Must a sole proprietor who has (or is interested in setting up) a "Uni-K" plan have their elective deferrals made by December 31? I seem to remember reading somewhere that the elective deferrals can be made up through the due date of the tax return. Any help would be appreciated!

This plan has a discretionary match contribution, which is determined for the entire plan year (not on a payroll period) basis. At the beginning of the plan year, employees were informed that effective for the plan year beginning January 1, 2002, and for each plan year thereafter, until modified by resolution of the Boards of Directors, the corporation shall match XX% of a participant’s salary reduction contribution, up to a maximum XX% of a participant’s compensation.

At the end of the 2002 plan year, the employer now wants to increase the match for the plan year. Can the employer do this?? I was under the impression that the employer must disclose the match formula for the plan year so eligible participant can consider the match formula in making their salary reduction elections.

Also, I and trying to find any regulations, notices, etc. that says the employer must disclose the match percentage before the plan year begins. ERISA 2520.102 is vague.

Thanks!

If you have stock in a Roth IRA and it has lost money, can you sell it and take the loss on your tax return?

ER had a plain old Profit Sharing plan up until 1/1/02 when it was amended to be a Safe Harbor 401(k). Several EEs in 2002 are rehires. Some of these EEs had met the 1 year/age 21 eligibility requirements, but had never entered the plan because they were not EEs on what would have been their entry dates.

Some EEs were gone for a period longer than their period of employment. Is this a break in service? Do they have to meet the eligibility requirements again when they are rehired?

Some of the EEs were gone for a period shorter than their period of employment. Since these EEs had previously met the eligibility requirements they are considered immediately eligible upon their rehire date. Do they enter the plan on the next entry date following their rehire date? (Remember that they had not entered the plan during their first period of employment.)

Participants in Medical and Dependent Care Reimbursement Accounts are charged a monthly fee of $3. ($4 if both are selected)

QUESTION: Is this fee to be assessed PRE or AFTER tax?

Thank you!

I have heard the suggestion to employ young part-timers (like high school interns, kid's of other employees, etc.) to make cross-tested plan work where owner is, say, in their 30s and regular employees are same age or older.

Would something as transparent as this work, especially since the young kids would rarely be around more than a year and would never get vested. Would this fail the "discrimination in operation" kind of smell test, even though they provide a legitimate business service to the company?

Thanks!

I have doctor, spouse (who magically makes $12,500) and two NHCE staff. In regular cross-tested safe-harbor 401k plan, spouse deferring $11,000 would cause Avg. Ben. % test to blow up, right?

To avoid that problem, would the following work:

a) Restructure into Component A (doc plus youngest staff, even though fail "reasonable class. test") and Component B (spouse and older staff).

b) Use cross tested 3% SHNEC 401k for Component A and 3% SHNEC 401k as ONLY plan for Component B.

c) To pass 410(B) Ratio Percentage Test: Each component NHCE/HCE = (1/2)/(1/2) = 100%, so pass 70%.

d) For Component A to pass 401(a)(4) only have to pass NCT part of ABT (since passed R/P test already).

. (i) Per post by Mike Preston 1-24-02, I should be able to use safe-harbor mid-point % even though arbitrary assignment of NHCEs to components causes reasonable class. test to fail.

. (ii) Assuming NHCE has high enough contribution to be in doc's Rate Group, formula to pass is NHCE/HCE = (1/2)/(1/2) = 100%.

e) Component B is safe-harbor 401k only, with 3% SHNEC, so should automatically pass 401(a)(4).

Thanks!

I've had a roth since 97 and I've put in the max for each year. This year I made my 3500 contribution in Jan and now have to withdraw it as I've made over the $95 K limit. Problem is my total value of my account is down to $3300. Since I've contributed $11,000 for the other years in which my income qualified, is there any way to save this account? I've made a lot of bad investment decisions, obvously.

If 2% of more shareholders participate in a self-insured medical plan, must the 2% shareholders base their premiums on the 2% shareholder claims or on the broader population of the corporation?

Several questeions regarding top heavy plans:

- If a 12/31 plan year is top heavy in 2001 and it is now 12/2002, when must the minimum 3% of compensation be paid to the eligible participants?

- What year can the plan sponsor use this contribution as a tax credit?

- What year of comp should be used to determine the contribution?

- If the plan sponsor never makes the top heavy contribution and then wants to terminate the plan, what approach should the trustee take? Or if the plan sponsor never makes it, what are the consequences?

A participant in a top-heavy cross-tested profit sharing plan who works less than 1,000 hours and is employed on the last day of the plan year is required to receive the employer top heavy minimum contribution.

Are we required to include this participant in the non-discriminatory classification test and the average benefits percentage test?

Would it make a difference if he worked less than 500 hours?

I am 44 and have been on Long-Term Disability for over 6 years. I have an ESOP with my employer valued at $65,000.00. The ESOP is part of my employer's Retirement Plan.

Last year i requested a distribution assuming that disabled equated to retired. Unfortunately, the Summary Plan stated that retired is 55 or older regardless of disability status.

I am in desperate financial need of these funds and want to request a Hardship Withdrawal instead. The Summary Plan makes no mention of either allowing or prohibiting this type of distribution.

My questions are:

Do i have any right to a Hardship Withdrawal of these funds if it has not been prohibited in the Summary Plan?

Does the recent legislation regarding Retirement Plan distributions benefit me considering my request and situation?

Can an exception be made if the Retirement Plan Committee or Fiduciary allows it?

Thank you in advance to anyone who can give me some advice or recommend a resource so i can research this further.

I'm doing HCE determination for 2002 for CY PY. Assume I have seven 5% owners and, in doing my 20% TPG calculation, come up with a total of 4 employees that could be in the TPG. However, the 4 highest paid employees each earn more than the seven 5% owners. I would assume then that I have a total of 11 HCEs for 2002. Sound right?

Also, in doing the 20% TPG calculation, I assume I include employees who terminated during 2001 in my overall number that is eventually multiplied by 20%.

Thanks for the assistance.

Our company started a 401K plan a few years back, but everyone stopped contributing because the performance of the plan was very poor, and the plan administrator was difficult to work with. We are just starting a new 401K with a new investment company and plan administrator. I am 45 years old, and still employed with the company.

I was just told by the plan administrator that I cannot withdraw or transfer the funds (to an IRA ot Roth IRA) of the old plan, even if I agree on the 20% withholding and 10% penalty. Eventually, the funds will be able to be transferred to the new 401K, but I would rather cash the old fund out.

Is it true that I can't touch the money? I don't want to borrow against the 401K, I want the funds free and clear or rolled over to my IRA's.

Do I have to declare a "hardship" to get the funds? What are Can the old 401K be rolled into my Roth or traditional IRA?

Carl C

Profit sharing plan provides that participant must be employed on the last day of the plan year to receive an allocation. Plan is cross-tested. Advisor is telling employer that e/ee's who terminate with less than 500 hours must receive an allocation, otherwise, the amount of the contribution going to NHCE's would have to be increased...???? Any idea what he may be talking about??? I thought that as long as you satisfied the lesser of either 5% or 1/3 of the HCE's you were OK.... Thanks.

As an Employee Benefits Plan Administrator with over 18-years of ecperience in both Daily and Balance Forward participant recordkeeping, I recenly had a baby, have moved, and am looking to work from home as a consultant for a reputable TPA Firm. If you were me, what would you charge on an hourly rate for your expertise and administrative services? I have a home office set-up with the latest and fastest technology, and am ready to dedicate anywhere from 4-6 hours per day to this profession.

Any input that anybody would be willing to contribute would be greatly appreciated.

Thank you, and hope everyone had a fun and relaxing holiday before testing season.

As a TPA with over 18-years of experience, I recently had a baby and plan on continuing my career in Employee Benefits Administration by working as a consultant from home for a couple of well-established, credible Firms. If you were me, what kind of reasonable hourly rate would you place on yourself? I have most of the technology set-up in a home office, and am getting the rest completed within the next couple of weeks.

Thanks for any input you may have in this regard.

I am divorced, I have cobra from my ex-spouse ins. I am covered under flexible comp with my employer, can I claim my cobra payments under my flexible comp plan.

How long will the otherwise excludable test work for a person? If a person is hired in 2000, won't they fall out of the otherwise excludable group in say 2001 or 2002?

Please site any references from which you obtained your answer.

Also, what about the guy who is still employed but doesn't get paid??? Weird right, but it happens. Wife of owner works, is credited with hours but does not get paid. Is this person included in the ADP/ACP test? A zero sure looks good on the HCE side, but is that the right way to approach it? It sounds to me like they are trying to get around the test.

:confused:

Client sponsors two plans, A and B. (Assume: (1) no other plans in the controlled group, (2) none of the plans is top-heavy, and (3) broadly available allocation rates will not work.)

Each plan provides for 401(k), match, and profit-sharing.

Each plan passes all of its 410(B) 70% coverage tests separately.

(a)(4) Testing: Client wants to test the profit-sharing contribution for Plan A, but not for Plan B, on a benefits basis. The profit-sharing allocation for Plan A passes the "minimum allocation gateway" test. The profit-sharing allocation for Plan B complies with 401(a)(4) tested on an allocations (not benefits) basis. It would not pass the "minimum allocation gateway" test if Plans A and B were tested together.

Issue : When I run the average benefits percentage test (for purposes of my 401(a)(4) testing) for Plan A do I test on a benefits basis or an allocations basis? [if I test on a benefits basis, then the 401(k) contributions made by young non-HCEs who are not in a plan that passes the minimum gateway allocation test will make it easy for Plan A to pass the average benefits percentage test.]

Do I use a benefits basis for testing Plan A and an allocations basis for testing Plan B?