Problems Problems

In 2001, employee contributions were made to the 401(k) in a proper manner (correct percentages). However, the match for some participants was too high. Now, the employer would like to correct the error by returning the excess match amounts to the company and issuing revised W-2s to the effected participants. The plan document discusses return of excess contributions to participants and discusses forfeited matching amounts but is silent on this particular fact pattern.

Employer is concerned that permitted the participants who received the higher match to keep the excess amount would be a discriminatory practice.

Any advice would be appreciated.

we have a client that owns an s corp. their are 2 owners. the current owners want to possibly establish an ESOP. they have 3 key employees that are going to buy stock individually and will also be participating in the ESOP. the point is to have these 3 employees have controlling interest in the company. my question is who has voting rights on the stock owned by the ESOT? could these 3 employees be named as trustees of the ESOT and therefor control the voting rights? could the stock in the ESOT have non-voting rights?

any input will be much appreciated. thanks.

I'm looking at the final 401(a)(9) regulations for the first time and am puzzled about a sentence that was not in the proposed regulations (or if it is, I missed it).

Q/A 5© of (a)(9)-4 states that "the separate account rules under A-2....are not available to beneficiaries of a trust with respect to the trust's interest in the employee's benefit."

Does this mean that if there are 3 individual beneficiaries of a trust, and assuming that the requirements re. the trust are met so that they are deemed to be the designated beneficiaries for (a)(9) purposes, separate accounts cannot be set up for their distributions post death of the employee? What is the rationale for this.

If there was no trust, then separate accounts could be established following the death of the employee (unless again, I am reading this incorrectly), and distributions from the separate accounts could be made to the 3 individuals based on their own life expectance?

Thanks for your thoughts.

Is there a safe harbor plan design available for 403b plans, as there is for 401k plans? I understand no ADP testing is required for 403b plans, but didn't know if there was the ability to 'get out' of the ACP test as well.

do trust departments of state chartered banks have different oversight responsibilities as a fiduciary of ERISA governed accounts managed by QPAMS as compared to those managed by non qpams?

Does anyone know how the IRS evaluates whether a partial termination has occurred for an employer who is one of several sponsors of a multiple employer plan?

My guess is that the IRS would look only at the individual employer's employees to determine the appropriate percentages used to evaluate if there has been a partial termination. I'm basing this on the fact it seems more in tune with the spirit of the nondiscrimination rules, and that employers in multiple employer settings are evaluated individually for the purposes of coverage nondiscrimination. However, I haven't been able to find any authority supporting this view. Anyone have an opinion/citation?

Hello:

I am researching a situation where we have an "agency or instrumentality" of a state government which is likely to make changes to its structure such that it would resemble more a private entity, and less an "agency or instrumentality."

Unfortunately I haven't found anything that provides guidance on how its existing benefit plans would be treated. It is currently treating them as exempt from ERISA but how should we handle the transition as the changes are made? This particular entity is obtaining 501©(4) status during this process.

I have seen a short email from Ms. Calhoun dated 8/02/2001 on this board, that basically says there is no clear answer on these issues. It's looking like that is still the case but would appreciate any input from this board as to any resources or articles that might help.

Thanks!

Albert:confused:

What are the recordkeeping requirements for a 412(i) plan?

It is my understanding that they do not need an actuary to review the funding since the funding is through individual insurance contracts with level annual premiums.

I know there have been lots of posts about this topic but with things changing, etc. I want to make sure I have the latest/greatest knowledge. We have a retired 401(k) participant who will be 70 1/2 in calendar year 2002. Can he roll his approx $8,000 balance out of our 401K plan into an IRA and take RMDs from there, or do we have to pay him the RMD then he rolls the remainder to the IRA? I think the answer is the latter, but want to be sure so a cite would help...thanks!

Can anyone recommend a website for information on employee pay-all VEBA's. I am looking for basic information. Thanks.

Have any IRA providers publicized the availability of their products specifically as a designated IRA for employers to use to send the default rollovers for small distribution amounts (under $5000 and over $1000) under EGTRRA?

With the elimination of Form 5303, it appears that submissions related to collectively bargained plans must now include information on controlled groups and the other plans maintained by the employer, under the general Form 5300 instructions. Has any else considered this issue?

May not be as complicated as I am making it but - Car dealerships A and B each have a 401(k). Car dealership A purchased B in 2002, inventory and employees. B no longer exists. Haven't seen any agreements, amendments, resolutions and don't know whether A actually assumed sponsorship of B plan.

If there no longer is a dealership B, and A purchased the assets of B, is B's plan an asset and therefore A automatically assumed the sponsorship of B's plan?

Can B's plan be terminated and assets (including deferrals) distributed without any successor plan issues?

Could assets be distributed as a severance from employment, or would it be too late if A is now the sponsor of B's plan? Should B's plan adopt the

EGTRRA provision allowing the severance from employment distribution?

Trying to stay away from merging the two plans because there may be a testing issue in the B plan.

Can a US citizen living in Canada hold a Roth IRA? Upon moving to Canada two months ago, I was told by my current custodian that I would have to take the account elsewhere since they could not do business in Canada. I've contacted other brokerages about this, and some have suggested that Canada does not consider a Roth IRA a recognized retirement instrument since the gains and/or distributions are never taxed. I'm trying to figure out if a new home for my Roth is possible, or if I need to liquidate it and pay the penalties.

Is it necessary to provide a 204(h) notice to participants upon conversion of a money purchase plan to a profit sharing plan where the participants will be receiving the same contribution.

We are having a slight disagreement as to what exactly the IRS means by Particpant directed brokerage accounts.

Does that mean an individually directed account feature where the participant can invest in any assets but all assets are held with the Trustee, or does this specifically mean brokerage accounts that are held by outside brokers?

I have left a message with the help desk but thought I would check and see if anyone had already answered the question.

Thanks

I have a very basic question regarding the way in which ESPPs work:

When making payroll reduction contributions to an ESPP, can an employee make the contribution on a pre-tax basis (like a 401(k) contribution)?

If yes, please provide a cite which authorizes such a practice.

Thanks in advance.

Tax-exempt employer maintains 403(B) program funded solely by employee elective contributions. Same employer also maintains 401(a) defined contribution plan.

Loans are NOT PERMITTEED from the 401(a) defined contribution plan.

QUESTION: In determining maximum loan an employee can take from the 403(B), do you agggregate 403(B) account balance with vested 401(a) account balance for purposes of determining the 50% limit?

I know what 72(p) says. Any citations beyond the statute would be appreciated.

We have a calendar year profit sharing plan. Effective date 1/01/01. Eligiblity requirements are 21 & 1. Plan sponsor wants to now retroactively amend the Plan to include all employees employed on 01/01/01. Is there any reason this can't be done?

Several people have told me that such an amendment must be made within 2 1/2 months after the end of the Plan Year, based on 412©(8). I don't see how 412©(8) is relevant because profit sharing plans are not subject to the minimum funding rules.

Here are the facts of the situation:

- A company's plan specifically excludes "leased employees" from plan participation (knowing that they may have to be included in the coverage testing in certain instances)

- The company "leases" an employee for two years and then hires him as their own employee

Questions:

- Does the plan automatically recognize that individual's two years of service as a "leased" employee for eligibility and vesting purposes under the plan?

- If not, and if the employer wishes to recognize that service, should they amend their plan document to recognize predecessor service with the leasing company?

Thanks.