A Plan has been amended in accordance with EGTRRA eliminating the distinction between severance of employment and separation of service.

Participant A is 55- he leaves employment of the company and obtains a total distribution from the plan. He is looking to claim the age 55 exception rule so as not to pay the 10% penalty. However, he then performs service to his former employer as a bona fide contractor. The decision to allow him to perform such contract work was made and agreed upon prior to his termination.

1) Was the Plan wrong in allowing this distribution- did he really have a separation from service?

2) Does he qualify for the 10% penalty exception?

Scenario:

Plan year end 6/30/02 fails ADP testing. One of the HCEs is over 50 as of 12/31/02. The Plan has not formally adopted an amendment allowing catch up contributions. Plan sponsor would like to be able to rechacterize some of this HCEs ADP return as catch up contributions.

Can this be done even though a formal amendment has not been adopted as of 6/30/02?

Notice 2001-57 says: "a good faith EGTRRA amendment is timely if it is adopted no later than the later of (1) end of the Plan year in which the EGTRRA change .... is required to be , or is optionally, put into effect under the Plan or (2) the end of the Gust remedial period for the plan.

I have read other materials that seem to indicate it must be adopted by the end of the Plan year... period.

Can we adopt the amendment now, with a 1/1/02 effective date?

The GUST remedial, as I understand it, will be until 12/31/02- the plan uses a pre-approved volume submitter.

Can you withdraw money for education(college) without penalty?

We have a DB pension plan that I would like to benchmark against other DB pension plans; any suggested surveys ?

A Plan failed to allocate profit sharing and match based on the Plan's definition of compensation. Operationally, the Plan Admin used the wrong definition of compensation.

This occurred over 3 years. Can the correction (adjusting the PS and match) be made under the SCP? Or, will a VCR filing be required?

Excuse the possibly stupid question.

I'm working on setting up a Roth IRA. The company I'm considering charges a fee. The fee is 50% from 12 regular monthly payments I believe. In my case - I want to put $3,000 in the account. The company says that $1,500 will be deducted for various charges. They say this is a one time deal. They say that in the end it's an effective charge of 3.333 percent of total payments (total payments planned being $45,000). Naturally if I don't contribute over the 15 year period what I agreed to - the percent would be higher. And if I closed the account for any reason -I'd be out this money - I understand that part.

What I'm wondering is....

Is this common practice? I have kind of a sticker shock here, and I have no experience with investments (except for a money market account which doesne't really count...) I just don't want to get ripped off I guess :-)

Hope someone could help by letting me know if this is normal - or should I be considering another company.

Appreciate any assistance

my email is dmvillarreal@hotmail.com

Facts:

Plan Year 9/1/02 to 8/31/03

Catch up contribs available beginning 10/1/02 to partics over 50 and deferring the 15% plan limit or meeting the 402(g) Limit

What is the maximum Catch up an eligible participant can have for the PLAN YEAR? $2000 (the 2003 catch up limit)?

$3000 ( the 2001 catch up limit + the 2003 catch up limit)?

As of 1/1 how do you determine if any catch up has to be recharterized as regular elective deferral? Or do you wait until the Plan Year end?

I am currently dealing with a TPA in NY, that negotiated the reinsurance with an A+ rated reinsurer. To remove the pre-cert for in patient hospital, my client is being chrged an additional $18,000. We never had pre-cert before and now are being penalized for not taking it. Any advices or suggestions

robkt

Really basic question:

Can someone, in simple terms, explain the difference between a 457(B) & 457(f)?

Many thanks!

While working on year end census, it was noticed that the client missed deferrals and match from a bonus paid. The definition of compensation includes bonuses. This client actually has bonuses thoughout the year (PYE 6/30/02) and all the others were deferred and matched. How would they correct? Should the client fund the missed deferrals on the ee's behalf along with the match?

For a 7/1/2001 valuation (for plan year 7/1/2001 - 6/30/2002), can one:

1. Apply EGTRRA 401(a)(17) limits (ie 200K sal cap for all yrs) for this val? Or does one HAVE to use pre-EGTRRA limits for 7/1/2001 val and wait til 7/1/2002 to apply new limits. These new limits have already been adopted and client would like to start funding for this.

2. If plan formula was to be increased effective 7/1/2002, can this be recognized in 7/1/2001 val (and hence set up base for FSA one year ahead of actual increase) or must one wait til 7/1/2002 val? Cost method is FIL.

I just received a DRO (signed by the court!) naming the plan participant as the Alternate Payee. IRC section 414(p)(8) defines alternate payee "any spouse, former spouse, child or other dependent of the participant who is recognized by a domestic relations order as having a right to receive all, or a portion of, the benefits payable under a plan with respect to such participant." In my opinion, the participant is clearly not an alternate payee.

I been in the business 23 years and this is a first! Before I recommend to the plan sponsor to not qualify the order, I'd just thought I'd check and see if I'm missing any recent developments or anything. Am I? Thanks.

I would like to get info from employers that allow ee's to op-out of medical 125 plan and received cash instead.

I have a 403(B) plan (drafted in 1989) that set the deferral limit at 16% of compensation. Is there a reason to retain a deferral percentage limit in this type of plan?

Has the 100% J&S distribution option from a qualified DB plan ever required the application (exclusive of its application in MRDs) of the "minimum distribution incidental benefit" (MDIB) requirement and use of the table in 1.401(a)(9) for both spouse and non-spouse sole beneficiaries when the named beneficiary is more than 10 years younger than the employee? If so, when did such apply, has it changed and if so when? Thanks.

An existing 403(B) plan currently only offers lump sum as the form of distribution under the plan. Under egtrra, portability rules have been expanded. The plan administrator has posed the question whether or not rollvers from a former employer's money purchase plan are permitted now under egtrra. Good faith plan amendments aside, is this permissible? Even though the 403(B) plan does not offer the QJSA feature?

Thanks!

The issue of "qualified" daycare has come up...

After referring to our Thompsoms manual - we are left feeling that this is a grey area. In order for an expense to be reimbursable, is the provider required to be a bona fide "daycare center"? Or, can the provider be a neighbor who sits for just the one child of the DCA participant?

As a second part to this - how are we to KNOW if someone is "qualified" and do we need to know how many children are cared for by the provider?

(The other DCA issues do not seem to be a problem. The participant only uses this neighbor to allow her to work. They both claim the appropriate taxes etc...)

Thanks in advance for the kindness of your reply.

Does it cause a problem if a TPA receives, reviews and makes the decision to grant participant loans in accordance with the provisions in the Loan Policy? In this case the loan policy is not part of the Plan document. I see the discretionary decsion as to whether or not to make a loan as a discretionary (fiduciary) function.

What if there are no restrictions for loans (loans can be made for any reason) and the terms (interest rates etc.) are given to the TPA?

If it is a fiduciary function, what is the potential liability for a bad loan? I see it as an excise tax DOL Compliance issue.

There is a chance that our accountants will not have our VEBA audit done before 10/15/02.

Does anyone know if there is a penalty if we cannot complete Schedule H and do not have the financial statements filed?

401(k) with Match. Plan permits nonelective contributions, but never makes one. All employer contributions 100% vested.

Participant brought into plan on date of hire. 6 month eligibility requirement. Oops. (I didn't do it).

Document provides for refund of deferrals, and allocation of employer contribution as forfeiture if ineligible employee participates in plan. Problem is twofold: 1. no forfeiture allocation language in document because all monies vested, and 2. don't understand which year forfeiture is applied to because:

" . . . the amount contributed with respect to the ineligible person shall constitute a Forfeiture . . . for the Plan Year in which the discovery is made . . .

Does this mean that because I discovered this problem in 2002, the forfeiture will be allocated as part of the 2002 contribution?

Or does it mean that this error was discovered for the 2001 plan year, so the forfeiture will be allocated as part of the 2001 contribution?

I would assume that because there is no specific language on how to treat a forfeiture, that it would be treated as the kind of contribution it is . . . a match.

If it is treated as a match, I cannot apply it to 2001, because the match has already been made to its limit for all who have deferred. If I must apply it to 2001, can I characterize it as "nonelective?"

If I must apply it to 2002, the year in which it was discovered, no sweat . . .

This is a Corbel document, circa 1994.