We have a Sole Proprietor MONEY PURCHASE plan. For 2001, there were approximately $4,000 in forfeitures which, according to the plan document reduce the contribution.

Determining SP's net income for the plan is normally not too complicated. This plan is integrated so a bit more complilcated, but it still works to solve for salary while integrating. The total allocation comes to about $44,000 - after deducting forfeitures the net tax deductible contribution is about $40,000.

What figures do we use in determining the SP's net compensation on which to base the allocation? Do we deduct the total allocation of $44,000 or the net deductible contribution of $40,000? (I know we also deduct the self-employment tax)

The answer to this seems logical, which always scares me. So I have to ask the experts. If a 401k Plan must make refunds due to ADP testing and the participant has requested state withholding as well as Federal - Does state withholding come out of the gross amount or the net amount after Federal?

According to the news story on this site, Gephardt introduced a bill to do away with Roth's and to make all retirement account distributions taxable. This is not going to make young investors save.

I just know that sometime between now 30 years in the future when I retire, Congress will get greedy and change all of my Roth tax exempt savings to taxable.

Anyone ever heard of this? Potential client says that last year they issued a combined SAR to save on mailing costs. They had all the standard language, but added a separate paragraph for each plan with details on participants, assets, etc.

For some reason, this doesn't "smell" right to me! (And I don't know how it would really save on their mailings, anyway, since all the participants would have to receive it, but that's another issue.)

Any thoughts/authority on this? Thanks!

We have a client who terminated their SEP June 30, 2000 and began a 401(k) plan August 1, 2000. The plan document for the 401(k) plan says the limitation year is the plan year. We believe the the compensation limit of $170,000 needs to be prorated for 5/12ths of the year. We also thought the annual additions limit of $30,000 needed to be prorated for 5/12ths of the year. Can anyone gives us some guidance as to the proper treatment here?

A 401(k) plan participant is deceased and had directed his account to be divided between 9 beneficiaries. Four of the beneficiaries are minors. The guardian of the four minors has legal counsel urging him to rollover the funds to a Stretch IRA. I cannot find anything to support this action. Is this legal?

I received the following from the client:

"I am forwarding you copies of the amendment for the XXXX and YYYY Plan. They signed it and have executed the individual classes of partners."

It was not indicated whether the partners were shot or hung, but I guess the law requires you to follow the document, doesn't it?

We have a client whose 401(k) plan which allows for a discretionary match.

Have you ever heard of a situation where the employer provides the NHCEs with a 50% match, and the HCEs a 60% match? Sounds suspicious to me . . . Funny thing is, the plan passes ACP.

Does anyone have information about a new "Flexible Benefits Plan"? This plan allows each employee a fixed dollar amount to be used to fund the retirement plan, pay insurance premiums, or purchase any of a variety of benefits.

I am not sure of the name of this plan.

Thanks,

Does anyone have information about a new "Flexible Benefits Plan"? This plan allows each employee a fixed dollar amount to be used to fund the retirement plan, pay insurance premiums, or purchase any of a variety of benefits.

I am not sure of the name of this plan.

Thanks,

Are health FSAs considered group health plans for the purposes of the new claims procedures?

We are taking over a plan that was using ang age weighted formula on a volume submitter plan. Employer signed gust certification. Employer has now restated plan onto a different document providers non-standadarized document. ( Resatement date from original effective date of plan with Gust amendments.) Any problems with this?? Prior admin is saying that contributions from orig effective date to re-adoption date could be disqualified.

Thanks in advance.

I have a retiree that elected the 50% J&S form of benefit. He is in the process of getting a divorce. Once it is final, he would like to change his form of benefit to a life only. Must he wait a year to do this? Please site any regs.

Thanks, Sue

How do you feel about a plan issuing participant loans at a 0% interest rate?

I was wondering if it's possible for the employer contribution to a money purchase plan to be a match of amounts contributed to a 457 plan? While the amount would vary per particiapnt based on his or her contribution to the 457 plan, I think that this should be okay because the formula itself is fixed an determinable (i.e., the employer would contribute dollar-for-dollar the amount that was contributed to the 457 plan). Does anyone have any thoughts on this?

Thanks.

A profit sharing plan permits the purchase of life insurance. An exception to the incidental benefit limit of 25% and 50% of aggregate contributions for term and whole life insurance, respectively, applies to "seasoned contributions." These are contributions that have been accumulated in the trust for two years. I have three questions:

1) Would 401(k) deferrals, which are considered employer contributions, be within the exception even though they cannot be distributed prior to age 59 1/2?

2) Does the exception apply to profit sharing contributions and/or 401(k) deferral contributions even if the plan document does not permit in service distributions?

3) If an employee has been a participant for 5 years or more, can he or she invest all employer contributions into life insurance, even those contributed within two years??

Thanks.

We have just discovered that after changing jobs we are not entitled to do anything with our ESOP until January 2004 - no rollovers, changes nothing. Have been with the company 12 years. Please advise on how this is possible and what laws govern ESOP distribution upon termination of employee.

Im relativly new to all this. But I was wondering how I would go about openeing a Roth IRA. I want to start putting money into one. any help would be greatly appreciated, because i have no idea where to start or what to do. Thank you. Steve

If a participant's spouse is enrolled in a health FSA through her employer, and the employer reduces the maximum benefit limit in the middle of the year from $5000 to $1500, can the participant enroll in his employer's health FSA in the middle of the plan year? My inclination is no, since the cafeteria election change rules based on cost/coverage changes don't apply to health FSA's, but I'm not positive about that.

Anyone have a good on-line source for the Mayberry vs. Madison case? It refers to 125 elections after the start of the 125 plan year. Can't seem to find it off hand.