A Money Purchase Plan was merged with a 401(k) Plan.

Is that MPP money available for in-service withdrawals such as 59 1/2, and hardships?

Here is a plan design we are considering- please offer your input. Your feedback is appreciated.

The allpcation groups will be determined based on a points system- participants will receive points for age and service. The Groups will be tiered. Group A consist of all those with points ranging from 25-30. Group B consists of all those with points from 20-25; etc.

To staisfy the gateway, all groups will get a min. 7% contribution.

Group A will get 5% in addition to the base contribution. Group B will get 5%; etc.

In addition to your thoughts on this design, the employer wants felxibility on the amounts above the 5% min. each year, as profitability will be a factor.

Any problem with that not qualifying as a definately determinabel formula?

I converted my traditional Ira to a Roth Ira in 1998 when it was worth $25,000. I have paid taxes over 4 years on the $25,000.

My contribution was $13,000. Now the Roth Ira is only worth $13,000. I would like to take it out before I lose more money. Will I have to pay the 10% early withdrawal penalty? What would my basis be: the original contribution of $13,000 or the $25,000

converted amount?

I am so confused. I hope someone can help me with this.

How does one deal with using forfeitures to reduce the employer contribution?

Here's the situation:

Maximum deductible contribution = 28,000

Client has already made deposit and filed tax return.

Plan is run, and it is found that there is a forfeiture of $10,000.

The document says to allocate in proportion to compensation. If there is excess due to forfeitures, then reduce the contribution. Well, there's an excess of $10,000.

Okay, so I know that I am supposed to enter $18,000 on the Schedule I of 5500 as the contribution because it is "new" money. How do I balance everything else out? Do I show $18,000 on the trust accounting also? The valuation reports will look okay, because the 10,000 is taken out of the forfeiture column and dumped in the contribution column, therefore showing a contribution of $28,000.

The other questions is, if the deductible amount is $28,000, but we can only really deposit $18,000, what does the accountant enter on the Schedule C?

How does this all work?

Can somenone shed some light on this for me?

I am curious how the actuaries and defined benefit mainstays out there would calculate the most valuable accrual rate using the plan year testing method for a general tested plan.

Details:

Testing age and normal retirement age is 65

Normal form of benefit is single life annuity

Optional form is a joint & 50% survivor annuity

Actuarial Equivalents are 6% post/pre and 83 GAM Unisex

Testing Assumptions are 8.5% interest and 83 GAM Unisex

Compensation is $100,000

Benefit accrued during the year is $500 sla annuity paid monthly

Attained age is 50

I know you will have to break out the calculators and purchase rates, so I appreciate any input. Let me know if I forgot anything.

Plan has about 20 instances of the following...

Participants in a 401k plan terminate and are consequently paid out correctly.

Payroll system of employer withholds 5% on the employers last check a couple of weeks after termination and after participant has been paid out.

Therefore, there are about 20 accounts with less than $50 in total that has been erroneously contributed.

What are the options on correctly this and getting the immaterial amounts paid to the employees? These amounts should never have went into the plan, they should have been on the final paycheck as compensation.

Can the employer just have the investment firm by out the immaterial amounts of the 20 accounts to the employer then the employer issue checks to the participants for the compensation due?

Thanks,

Ronnie Wasel

Does New Jersey law prevent a local public school district from sponsoring a 457 plan?

Thanks,

Joel L. Frank

Employer maintains a Money Purchase Plan and a Profit Sharing Plan. Both plans cover the same employees, including keys.

Do I need to group these together for top heavy test? If you can point me to the correct citation that backs up the answer I would appreciate it. Thanks very much!

I am working with version 6.0 and was wondering how I could override the NRA and RA for a particular individual in the plan. I am also having trouble with an accrued top heavy benefit calculation. The top heavy accrual is supposed to be based on a 5 year salary average but the system seems to insist on using a 3 year average.

Any help would be appreciated........pp

We are TPA for plan - individual who was injured at work has asked for a hardship distribution to cover medical expenses. He has injured his hands & cannot sign the forms. We are waiting to see if his spouse has POA, in which case she could sign. Let's say POA doesn't exist - what other options are there?

How does the shrinking number of insurance groups (due to M&A+) have an impact on benefit plans? Especially with the soaring costs of healthcare plans, what does this mean with less competition for quotes?

Company has 23 business units, across 5 states. Employees in different states are enrolled in different plans, with varying levels of premiums and benefits covered. Most are employed in Ohio, covered under the company's self-funded plan. Employees in the other states are covered under either a fully insured PPO or self-funded PPO.

For purposes of 105(h) testing, I have several questions:

1) Must the employees covered under the fully insured plans be included in either the eligibility or coverage parts of the test? If not, is there a reason an employer would want to?

2) Must the amount of employee paid premiums be the same for all employees, in every location, to avoid an excess reimbursement for HCE's?

3) Must the actual benefits provided be the same for all employees to avoid an excess reimbursement for HCE's? I do see the exceptions in the regs for diagnostic tests, etc.

4) If the answer is yes, how can this issue be resolved for a business with multiple locations which may require different plans for budgetary reasons, claims experience, etc?

Does anyone know where I can find the most recent list of states that have and have not conformed their state tax rules with EGTRRA?

Is a 5500 required for an entirely voluntary, group-sponsored vision plan? It that is not enough information to make a determination, what further info. do I need to determine if a 5500 is or is not required?

Is a 5500 required for an entirely voluntary, group-sponsored vision plan? It that is not enough information to make a determination, what further info. do I need to determine if a 5500 is or is not required?

If the sponsor is not eligible for the DFVC program, what do they do to remedy their failure to file dating back several years?

Does an individual life insurance policy count as a "security" which should be disclosed on line 4i of Schedule I if the cash value exceeds the 20% threshold?

May a 401(k) Plan retroactively amend its plan to provide that no catch-up contributions can be made? The plan is sponsored by a member of a controlled group and the other plans do not and will not provide a catch up contribution. If the Plan is retroactively amended, will the return of catch-up contributions be a violation of 411(d)(6)?

I requested information from a "high" friend at Treasury. Their reply, received on 7/26/02, is as follows--

"We talked with the IRS about this [the 3 questions below] and they are not prepared for us to go out with answers on these questions."

[see NOTE at end; Q3 may have been aswered]

Question 1: Integrated SEP -- Code Section 402(h)(2)(B) regarding the exclusion of an employer's SEP contribution provides for a reduction of the $40,000 limit. If, for example, a SEP plan were fully integrated (5.7%) at a $10,000 integration level, would the reduction for an HCE earning $100,000 of W-2 wages be (a) $570 [the integration level $10,000 x .057] or (B) $5,130 [the excess compensation of $90,000 x .057] under Code Section 402(h)(2)(B)? Based on the way integration used to work, $570 would appear to be the correct answer. But the language of IRC 402(h)(2)(B) suggests that the limit is computed separately with respect to each employee "by the amount taken into account with respect to such employee under 408(k)(3)(D)." This seems to suggest that the true benefit of integration is the excess compensation times the spread. Recent LRMs do not address this issue.

Question 2: SARSEP-- Whether compensation used for the 25 percent 402(h) exclusion excludes catch-up elective deferrals?

Assume $100,000 with an elective of $11,000 and a catch-up of $1,000. Is the maximum exclusion based on $88,000 or $89,000?

Under IRC 414(v)(3)(A)(i) and (ii), $89,000 would appear to be the corect answer, otherwise (if $88,000 were used) the employer would not be able to contribute, on an excludable basis, $250 (that is, $89,000 x .25 versus $88,000 x .25). IRC 414(v)(3)(a)(i) specifically references IRC 402(h).

3. Question: SARSEP and 401(k) -- An individual, age 50, earning $13,000. elects to defer $12,000 of this amount into a SARSEP. The employer makes a $2,000 contribution. Although the employer receives a deduction for the full amount under IRC 404(n). In the case of a SARSEP, most of the contribution is includible in the participant's income under IRC 402(h). IRC 402(h) aside, does the $14,000 allocation exceed the 100 percent limit under IRC 415 or any other limit? Same facts, but a 401(k) plan? [see below]

However, on July 30, 2002, the IRS issued and new publication that contains "draft" versions of worksheets that appear in other IRS publications. [Pub 918--Drafts of Worksheets in IRS Publications] In Publication 918, the IRS issued a draft of a worksheet for Publication 560 entitled "Deduction Worksheet for Self-Employed." This "draft" indicates that the sum of the employer contributions and the elective deferrals plus the catch-up contribution ($1,000 for 2002) may exceed the earned income (compensation) of the self-employed individual. Even if true, such a position would not apply to a common-law-employee or nonowner paid on Form W-2--Wage and Tax Statement. Arguably, the 100 percent of EI limit would not be exceeded in a SEP/SARSEP by the catch up amount, but Code Section 401(d) would appear to limit contributions to the amount of EI in the case of a qualified 401(a) plan.

Example. Based on Publication 918, if a self-employed's earned income is $10,000 (after reduction for the 1/2 of the self employment tax deduction), the individual may contribute $2,000 as an employer contribution (25% x ($10,000 - $2,000)) plus defer $8,000 as an elective deferral, plus defer an additional $1,000 if age 50 or older--and still be within the 25 percent deduction limit under Code Section 404(a) (3)(A). This totals $9,000 as an overall contribution with compensation equaling only $8,000. It should be noted that the 25 percent deduction limit is based on the eligible compensation of all plan participants.

Caution: The worksheets are subject to change before they are officially released. It is difficult to imagine the source of contributions that exceed an individual's earned income. As a general rule, an individual may only make elective contributions from amounts they would have otherwise received in cash, had the election not been made. With earned income of $15,000 or more ($16,140.27 before reduction for 1/2 of the self-employment tax deduction ($1,140.27) for 2002) this problem would disappear. In the authors opinion, the worksheet found in Publication 918 is likely to be corrected.

Lets say in July 01, an insurance company informed my client that they would be receiving a demutualization check before the end of the year. The valuation date is October 1. They received the check in December 01.

If I am just now doing (or re-doing) the 10/1/01 valuation, and I know the amount of the check, can I recognize it as a trust asset for the 10/01/01 valuation?

What if it increases my assets by 10%?

If I can recognize "accrued income" as an asset, is a demutualization check any different? Can I treat it as a realized gain that just hasn't settled?