What are the requirements regarding an individual who has been on military leave for more than 31 days who wishes to drop both his HCRA and DCRA? Please site specific reg if possible supporting the answer. Thanks.

If an employer chooses to adopt a qualified plan during a year when both employee and employer Simple IRA contributions have been made, what happens regarding any account losses when employees effect a "refund" of invalidated contributions? How are the refunds split between employee and employer? Are both sources (employee and employer) refunded to the employee and the whole is taxable? Are gains taxable?

We have a plan that was effective 1/2/2002. The original document (prototype) was written such that the plan would use prior year testing and 3% assumed for the nhces.

Now that the plan has been tested we find that the plan will fail ADP testing using the 3% but would pass with current year numbers.

The ERISA Outline seems to indicate that an amendment to current year would be ok.

The plan WAS amended effective 1/1/2003 to be a Safe Harbor Plan and the new amendment says the plan will use current year testing.

The question is, should we do a separate amendment amending the testing method to current year effective 1/1/2002 or will the existing amendment suffice.

Thanks.

If I die, are the assets in my 403(B)(7) account taxable to my wife? What about to my children? Do they have to be cashed out, or can they be transfered into my wife's or children's name. Thanks

Some of you might have heard this at the LA Benefits conference. I have confirmed the information with some folks at the IRS. If a plan is a non-calendar year plan year and the EGTRRA Good Faith amendment was signed before the GUST restatement, the IRS is saying that the EGTRRA Good Faith amendment is nullified and another EGTRRA Good Faith amendment needs to be adopted. Also, if a plan sponsor moves from a prototype document to an individually designed plan, the EGTRRA Good Faith amendment would need to be incorporated into the individually designed plan adopted. The same would apply if a plan sponsor moved from one service provider's document to another or had a restatement for any other reason.

I had been under the impression that the EGTRRA Good Faith amendment granted the plan sponsor the EGTRRA RAP and all was well with the world. Now it seems we have to stay on top of the EGTRRA Good Faith amendment with every document change. Was this everybody's understanding except for mine?

Let me know your thoughts, positive or negative.

are there prior threads for this:

If a cross tested 401k plan is using match to satisfy top heavy min, would that employee also get the gateway if the match allocation req's are more liberal than the p/s req's? the ee gets at least 3% match but did not satisfy the 1000 hr req to get the p/s alloc. for the 401a part he/she is a "0" .

Our new client adopted a 401k PSP effective 4-1-02 with year end of 3-31. Did this last spring (2002)

Year progressed and CPA noted an excess contribution so called us to say that the SIMPLE deferral and 401k deferral for one employee exceeded the limit so an excess distibution needs to be done. This was discovered in February 2003.

This is how we now found out there was a SIMPLE maintained in 2002 for the first 3 months! Financial advisor told client you could end the SIMPLE on 3-31-02 and start a 401k on 4-1-02. SIMPLE was not disclosed to TPA.

What needs to be done, as you cannot both in the same year. Arguably, the FA wasn't thinking calendar year for SIMPLE - hence the effective date of new plan.

what should we do next?

Our new client.... adopted a 401(k) PSP with safe harbor non-elective language. Effective 4-1-02 with year end of 3-31.

All went well, until at end of year, CPA notices that SIMPLE and 401K amounts are on the W-2 (which they didn't have a problem with) and when combined one individual was over the $ limit.

Brought to our attention in mid-Feb when an excess contribution distribution was requested.

Financial advisor said they could do this because they terminated the SIMPLE on 3-31-02 and didn't start the 401k until 4-1-02.

What steps do we take to correct this? As I'm quite certain you cannot have the 401k and the SIMPLE in the same calendar year (boy I wish/hope I'm wrong).

A plan sponsor just signed the GUST restatement for an individually-designed plan, missing the 2/28/02 deadline and the 9/3/02 relief.

What are the corrective steps and costs?

Also, was the 2/28 deadline a submission deadline or execution of the document?

It is my understanding that if a participant signs an irrevocable waiver they are still included in the general non-discrimination test of 401(a)4 just as they would be included in the 410(B) coverage test. Can someone give me the cite reference for this regulation?

TAG recently sent a message indicating that the deadline is extended to 3/17 due to 3/15 being on a weekend.

The ERISA Outline Book takes a different approach, stating that the IRS position is that the deadline is 3/14. The ERISA Book indicates that the extension due to a weekend applies to the 4/15 date for 402g corrections, but not ADP/ACP refunds.

Any additional insight? What has your practice been?

I have read much of this board, and it looks like the Roth IRA is the preferred IRA. But I am a 29 year old that owns a home already. I am looking for the best IRA to gain me the most retirement income, AND help me right now. If I am in the 39% tax bracket right now, would I not be better off with a traditional IRA rather than a ROTH, since I assume my tax bracket will drop when I am at retirement? Isn't the rule of thumb that older investors should open a ROTH, while younger investors should stay with a tradtional?

If anyone has ANY advise, or links to areas where this topic is addressed I would appreciate it.

We have had a transit/parking pre-tax reimbursement plan in place for a few years. The employees have rolled over balances from year to year. Starting in 2003, we changed TPA's but some employees still had balances from 2002 with the prior plan. We're not sure how to handles these balances. We don't want to make them forfeit the balances, but I don't believe we can tax and then refund the money.Any suggestions?

i have been unemployed for the past 4 years and have an ira account from a divorce that i need to withdraw money for support is there any way this is done without paying a large amount of money such as withdrawing small amounts? would it simply be regarded as income? is there some kind of financial hardship exemption?

An accounting firm that we work with has software they use for tax returns. The software is adding the catch up to any participant 50 or over when calculating the maximum 415 contribution, even if the plan is a p/s only.

I read 414v to allow catch up contributions for deferral plans only. Am I missing something?

I am currently looking for an attorney to refer a matter to that has experience dealing with the IRS / PWBA regarding a failure to file Form 5500 by a self employed individual for a single-member profit sharing plan.

The individual mailed in the delinquent 5500s and has received back letters from the service stating that he must respond within 30 days to prevent being automatically subject to the administrative penalties described in the intructions to form 5500. It appears from the instructions to the form that the penalties will wipe out his retirement savings.

If you have specific expertise related to this situation and can provide some assistance, let me know.

I am currently looking for an attorney to refer a matter to that has experience dealing with the IRS / PWBA regarding a failure to file Form 5500 by a self employed individual for a single-member profit sharing plan.

The individual mailed in the delinquent 5500s and has received back letters from the service stating that he must respond within 30 days to prevent being automatically subject to the administrative penalties described in the intructions to form 5500. It appears from the instructions to the form that the penalties will wipe out his retirement savings.

If you have specific expertise related to this situation and can provide some assistance, let me know.

I am permissively aggregating 2 plans for coverage and nondiscrimination. The plans happen to be a DB and a DC, although I don't believe that is important. Both plans define normal retirement age as the later of age 65 or 5 years of participation. Because one of the plans existed before the other, I have a case where some older people have different normal retirement ages.

Therefore, my question is when I run the general test, what testing age do I use?

My former employer through which I receive COBRA benefits has declared Ch 11 Bankruptcy. I have a COBRA premium due. Do I have coverage as a result of the CH11? Should I forget the COBRA payment and get individual insurance?

Perplexed

While it is clear that uniform coverage is required for a health fsa and it is further clear that the regulations specify that this same requirement does not apply to a dependent care benefit, is there any prohibition against an employer voluntarily applying the "uniorm coverage" rule to their dependent care benefit?