Can prior service be included for eligibility purposes and excluded for vesting purposes? Or are they tied together?

Hello, been here before, but got busy and was working on several other things......back to the grindstone though!

I want to open ROTH IRA's for my wife and I. I am the owner of a corporation and my wife "could be" an employee but is currently not working. I make approx. 100k per year roughly. Perhaps a little less. I am 34 and wife is 35

Could we do this:

I pay my wife approximately 500 per month or 6k per year so that she would qualify for earned income.

We take her money (paycheck) and fund our IRA's. Is this possible/and or feasible? What do you think?

Thanks in advance.

BTW....John G....we have snow in Woodland Park this am! 1-2 inches on my deck!

I have a new takeover client for the 2002 plan year. The entity is a C Corp, and the plan was initially effective in 1981. It was just a profit sharing plan, and permitted loans.

In 1997, the plan was restated the same provisions as the original plan document .

However, in 1999 the plan document was rewritten, adding a 401(k) provision to the plan. During this rewrite, loans were not permitted. The SPD distributed to the participants stated loans were not permitted for the 1999 and 2002 rewrites.

Sometime during later 1999, early 2000, 2 of the owners (33% each), took a loan and then a second one several months later. The second loans taken had interest rates as 0%. I'm still trying to track down a signed promissory note for all 4 of these loans.

Their document was restated already for 2002, again not permitting loans. I know that I can amend their current plan document to permit loans, but what can we do retrospectively regarding:

1. Operational failure of the document. (favoring HCEs)

2. Not having a reasonable rate of interest.

3. Anything else I may not be considering...

Thanks for any insight.

I get the impression from speaking to my plan administrator and from reading my plan documents (a 457(B) for state employees) that not much if anything exists in the way of federal regulatory oversight or assurance.

That is, I see nothing akin to FDIC deposit insurance, but I do see a disclaimer statement that SEC registration is not required, and some generally confusing language about what comprises the formerly 'guaranteed' fund and what it is that the 'guarantee' covers and/or means now that they changed it to a 'stable value' fund.

Is this the way it is across the country or is ours different? Does any one particular federal agency have jurisdiction and/or watch these plans?

Thanks in advance.

--Ford

Company has 1 Key employee, a second employee is Non-Key but an HCE, employees 3-6 are NHCEs. Plan is top heavy. There is a Match. All the NHCEs defer and get enough of a match to satisfy the TH min. The non-key HCE does not defer so he gets a 3% PS contrib.

He is the only employee to get a PS contribution.

Does this have to go through 401(a)(4) to show non-discrimination? IOW, can a required contribution create a discrimination issue (and more required contributions)?

We have a client who has a money purchase plan they want to terminate. In 2000 there were 2 employees eligible and participating. Both of these employees terminated by the end of 2001. Neither one of them was vested, so they forfeited their money. None of the other employees have been there long enough yet to enter the plan. Does the forfeited money just get paid back to the Plan Sponsor?

I've looked at the last 2-3 years of posts and do not see a similar thread.

A church maintains a 403(B) plan - using retirement income accounts and a bank trustee - for its lay employees, including its school's employees. It is clear that plan meets the "church" definition. The plan provides for deferrals and an employer match of deferrals "provided, however, such matching contribution shall not exceed 3% of the participant's compensation". Because it is a retirement income account plan, the plan document is the only "document" for the plan.

Unbeknownst to the trustee, the pastor of the church negotiates with the school's principal and athletic director for the 2000 and 2001 academic years that they will receive a match of 4% and 5% respectively. (A trustee employee recently noticed that the match check for 2001 seemed too high for a 3% match, but they do not calculate the match amount). Neither employee makes a salary sufficient to be a highly compensated employee.

Since the discrimination rules do not appear to mind if a plan discriminates among NHCEs (and a church isn't subject to 403(B)(12)), the only issue I have left is whether an operational defect occurred and how (or if) to correct it.

My instinct is to say it is an operational defect and should be corrected under SCP because the church clearly did not follow the terms of the plan document. However, I have discovered a number of sources (including the IRS guidelines) that keep repeating that a 403(B) plan need not have a written plan document. (but that the annuity contract or custodial account must have certain provisions) Other sources state that this situation should be corrected (suspense account or 2% fee from Rev Proc 99-13).

My options appear to be:

1) treat the match as an operational defect and place the excess amounts in a suspense account for future matching contributions (amend the plan to allow the increased match "as negotiated" for 2002 forward) under SCP

2) treat the church's employment contracts with the employees as de facto plan amendments and fix the document accordingly and retroactively

3) use the 2% fee I've seen discussed on this board but do not really understand

I would appreciate any opinions or thoughts (especially from anyone who has had this situation arise).

Thank you!

(Sorry for the length, but wanted to lay out the facts well)

Many plans we see allocate contributions periodically during the year even though there is a last day of the year employment requirement. When a participant is terminated, we have to back out YTD contributions--a major hassle.

We've gotten some of the sponsors to contribute to an unallocated account to accomodate their cash flow needs, from which we allocate to participants after t6he close of the year. But some sponsors insist on allocating to participants and backing out contributions if necessary.

Aside from the HR mess it causes when money is taken from a participant, can anyone venture an opinion on the propriety of the practice? Isn't such a practice inconsistent with the terms of the document? How big a compliance problem might this cause?

Anybody have any experience with this apparent exception to withdrawal liability?

It looks like if you've only been in a multiemployer plan for a short time before withdrawing, you may escape withdrawal liability if certain requirements are met.

Here are the facts: Our client merged its own DB plan with a multiemployer plan in 2000. Now it plans to sell the facility to buyer in an asset deal. The multiemployer plan clearly comports with 2 of the 4 requirements of ERISA 4210(B) (e.g., not a construction industry plan; plan says ERISA 4210(a) applies).

My questions are:

(1) Does ERISA 4210(B)(3) require that the multiemployer plan be amended to expressly refer to my client's employees? (Related to this, is the reduction referred to in that section, the reduction of Code 411(a)(3)(E) or (F)? What I'm looking at says (E) but (F) seems to be the section that refers to a reduction.)

(2) If that's required and the plan agrees (or if it is not required), and the ratio of assets to benefit payments for 2000 was at least 8 to 1, will my client (seller) escape withdrawal liability?

(3) What's the usual procedure for sorting through all this? Contact the plan and ask if they agree we ought to get the benefit of this exception?

If we can't make this work, I guess we'll try and get buyer to agree to comply with ERISA 4204, but it seems we ought to explore this first.

Thanks for your thoughts.

What is the contribution limit to a traditional IRA for 2003?

As far as I understand, a rollover contribution may not be made to an inherited IRA.

I have a client who inherited her husband’s 401(k). She wants to roll it to an inherited IRA so that distributions are penalty free. Is this permissible? I told her the assets may be rolled to a regular IRA.

Please provide cites.

Thanks

Africa

I ran across a unique (to me) defined benefit plan provision this morning and wonder what others think of it.

Under the death benefit provision, a surviving spouse is entitled to a death benefit as follows: (1) in the form of a QPSA (essentially a deferred life annuity equal to the survivor portion of the QJSA) or (2) a 60 month temporary annuity payable immediately. The actuarial equivalent of the temporary annuity may be distributed in lump sum form, if elected by the surviving spouse.

Assume the present value (as of the participant's death) of the QPSA is $35,000 using the Plan's mortality and interest rate assumptions and $42,000 using the 417(e) mortality and interest rate assumptions. The present value of the temporary annuity is $20,000 using the Plan's mortality and interest rate assumptions and $26,000 using the 417(e) mortality and interest rate assumptions.

Even though the present value of the QPSA is $16,000 more than the present value of the 60 month temporary annuity, is it OK for a participant to take the 60 month temporary annuity in the form of a lump sum anyway?

It seems to me that this is OK. Does anyone have any thoughts? Thanks.

Having trouble with 5500 question 8(a) for a multiemployer (Taft-Hartley) "annuity plan". I've considered it to be money purchase plan since contributions are not discretionary and are spelled out under the plan and the CBA. Also, I don't believe Taft Hartley MP plans are subject to Sec. 412 minimum funding standards.

With EFAST, answering 2C for MP plan results in an error for not completing Sch R line 6, which I believe does not apply. Instructions do not indicate that question 8a is only for purposes of Sec 412, so I have always used MP designation. This doesn't work anymore. How should this be handled?

I am using this board instead of multiemployer board hoping for more responses.

Thanks

Is there any law (or IRS precedent) which would allow the Roth plans to be cancelled in the future, forfitting the benefits we all put up taxed $ for? I'm looking at a Conversion which will cost a lot of Taxes right now, with the benefit depending on the tax-free growth over many many years. I'm interested what professionals familiar with the IRS would estimate the probability of these plans being wiped out by a new Tax law, and if so would the accumulated interest be taxed at that time?

:confused: I represent a TPA which administers approximately 60 flexible benefits plans. We have recently been contacted by brokers representing two of our plans who have asked whether we will be HIPPAA EDI compliant by October 16, 2002. Perhaps I am the "last to know" here, but I was under the impression that HIPPAA EDI compliance concerns electronic transmission of data between insurers and health care providers. I understand that health FSA's are considered medial plans, but we do not receive information directly from insurers or providers and do not make payments directly to providers. What are we required to do here?

Notice 2002-45 is clear in saying that HRAs can't be used to reimburse expenses for qualified long-term care services, but can it be used to reimburse employees for premiums for long-term care insurance?

A local bank has just purchased a local recordkeeping firm. The recordkeeping frim currently does the administration for the bank's 401k plan. Can the TPA still invoice the bank for administration of the 401(k) plan now that the bank owns the TPA?

Does it make a difference if the bank pays the fees directly or if the bank has the fees deducted from the trust?

Thank you.

Recently, my father received a letter from the General Board of Pensions of the church he served for thirty-some years notifying him that due to a recent audit, he had been mistakenly receiving overpayments. Not only has the Board reduced his current payment benefit but they are now requesting that he pay back the amount of the overpayment. The election option my father chose was life plus 100% survivor. Is this action permissible? Once an annuity option is elected, hasn't an irrevocable election been made? It would seem that the position the Pension board is taking is that this is a unilateral, not bilateral, contract. Any advice out there?

Employer establishes a SEP through the adoption of a SEP Adoption Agreement with an insurance company in 1997, and made contributions through 2001. This year the employer set up a 401(k) plan, and does not intend to contribute to the SEP plan. Does the employer have to amend the SEP for GUST, etc.? Does it matter that the owner still has an IRA funded with the SEP contributions? Can the owner convert the IRA to a "traditional" IRA to avoid updating the SEP?

How do you correct a failed coverage test for a 401(k) plan that excluded a classification of employees? Looks like I need to benefit at least 2 more employees. Assume no matching contribution was made, only employee deferrals. Document only provides direction about who should benefit, not how they should benefit.