Would a 412(i) be a good option for an owner, age 45, who is currently earning $600,000 annually, but whose income level will be tapering off over the next five years?

Is the brother of the one and only owner (100%) also considered an HCE?

Other than the seven factors (and related examples) listed in Rev. Proc. 2002-47, is there any guidance available on what qualifies as a "significant" versus "insignificant" operational failure?

We have been asked to advise a plan which underpaid matching contributions to some of its participants over the last several years. The error resulted from calculating the contribution on a bi-weekly (payroll) basis, rather than on a plan year basis as required by the plan document. Only 5 to 10% of the participants were affected each year, and the correction for each year is equal to approximately 5% of the total contribution made for that year. We believe a reasonable case could be made that the failures in this case are insignificant and can be corrected under the Self-Correction of Insignificant Operational Failures program. Because it exceeds the two year requirement it is ineligible for correction under the Self-Correction of Significant Operational Failures program.

Any thoughts or suggests on "significant" versus "insignificant" operational failures would be greatly appreciated. :confused:

We have some commission sales people who only get paid at the time that a transaction is completed. At times this causes ee to go without a paycheck for several months so there is no money from which to deduct the employee portion of the healthcare premium. Can we discontinue coverage for ee and/or dependents? If so what reqluirements must we meet. We have a 125 POP plan.

Thanks.

Fact Pattern:

- PSP with discretionary, pro-rata allocation

- non-standardized prototype document

- top heavy

- 6 participants; 2 are HCEs

- 3 parts earn commission only; 1 is HCE

For 2002 PY, def of comp has been amended to exclude commissions. Plan fails 414(s) testing. Trying to satisfy 401(a)(4) using "cross-testing". We were able to pass general test giving 3% TH min to commission-only ee's and by giving 11% of comp to other 3 ee's.

1. For testing purposes, can we cross-test to pass 401(a)(4) if we're using a prototype?

2. Even though this isn't a cross-tested plan from a plan design standpoint, do we still have to satisfy the gateway test?

Any other ideas for satisfying?

A safe harbor 401(k) plan consisting solely of deferrals and safe harbor match is deemed to be not top heavy. What happens if there is a forfeiture to be reallocated? Are we now not deemed not top heavy? This issue has been discussed before, but I don't know if its been resolved. My client uses the safe harbor match, so having to bring everyone up to 3 percent is kind of a big deal.

any insight?

A company sponsors a qualified plan and a nonqualified plan. The ADP test was run on the qualified plan and it fails. The contributions to the nonqual plan were not included in the calculation of the test.

Do I have "room" to transfer contributions from the nonqual plan into the qualified plan OR should the contributions to the nonqual plan stay put? In other words, when determining the maximum permissable amount that an HCE could put in to qualified plan, should I aggregate the contributions to both plans first, then calculate ADP -OR- do I ignore the nonqual contributions and dertermine if the qualified plan passes without them?

Can a PS only contribute an additional $1,000 (for 2002) as a catchup - Total Profit Sharing Allocation $41,000.

I am 65, collecting Social Security but have a part time job. I made approximately $5,000 in 2002. Can I take out the Roth IRA for 2002. If yes, may my husband, who is 73, take one out also?

thanks

Is a public school district permitted to establish a 401(k) plan, or is it considered a state/local government entity and able to establish a 403(B) only? Thanks.

Employee is a pathologist and works for a hospital in which she participates in their 403(B).

Same pathologist is a partner in a partnership which maintains a SEP. With respect to the $40,000 annual addition limitation, do you have to aggregate the two plans together? (The employers are totally separate and unrelated.)

There are no deferrals in the SEP. Employer contribution only.

I know that if we were talking about deferrals, the 402(g) limit applies to both employers together. Not sure about the $40,000. Can she have $40,000 going into the plan with the hospital and another $40,000 going into the plan sponsored by the partnership?

Where could I find the citation? Thank you very very much.

Suppose a gov't hospital or public university sponsors a Non-ERISA 403(B) plan. The plan has several investment vendors such as TIAA/CREF, VALIC, ING, etc. to which employees may choose as custodian of their individiual account. Since, the employer has no written plan document or SPD, is it the responsibility of each custodian to determine employee eligibility, hardship distribution rules, loan provisions, etc. Also, should each custodian provide the employer an annual evaluation of the plan assets, number of participants and so on.

Profit Sharing Plan w/401(k) feature.

Profit Sharing provided only to those employed on last day of plan year.

Employee goes on maternity leave on 11/1/02. Supposed to return on 1/16/03.

On 1/16/03 employee decides she is not returning to work.

For Plan purposes, is she terminated on 11/1/02? or 1/16/03?

Thanks!

I am a little new to this, so any help would be appreciated. I am in a disagreement with how the average benefits test on a new comp 401k was calculated in prior years. My understanding is that you add all contributions and divide by compensation. The NHCE's should average 70% of the HCE average. Is this correct?

A prior TPA firm calculates the average based on the ebars divided by compensation, producing a very low average. The advisory firm wants to know why we are not performing the calculation like the prior TPA firm. I think this is incorrect.

Please let me know what you think.

One More thing: Please confirm my understanding that for a plan that excludes comp prior to plan entry I would need to use the full plan years compensation for testing, correct? The gateway rules require a 5% on a full years compensation (in situations where HCE's receiva a 15% accrual).

Thank you

Can an employer sponsor multiple 403(B) plans?

We have an employer (2 owners) who always fails the ADP test (no match). Each year both owners must take a corrective distribution of around $5000 each. They also receive a cross tested ps contribution.

Their CPA has suggested that they add their wives to the payroll. Pay them each $2000 and do not have them defer. This will enable the plan to pass the ADP test. In addition, they want to have the wives in a separate class in the new comp portion of the plan to help the two husbands with the new comp allocation.

To me, this seems somewhat "suspect." However, I am rather conservative. Does it seem appropriate to have them in the same group for ADP testing but in a different group for new comp allocations?

I'd appreciate greatly any feedback.

This one is almost laughable. An HCE took a full distribution from a deferral-only plan. When asked why, he said he didn't like the investment options. He is still active, no hardship, not 59-1/2, so, putting aside the obvious fiduciary/control issues, what options are there to correct this? Is Walk-in Cap the only possibility?

Plan was established in 1994 and had a couple of short amendments (#1 and #2) before it was completely restated in 2002 for GUST and EGTRAA.

Question: We now have to complete another short amendment to this plan, will the amendment number be #1, since it is the first one after the restatement, or will it be #3, because it had a #1 and #2 before restatement.

Thanks.

Anyone had experience making an over-distribution to a member of a defined contribution plan? If so, how did you get the payment back? Did you hire a collection agency? How did you recover the money if it was rolled over to another plan or IRA?

Thanks for any help you can provide.

Walter Kelleher

kelleher_walter@fsba.state.fl.us

Anyone had experience making an over-distribution to a member of a defined contribution plan? If so, how did you get the payment back? Did you hire a collection agency? How did you recover the money if it was rolled over to another plan or IRA?

Thanks for any help you can provide.

Walter Kelleher

kelleher_walter@fsba.state.fl.us