Employer J maintains a 401(K) Profit Sharing Plan. Under the plan, an eligible employee is entitled to an employer match contribution of 100% of the employee's deferral up to 3% of compensation up to the §401(a)(17) limit. During the 1994-2000 plan years, an eligible employee, Employee W, inadvertently was credited with an employer match contribution based on compensation above the §401(a)(17) limit. resulting in an improper allocation for seven plan years. My correction for this defect based on Rev. Proc. 2001-17 would have been to take the improperly allocated match amount from Employee W. and place it in an unallocated account, similiar to a suspense account, to be used to reduce future employer match contributions in suceeding years. I have been told by some that the excess employer match contribution made to Employee W. should have been allocated to the other employees in the year of the failure under the Profit Sharing feature of the plan. Though the plan does have a profit sharing feature (discretionary), it has never been utilized by the employer since the plans inception. What is the most proper way to fix the defect described above?

I would appreciate a little education...

I converted an IRA in 1998 to a Roth (still active);

I also have a 401K with my employer...

Can I open another IRA and if so, are there any restrictions?

Thanks in advance

I made a $2000 Roth contribution in January 2001. Just learned our income went up to $158,000 so I guess I'm not eligible. Of course, as usual, I lost money on the $2,000 investment. It's now worth $1500. Am I correct that I need to withdraw the $1500 by the time I file my return (I extended) to avoid a 6% excise tax? Can I deduct the $500 loss on my 2002 return?

If an employer changes the conditions required for an employee to be eligible for a death benefit so that fewer employees will receive the benefit, do those changes affect current employees? Or is the benefit an accrued benefit that cannot be changed or reduced?

This concerns improving benefits for inactives (not simply COLA adjustments).

For the general test, what would the testing age be for retirees...current age or the same that would be applicable for an acitve (later of NRA and current age)?

Also, how would one determine NAR & MVAR for retirees? For NAR, do you use the current benefit level or the accrued benefit at retirement, to convert to a straight life annuity and divide by service and prior pay? Is MVAR = NAR or do you have to look at the most valuable retirement age even though we know when the retiree retired? It would be a pain to go back and unearth the accrued benefit for each retiree; we already have everyone's current benefit in pay.

Not-for-profit ("NFP")wants to terminate its underfunded DB plan (estblished several decades ago). NFP wants to do this AS SOON AS POSSIBLE because it is weary of the responsiblities and wants to focus on DC Plans.

NFP already has a 403(B) plan that was established some years ago.

NFP understands that it must bring the DB plan up to a fully funded status before it can be terminated, but would like to freeze the plan in the meantime.

The distribution options available to employees through the DB plan include both/either annuities and lump-sum payments.

The NFP understands that a termination contract may be an option...... is this true? Does this seem to be a viable solution even with lump sum payments as a distribution option?

In addition, is there any way to freeze the plan for a certain period of time so that evenually the NFP will not have to make additional contributions?

This is a charitable NFP without a great deal of $.

Thank you for any assistance.

I am trying to assemble a list of providers who offer prototype (i.e., non-model) SEPs.

Any and all responses are most appreciated!

We have a young doc's new PC buying 50% of assets of old doc's PC. The 2 PCs will then form an operating partnership.

Old doc has existing cross-tested PS plan. An advisor has suggested that he retain that plan (for benefit of staff and young doc) and form a new DB plan to shelter proceeds from sale of practice over next, say 5 years.

Questions:

1. Am I safe to assume that some form of affilliated service group rules will apply, so DB plan has to potentially cover docs and staff in all 3 entities? (Or does that just apply if OVER 50% ownership--or am I confusing that with controlled group issues?)

2. Assuming both plans have to recognize all staff, to what extent do the employer PS contributions for rank and file offset any required DB contributions or at least do double duty (i.e. 3% top heavy or 5% gateway)?

3. If there was an especially "old" staff person, I assume we would have to be sure to exclude her classification to avoid big DB contribution?

Thanks from a CPA who knows just enough about DB plans to be truly dangerous!

plan defines act equiv as 7% and up84 with a 1 yr setback.

for j&s payouts act equiv is 7% and up84 no setback for participant and 3 yr setback for co annuitant.

no for the dilemma.

say we have a participant age 65 and spuse age 60.

if the pension were paid as a life annuity it would be pvab using 7% and up84(-1). say this amount is 150,000.

then for a j&s, using the j&s act basis the pvab of such benefit is only 152,000. this difference is due to the different mortality tables for the different payout options.

i see this as a flaw and feel that the j&s factor should be a factor that would result in the pvab of such j&s benefit to be the same as the life option. i believe that all optional forms s/b act equiv to normal form.

any comments?

gary

Non profit corporation owned by a native tribal entity is thinking of establishing a 457(B) top hat plan. The 457 regulations do not define "government" or "state" in a way that incorporates native tribal entities. Should I assume that they must just be treated as a non-profit in setting up this plan? Concerns are the rollover rules and the "unfunded" nature of the plan.

we administer a mp plan that we want to terminate prior to april 30th. all notices & distribution forms were sent out over 30 days ago. 1 person has not responded in writing and balance is over $5,000. i did speak with that same participant over the phone a couple weeks ago and she told me she wanted to rollover into an ira. can we just pay her out lump-sum and withhold 20%? or can we mail her a check directly and tell her she has 60 days?(knowing this isn't the preferred method...)

i appreciate any input!!!

by way of plan design, what can be done to defer the inclusion of income in a NDC plan beyond separation from service? The law is essentially straight forward with respect to section 83 and constructive receipt. Can this be accomplished by putting additional restrictions in the plan? specifically i am thinking of a payout over a few years?

The group annuity carrier (Company 1) sold all retirement assets on 6/30/01 to another carrier(Company 2); however, two schedule A's were produced, one by each insurance company. Even though no assets remain with Company 1, but commissions were paid, is a Schedule A required for this Company? Lastly, is a Schedule D also required for Company 1? Thanks in advance.

Does a transfer of a Governmental 457(B) plan assets to another qualified plan (403(B) or IRA) - allowed under the provisions of EGTRRA - require a triggering event?

What is the norm for other DC plans in regards to reemployment after retirement (i.e., after a distribution or rollover has occurred)? Are there restrictions?

Under the Florida DB plan, retirees cannot return to employment for one year after retirement unless they suspend their DB benefits. The same law applies to members of the University Optional Retirement Program (DC plan), however, if a member has taken a distribution or rollover there is no benefit to suspend. In essence, there is "no teeth" to the law for the DC members.

If a participant did not receive a Required Minimum Distribution that was due by 12/31/01 (not first year so no extension to 4/15):

1) Is there really any due date for when the 2001 Form 5329 is filed?

2) Are there any consequences if the 2001 Form 5329 is not filed by 4/15/02?

3) Is the penalty to be paid 50% of the RMD, with no adjustments for interest or anything else, whether the 2001 Form 5329 is filed in 2002 or 2006?

I have read several articles that say some employers are hesitant to include the new catch-up contribution language in their plan because there are nearly "two dozen states" that don't automatically conform to federal laws, one of which is California and these contributions could be subject to the state income tax. How do I find out what the other states are?

Is it possible to continue placing money in a Roth IRA account if you have already opened one, but are now outside the joint income limit of $160K?

I've got a rather unusual question for some of you attorneys out there. We have a client who has a life insurance policy in his pension plan. (and I don't want a debate about life insurance in qualified plans, please!) The client wants to purchase a new life insurance policy, within the plan, with another company. But they don't want to surrender and transfer the money to the new policy, because doing so would cause the new policy to be in MEC status. (And they know that MEC status doesn't make any difference while in plan, but they plan to purchase it from the plan in a couple of years.)

What they are doing, on advice of counsel, is to do a 1035 exchange from company A to company B.

Now, I'm not aware of anything in Section 1035 which says it CANNOT be used in a qualified plan. But I'm rather concerned that the act of assigning the policy to company B, even though part of an integrated 1035 transaction, might be considered a prohibited transaction as an impermissible assignment? Am I worrying about nothing? Any thoughts on this whole issue? Thanks.

As the plan sponsor (employer) of my company's 401(k) plan, can I be held liable for anything that may happen to my participating employee's 401(k) accounts, if I recommend a vendor who would handle an IRA rollover transaction for them?