I am working with a takeover plan. A 2000 terminated participant stopped paying on a loan in the last quarter of 2000. The prinicipal balance is about $5,000 (without accruing interest). She wants to take a lump-sum distribution from her 401(k) account (about $3,000). Should interest on the loan be accrued through the 1st Qt 2001 or through 2002? Even though she had a deemed distribution as of 3/31/01, should 20% tax still be withheld when she takes her lump sum in 2002 and/or should she receive a 2002 Form 1099R?

thanks

An ESOP Plan document (leveraged ESOP) allows the ESOP Committee to choose between Principal Only and Principal + Interest for the annual allocation of financed shares. This design was chosen for maximum flexibility. Anyone see a problem with the "definitely determinable" benefit requirement? In other words, is only one of these methods, to the exclusion of the other, allowed in the plan document?

Thanks in advance for any feedback.

anyone know reason(s) that hedge funds are not included in the Patriot Act but ERISA governed pension funds are????

this seems rather strange seeing that hedge funds have scant reporting requirements whereas pension funds are highly regulated. wouldnt it make sense that money laundering was much more rampant in the less regulated hedge fund world than highly regulated pensions?

am i missing something?

any thoughts?

I have been researching the issue of what is included in a debtor's bankruptcy estate as far as non-ERISA plans are concerned. I have been unable to find any authority dealing with church plan assets, however. I was wondering if anyone has any insight into how courts (specifically Michigan/6th Circuit Courts) will handle inclusion of a debtor's retirement plan assets.

My understanding is that, under Patterson v. Shumate, whether a debtor's retirement plan assets will be excluded from the bankruptcy estate under 11 U.S.C. 541©(2) is based on state OR federal law that clearly provides an anti-alienation provision, which Michigan apparently does not have in regard to church plans. My final determination, based on many factors, is that church plans must be included in the debtor's estate. I would really appreciate any information or authority to the contrary.

Thanks!

How do the consent rules of 401(a)(11)/417 now apply to 457(B) plans? Is consent of participant required for distributions in excess of $5000 or at all?

:confused:

How does the exclusive plan rule work? Is it an issue of no employee benefitting under 410(B)?

Can a company that sponsors a frozen, underfunded DB plan where nobody benefits under 410(B) maintain a simple IRA?

A former client of mine is being audited by the IRS for 2000. The IRS asked him for the original plan document, effective 1/1/90. My company took over the case in 1992 but we cannot find the original document and neither can the client (but we & the client remember that it was a KPMG prototype document). The IRS has told my client that since the plan document cannot be located, he believes the plan never to have been qualified, even though subsequent document have been located and the plan has been operated properly. So, the IRS wants to go back three years (as per the limitation period) and tax the client what the employees would have paid on their 1040s if no plan existed. We estimate the deferrals to be $300,000 for that period making the fine with an assumed 25% tax bracket $75,000!!!! Is it me or is this IRS auditor being totally screwy. The auditor has refered my client to Rev Proc 2001-17 which I have not read yet.

Any comments?

If a newly terminated participant has $8,000 in deferral money (obviously 100% vested) and $2,000 of 0% vested profit sharing money, is the participant considered 0% vested for forf purposes? And thus the forfeiture can occur prior to the participant taking a distribution (assuming 5 1-yr breaks have not passed)? Or do I have to wait until 5 years have passed (assuming the participant does not request a distribution) in order to forfeit the non-vested PS?

Corbel supplementary material to their prototype states "for purposes of these rules, a zero percent vested participant is treated as having received a distribution of the participant's vested account balance (ie zero) in the year of termination, causing the forfeiture to occur at that time." Language is silent as to whether we are just talking employer money, or all money sources.

Client wishes to use the terminated participant's unvested PS money now to offset the employer's liability for currently due PS contribution (this is an allowable use of forf's in accordance w/ their doc). Can we do this?

Thanks for any help.

The newly-released final rules on required minimum distributions state that a surviving spouse who is the sole beneficiary of a deceased spouse's 403(b)account may not treat the account as his or her own (see s. 1.403(B)-3, A-1.©(3)). (The rules are different for IRAs.) However, under EGTRRA, s. 402©(9) of the Code gives a surviving spouse the same rollover rights as the employee, i.e., a distribution from a 403(b)plan attributable to the deceased employee can be rolled over to any other eligible retirement plan, presumably in the spouse's own name.

How can the rule and the statute be reconciled?

At last year's ASPA conference the following questions were raised:

May a 401(k) plan that would be considered top heavy without regard to (the change to allow SH Match to preclude top-heaviness) provide the safe harbor matching contribution only to employees who are age 21 with one year of service? Would participants who meet the plan's eligibility requirements but who do not have a year of service be required to receive any contribution?

Does anyone recall the answer or have any other guidance with respect to the issue?

Thanks.

With a standard LTD plan, the typical language used under Exclusions is generally something along the lines of - monthly benefits for any Total Disability will not be paid if caused by "an intentionally self-inflicted injury, while sane" - does this exclusion comply with the HIPAA nondiscrimination rules that state if a suicide attempt is the result of a medical or mental health condition (such as depression), benefits cannot be denied. Who determines whether the participant was "sane"? Does this even apply to LTD plans? I'm assuming they do because they fall under ERISA. Any clarification on this would be appreciated.

I have a plan with an effective date of 8/8/2001.

Do I indicate in Part 1 that the plan year begins 8/8 and ends 12/31. Then indicate a short plan year and indicate it is the first return filed.

Relius does not seem to like this approach.

When (1) a Company is terminating its 401(k) plan and (2) the plan provides that forfeitures (fully forfeited) are used to offset future employer matching contributions - how should such forfeitures be allocated to participants accounts upon such termination (i.e., there are no future contributions to match - so how should the forfeitures be allocated)?

I am trying to determine if it is universal in the recordkeeping industry to NOT ACCEPT partial loan payments. In otherwords, when we set up a new participant loan, we establish a fixed amoritization schedule. The only option the borrower/participant has is to make the scheduled payments or payoff the entire outstanding loan. Our Omniplan system cannot accommodate an 'extra payment to principal' like you might do with your mortgage or credit card. I've also confirmed that Fidelity does the same thing. Is there something different offered by other service providers out there?

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.