I need clarification on the deductibility of contributions by the employer to both a DB and DC plan.

I have heard that if an employer has both types of plans in place their deductible contribution is limited to the greater of the DB plan required contribution or $40,000.

In other words although 415 was repealed as far as individual limits are concerned, the employer may not be able to deduct the full contributions made to both plans. Is this correct?

The repeal of 415 made the individual participant limit go away but have the appropriate changes been made for the deductibility side?

Does Gateway applies to each plan sponsored by employers part of a controlled group? Specifically, I have a client who owns three companies (A, B & C,) He si the only employee of A (A sponsors a generous PS,) B sponsors a 401(k) w/ a PS provision and C sponsors a 401(k) w/ a match provision, no PS. Will the sponsor be required to provide gateway minimum to employees of C? Or will that depend on whether A & B can pass coverage independently of C?

We have a client with a straight 401(k), never really administered with much heart, and they have decided they just don't want it around any more . . . too much trouble.

Because of their lack of interest in the past few years, over time no new eligibles have entered the plan, and now the only people with balances left in the plan are terminated. What's more, they all have balances well under the $3,500/$5,000 threshold.

Client doesn't like to part with money either . . . they do not want to pay for a restatement/amendment for new law. They have decided it is just as easy, and legal, to liquidate the plan under the involuntary cash-out rule, and just leave it alone . . . file that final 5500 for 2002 and be done with it.

I am thoroughly uncomfortable with this scenario, but I am just a cog in the works . . . what are the implications?

Does anyone know of benefit administrators who routinely notify Medicare of those individuals who are retired and reach 65 years of age? If so:

Which administrator?

Is plan self-funded/insured?

What actions are taken?

Any online sources?

Thanks in advance!

If a qualified retirement plan is amended to allow for IRA rollovers, is the qualified plan subject to IRS Form 5498 reporting requirements or do the IRA funds take on the ERISA reporting requirements for ps plans?

If the ps plan is amended for IRA contributions, is the "separate accounting" requirements applicable as well? Meaning that the plan is requires to account for the funds separately from all other assets in the partic's account?

We have a client who has recently discovered that they failed their ADP test for 2000 and 2001. In determining which correction methods to use, we've decided to use the "one-to-one" method for the 2000 plan year (this is one of the correction methods outlined in Appendix B of Revenue Procedure 2002-47 and provides for a distribution to HCEs and a corresponding QNEC in the same amount to NHCEs) and a distribution to HCEs (without any corresponding QNEC to NHCEs) by 12/31/02 for the 2001 plan year.

Since both correction methods include a corrective distribution to HCEs, we are trying to determine how to allocate applicable earnings/losses.....the plan document (prototype) does not appear to provide for the allocation of "gap period" income/loss and the regulations state that gap period income can only be allocated if the plan so provides. Since the market has been such a bear (pardon the pun) lately, we are concerned whether HCE account balances are large enough to withstand the corrective distribution. Any thoughts about being able to allocate earnings and mainly losses through the date of correction?

Rev. Proc. 2002-47 only seems to address the allocation of earnings on corrective contributions, rather than distributions.

If an individual (assume 45 yrs old) wants to elect a retirement age of say, 55 or 60 - will the IRS actually hold him to "retiring" at that age?

I seem to recall that this was a controversy many years ago with individuals setting up plans using early retirement ages in order to sock away greater annual tax deductible contributions but in reality there was never any real intention of ever taking early retirement. Any thoughts would be appreciated.

I am running the 401(a)4 test in Quantech and it includes the 401(k) and match in the cross-testing for the HCEs. How do I get it to stop doing that?

We are looking for a new daily system and are looking at ASC, Benefitstreet and Investlink. Does anyone have any experience with any of these, Good or Bad?

We are looking for opinions on the quality of the system and quality of service.

Hi,

I received forms for continuing coverage from my previous employer which I elected to continue coverage and have been mailing my premiums to my former employer (as directed by them)They have cashed the checks. My son was sceduled to have a heart procedure at Riley Hospital. The hospital called me to inform me that they contacted the insurance company and that my former employer has not been covered as of 9/1/02 due to nonpayment of premiums. I called my former employer and they said they are trying to get reinstated under the policy. I have had to rescedule my sons heart procedure due to no insurance.That was over a week ago and the insurance company said we still are not reinstated and my former employer said they will call me back as soon as they hear something. What if they are not reinstated? Will I have lost my coverage? I have paid for this insurance since mid August.

Can an employer offer a health plan to existing employees but as of 1-1-03 not offer to new hires? The employer is located in CA

For those who work with Top Hat plans, who are the "usual suspects" in terms of types of tax-exempt employers. I know hospitals and private universities, but who are some of the other tax exempt organizations that are stepping up to take advantage of this benefit? Is it tax exempts across the board or certain types?

I am writing a short article for my website and I am looking for some background information.

ScottyD

Client established a SIMPLE IRA plan during 2001. The matching contribution was calculated properly, and deducted on the 2001 corporate (S-corp) return. However, the matching contribution was not deposited with the bank trustee until September 28, 2002. The bank will not classify the matching contribution as being attributable to 2001, due to the lateness of the deposit.

What are the options available? Should the 2001 corporate return be amended (which would also cause a trickle-down effect to the owners Form 1040, as it is an S-corp), and can the corporation take 2 deductions (the late 2001 contribution and the regular contribution) for 2002?

Thanks for any assistance.

At the ASPA meeting and heard that if a plan has a discretionary P/S contribution it is only allowed to be deposited annually rather than throughout the Plan Year. Is this true and, if so, where can I locate the code siting it. Thanks in advance for any help on this issue.

IRC section 409(h) provides that an ESOP participant must have the right to demand that benefits be paid in the form of employer securities.

I assume this requirement extends to a KSOP where all investments in employer securities (deferrals and match) are made at the participant's election? Does the requirement apply to in-service distributions? Hardships?

PLEASE HELP !!

The rule states that a participant may not borrow more than 50 percent of the vested portion of his/her account balance in his or her 403(B) plan. The 50 percent limit will not be violated if the loan does not exceed the lesser of (1) $10,000 or (2) 100 percent of his or her vested account balance.

The 403(B) plan document states that the loan may be secured ONLY by the participant’s nonforfeitable account balance.

If the participant has a balance of $14,000, can he borrow $10,000?

I think not, because the remaining balance o $4,000 is not adequate security. Or is the promissory note considered the security?

HELP PLEASE!!!!!!!!!

OK - I know that this question has been asked in many ways before, but I want to be sure that I am clear...I have a top heavy 401(k) PS plan with immediate eligibility for deferrals and a 2 year wait for new comp PS. Participant is deferring but has not yet met the 2 year elig for PS, does she receive a TH minimum? I think that she does, but wanted to clarify. Is this supported anywhere? My guess is that even though we refer to it as "dual" eligibility, the employee is actually a participant immediately and the wait for a PS allocation is 2 years. Therefore, the participant is eligible for the TH even though she won't be receiving the PS allocation. Everyone agree with me? Thanks for any thoughts.

Can the employer have participants pay for Administration Expenses of Cafeteria Plan. If so, what is the best way to handle. If not, is there something I can cite to tell him why?

Thanks for any help you can provide.

In a Safe Harbor 401(k) Plan under the IRC 416(g)(4)(h) as added by EGTRRA which states that this type of plan does not fall under top-heavy as of January 1, 2002. If they choose not to make a safe harbor contribution for 2002, will top-heavy apply and they will have to make a top-heavy for 2002.

Places in the Bible where automobiles are mentioned.

a. During the Exodus from Egypt, all the children of Israel were in one Caravan.

b. In the book of Acts, we are told that the disciples were all in one Accord.

c. In the book of Genesis 3, we read that God drove Adam and Eve from the Garden of Eden. We can only guess that it must have been in a (Plymouth) Fury.

d. In Isaiah 40:31 we are told to "mount up with wings as Eagles".