I have a client who cannot take advantage of the the catch up contribution even though she is age 50, wife of the owner because they do not fail testing, neither husband or wife put in $11,000. She is looking for something I can give her that explicitely spells this out and I am having a hard time finding something in layman terms to give her. Any suggestions? Thanks.

I know I should keep up better than this but we've just been swamped.

Whatever happened to the President's proposal to allow Healthcare Flexible Spending Account participants carry over up to $500 of their unused money to the following year rather than forfeit it?

I would like to know how Retiree Group Term Life is processed under IRC Section 79?

Do you issue 1099's or W-2s? If so, do you have to set the retirees up on the payroll to produce w2s?

Any ideas on where I can order 1099-R Forms from? Seems like our AA had taken care of this in past years and she is no longer here, and left no paper trail as to where she had ordered these forms from. I've called the local office supply places and had no luck. Boss doesn't want to buy software for it. He wants the AA to type them out (probably the reason why the last one quit...).

Thanks

I have a participant in a 401(k) plan who reached age 70 1/2 on 8/5/02. The plan year ends on 11/30/02. The participant was a 5% owner until 7/1/02, after which he no longer owned any portion of the company. Am I to assume that since he was a 5% owner at least one day during the calendar year in which he turned age 70 1/2 that he is to be considered a 5% owner to determine his required beginning date? I can only find material that addresses a change in ownership after the person reaches age 70 1/2, not before.

Any help is greatly appreciated.

Thanks!

I just need a tax clarification. Does anyone know if I can file my 2002 income taxes claiming that I made a $3000 contribution to my 2002 Roth IRA, then use the tax return money to contribute to the IRA before 15 April? Thanks!

If the issuer of an annuity (selected as the form of benefit from a qualified plan) declares bankruptcy, where does that leave the holder of the annuity?

Is there any protection for the annuity holder?

Is it possible to have company A and B who have common ownership to have the following and pass coverage, etc.

Company A has 4 HCE and 125 NHCE with a safe Harbor(Match) 401(k) Plan. No required testing necessary.

Company B has no HCEs and 250 NHCEs with a traditional 401(k) and no match.

Does this pass 410(B) 401(a) etc...? Any thing els to watch out for?

I know that 401(k) deferrals may not begin until the date the document has been signed. Can the document, however, be made effective as of 1/1 if deferrals are starting later in the year? For instance, ER wants to establish 401k/psp. PS provisions will be effective for entire year. Plan isn't signed until 8/1/. Deferrals may not be made before 8/1 but does the document have to refer to the 8/1 date as effective date for deferrals. We use Corbel and the AA makes provision for separate effective date for deferrals. If the document was prepared w/out specifying 8/1 for deferrals is it still ok?

As I was converting plans and etc., I pulled an exported plan to one side and ran a couple of _hypothetical_ vesting runs across plan years. The first was a decreased vesting percentage, the second test was a vesting schedule change for a plan containing a terminee who terminated prior to the change.

I should point out here, good or bad, the Term break w/ svce Curr Plan Cat was used. Your mileage may vary.

In both cases, changing the secondary schedule and implementing the schedule change at the participant census level was the solution. Noted that a decrease in percent along the same vesting schedule will not work - the schedule must be changed (fine, compliant).

The first example also worked with an odd percentage, I used 31.28 percent on a 1000 dollar balance and it checked out fine.

The final test was also successful, a participant who decreased in vesting percentage from 80% to 31.28% was enabled by switching to a vesting schedule that was zero percent along the same time line. Please note that there is compliance here because the imputed percent on either schedule will not decrease from year to year. I wanted to see how the percent overrides carry forward, and in what manner, & simple.

I wasn't able to apply any test or audit to various and sundry sources or accounts, just one Employer source, forfeitures in suspense, originating investment, 5 year break, 501 hours to avoid BIS. Standard disclaim here, there are many ways to run this.

A small change found (ours not Relius) was the rounding of the vested amount on reports. A change in formatting of the field was/is probably in order to carry two decimal places. Other than that it looked pretty good. Ver 7.3 SP0

Regards,

Bill

Participant A receives a RMD from ABC, Inc. PSP. Assets for ABC, Inc. PSP are held at American Funds. Participant A also has an IRA with American Funds. Participant A's broker has the RMD for the IRA withdrawn from the ABC, Inc. PSP.

It is my understanding that although 2 or more IRA's can be aggregated for RMD purposes, and IRA cannot be aggregated with a qualified plan. Has something changed that I am missing?

Assuming I am correct that the IRA RMD should not have been taken from the ABC, Inc. PSP, what are the ramifications to the Plan? I can see immediately that withhloding would not have been done correctly. Is there anything else? I don't think so, but just want to double check. (Under the document participant can take in-service distributions any time because he's reached NRA.)

Thanks in advance for any guidance.

Notice 98-52 indicates that the safe harbor match cannot be used to satisfy the top-heavy minimum nor can it be used in 401(a)(4) testing.

I know that under EGTRRA generally a matching contributon can count as a top-heavy minimum contributon.

It's been a few years since I was involved with a 401(k) plan and an curious, after EGTRRA, can the safe harbor match now be used to satisfy top-heavy minimums?

What about 401(a)(4) testing?

An employer teminates it's service agreement with a PEO who co-sponsors a multiple employer plan. The employer no longer wishes to provide a 401k for it's employees.

Can the assets be distributed to employees like single employer plan terminations or is there a special rule for multiple employer plans?

I have read REV PROC 2002-21 and many Who's the Employer Q & A and can't find an answer specific to my situation.

Top-hat NQDeferred comp. plan allows participants to elect to defer a bonus prior to 12/31 each year, and also allows them to designate the distribution date, and the size of distribution (e.g., $20,000 distribution may be made in two installments of $10,000 each).

These distributions may occur during employment; i.e., plan does not restrict distributions to death, disability, retirement or other termination of employment.

Is this arrangement permissible (i.e. it avoids constructive receipt) so long as "haircut" penalty is imposed on in-service distributions? Is "haircut" penalty necessary to avoid constructive receipt?

Any and all comments appreciated.

from the "taxation of distributions from qualifed plans" page 8-48,

"the IRS takes the approach that after a DEEMED distribution, the amount is not in the plan for tax purposes" it references treas reg 1.72(p)-1.

A DB plan covers a sole proprietor and his spouse. Is this plan subject to PBGC coverage?

Thanks.

I have a SIMPLE 401(k) plan on a standardized prototype document. The current document provisions state that non-elective contributions are not allowed. Could the employer revoke his SIMPLE election prior to 12/31, subject the plan to 401(k) testing and make a non-election contribution under any allocation form he chooses? The plan would be amended to provide for an age weighted or integrated allocation? It would seem that since non-elective contributions were not allowed, this would prevent any problems with anti-cutback because of the 500 hour/last day rule.

If a governmental entity established a 457 Plan beginning 1/1/02, and participants want to know if they can use the 3 Year NRA catchup provision, is it possible?

I understand for determiningg the amount previously unused limits in years before 2002, all elective deferrals(401(k), 403(B), 457(B)) can be taken into account in determining the unused portion. However, I can not find guidance on what if the entity did not have a 457 plan for prior years? Can you still use the 3 year NRA provision based on the other plan deferrals unused limits?

Seasons Greetings all.

Can someone give me the short version of underfunded plans and make up contributions.

first, when is it determined? year end? by plan actuaries? for which type of plans typically? and which plans have no underfunding requirements.

secondly, if it is determined, (what is the timing test, at anytime?, or as of plan year end?) that the plan is underfunded, what steps are to be taken, within what time frameframe. is there a reporting requirement? penalties assessed?

what governs? pbgc? dol? irs? common sense (just kidding on that last one)

happy healthy and prosperous holiday season and new year to all ya.

Thanks as always.

Hi,

I have a new situation to me. I have someone receiving deferred comp payments while still employed, albeit in a reduced capacity. However, the employee is still eligible to participate in the plan because the benefit accrual requirements are minimal.

Since the plan uses the broadest definition of comp (reported under 6041, 6051, and 6052) using 3401(a) it appears to me that this deferred comp is included as compensation for qualified retirement plan purposes.

Can anyone comment as to whether that is correct or not? Tx. for any insight.

Happy holidays.