I am reviewing an investment and administrative services agreement with Fidelity for a UK plan. The agreement provides that if any participants become US or Canadian residents, Fidelity will not accept investment direction from them; it will require direction from the trustee, Fidelity will not send prospectuses to the US or Canadian residents and if US or Canadian residents subsequently become plan participants, the plan may not mention the Funds to these individuals and the percentage of US and Canadian residents can not exceed 5% of total plan participants. Does anybody have any idea what this is about? Thanks. Ed

Maybe this is a dumb question. PEO handled all benefits of XYZ, Inc. including 401k plan. 2001 ADP test fails, refunds processed after 3/15/02. Who pays the excise tax? The PEO or XYZ?

Thanks for any help.

Does anyone know whether New Jersey has been grandfathered under 401(k)(4)(B)(ii) to permit it to maintain a 401(k) plan? I know that the state of Idaho has been grandfathered. See PLR 200028042. If no one knows, please let me know if you have suggestions as to where I may look for an answer. Thank you.

Controlled group, 2 members (A&B), 2 separate plans. I set up both plans under the same employer. List all employees in both plans. I am trying to do coverage testing for Company A. All of Company B's employees are put in an excluded division. Relius is treating all employees of Company B as eligible, but not benefitting, regardless of whether age and service requirtements have been met. I am fairly certain that Company B's employees still have to meet age and service to be included in testing. How can I make the test work properly?

I know can get around this by taking such employees out of the excluded division, but I would rather not do that. I want to carry the employees forward each year and I am afraid I'll forget to put them back in the excluded divsion once age & service have been met.

Thanks in advance for any guidance.

We are the TPA and document provider to a 401(k) Profit Sharing Plan. The Plan has a separated former HCE with several hundred thousand dollars in assets. The CPA for this plan insists that the plan can be re-written so that the separated participant is forced to rollover or cash out his account within 3 monhts, 6 months, or possibly a year after separation. I am unaware of such rules other than the TRA97 involuntary cashout for separated participants with balances under $5,000. Does he have any ground to support his thoughts about rewriting the plan to either exclude this former participant or force him to move his money?

It is my understanding that even if a plan has terminated it still needs to be restated to be in compliance.

Specifically I have a client that terminated his profit sharing plan and the final 5500 filing was submitted for his fiscal year end August 31, 2001. Now the document restatment has popped into my in basket and I am being asked what the effective date of the restated document is. My gut feeling says that it would be effective September 1, 2001, but that is after the plan is terminated which just seems "funny".

Any thoughts?

We will begin distributing funds to participants of a terminated profit sharing plan. Some participants are missing. Has the IRS or DOL approved the 100% withholding method for missing participants in a profit sharing plan?

The Plan has forfeiture and redistribution provisions for lost participants. But the problem is that such provisions contemplated an ongoing corporation (plan sponsor) and the corporation has dissolved. Thus, an amendment regarding 100% withholding seems an attractive option to remove the fund balances from the Plan without harming the value of a missing participant's account balance. Any problems?

According to the document the employee, upon rehire, becomes eligible for the plan in the same fashion the employee was when they left employment. This is only true if the participant did not have 5 Breaks in Service. Here is my dilema, the participant satisfied the eligiblity, but never entered the plan becuase they terminated prior to the entry date. I say the participant is eligible, but must wait until the next entry date to participate, and does not participate immediately because the employee was never really a participant even though they satisfied the eligibility requirements.

Is my thinking way off? Would someone be so kind as to set me straight on this topic.

Is it acceptable to use prior year in order to pass acp when the prior year discretionary match was 50% and the current year discretionary match is 25%?

Is a change in plan year a "material modification"...?

Controlled Groups Relating to COBRA Example: Company A employs under 20 people offers medical insurance as a benefit Company B employs over 50 people but doesn't offer medical insurance as a benefit Comptroller of both companies which is paid under Company A is terminated and is also member of the employer sponsored medical benefit package. Does this establish a Controlled Group under IRS Reg Number 54.4980B-2 and if so then COBRA would have to be offerd to the Comptroller? *Both companies share common ownership *Company A - Sole Proprietorship *Company B - Limited Liability Company Please email your response to barronvonteak@yahoo.com ASAP! Thanks for your help!!!

If a participant chooses to receive disability benefits on an after-tax basis, can pre-tax deductions such as health care premiums be withheld from the disability payment? Or can pre-tax deductions only be taken from pre-tax disability payments?

I'm wondering how I can invest in non-public companies with my ROTH. I am part of a consulting company (LLC) and would like to know if it would be possible for me to invest via my ROTH?

What action can an employer take to be reimbursed from a terminated employee who has been reimbursed from their FSA for amounts that exceed what has been collected? For example: An employee elects a $1200 yearly allocation and has tax-deferred contributions of $100 per month. Six months after enrolling they've contributed $600 but have been reimbursed for $1200. They quit. Can the employer legally attempt to collect the non-contibuted $600?

Under EGGTRA, safe harbor Plans will not be subject to top-heavy testing if the contributions are limited to deferrals, safe harbor contributions, and matching contributions that satisfy the ACP safe harbor. Does this mean that they can have a discretionary matching contribution, subject to vesting, on top of the SHMAC? I believe you satisfy the ACP safe harbor if the discretionary match is in amounts not exceeding 4% of salary and if no match is made on deferrals that exceed 6% of salary. What exactly can a safe harbor Plan contribute and still not be subject to top-heavy testing? What if there is a discretionary profit-sharing or after-tax provision that is never used?

I seem to recall hearing at a recent ASPA/IRS conference that various proposals were pending to develop a defined benefit plan with a salary deferral feature. Is this true?

Participant completed TEFRA 242 Election - is over 701/2 and a 5%

owner. Started distributions in 2000 - plan allows participant age

65 or older to withdraw fully vested account balance and this person is 100% vested. Plan was a Target Benefit plan - TB plan

frozen & 401(k) added although this participant only has TB balance. TPA not aware of distributions until after the fact. Appears participant never completed any paper work when he 1st requested payments of a monthly amount. Now questions have begun? Did the withdrawal of a periodic amount effectively

rescind the 242 election? Should these payments have been considered RMD amounts? One interpretation has been that since plan allows for withdrawals (subject to QJSA) these payments should be considered "by request" of participant. 242

election is not revoked as participant is still actively employed by sponsoring employer and can delay RMD's until actual retirement. I am just curious about what others may opine regarding this

scenerio. Thanks in advance.

Can you distribute earnings for an in-service withdrawal of after-tax voluntary contributions? How do you report a distribution of after-tax voluntary employee contribtutions on Form 1099-R? For instance, total after-tax account value is 10K, of which contributions are 8k and earnings are 2k. Can you only take the 8k in contributions as an in-service withdrawal of the after tax cont's? Because the part is under age 59 1/2, do you use code 1.

unfortunately, not a 401k issue but don't know where i would otherwise post this:

March 19th, 2002 the client calls and says he sold all assets of the biz to another unrelated company (12/21/01). Now he wants to make a pension contribution. All employees either terminated or went to work for new co. on that date. (Begs the question as to where the money would come from now that company has no assets.)

MP & PS both contained a last day rule. Can last day rule be amended out now? Was 3/15/02 the deadline for the MP Plan with effect on min funding standards? Could PS be amended now (till 9/15) or is that only for disqualifying defects, which this is not....

any thoughts would be appreciated. thanks

Let's say we have a start-up 2001 calendar year Plan. Assume we have an officer that is earning around $90,000. I believe he would be a key employee for determining if they are top-heavy for the start-up year 2001. Wouldn't he then be a former key employee in determining if the Plan is top-heavy for 2002 under EGGTRA? The strange part is that we are looking at the same determination date, 12/31/01, and the same 2001 census data in determining his key employee status for both Plan year's top-heavy tests.