Partnership adopted SIMPLE IRA (prototype) in April, 2001. Effective date of the SIMPLE IRA was January 1, 2001. Deferrals began in April.

Question: With respect to calculating the 3% match, do we use compensation for the whole year or do we use only compensation from April thru December?

Controlled group members 1 and 2 both sponsor Section 401(k) plans. An employee from controlled group member 1 transfers to member 2. What is the best way to transfer the employee's account from member's 1 plan to member's 2 plan? Can I use the new EGTRRA 411(d)(6)(D) plan transfer provision?

How are timely 401(k) refunds treated under the Average Benefits Percentage Test component of the 401(a)(4) test? I have one with refunds under the ADP test and the 402(g) limits. I think the last time I looked this up the answer was "unclear".

Opinions? Thanks.

1st year 401(k) Plan, no NHCEs defer. HCE's defer 5%. Is it ok to use 3% (prior year) to pass ADP & ACP Tests? I can't think of a reason not to.

I talked to John Tolleris shortly before the end of the year regarding such an issue and he said that proposed regulations should be coming out soon. First question is has anyone seen them? Second question is to what extent will such proposed regs be issued now that the limit between 401(k) deferrals and 457 is not tied together going forward?

I'm completely lost on how to find an answer for this one. I've been looking, but I'm at the just ask everyone stage.

What are the citizenship requirements for opening a 529 plan? It seems that even if the beneficiary is a US citizen, a relative outside the US cannot open an account for them without a SS#.

Has anyone encoutered this? Has anyone found a work-around?

HOW DOES THE DEDUCTION LIMIT FOR AGGREGATE PLANS (EMPLOYER MAINTAINS BOTH DC AND DB PLANS)APPLY WHEN NOT ALL PARTICIPANTS IN THE DC PLAN PARTICIPATE IN THE DB PLAN? PLS HELP. THANKS.

My client, a city, participates in the state PERS. The city picks up the mandatory employee contributions. The city and the employees' unions would like to agree that the city's PERS contract will be amended to improve benefits, and that the employees will pay the amount of the increase in the city's contribution.

They'd like to let employees pay this "cost-sharing" on a pre-tax basis. Could it be treated as a salary reduction pick-up? Section 414(h)(2) requires that picked-up amounts be "designated" as employee contributions. Can the city make such a designation on its own even if PERS does not treat these as employee contributions?

Failing pick-up treatment, could these contributions be excluded from income as deferred compensation under section 457? That seems like a stretch to me, but maybe it would work.

Thanks for any opinions or ideas.

When trustees pay for legal services (or accountant services etc.), what steps do they have to take to ensure that those services are reasonable? Do they have to audit their bills to ensure that they are not overbilled? Must the bills be detailed? What are the benefits of having a consulting firm provide this service?

I'm getting myself confused here. The employer's taxable year ends 9/30. The P/S 401(k) plan's year ends 12/31/01. The employer fails ADP and wants to make a QNEC for 12/31/01. The QNEC should be deductible in the employer's taxable year 9/30/02 because that is the year it is paid. Correct? The ER has already filed tax return for 9/30/2001.

Any P/S contribution for the 12/31/01 would also be deductible in 9/30/2002? When would the 12/31/01 contribution have to be made?

Smaller not-for-profit employer (approx. 100 employees) currently makes one check out per month to 6 different 403(B) provider/vendors, reflecting that month's deferrals/matching contributions.

Employer normally has 2 payrolls per month; sometimes 3.

This would necessitate 12 to 18 separate checks per month for the small Business Office staff to oversee.

Seeking opinions as to whether requiring 2 or 3 separate rounds of checks to the 403(B) vendor/providers is reasonable to expect under the circumstances, or whether the employer can meet the standard with one or two rounds of deposits.

Is it legal for a DB plan to offer only NRD annuities (including QJSA) but offer lumpsum cashouts at any age (with spousal consent).

Specifically, legal is telling me that if the plan offers option for immediate LS, that you must also offer immediate QJSA. I.e. you could have a 35 yr old who could elect a monthly annuity.

Any confirm is welcome (or just a lead where to start researching...)

Thanks.

Our company has an ESOP and has been bought out. Are there any rules on what share price I must accept? Must I sell? The majority shares are controlled by a single person who is the CEO. The buying company is a foreign company that is NASDQ listed.

I've always seen DROP plans associated with governmental entities. Is it possible for a company to establish such a plan?

401(k) Plan currently has 2-6 graded vesting with 100% vesting at ER, age 55. Want to remove 100% vesting at ER - is that a change in vesting schedule, which would grandfather all current participants, or is that an ER subsidy that can be removed for participants not yet age 55?

Has anyone begun amending their plans for EGTRRA? I know we have until the end of 2002, but I'm concerned about violating the anti-cutback rules if we wait that long. Thanks for the input.

As part of a plan audit on a new comp plan for a sole proprietor with 2 additional participants, the IRS agent is telling me that the sole prop is limited to 15% (reduced for self employment tax, etc.) of his compensation. I replied that his position would be true if there were no other participants, but that because there are, he could get 25% (reduced for self employment tax, etc.). The agent is still insisting that the lower limit applies. Anyone have any suggestions or agree with the agent? Why?

I have a client, in California, with a commissioned employee. Occasionally the employee does not receive high enough gross wages to cover all of their deductions, including health insurance. The client wants to wait and take a cumulative pretax deduction when the employee has sufficient gross wages. However, they were told by their attorney that they could not do this because it violates ERISA. Though I am currently checking with the state to make sure this doesn't vioalte any state labor or insurance laws, I did not see anything (even in ERISA 3(1)) that indicates this violates ERISA. Has anyone encountered this before? Also, if anyone is aware of any issues specific to California, that would be helpful.

Thanks!!:confused:

I am confused about the accelerated vesting schedules due to EGTRRA. If a plan currently has a 5-year graded vesting schedule do they have to amend it to a 6-year graded schedule or can they continue with the 5-year schedule because it provides for faster vesting? (I realize that the employer also could amend to the 3-year cliff to make the employees even better off if they would choose).

I have an ESOP that froze contributions and fully vested participants on 9/30/99. The Plan states that forfeitures occur following a 1-year BIS. At the time the Plan was frozen, the ER did not restore forfeitures for those participants who had not received a distribution from the Plan, were partially vested, but had forfeited their non-vested balance prior to having a 5-year BIS. On 9/30/01, the Plan terminated.

The question is whether or not forfeitures need to be restored for those participants who never received a distribution from the Plan, but whose non-vested balance was forfeited prior to their having a 5-year BIS, as of the date of freeze?

Thanks