I am doing some preliminary completion of 5500's and in doing the Schedule D to indicate that the PSA we participate in does not act as a DFE and file their own forms, I receive a warning telling me that more information will be required.

I know that Aetna sends detailed information to our trustees regarding where the money is invested.

Does this have to be included with the 5500 or are they looking for something else. This is a small plan so there is no Schedule H but an I. I am using Relius.

Assuming a profit sharing plan allows a Hardship Withdraw, What are the IRS regulations on future contribution and what amount might be withdrawn(principal or principal + gains)?

Can I remove securities from my conversion Roth IRA for 60 days and then transfer them back into my Roth IRA without any penalty or tax similar to the way it was previously, using a traditional IRA? I have a short term need to use the borrowing power of these securities and I plan to return them in their exact form within 60 days to my Roth IRA. Does anyone know if this is allowed or not?

An employee signs up for a pretax medical deduction utilizing an HMO medical plan. The doctor list changes substantially and so does the hospital list. The employee wants to drop the medical coverage becuase of this. Can they drop the coverage during the plan year?

We have a client who sponsors a profit sharing plan with pooled investments. The vice-president of the company will retire this year and wants to sell his company stock. The stock is worth about $300,000 and plan assets are about $4,000,000. The employer wants to know if the profit sharing plan can purchase the stock.

The plan is considered an individual account plan so we believe it could invest in company stock. The employer wants to know if the plan could purchase the stock directly from the vice-president. I would think the stock should be bought by the company and then bought by the plan.

Does anyone disagree?

Thanks.

We've got an ASG and each ER in the group is adopting a 401(k)--using a pre-approved volume plan, with no deviations from the pre-approved document. Can the members of the group rely on the volume plan advisory letter (under Ann 2001-77), or is there some reason why they must or should file a 5300 for the adoption of the volume plan to include a determination as to ASG status? Any comments?

I am trying to determine if a 501©(3) entity can be classifed as having a governmental or an angency therefore 403(B) plan. I would greatly appreciate any help to this matter.

I have read Revenue Ruling 57-128, 1957-1 and understand there are 6 points to consider. However, I am still left with the unknown of how/who determines if a company is classified as a "governmental entity".

Are the Head Start programs considered governmental? They are heavily funded by the government. The purpose it performs can fall under a governmental function. There aren't any private interests.

Should Form 5500 be filed? If you file Form 5500 and one has never been filed, wouldn't that be a flag for the DOL?

Does anyone has any experience with the effect that Chapter 11 (reorganization) has on pension contributions? Specifically, were pension contributions given any type of priority? Was there a distinction between pre and post filing contributions?

Does a safe-harbor plan utilizing the prescribed match lose the pass on top-heavy testing where the employer also puts in a profit sharing contribution?

I am new to New Comparability Plans . . . I'm running 2002 projections for a client who is interested in a New Comparability design. We have a large population of owners, several of whom are young, which means to maximize their contribution I'm going to have to do something about the EBARs of some of my young NHCEs. What are the rules about making a "corrective contribution" or "bottom-up QNEC" as far as plan design or amendment goes?

For instance, if I'm going to single out a couple of youthful NHCEs to boost what I can offer my HCEs, what is the legal mechanism? Do I build it into the Plan, or do I amend annually to provide specific amounts for specific NHCEs?

I am doing some preliminary completion of 5500's and in doing the Schedule D to indicate that the PSA we participate in does not act as a DFE and file their own forms, I receive a warning telling me that more information will be required.

I know that Aetna sends detailed information to our trustees regarding where the money is invested.

Does this have to be included with the 5500 or are they looking for something else.

What is the difference between 403(a) funds in a TSA and all the other funds. Is it true that there are TSA amounts that cannot be transferred to another TSA contract?

Company A provides all of the funding for company B. However, they have no ownership in B. Company A does this same thing for several other companies. They basically have "control" as they provide the funding and if the funding stops, Company B would go out of business. (Company B is a new startup company). Company A sponsors a retirement plan that each of it's funded companies can elect to participate in. Can Company B start it's own retirement plan without having to worry about the controlled group issue?

The client (Company b) assures me that A has no ownership in B, however they still refer to A as their "parent company".

I have a controlled group of 3 companies. All 3 are have defined benefit plans (1 year wait, NHCEs); all 3 have 401(k) plans (immediated entry, NHCEs, no match); 1 has a profit sharing plan for HCEs only.

To determine the maximum profit sharing allocation, I run the ABT. With just the DB and PS plans, the rate is 10%. If I add the 401(k) amounts for the DB participants, the rate increases to 12%.

Must I add all the 401(k) participants to the test - even those who have a $0 benefit?

Are there any other considerations for boosting the PS allocation?

There are approximately 1000 employees combined. The DB active participation count totals 600. That leaves about 400 employees who have not met eligibility for the DB plan. Approximately 40% of the employees contribute to the 401(k) plan.

Thanks in advance for your help!

Are there any rules about how long a company has to make plan participants fully vested when there has been a partial plan year termination?

I've been told we fall into this category due to layoffs in 2001. Also, do we need to make everyone who left our company in 2001 whole, or just the participants who were affected by the layoff?

If company A (who maintains a noncalendar year cafe plan) purchases 100% of the stock of company B (who maintainsa a calendar year cafe plan), when are the control group tests to start? Can we allow company B's plan to run out the calendar year, allow elections for a short year and then formally merge the two together under A's plan? Would we test then or at the point of sale?

Any thoughts comments would be welcome.

Participants in a 457 Plan maintained by a school district used deferrals to pay premiums on life insurance policies. Policies were owned by the school district. Just discovered that in 2000 three participants who were unhappy with the investment performance of their policies decided to move them to another company. The school district transferred ownership of the policies to the participants who then assigned them to the new company in a tax free exchange for the new policies. The new policies are owned by the participants. Apparently no one involved in this transaction knew that the policies could not be distributed to the participants absent a qualifying event.

What, if anything, can be done now to correct this situation? Can the participants pay back the cash value of the policies distributed on the basis that the distribution of the policies was a mistake? Unfortunately one of the participants has died and his beneficiaries have collected on his new policy.

What reporting should be made to the IRS? Will treating the distribution as a taxable event and having the participants include it in their income for 2000 affect the eligibility of the Plan because it made an improper distribution?

I would greatly appreciate any comments.

Thanks

tws

I have an EOY valuation for funding and FASB 87 purposes. Assuming that the only decrements considered are interest and mortality - how is the service cost and PBO calculated??

The reason for the question has to do with the presentation of information for FASB purposes.

IF I run the valuation as of the beginning of the year (with perfect foresight - knowing what the compensation will be for the upcoming year) versus and end of year valuation - my service cost and accrued benefit at the start of the year are equal. However, the present values are computed one year apart.

Is it acceptable to present the service cost for an end of year valuation equal to the present value using interest and mortality (at valuation date) and have no interest adjustment to year end?? OR must the benefit be valued at the beginning of the year with interest and mortality and then brought forward with interest ONLY to the end of the year?? (You would obviously get 2 different numbers and I required all my old clients to have beginning of the year valuations so never got into the issue)

Again, any help is appreciated. Thanks in advance.

I have a client with an Entry Age Normal valuation. The assets have increased enough so that the total unfunded accrued liability is negative.

I believe this is one of the prohibited situations for a reasonable funding method.

An actuary wants to maintain the entry age method and just automatically set the unfunded liability to zero. They claim to have done this in the past. Union negotiations are involved - therefore, they are confident that after the next round of negotiations that the unfunded liability will be positive again - in a year or two.

Doesn't the IRS require the change to the aggregate funding method (or something similar) in this situation??

Any help is greatly appreciated. Thanks in advance.

Two plans (A&B) are permissively aggregated in 2001. The test is performed by excluding all employees who do not meet the statutory minimums. For 2002, plans A&B are tested separately. Plan A uses prior year data, Plan B is now safe harbor (deemed to be using current year data). How do I determine my prior year NHCE averages under plan A? Do I use the prior year averages of the aggregated plans, or do I need to re-run the 2001 test just to determine what the prior year averages would have been for plan A if it were tested separately in 2001?