I'm posting this here for a money purchase pension plan because I didn't see a forum for MPPPs.

We just started working with a client that has a MPPP and they overfunded the employer contributions by about $250k about 3 years ago and they left the money in the plan. Was that excess contribution supposed to have been retuned to the sponsor 2 1/2 months after the year end when the excess contribution was made? Are they subject to an excise tax?

Thanks for your help

I have a client who has always filed one 5500 for their medical plan and one for their flex plan. As the preparer, we were told that the employees paid 25% of the medical "premium" (they are self funded) into the flex plan for the coverage in the medical plan.

There has been a change at the employer and the old HR person is replaced by a new HR director who just told me that the Flex plan is completely separate and used only for things like co-pays on drugs, eye care & dependent care.

They also said that the medical plan is in fact not one plan, but a series of separate plans all with their own SPD's and insurance contracts. What we thought was a medical plan that provided medical, dental, ltd & life turns out to be a self-funded medical plan, a fully insured dental plan, fully insured ltd plan and a group life contract.

The employees pay 100% of the ltd & life premium on a post tax basis. The dental premium is treated as pre-tax as well as the employee’s portion of the medical coverage. Apparently they determine the anticipated total cost of the plan, then split it 75/25 and then split the 25% to each employee. They do this calculation internally. These "premiums" are collected through payroll deduction and the money goes to a side fund administered by a local claims paying firm. They treat these employee payments as pre-tax contributions.

Can they do this? My exposure to medical plans is limited, but I didn't think you could collect premiums as pre-tax unless they were run through the flex plan.

Where is a good source for information?

My IRA has lost considerabily and is below the contribution amount and has no earnings. Can I take a distrabution for the whole IRA? Can I also take a tax break for the amount that I lost?

EXP: Invest $2000 in 1998 and now IRA is worth

$1165 in 2002.

We allow DP's to be added to an employee's benefit plan during open enrollment, but the employee needs to show the DP is considered an IRC Section 152 dependent.

In reading the guidelines for an IRC Section 152 dependent, I was unable to determine as to whether the DP's need to file jointly on their taxes to be considered an IRC Section 152 dependent. Can anyone clarify this?

Thanks.

An employer sponsors a 401k plan in which they allow entry into the plan within 3 months. They have recently acquired out of state contracts. They will be hiring out of state employees but do not want these employees to be able to participate in the plan. These employees are not leased or temporary. The company is paying these people directly and only for the length of the job which could be 3 months or more. Is there a way to exclude these individuals without changing the waiting period?

I have a client who has two separate and unrelated businesses. Each files a Schedule C. The client would like to have a SEP plan for each business, and make contributions to each separate plan. Can he do this?

To further complicate, last year the client made a single contribution to one SEP plan based on both businesses income. Can he now separate the two, or must he aggregate the businesses?

Thanks for any input.

I need to amend the Schedule I for a prior year 5500. Can I just send a new 5500 and Schedule I, or do I need to reattach all the schedules again?

QP-SEP Illustrator software programs for 2002 have been delayed - see "3Qs for IRS thread).

SIMPLE Illustrator (v 2002) has already been released.

I have not even begun to think about the TSA/MEC Calculator and Analyzer software, which I will prepare once IRS worksheets are finalized.

For more information, all me at (317) 254-0385 [after 9 a.m. please - that's 10 a.m. if set to NY time]

Note: I have heard that the IRS is standing by their draft worksheets (allowing elective and employer contributions to exceed earned income). The result would seem to conflict with IRC 401(d) in the case of a qualified plan (and, IMO, may result in penalties under IRC 4972). IRC 401(d) is not mentioned in IRC 414(v). Also, the IRS needs to have separate worksheets for Roth IRAs which generally have a $15,000 (not $10,000) spread.

I have received several inquiries regarding the Panel Answer Book series. Of the books that I write, edit, or contribute to--

(a) The Roth IRA Answer Book (3rd Ed) was recently released.

(B) Simple, SEP, and SARSEP Answer Book (8th Ed) was recently released.

The following books are in press and will be released by year end:

© 457 Answer Book (2003 Supp)

(d) Life Insurance Answer Book (2003 Supp)

(e) Quick Reference to IRAs (2002?)

(f) Individual Retirement Account Answer Book (9th Ed, Donald Levy)

(g) Gov't Plans Answer Book (2003 Supp, Carol Calhoun & Cynthia Moore)

(h) CRT/CLT Answer Book (1st Ed, George Jewell)

I am also seeking some contributing authors to take over certain chapters (or write new chapters for) "c" and "d" above. If interested, please e-mail me at QPSEP@aol.com and also leave your telephone number.

Please note that all books are distributed/sold by Panel Publishers. They can be ordered by calling (800) 638-8437.

I have served as a pastor in different roles, both employee and self employeed. I have served with a denomination, presently in a non-denominational church. I desire to take advantage of the 15 years of service catch up contributions. But I don't have 15 years. Since even a self employeed minister is considered an eligilble participant for a 403(B) it seems there is flexibility when it comes to people in ministry. My questions is this - can I just bunch together all my years in ministry or is there a specifics approach I must follow. Thanks.

Facts: A company presently sponsors a 401(k) plan that excludes all union employees from participation. One of the plan sponsor's union groups has negotiated that its members will be eligible to participate in a 401(k) plan effective 1/1/2003. The benefits, rights, and features that these union employees will be entitled to are to be the same as those provided under the sponsor's present plan (for non-union employees). The union negotiated this benefit to last for two years.

Questions: Can the non-union plan be amended to allow this particular union group to participate for two years or should a separate plan be established? What happens after two years when these union employees may no longer make contributions? Will their accounts automatically become fully vested and distributable? I thought a 401(k) plan must be intended to be permanent in order to be qualified.

Is it true that a DB plan, with a safe harbor benefit formula, that incorporates the EGTRRA 200,000 salary cap effective 1/1/2002- not only prospectively but also retroactively -will not jeopardize its safe harbor status? Will the answer be the same for a final average pay plan, career average formula plan, and cash balance plan? Thanks.

Okay--it's a fairly complicated segregation, but it is legal and "do-able"--I won't go into the gory details. Attorney for plan gave it his blessing and actually provided some revised language to the attorney for P to clarify some points. Third Party Administrator/Trustee consulted its legal dept and also confirmed it was fine. Now the DRO is signed by all parties and entered in the court. Attorney for the Plan received the DRO and notified all parties that it was qualified. The plan then directed the 3rd Party Administrator/Trustee to segregate the accounts. 3rd Party Administrator now says that it is not administratively feasible/possible to do it as set forth in the QDRO. Now what? Can we now reject the QDRO and ask for revisions? Or, can we go to the P and the AP and have them sign something which indicates the actual dollar amounts (determined in accordance with the QDRO) they are to receive? Trustee will proceed with dollar amounts. They just don't "get" the segregation formula. Otherwise, Trustee wants a new QDRO. Help?

Reg. sec. 1.412©(2)-1(B)(6) sets limits on the adjusted value of assets. Regardless of how the assets are adjusted the maximum value is the greater of 120% of the fair market value or 115% of the average value of assets. If I compute the average value as described in the reg that will always give me an acceptable value even if it's greater than 120% of fmv,right?

A client is interested in applying for a prohibited transaction exemption to make an in-kind contribution to its DB. In-kind contributions are definitely prohibited transactions--a 1995 Intepretive Bulletin made that very clear. Has anyone ever made a successful application for PTE for in-kind contributions, or run across someone else's successful application? I found one PTE for GM for an in-kind contribution, but that case involved some pretty hefty cash contributions ($4B) in addition to the in-kind contribution, and the proposed transaction was the result of PBGC/GM negotiations. Any thoughts?

I have a plan takeover that included the Employer Davis-Bacon Prevailing Wage contributions in the ADP for the NHCE's. I have never done this before, but it would should help if it's allowed. Can anyone tell me if this is acceptable.

Thanks.

I am looking to determine what the industry standard is regarding a match true up calculation within a 401k plan. We have a client who recently implemented an annual match True Up. The eligibility requirements for match is one year of service and 1000 hours. It is a retail company who has issues with payroll adjustments not being input in a timely manner. They are telling us that we could see adjustments from up to two years ago. They are leaning towards making a participant "un-match" eligible if an adjustment comes through which occured prior to the one year anniversary date. For example, an employee is deemed match eligible on their one year anniversary date of 7/1/02 with 1000 hours. On 9/27/02 we receive an adjustment of negative 50 hours with a payroll period end date of 6/15/02. Although the participant appeared to have 1000 hours on their anniversary date, this adjustment to hours would mean they truly were not eligible. In this instance, our client wants to go back and make this participant ineligible for match as of 7/1/02 and they want to back out all of the match contributions that were contributed in error. I am trying to determine the industry standard practice in this situation. Do most plans operate under the "once eligible always eligible" rule? How do other plans who offer true up handle adjustments to payroll?

One of my clients is looking to amend their document to allow for after-tax contributions. They have a 401(k) Plan. They are curious to what the pros and cons are. I would appreciate it if I could get the boards opinion on this matter. Thanks!

Do contributions to a 457 plan for a particiapnt effect that participant'ss 415 limits in a profit sharing 401(k)plan sponsored by a second employer?

An employee who works 30 hours a week is eligible to participate in an FSA. Would it be considered a change in status, which would allow a mid-year election change, if an employee working 40 hours a week drops to 30?

Thanks,