We have some relatively old documentation for our TSA Annuities. I am looking for more up to date forms that are used for TSA annuities.

I have visited with someone at the IRS, and he was as helpful as he could be. He did turn me on to this forum. Anyway, he let me know that some information was required in a plan document, but could only provide me some general information. I am looking for some guidance on what needs to be attached to the policy to make the annuity a 403(B) annuity.

The IRS man explained that the plan document should include contribution rules, rollover/portability rules, distribution rules, matching rules including top heavy testing criteria and eligibility rules.

Our old form had an Employee-employer compensation agreement, an employee request for Purchase of Tax Sheltered Annuity Retirement Plan, and Annuity Purchase Agreement and an acknowledgement.

I know some of the items referenced in the old form are way out of date. Can I get some feedback on what other companies have on their forms?

Thanks,

Facts: the plan is safe harbor for testing for 2001, but has an after tax source that must be tested in ACP. They Document states Prior Year Testing Method. For 2000 the ACP test included After tax and employer match.

Question: Using Prior Year Testing Method , comparing Current Year HCE ACP , which consists solely of after tax contributions, to Prior Year NHCE ACP, which consists of after tax and employer match, the ACP test passes. Is this Okay, since we are not comparing same sources of money? I haven't found anything that says it is not. The Test will fail miserably using Current Year method, and will fail in 2002 using Prior Year NHCE ACP ....the plan has mostly HCES contributing to After Tax.

I am looking at a plan that uses a J&50%S as the Normal Form. I am not the signing actuary. The document states that "For purposes of determining the joint and survivor benefit, the Normal Form of Benefit will be caclulated assuming that the Participant is married to a spouse the same age as the Participant. However the form of distribution of such benefit shall be determined pursuant to the provisions of Article 7." Article 7 describes the optional forms of benefit, including lump sums, but does not contain the actuarial equivelances.

My question is, shouldn't the lump sum include the value of the spousal death benefit? If I remember my EA-1 exam, to determine the value of the deferred J&S, you need to value each component seperately. Which would mean value a deferred life annuity to him, 50% defferred life annuity to her and subtract 50% joint deferred annuity if they are both alive at RA.

I don't think its as easy as determining the J&50 factor at NRD (assuming both same age) and hitting it w/ a Dra/Daa (based on the participant) to get the lump sum. It's much more complex, isn't it?

Does anyone else work with plans using J&S as the Normal Form?

The trustee-to-trustee transfer method may be used if one wants to use 403b funds for the cost of purchasing prior service credit in a governmental DB plan. Because it is deemed to be a "transfer" and not a "distribution" no triggering event is required. This transaction basically has no time constraints. It simply must be done prior to receiving a DB pension from the governmental plan that will accept the purchase.

Now for the rollover provisions of EGTRRA Sections 641-644:

Tens of thousands of active 403b participants are also accruing benefits under their current employer's qualified 401 plan which includes but is not limited to governmental DB plans. According to EGTRRA Sections 641-644 one may rollover 403b funds to a 401 plan. In a practical sense, how could a rollover, which requires a distribution event, ever take place if the 403b holder must first satisfy a triggering event of: death, disability, separation from service or the attainment of age 59.5? Upon "death", one for an obvious reason cannot effectuate a rollover. Upon becoming "disabled" a rollover to the employer's 401 plan may not be allowed because the plan may require active status. The same holds true upon "separation from service". The 4th and last triggering event that allows for a distribution and, thus, a rollover is attainment of "age 59.5". But once again, the employee must be active at age 59.5 if he chooses to rollover his 403b funds to the employer's 401 plan.

I understand the IRS is having some trouble in effectuating the rollover rules authorized under EGTRRA Sections 641-644. Can anyone shed some light on this issue?

Peace,

Joel L. Frank

Takeover case for me today. They do not have enough money to fund the 2001 minimum funding contribution and have exhausted all business and personal loans. The outlook for the company is good, though. My client is deciding whether or not to begin compiling the necessary paperwork to send into the IRS for the waiver under Rev Proc 94-41. They want to know that if they rush around prior to March 15th, will this waiver even be granted? If anyone has applied for a waiver under Rev Proc 94-41, can you tell me whether or not it was granted?

My company has two child care programs. One program is a typical dependent care assistance plan where employees contribute a portion of their salaries to the plan and get reimbursed from the plan after submitting a claim. The other program is a back-up program for occasions when an employee's regular child care provider is unavailable. The back-up program is free to employees and is paid for by my Company.

Could someone confirm or correct my opinion that both benefits have to be combined for the exclusion under Section 129. In other words, combined amounts under $5,000 are excludable and amounts above $5,000 are taxable income. If an employee uses the back-up program, it reduces the amount that can be claimed tax free from the dependent care assistance program.

My company has two child care programs. One program is a typical dependent care assistance plan where employees contribute a portion of their salaries to the plan and get reimbursed from the plan after submitting a claim. The other program is a back-up program for occasions when an employee's regular child care provider is unavailable. The back-up program is free to employees and is paid for by my Company.

Could someone confirm or correct my opinion that both benefits have to be combined for the exclusion under Section 129. In other words, combined amounts under $5,000 are excludable and amounts above $5,000 are taxable income. If an employee uses the back-up program, it reduces the amount that can be claimed tax free from the dependent care assistance program.

I have a question regarding the exception to the 10% penalty for distributions under age 59-1/2. My understanding is that if a person terminates at age 55, they are not subject to the penalty. Does the person have to actually be age 55 at the time of termination? Or, as long as the person turns 55 during the calendar year in which they terminate, are they not subject to the 10% penalty? I just spoke with someone at the Martinsburg Center and was told that there was no such exception.

401(k) plan with dual eligibility/entry - immediate for 401(k) deferrals, 1 Year of Service/semi-annual entry for employer discretionary (no matching). Employer discretionary contribution is cross-tested class allocation.

I am "assuming" (always dangerous!) that for purposes of the 401(a)(4) non-discrimination testing on the employer discretionary contribution that employees who have not met the 1 Year of Service requirement are excluded from testing, even though they are "participants" by virtue of being eligible to participate in the 401(k) component.

This is my first experience with this particular situation and would certainly appreciate any and all input from those of you who have "been there, done that"!

Thanks!

If anyone is interested in facts about the Enron DB/ESOP offset arrangement, see DoL Advisory Opinion 94-42A.

Can a Section 125 Plan limit the number of HCEs and Key employees when performing the nondiscrimination tests. I know in a qualified retirement plan you can limit the number of HCEs by using the top paid group and keys can be limited to the lesser of 3 or 10% of all employees. Do these same rules apply to 125 Plans.

Generally speaking, an employee who works 20 hours or more per week is eligible for participation in a 403(B) plan. This is the equivalent of a calendar employee with 1000 hours of service that the Service uses in all retirement plans.

In the real world, those of us who work full-time work 40 hrs., 5 days a week, which is 2080 hours. I realize the Service uses 1000 hours as the equivalent to 2080 in a calendar year, however....

....here's the twist, the Service also recognizes equivalancies for periods that are not 12 months of employment.

In any given school district, there will be full-time, 12-month employees (administrators, clerical support, and custodial staff) as well as full-time, 9-month employees (generally all certified staff).

Question: If 1000 hours is equivalent to 12 months, is 750 equivalent to 9 months for the certified staff? Ergo eligibility in a district 403(B) plan be offered and extended to employees as follows:

1) For calendar year employees, those that generally work more than 20 hours per week.

2) For school year employees, those that generally work more than 15 hours per week.

Since the TVC sanction for excluding a participant is not a cheap one, what are people doing?

Can a partnership provide a SIMPLE for its employees and have the partners do SEPS? I don't believe it's ok to do this, and I need to know where to look to find such in writing.

Our company has a rather lengthy Article in its Health Care Plan Document regarding the years of service that will be credited to employees of acquired companies. There is a concern that our plan document is becoming too lengthy (over 100 pages). Every time we restate the plan, we include all the sections of the Article dealing with service credit for employees of acquired companies. Our concern is that if an employee leaves an acquired company and becomes an employee of the acquiring company, he or she will assert that service credit should be measured based upon the acquiring company's service credit rules. We have several Health Care Plans. If the provisions are fully excuted, we are wondering if they have to be restated over and over again. My concern is that any employee who requests a copy of the plan document would not have knowledge of the provisions unless we restate them. As far as I am concerned, I think it is better to have a longer Plan Document and not risk having an employee be less than fully informed.

Any thoughts?

I'm considering creating an LLC and having my Roth IRA invest and become a 25% member. I would personally own the other 75%. Is this possible?

Can you amend an ESOP (actually a KSOP) to remove the stock provisions and just leave a 401(k) plan?

Here are the facts, as I understand them. The sponsor has a non-leveraged ESOP with 401(k) provisions. It was one of those start-up financing deals. The early facts are a little fuzzy as it wasn't our plan at the time. But as I understand it, the 11 or 12 initial employees received the ESOP contribution. After the initial ESOP transaction, no further stock was contributed. So, the initial employees have employer stock in their accounts. The sponsor does not intend to make any additional stock contributions.

What I am wondering is can the plan be amended and restated to remove the ESOP provisions and make it a regular 401(k) plan? The current stock that is held by the initial employees in their accounts would simply be treated in the same manner as a frozen investment option.

Any thoughts?

Does anyone have any experience working with DST and Trac2000 and who would be willing to share their experiences, good, bad, or indifferent?

Is there a users group or any other forum to gain general information on Trac2000 and people experiences? Thanks

Assuming I have a well diversified 401(k) plan that currently offers 20 different investment funds and I would like to get rid of a few funds that share very similar investment strategies in order to make the election process a little easier for the participants, can I, as the trustee, just do it?

In other words, say I have Windsor and Windsor II. Can I just tell everyone in Windsor that we're closing out the Windsor option and that all their money will be moved to Windsor II, unless they direct it otherwise?

Is there anything I need to be aware of? Are there any sites that state that I can't do this? I was sure this was not a problem, but I've heard from several people who said I couldn't do it.

What is the date I need to make a top heavy contribution by when deductibility is not an issue? Do I have 12 months after the allocation date (like a QNEC made to correct an ADP failure) or 30 days after the 404 period ends, like an annual addition?

Thanks

What date did the state withholding requirements become effective?