Pursuant to §1.402(g)-1(e)(8)(iii), distributions of excess deferrals made after the 2½ month correction period may only be distributed when permitted under §401(k)(2)(B) (i.e., severance from employment, death or disability; attainment of age 59½, hardship, termination of plan).

I do not see this stated anywhere under Appendix A of Revenue Procedure 2002-47, which merely provides that the permitted correction method is to distribute the excess deferral to the employee and to report the amount as taxable in the year of deferral and the year distributed.

Any thoughts on this?

I have read that those who contributed to their 403(B) plans prior to 1987 may defer their MRD's until age 75, but there are rules associated with this, namely, if these funds are transferred to the individual's IRA that this option will be lost. Can anyone direct me to more detailed information?

Thanks

BruceM

Qt: A owns 75% of his corp. B subsequently starts up and owns 100 % of her corp. They are legally divorced so no attribution flows to either and no controlled group exists.

However, since they have a minor child, that child is considered owning 75% of dad's corp and 100% of mom's corp. Am I correct in that there is now a controlled group because of the minor child?

Tx for any insight.

I am trying to find out if an employer (without a group health plan) allows employees to pre-tax (and he payroll deducts but pays no portion and does not select the plan) individual health insurance premium if it would be considered a group health plan under HIPPA. From what I have found HIPAA refers to ERISA to define a group plan. ERISA's definition is quite broad however safe harbor exceptions exist under DOL Reg. Sec. 2510.3-1(j) as follows: (a) no contributions are made by the employer; (B) participation is completely voluntary for employees or members; © the program is not endorsed by the employer; (d) the employer merely collects premiums through payroll deductions, remitts them to the insurer, allows the insurer to publicize the coverage, but has no other functions; and (e) the employer receives no consideration connected with the program other than reasonable compensation (without profit) for administrative services actually rendered in connection with the deductions. Any opinions out there?

I would like to know if anyone has heard if a Nursing Home can take a participant's assets in a Profit Sharing Plan?

I'm surprised that there is very little in Benefitslink.com regarding anything about short plan years.

My Question:

A PSP & MPPP are going to terminate at 12/31/02. Benefit accruals will cease at 10/31/02. The plans have only one participant. The administrator is trying to determine the max that can be contributed to the PSP for 2002. What effect will the fact that eligible compensation will be comprised of only 10 months, have on the max $amount that can be contributed to the PSP ?

If you use a 2 year service requirement for entry into a safe harbor 401(k) Profit Sharing plan in which you are using the nonelective contribution rather than the matching contribution to satisfy the safe harbor, do you have to 100% vest both the nonelective contribution and any profit share contributions or just the nonelective contribution?

Has anyone heard of concrete dates/plans for the adoption of the XML payroll spec from hr-xml.org? I'm trying to find out if ADP, Ceridian, Paychex have made any hard committments to the spec.

If someone makes a contributions into a Roth IRA, but shouldn't have because their income is too high, how do they reverse what they have done?

Has anyone seen any information regarding employer contributions receivable and the 95% of plan assets requirement?

Anything I read seems to state that the qualifying plan assets are limited to those that are invested. Should the qualifying assets automatically include the contribution receivable?

How do you verify that a plan amendment is non-discriminatory? Specifically, how do you test a partial plan freeze?

Assume the DB plan in question is part of a larger controlled group. My plan is to test the plan before the partial freeze (on a controlled group basis) and after the partial freeze (also on a controlled group basis). I'm stuck on the middle portion ... how to test the freeze itself. Do we just test those affected (i.e. those in the DB plan in question)? Is it sufficient to just test on 410(B)?

the following were from the IRS Q & A.

the comments only express opinions. they do not reflect any official position, nor have they been approved or reviewed by the Service or the Treasury.

(so basically they were like opinion letters, can you rely on them for your particular situation? well, not really, but they might provide a good starting point.

otherwise excludables - Q. must the employer use the plan's entry dates or the maximum entry dates permissible?

A. use 1st day of plan year or 6 months after meeting the 1 year wait. (That is of course slightly different than dual entry dates.)

for top heavy - include receivable profit sharing contributions.

(That is different than what I ever learned, except of course in the case of a first year plan. Interesting discussion on this one!)

minimum distributions - Q under the new rollover rules can an individual rollover an amount from an IRA to a qualifed plan and delay required minimum distributions? A. YES.

small distributions - Q. ...amounts are small, many are less than $15. Is there a de minimis amount (that one can skip paying)...?

A. No, there is no de minimis rule

At the ASPA conference, the IRS voiced the following opinion. This is an opinion only, of course, and does not reflect any official position, nor has it been reviwed or approved by the Service or Treasury.

but at least it is something to go by...

Q. A plan has the following possible contribution types:

401k, 401m and discretionary profit sharing.

No discretuionary profit sharing will be made in the future.

Can the matching safe harbor contribution satisfy top-heavy...?

A. Yes, however, if no profit sharing contribution is made such that the only current contributions are elcetive deferrals and safe harbor match, then the plan is not top heavy.

This one was actually asked twice under the Q and A (21 and 33) and though posed slightly differently in the two questions, the answer was still the same.

Reg. §1.4980B-5 Q/A-4(a) requires a group health plan to offer COBRA to a qualified beneficiary even if he moves out of an HMO's service region and the coverage ceases to be of value.

What if the HMO contract states not only that services outside the service region are not covered, but goes a step further and states that coverage itself terminates on the date a participant "no longer resides or works in the service area"? Is this allowed? This is a fine distinction, but the result seems to be that the participant cannot continue coverage and return to the service area for medical care, since he does not reside or work there.

The COBRA section of the HMO contract states that COBRA continuation coverage will end on "the date coverage would otherwise terminate under the policy." I do not see this as a reason to terminate COBRA coverage in IRC §4980B.

To add some facts, the company subject to the above provision has an employee who has elected COBRA and lives in the HMO service area, but is about to relocate out of the service area. The company needs to know whether his COBRA coverage continues after the move. The plan says it does not, since coverage would have otherwise terminated under the policy, but the Code and regs seem to indicate that he has the right to continue his coverage, even though it is of no value.

Thanks in advance for any thoughts!

I have a 401(k) Plan that will become a Safe Harbor 401(k)on January 1, 2003. A few HCEs have signed irrevocable waivers for the current plan. Will they not be able to participate in the Safe Harbor? What happens if in a few years one becomes an NHCE? Then if they don't get an employer safe harbor contribution there's a big problem. These guys want back in now that its going to be safe harbor. Any ideas would be much appreciated!

The plan currently provides for distributions to be made "as soon as administratively feasable after termination of employment". ER wants to amend to provide for distributions "on or after April following the Plan Year of termination of employment."

Would making this change violate 411(d)(6)? Can it only be made for terminations after the adoption of the amendment or can amendment be made retro? The "administratively feasable" language was put in the GUST amendment in error and ER wants the language to read "on or after April".

My husband and I opened individual Roth IRAs with a small broker about a year and a half ago. Since then the broker's business has expanded and he does not seem to have the time for us anymore.

How can we get our Roths out of his hands and into our own hands? Should we cash them out and pay up or can we transfer them? If we can transfer them, how would we do that? We would prefer to manage our funds without a broker for the time being. Any suggestions would be greatly appreciated?

Is there a different Uniform RMD Table for IRA distributions than the table used for qualified retirement plans?

I have a situation where the matching contributions for participants in a 403(B) plan are made to a church retirement plan (defined benefit). Do the EGTRRA vesting requirements apply to the matching contributions made to the church retirement plan?

I have a situation where the matching contributions for participants in a 403(B) plan are made to a church retirement plan (defined benefit). Do the EGTRRA vesting requirements apply to the matching contributions made to the church retirement plan?