quarterly contibutions are required for the plan year beginning in 2002, JCWAA allowed the plan to recalculate the 2001 current liability funded ratio using an upper bound of 120% of the CL rate. In order to utilize this, did the 2001 CL rate already have to be at the 105% level?

I am working with a non-calendar year plan that has failed the APD test. The amount that needs to be refunded to one HCE is over $1,000 (but less than $2,000).

Since the plan year spans 2002/2003, can I recharacterize only $1,000 of his deferrals as catch up (and still have to make a refund)- since that is the limit for 2002, or can I recharacterize up to $2,000 of his deferrals as catch up - since that is the limit for 2003?

If you fail the ACP test and have to refund after-tax contributions, must you also refund earnings on contributions? What if there is a loss?

A plan wants to change their 0 service requirement to 1 year. Would only non-participants be affected? What about an employee that was approaching the entry date, would he now be subject to the new 1 year wait?