Did everyone see the white paper put out by the Joint Committe on Taxation on April 17th? They put out an excellent overview of nonqualified plans etc "Present Law and Background Relating to Executive Compensation". It's 46 pages.

A Plan uses the prior year method for nondiscrimination testing. The Plan Admin would like to retroactively amend the Plan to use the current year method beginning with the 2001 plan year. Can a plan be retroactively amended to switch? Notice 98-1 says that "A plan using the prior year method may adopt the current year testing method for any subsequent testing year." Should this be interpreted to mean that you may only amend to switch to the current year method in a plan year prior to the first year in which it will apply? There is an 1999 ASPA Q&A on this subject (#60 for anyone who wants to take a peek), but the answer is unclear at best (the question is whether A or B applies, and the IRS answer is essentially "yes").

This seems like a question for which there is an obvious answer, but I have had a difficult time finding a concrete answer under the law.

A publicly traded company sponsors an ESOP comprised of both a stock bonus plan and a money purchase plan. Under the money purchase portion of the ESOP, the employer must contribute 5% of compensation. The contributions are made in the form of employer stock, not cash. Is the number of shares contributed and allocated to participant accounts based on the market value of the shares on the allocation date under the plan document (e.g., the last day of the plan year), or is the number of shares that must be contributed based on the market value of the shares on the date the contribution is actually made?

Using the improper value could lead to potential deduction or 412 problems if there is a fluctuation in the value of the stock.

For deduction purposes, it is my understanding that the deduction would be determined by multiplying the number of shares contributed by the market value of shares on the date the contribution is actually made. Would 412 apply a similar rule? That is to say, would the number of shares needed to satisfy the minimum funding obligation also be determined based on the market value of shares on the date of actual contribution?

Thank you in advance for your input.

As many of you know the Florida Retirement System is offering to its 600,000 members a new participant directed Defined Contribution plan under Section 401(a). The following link provides a summary of the available investment options:

http://www.myfrs.com/pdf/Invest_Fund_Summary.pdf

How do these investment funds compare to other large participant directed DC plans?

I am trying to find information on temporary agencies that offer retirement plan benefits to their employees. (By that, I mean the people who are assigned to the agencies client locations.) In particular, what eligibility criteria is most common? Also, what is considered a termination for purposes of distribution of the account? Do the temp agencies make any matching contributions? I will appreciate any experiences or ideas you can share with me. There doesn't seem to be much real information on the web - just that temporary workers are beginning to get more benefits from their employers. Thanks.

If your plan allows medical coverage for a child over 19 who is not a student... does your financial dependency criteria exactly match that of the IRS to avoid imputed income issues? For example, plan allows unmarried children to age 21... no questions asked! If this child works and files taxes, is imputed income applicable to the employee?

Has anyone heard of a legislation, soon to be in effect, which would have IRAs subjected to back-up withholding, if the IRS finds discrepancies in the IRA owner’s tax ID number and a Form W- 9 is not provided to the IRA custodian/trustee within certain timeframe.

I have a client with an overfunded DB plan. he is the only participant. he reached retirement age several years ago and did not take any money. he wants to know what his options are with respect to the overfunded money if he takes a lump sum distribution. someone suggested that he take distributions retroative to when he could have taken them. is this a viable option? if so what would the authority be for this position?

Is it possible for the same plan document to be used for 2 different plans? For example, if an employer has one plan for non-union employees, and a separate plan for union employees, can both plans be included in the same document (not a prototype, not separate but identical plan documents, but actually the same document which lists both Plan 001 and Plan 002)? Or does each plan have to have its own separate document?

An employee requested that I not withhold their Flexible spending account deduction from their last paycheck. The check is for hours worked before termination. My FSA vendor said I have to deduct. Can anyone point me towards a resource I can share with the ee when they don't believe me? I couldn't find anything at the IRS site. Thanks!

Whether an S corp ESOP (no readily tradable common stock) is permitted to hold nonvoting securities of the employer (satisfies the S corp requirement as to a single class of stock). It seems that § 409(l) does not permit it. Any insight would be greatly appreciated.

Our (institutional) trustee is telling us that the deadline for recovering erroneous FIT withholding for calendar year 2001 distributions was 1/18/02. Can anyone tell me whether this is an IRS deadline, or just something that the trustee is doing for their convenience?

Longer story: we made a mistake in making a death benefit distribution from a 401(k) to the beneficiary. Instead of distributing to him, we cut the check to the deceased and took the 20% withholding in the deceased's ssn. The check was cashed and we are pursuing the net amount as a forgery case. But that leaves the 20% that was submitted to the IRS in the deceased's ssn. How do we recover that portion?

I'm out of my element here--any ideas anyone?

RCK

I have a plan that just came to us. Previously it had a PYE of 8/31 and we took it to a 12/31 with a short plan year in 2001. The document calls for match forfeitures to be used offset match in the next plan year. Due to extreme delays in getting information from the prior recordkeeper, we were unable to complete the 8/31/01 valuation until after the 12/31/01 PYE. When that valuation was completed, we discovered we had match forfeitures that should have been used in the short plan year. My question is does anyone see a problem if we just use them in the 2002 plan year? Do you think there is an issue with overfunding that would require filing a 5330?

I asked this question before here but did not get any responses, so I'm hoping that this time I will.

Situation is inherited business and inherited (50 life) DB plan which was continued for employees. They also have an employee deferral-only K plan.

The owners want to make up for not having compensation ($375k-$200k) covered in plan. I've determined that this could be done through a QSERP, but don't want to increase DB obligations with interest rates so low and market so bad.

Instead of QSERP, want to consider DC plan covering just the two owners, with annual contributions for each of maybe $25,000. Plan would be aggregated with DB for testing. I've determined that the (a)(4) test would pass.

Anybody see problems or complications with this? Seems to be exempt from gateways; BRF seems to not be a problem. Comments please. Thanks.

Is there any requirement for an ERISA governed fund to hold a specific amount of cash reserves based upon amount/value of company stock the fund holds?

thank you.

enjoy the weekend!

I am performing an ACP test for a safe harbor plan (safe harbor contribution is the basic safe harbor match) with after-tax contributions (I know, what's the point in being safe harbor with after-tax). I would like to include the safe harbor match in the ACP test to improve test results which I beleive is permissibe under IRS Notice 98-52. Section VIII.F.3. (Special Rules for ACP Test) provides that if the safe harbor plan has after-tax contributions, an employer MAY ELECT to disregard all matching contributions in performing the ACP test. I read that as saying an employer by default would include safe harbor matching contributions in the ACP test. Can someone confirm this understanding??

Tonight I went to my bank to make my contribution for 2002/2003 to my Roth IRA which I established in 1999. The bank manger said I couldn't. The bank's policy is I have to create a new Roth IRA account with a new number every year. I responded that she had processed a contribution to the account last year, and showed her two statements which the bank sent me reflecting the same. She said it was an error and shouldn't have happened. I went to another branch, and I got the same info. I didn't make the contribution tonight because I think the bank is wrong.

Anybody aware of info. on such a policy?

Thanks,

Bob

Other than Hartford, Nationwide, Pacific Life, and VALIC, what are some other vendors out there that offer VAs with the 457 plan option?

Also, who are the good ones?

Any help at all is appreciated. THanks.

Chris

I am a self-employed individual who is setting up a Sec. 105 account for myself and my spouse. I know that with less than 100 employees, the 5500 is not required; exactly what form is? It appears that the 5500EZ is only for retirment benefit plans. What form should I be filing? Also, when I hire a couple employees and offer them this plan, is there a different form to file for a group less than 100 but greater than the owner and spouse?

Is there an interpretation out there as to whether a NQDC plan should be offered to a select group of HCE's or just to HCE's. the issue here is my client wants to offer the plan to all HCE's and I dont want them to run afoul of the exemption from having to comply with ERISA.