Since EGTRRA has become effective, does anyone know whether a SIMPLE IRA that has been held longer than 2 years can be transferred to another IRA or eligibile retirement plan. IRC 408(d)(3)(A) and (G) seem to indicate that such transfers and rollovers are permitted. Thank you.

If an Employer maintains both a DB and DC plan and the DB plan was frozen as of 1/1/02, is the DC top heavy minimum for 2002 3% or 5%? Are you considered as participating in both only if you receive a benefit accrual?

Postage/shipping fees for meds, medical supplies etc...reimburse or not?

As usual, THANKS for your response!

Does anyone know if the same rules for controlled groups and/or affiliated service groups apply for cafeteria plans as they do for 401(k) plans?

Can someone tell me if it is acceptable to reduce a catch-up eligible participant's deferral amount before running the ADP Test.

i.e, I have an HC who is eligible to make a catch up contribution, but is limited by the prior year ADP Test. He is only deferring a total of $11,000, but this amount would make the group fail the ADP. Can I reduce the $11,000 to $10,000 and then test in which case it passes ADP or must I wait and see what the correction and then recharacterize.

Was wondering if anyone has heard of this. We are being told that for example. A company amends to use the new table and signs it July 01, 2002. In this situation we are told we should be using the old table to calculate the amount up until July 01, 2002 and the new table to calculate the rest of the year. Therefore it is best to not use the new table until 2003. Others of us were under the impression that the amendment could be retroactive. Anything we can find says to use EITHER table. Thanks for any comments.

Been out of this for a while. What is generally being considered as the "cheapest" way to max 1 HCE out at $40K in '02..safe harbor plan or not. Thanks for your input.

I have a plan with a 6/1 plan year, and they have decided they want to freeze the plan to try to avoid a contribution for the current plan year. Accrual is based on 1,000 hours. Assuming they use a freeze date of 11/15/02 (to keep anyone from accruing a benefit this year) and distribute the 204(h) notices by 11/1, can they run the valuation for the 6/1/02 plan year (beg. of the year val) with the frozen plan even though the amendment and freeze date are more than 2 1/2 months into the plan year?

A company has terminated ther Simple IRA Plan as of December 31, 2002. They want to distribute the funds soon after that date. The company needs to make the matching contribution for 2002 and wants to wait until April, 2003 to deposit the funds.

Where should the company deposit the match since the IRA's would have been closed?

Owner of 401(k) Profit Sharing Plan received a 6.2% match, however the NHCE's received 5%. This plan is terminating, the owner has taken out his money and rolled over to an IRA (with additional match). Owner will not put the $2,000 overpayment back into the plan for re-allocation.

Plan will not be applying for a determination letter for the termination.

Does the plan stay open until this is resolved?

or

Should a letter be sent to the financial institution, the money was rolled over to, stating this $2,000 is ineligible and to send it back?

or

Should we sent out 2 1099's one for the $2,000 as an excess contribution and one for the eligible rollover?

:confused:

I have been brushing up on the COBRA rules surrounding asset sales. Assuming the buyer is carrying on business similarly to before the sale, my question (or rather I want to confirm) is that if the seller is no longer in existence and thus, no more health coverage, isn't the buyer required to offer COBRA to the qualified beneficiaries? I know in the past, this was not true, but I am thinking a law was passed so that employees aren't left without health coverage - even if it's COBRA. What if the buyer doesn't offer health coverage? What then?

Am I correct in thinking that the $5,000 automatic cashout rule (411(a)(11)) does not apply to governmental 457 plans?

Is an increase in daycare tuition considered an eligible change in family status?

Can an employee change an election if their daycare amount increases during the plan year?

I recognize that the trust needs an EIN, not the plan but my question is a little different.

I have a client that applied for a EIN number for their plan a few years ago. Since then, they have been filing a schedule P showing that newly applied EIN number as the trust's EIN but all other forms are using the company's own EIN as the plan sponser's EIN. That makes some sense to me and I can buy into that concept, but.....Capital Trust (American Funds) is shown on all paperwork, and admitted that they were in a phone conversation, trustees of the assets. However, they are holding each account separately and they are filing all 1099's and 945's under each individual ssn (which makes absolutely no sense to me!) rather than that plan ein number. In addition, they have never (at least according to my client) provided a signed schedule P. The schedule P that has been filed with the 5500's has been created by my firm and signed as trustee by my client.

Is American Funds remiss in not providing this schedule P with their signature and the plans ein number? or their own ein number?

Can we switch to the plan's ein number now without drawing attention to the plan? Should we even bother? The plan is terminating at end of year anyways. Has anyone else run into this with American Funds?

It is my understanding that any and all ERISA governed plan assets must always be invested and can not sit idle.

If this is in fact the case, can someone point me to the appropriate section that this is governed by please.

Much obliged.

I have a client who deposited employee contributions late. I have calculated the interest owed ("amount involved") to report on the form 5330. However, this amount has still not been deposited (the employee contributions were deposited.) Therefore, I would assume this transaction has not been corrected and would need to be reported on the 2002 form 5330.

My question is, do I report the original amount involved from the 2001 form 5330 on the 2002 form 5330. Or do I calculate a new amount involved based only on the interest owed which has not been deposited?

I am merging a Money Purchase Pension Plan into a paired Profit Sharing Plan and updating for GUST in the Profit Sharing Plan for both plans. The Money Purchase adoption agreement from a broker has an effective date of 1/1/80. Don't seem to have any of the update for TRA'86 or TEFRA. Both were on standardized prototype documents.

Do I have to go through compliance to update the plan?

What happens if you take a loan on your 401k, then become

disable and can not cont. to pay the loan?

When is the latest I can start a IRA for 2002

I am working on testing a plan with different match rates depending on YOS. The service groups and match rates are as follows:

0-3 YOS 0%

4-10 YOS $ for $ up to $1,000

11 + YOS 2$'s for every 1$ up to $667 deferred

I know the match formula needs to be tested for "availability" using the coverage testing principles. Following is an example of how I am interpreting the testing requirements for this type of match formula...

HCE's HCE% NHCE's NHCE% Coverage

Rate Group 1 3 21% 10 29% 138%

Rate Group 2 4 29% 15 42% 145%

Rate Group 3 7 50% 10 29% 58%

Total 14 35

Based on the above I would say Rate Groups 1 and 2 pass but Rate Group 3 fails.

If anyone is familiar with this type of match formula and testing requirements, I would appreciate your input.

Thanks!