My client sponsors a safe-harbor 401(k) plan has just filed Chapter 11 bankruptcy. They continue to remit employee salary deferral contributions but stopped remitting the 3% employer contribution in March. Due to cashflow reasons, they probably will not be able to make any more employer contributions. What exactly needs to be done from an a plan administration / compliance standpoint if the employer contributions stop?

Urgent - Thanx

What is everyone's opinion on whether the 415 limit rules of 415(n) apply to permissive service credit purchases in a DB plan under a trustee-to-trustee transfer from a 457 or 403(B) plan?

The language under EGTRRA amending 403(B) and 457 only refers to the definition under 415(n)(3). The link to the limitation application in 415(n)(1) does not seem to be there.

So, in a transfer, are these amounts subject to 415 limits or not? Does anyone know of another reference on the issue?

We have a mutiple employer plan (3 employers)

In 2000 our staff prepared the 5500 as follows (we have done this for several years)

1) One 5500 along with the appropraite schedules was sent under the main employers plan number (plan 333)

2) Another 5500 and only schedule T (no participant counts, no asset information) was sent as well for one of the other participating employers(001)

3) Another 5500 and only schedule T (no participant counts, no asset information) was sent as well for the other participating employer.(002)

The DOL sent the client a letter for 002 stating that the participant count and schedule H are missing.

I think we should have filed one 5500 with 3 schedule Ts.

Now the questions are:

1) Do you think my assessment is correct?

2) Should we respond to the letter by filing an amended return according to me approach- one 5500 plus all schedules (3 schedule Ts)?

3) If we do, how do we resolve the issue that there are plan nos. 001 and 002 out there? Will they not expect a filing for these as they have accepted this approach in the past?

I am a teacher in with 20 years in the FRS, but only 13 years with SCPS. For my 403(B) I am entitled to the age (50 yrs) increase, but am I entitled to the 15 yrs with the same company increase?

If no, what do I do about an overpayment into my TSA for 2001?

We have a 403(B) plan which is covered by ERISA and administered through TIAA-CREF. We have just made a change which adds additional cash withdrawal distribution options. Are we obligated to send a SMM to every person who is currently receiving monthly annuity benefits under the plan?

Also, are we required to send this group SPDs every five years? Is there a penalty for not doing this? Thank you!

Does anyone have any experience with working with a plan sponsor to create and "Investment Review Policy" which is intended to help them carry out their fiduciary responsibilities?

It's basically an internal document, which them becomes part of the plan, which lays out a means by which the trustees will examine investment performance, options, etc. to ensure they are performing their duties as trustees.

Thanks,

Ronnie Wasel

I know under PLR 9530038 that deferrals can be made to a NQ Deferred Comp Account, and then the appropriate amount moved to a qualified plan after ADP/ACP testing is complete. My question is this - can the reverse happen? Can excess contributions (as a result of ADP/ACP failure) be moved to a NQDCA post-testing? I'm thinking the answer is no, but don't have the official authority.

Any thoughts? Cites would also be appreciated (if they're available!)

Thanks!

Our company is terminating our 401k plan. Can the amounts in the forfiture fund be paid back to the company or do they have to be distributed to the active participants.

If a MPP plan has forfeitures that reduce the employer contribution listed on Sch. I. Should the reduced amount be listed as the minimum funding on Sch. R?

I was wondering if anyone knows of salary type information for service providers? For example, what would be the average salary for a full implementation project manager for middle market defined contribution plans?

Thank you

I have come across a situation where a participant in a terminating PS plan has a Universal Life policy. It is the sole remaining asset in the plan. The participant wants the policy to remain in force (due to insurability issues) and the policy has a substantial cash value built up. I know the policy can't be rolled over to an IRA, but is there a way to transfer the policy out of the plan to the participant without incurring a tax obligation? If this isn't possible can the plan remain in effect indefinitely with the policy as the only asset?

I'm sure someone has had problems with this:

Participant terminates employment and elects lump sum. The plan holds all assets in a brokerage account. We as administrator instruct the trustee (small business owner) to cut one check to the participant and the other to the bank the check is drawn on (the bank of the brokerage). We also instruct the trustee to send the withholding check with an 8109 coupon to the bank the check is drawn on.

Result: the bank sends the check back and has no intention of making the tax deposit.

I have told clients to set up a checking account in the name of the plan at their local bank and have the brokerage send the withholding check to their local bank for deposit. This works but clients are reluctant to take the time to establish the checking account.

I'm thinking about simply instructing the client (trustee) to have the brokerage make the withholding check payable to the company, have the company deposit it in the company account and then have the company submit the withholding with the 8109 coupon. I know, I know....plan assets are never to revert back to the employer but I contend that once a participant terminates employment and is paid his/her benefit, they are no longer a participant. This would solve many problems.

Does anyone agree or disagree with this approach?

Thank you.

Does anyone have information on damages under COBRA, e.g., big judgments against employers for medical expenses etc. I'm looking for actual cases where damages (and not just statutory penalty/excise taxes) have been incurred. Thanks a lot!

There are eight nursing homes, all corporations and all owned 100% by the same owner. There is also a separate corporation to manage the 8 nursing homes, also owned 100% by the same owner.

The owner wants to implement a retirement plan to cover the management company, and one of the eight nursing homes. The owner is not interested in offering the plan to the other 7 nursing homes.

There will probably be only one HCE (the owner), but he will not be participating.

Can this be done? It seems to me that they will have a coverage problem if they do not offer the plan to the other 7 nursing homes, but I cannot get a handle on why this would be. Thanks for any help.

Company A and Company B are are Controlled Group owned 100% each by one individual. The owner wants each company to have its own 401(k) plan. The owner wants to give a match contribution to the employees of Company A, but does not want to give a match contribution to the employees of Company B.

Since the two companies are a controlled group, it is my understanding that the employees of the two companies are considered one employee group for ADP/ACP testing and coverage testing. I am confused about how to handle the coverage testing in this situation. Do I aggregate the two companies together for coverage and see if they pass, or does each plan need to pass coverage by including the employees of the other plan? I am getting hung up on the coverage issues for some reason, and would appreciate any help.

Participant in a nonqualified deferred compensation died and the individual's benefit is about to be paid to the participant's beneficiary. Am I correct in assuming that this payment is reported on 1099-R?

Under the new status change rules, can a plan limit the mid-year election change allowed to only permit dropping coverage and NOT adding a dependent? We have a client who would like to do just that because they happen to have a very generous benefits package--consequently, spouse's of participants who have a different open enrollment period through another employer have been known to drop coverage under their plan and pick up coverage under our client's plan. The client would like to limit this (although we realize that it is simply delaying the inevitable because the dependent can be added later, during open enrollment) by allowing a mid-year election change ONLY to drop coverage and NOT to add coverage. Any thoughts? Thanks.

Our client has a Cafeteria Plan which includes a Dependent Care Reimbursement Account. (I only work with retirement plans, so I am unfamiliar with the ins and outs of Caf Plans).

An employee's position is being phased out, and she will be terminated as of June 30, 2002.

In the meantime, not knowing that her job would be non-existent halfway through the year, this employee elected to have the maximum allowable withheld from her pay for Dependent Care Reimbursement, with the knowledge that she is going to have spent every penny by the end of the year.

The TPA has informed this employee that once her employment has ended with the employer, she will no longer be allowed (by law) to submit child care receipts to recover any additional child care expenses withheld, and still sitting in the account.

In other words, although she will still have child care expenses related to the plan year, and there is still money sitting in that reimbursement account in her name, she is not permitted to access that money once her employment ends, regardless of any ongoing child care expenses during the plan year . . .

Is this correct?

Are there any legal mechanisms for bypassing the loss of this money, for instance, just putting any remaining amounts back into her paycheck, and taxing it as part of her ordinary income for the plan year?

Any thoughts?

Client has a PSP and MP Plan. He is terminating his MP plan effective 1/02....no benefits will accrue after this date. Per plan provisions, forfeitures reduce future contribution.

There is a participant that terminated in 2000 with no vesting. Her forfeitures were never used to reduce the 2000 or 2001 contribution. Now what do we do with the forfeitures left in her account? I would think we could reallocate among remaining participants and then terminate and distribute the assets. That's probably too easy.

Any suggestions? Thanks!