A traditional 401(k) PSP of a publically traded company has 15 investment options for self-direction. One of those options is "company stock." The company would like to amend the plan to take advantage of the Section 404(k) dividend deduction provision that was amended by EGTRRA.

The company is NOT going to make an employer contribution that is set aside in a newly created ESOP account. Instead, they want to take the position that the Company Stock Account in the self direction investment menu is the ESOP portion of the plan. The only money going into the plan represents deferrals and matching contributions.

Apparantly, the recordkeeper has seen this done on several occasions, and has even shown me such an amendment.

I don't see how you can take the position that an investment option is a plan or even a component of a plan designed to invest primarily in employer securities, even if you throw in all kinds of 409 and 4975(e)(7) language that applies to that investment option. We are talking about 401(k) deferrals and matching money that one day might be invested in a bond fund and the next day in company stock. How is that a plan or provision designed to invest primarily in employer securities?

If you've done this, have you gotten a determination letter on it yet?

Sole practitioner has retired so little or no income on Sched C.

DB plan is underfunded just before termination, so $80,000 is required to fund but is not deductible under 404(a)(8) because of little income. Is the non-deductible amount carried forward, or does it become a basis in the assets in the trust, or is it lost forever?

Question - A client would like to count past service for purposes of his 401(K) plan eligibility for "non-compensated" service rendered by his wif, while getting the business started. Essentially she was working but not on the payroll. Can this be accomplished ?

I have two separate questions:

1. If a prototype 401(k) plan with a GUST Remedial Amendment period ending in 2003 is merged into an individualized 401(k) plan that has already been updated for GUST (2/28/02) is there a problem? That is, how does the prototype plan get updated? Do you wait and sign a new prototype adoption agreement for the period prior to merger when it becomes available or do you prepare an individualized snap-on amendment to the prototype prior to merger? Or do you do nothing?

2. When one corporation acquires another corporation and 401(k) plans are involved, is it more advantageous (for purposes of avoiding liability for operational defects) to merge the plans or to terminate the acquired company's plan and transfer its assets trust-to-trust? Or perhaps one option is not more advantageous than the other?

Thanks. Any citations would also be greatly appreciated.

ok folks, i recall a discussion not too long ago regarding responsibilities of directed vs discretionary trustee, but can not seem to find it on the message boards.

can anyone steer me to it please!?

Thanks

We have a group that is installing a HRA that will be paying for 100% of in-network deductible and a Health FSA with a 2k max. They have a 403b plan already in place.

The benefits manager is getting nervous that there is a maximum on tax-sheltered benefits a employer can provide. I'm not aware of anything, but I want to make sure that there aren't any limits of pre-tax monies that an individual can run through or a total an employer can run through.

Thanks!

Is it possible for an employer to establish a line of credit (on a short term basis) to purchase stock? And then once the final purchase is accomplished, convert the loan to a traditional loan with an amortization schedule?

Can anyone provide further clarification of the rules relating to the timing of the elimination?

Example, Plan is amended on 11/1/02 to eliminate. The notice/SPD is distributed the same day. My understanding is that the elimiantion is effective 90 days later.

However, if a participant wants to take an in-service withdrawal today, can he do so without spousal consent as he has not reached an annuity start date?

What is the correct method for handling the following situation:

Valuation 12/31/2001

Interest rate 7%

Contribution 10/1/2001 35,000

Earnings 400

Market value of assets 35,400

Interest on contribution for Schedule B purposes

35,000 * (3/12) * .07 = 613

Assets for 412

35,400 - 35,000 - 613 = (213)

Should this be floored at zero????

Is the answer any different for the full funding calculations versus the funding method itself??

I believe the only prohibition is that the IRS takes a dim view of negative present value of future normal cost. For example, I believe it is acceptable to have a plan using Individual Aggregate where the retiree liability is bigger than the assets that negative amounts are allocated to the remaining employees to determine the normal cost.

Thanks in advance for any commentary.

Our client currently has a 401(k) plan with a 50% up to 6% match on the deferrals.

They would like to add the capability of offering year end bonuses that the participant can elect to defer to the plan - no problem. However, they also want to match those bonuses at 100% - over and above the 50% up to 6% already in place. They insist that their major competitor offers this in their plan.

Seems to me that this has the potential of violating both of the "discriminatory match" rules. 1. The match rate cannot accelerate as the deferral percentage increases. 2. No highly compensated participant can receive a higher rate of match when compared to the non-highly (ex. a highly gets the bonus match and now has a total 5% match and a non-highly who took the bonus in cash received only a 3% match).

Is this possible?

Has anyone figured out how to default to the portrait style reports for batch printing in Relius?

We have a take-over plan which provides that employees enter the plan for purposes of making elective deferrals on the first day of the quarter following their employment. It further provides that employees are eligible for all sources of employer contributions (including the 3% SH non-elective) on the first day of the quarter following the attainment of age 21 and completion of 1 yr. of svc.

Here's my question: Assuming a calendar year plan year, for a participant who becomes eligible for the employer contributions on 10/1/02, can the 3% SH non-elective be made only on comp from 10/1/02 to 12/31/02, or should it be based on full year comp? Remember, this participant entered the plan on 10/1/01 for elective deferrals.

Can a person who is eligible to receive a Davis Bacon contribution opt not to take that contribution, but take it in cash as part of their prevailing wage?

I have a question about veba's. My husband and I have a corporation. We are the officers and we have 6 employees. We have been approached about starting a veba. Instead of paying ourselves yearly bonuses out of our company, we would instead fund a veba. I know this entails buying several million dollars worth of insurance. My question is: What are the fees involved? How can we ever use the money in the veba? We have to join a union in order to do this. Is this legitimate? Is it legal? What are the upsides and downsides?

Can anyone possibly help me?

A client of mine is the Canadian parent of a US subsidiary. The Canadian parent acquired the US subsidiary a few years ago. The US subsidiary has a 401(k) plan.

A participant in the US sub's plan has terminated employment at the US operation and is now employed at the Canadian parent. I do not yet know if this participant is a Canadian National or a US citizen.

Do the typcial controlled group issues apply? If so or if not, can this participant take a distribution from the US plan at this time? (i.e., are the rules any different because the parent is Canadian?)If not, when he terminates from the Canadian parent, & is eligible for distribution, how is his distribution from the US plan paid to him? In US $$?

YIKES. I feel so clueless here. Hope someone can shed some light. Perhaps this is for legal counsel who specializes in the area of international employee benefits?

Company A is terminating its 403(B) plan to replace it with a 401(k) plan. I know the Plan termination is not a distributable event and its assets cannot be rolled into the 401(k). As participants terminate, distributions will be affected until either all assets are gone or the IRS allows for a distribution prior to employment termination.

Here's my question: Must the Plan Sponsor continue to file a 5500 each year even with no contributions being made, either employer or employee? The 403(B) asset pool includes Employer contributions.

Thanks.

Is anybody aware of any IRS reg, ruling, notice, etc. that requires 30% withholding if a participant does not provide an address when requesting a distribution or none is on a recordkeeper's file?

Does anyone think a plan design where the employer contribution is based on family size would be allowable under the HRA rules? Can you forsee nondiscrimination testing problems? The design would be $500 contribution for singles, $1000 if two family members, $1500 if three members, etc.

Brenda

Is there a source on the web for an employee to compare the Dependent Care Tax Credit and a Dependent Care FSA for 2003?

want info on how to go about getting a roth ira and the requirements etc