1. Can an employer pay the medical premiums for its highly compensated employees and not for the rank and file?

2. If an employer is permitted to do so, can that plan be a 100% self-funded plan?

Does the documentation for proof of a medical hardship withdrawal have to in one certain form? A plan administrator says the backup documentaion must be in the form of the insurancy EOB - she will not accept statements from the hospital, doctors, ect. which show what is due from the patient after insurance. Her reasoning is that she has to have "consistent administrative policies" for the audit.

Looking for some support to my conclusion.... ERISA 405(a) deals w/ co-fiduciary liability and a fiduciary’s duty to resolve/report breach by a co-fiduciary. 409(B) says a fiduciary is not liable for a breach that occurred prior to his becoming a fiduciary. Situation: Successor Trustee of a 401(k) discovers Prior Trustee incorrectly (and w/o malice) allocated plan earnings and resulting distributions for several years. PTtee is currently an executive and major shareholder of the Company and continues as a participant in Plan. Does the STtee have the 405(a) duty to resolve/report errors?? Is Yes, would the answer be “No” if the PTtee did not still have a fiduciary role (due to his role w/ Plan Sponsor) w/ respect to the Plan? If not, why not ?? All anecdotes, cites, or guidance appreciated.

Employer sold all assets of company this year and terminated their Profit Sharing Plan effective as of 9/30. A request for determination of terminating plan has been filed with IRS. Plan assets have not yet been distributed... awaiting IRS approval. Employer wishes to dissolve the corporation by end of this year, 12/31/02 for tax reasons. Would this cause problems for the plan if the determination letter is not received and assets are not distributed by the 12/31/02 corporate dissolution date?

Is it permissible to "roll over" MSA monies that are not used by the end of the year into an IRA? If so, please provide cite(s). Thanks.

Box 15 on a W-2 must be checked if the employee is an "Active Participant" in a retirement plan of the employer. Leading to the elimination or cutback of deductible IRA contributions.

Is simply being eligible for participation enough to check box 15, or as some instructions state, the employee or employer must contribute on behalf of the employee or they receive forfeitures?

If the plan only has a 401(k) with a match and the employee doesn't defer, is he/she an "Active Participant"?

I'm having trouble finding this example in the regs. Thanks

10 percent penalty if you take withdrawal from your 401 k prior to retirement age.

Under what circumstances is the penalty waived?

i know for financial hardship - first time home buyer exemption? what else can be legitimized to avoid the penalty???

thanks in advance.

If a top heavy, 401(k) Profit Sharing Plan allows employees to participate immediately (after one hour of service) for purposes of making 401(k) salary deferrals and rollover/transfer contributions, but requires one (1) year of service and attainment of twenty-one (21) (plus quarterly entry dates) in order to enter the plan for purposes of receiving a profit sharing contribution and/or matching contribution, does the plan have to make a top heavy minimum contribution before the employee enters the plan for purposes of the profit sharing and/or matching contribution. To me, Reg. Sec. 1.416-1 does not answer the question, at least not clearly, whereas Code Sec. 410 makes it clear that you can treat the early entry 401(k) employees as a separate group.

Our client missed his required minimum distribution for 2001. I know there is a 50% penalty for the failue to take it.

My question is this:

If our client does not make the correction, does the penalty apply for each subsequent year that the amount is not withdrawn (similar to the excise tax on excess contributions), or is it a one time only penalty.

A client adopted a new plan with a "GUST I" document in 2001. Does the plan then get an extension until the end of the "GUST II" RAP, for that document provider, to restate the plan document because there is no PRE GUST document to base the deadline of the RAP on?

Participant wishes to have trustee withhold 100% of their distribution for federal income taxes. The 20% rate is mandatory. Is there any reason the plan administrator should reject this request to have 100% withholding? Thanks for any feedback!

A foreign parent owns 2 companies located in the USA. They are therfore a controlled group. They meet the qualifications of QSLOBs. However, a 5310-A was never filed notifyng the IRS of the QSLOB designation. Both US-based companies sponsor 401k Plans. Each has operated as if they are a QSLOB (for purposes of coverage, non-discrim testing, etc.). Interestingly, when each of the companies filed for a deteremination letter for their individual plans, they marked the boxes stating it was a QSLOB and provided the Demo that that affect. Therefore, the Plans have determination letters based on them being QSLOBs.

Does the determination letter replace the need for a 5310-A? Does it protect the Plans, if on a non-QSLOB basis, they would ahve failed coverage/non-discrim testing?

The proposed regulations under Section 457 provide that participant loans are permitted under an eligible governmental plan to the extent permitted under 72(p)(2) and Treas Reg 1.72(p)-1.

As I read 1.72(p)-1, if a governmental employer offeres both a 403(B) plan and an eligible 457 plan, loans from the 403(B) plan would need to be taken into account in determining the maximum loan permitted under the 457 plan, and visa versa. Am I reading this correctly?

As loans from 403(B) plans are frequently initiated through the annuity vendor, rather than the employer, and that vendor may not be the investment provider for the 457 plan, this seems like an impractical, basically unworkable rule.

Any thoughts would be appreciated.

I recently received comments on a GUST restatement from an IRS reviewer. This one said we could not define "qualified domestic relations order" by reference to Section 414(p). I have never received this comment before, and I don't think there's any support for it, so I plan to resist, not just on principle but because the definition would probably be ridiculously long. Have any of you run into this?

More generally, it seems that the IRS reviewers are getting pickier and pickier (but not consistent) about requiring us to put provisions in the plans that really are not required. For example, one reviewer asked me to state affirmatively that the plan did not have an hours worked requirement for the top-heavy minimum benefit. The fact is that the plan does not have such a requirement (we know it's not permitted), so it seems redundant, to say the least, to make us say we don't have one. Such comments suggest that reviewers are imposing LRM requirements on our individually drafted plans .

Sorry for getting into a rant, but I just hate putting useless provisions in my nice, well-drafted plans. I'd like to hear others' experience in this regard and especially about successes in getting the Service to back off.

We have a client that currently vests on a 5-year cliff schedule. With the EGTRRA amendment they want to change to a 6-year graded schedule.

Does this change consititute an IRC Section 411(d)(6) cutback?

If it does, is an ERISA Section 204(h) notice required?

Hi all,

I need some experts advice regarding a questionaire I received from insurance company.Insurance company asking for previous coverage information.But, My old insurance was cancelled by Old insurance company due to preexisting condition.Now, I am on prenatal care, which is not preexisting condition under present group insurance.

1.Does previous insurance should give HIPPA letter as I was under their coverage?

2.How should I respond to this questionaire from the Present insurance company?

Thanks

Hello -

If anyone could help me with this question, I would sincerely appreciate it.

EGTRRA added 411(d)(6)(E) to the Code which allows for the elimination of an optional form of distribution (i.e., an annuity), provided a single lump sum payment (of the same amount and at the same time) is available to the plan participant. The regs governing 411(d)(6), which were issued prior to EGTRRA, provide that an amendment eliminating an optional form of payment will not be effective until the earlier of (1) the 90th day after the participant has been furnished with a sufficient summary of the amendment or (2) the first day of the second plan year following the plan year in which the amendment was adopted.

1.411(d)-4(e).

Therefore, due EGTRRA's addition of 411(d)(6)(E), is it still necessary to provide the notice and wait 90 days, as is stated in the regs, or are the regs trumped by the new code provision? I haven't been able to find any guidance on this. We have a client who will be performing a plan to plan merger and we aren't sure if we need to provide this notice and wait the 90 days. Thanks in advance for any comments.

Who at the IRS can provide an explanation of the HCE test.

(Highly Compensated Employee test for 401K plans so they can keep operating).

An article on the web defines a process but does not say where the process was defined. Article name: "Highly Compensated Employee Rules Aim to Make 401K's Equitable". author: Clifton Linton, Senior Writer, mPower; note: I emailed Clifton but received no response.

ISSUE:

My wife left an employer Nov 2001. And on Oct 17, 2002 the PLAN (not the brokerage) removed $900 company contribution and $3,500 employee contribution from the account. The notes from the brokerage say this was for an IRS TEST. To date we have not received:

1. a return of the $4,400 total deducted from the account

2. a check for the $3,500 employee contribution deducted from the account

ASSUMPTION

Either the PLAN is performing theft on the account or the PLAN is making a mistake. If the PLAN is making a mistake, who can describe the correct way for the HCE TEST to be applied?

When a 1099R is being issued for a deemed distribution, do you have to have the participant elect if they want taxes taken out or not?

My understanding is since the deemed distribution is not an eligible rollover distribution, the 20% mandatory withholding does not apply. No withholding is required, even if the participant has not formally elected to waive withholding, unless other case or property is bein distributed at the same time as the deemed distribution.

I need to find a code somewhere that shows participant election is not necessary. Do you know where?

Is there a de minimus rule for RMD's like there is for corrective distributions?

I am processing several RMD's where the balance is under $100 and the RMD is just a couple of dollars, or pennies in some cases.

It doesn't seem to make much sense to spend the effort on these.