The final regulations outlining minimum gateway contributions for new comparability plans

indicate that NHCEs must receive an allocation equal to the lesser of 5% or 1/3 the rate of the highest HCE. However for

combination DB/DC plans, the minimum gateway is increased by 1% for each 5% increment the HCE rate exceeds 25%.

When these final regulations were issued, EGTRRA was not yet enacted so that the allocation rate in a DC only plan would

never exceed 25%. However, since EGTRRA, it is possible in a DC only plan arrangement for an HCE to receive in excess of

25%. Have you seen anything to indicate the increase in gateway minimum, as outlined for DB/DC combination plans, now also

applies to DC only plans?

In light of the recent stock market fiascos like Enron and Global Crossing, we are considering lifting our restrictions on company stock. I was wondering if anyone has any names of companies who have done this recent or are planning on doing it.

In 2002, can I still contribute to both my Profit Sharing Plan and Money Purchase. I know limits are up to $40k or 100% of income whichever is less but I heard something about other changes. Do I still need the 2 plans or can I just have one? Can someone help sort out the details and where does the IRS talk about this (besides Pub 560 because it doesn't get specific). Thanks.

The LTD policy in question does not offset benefits from most employer sponsored qualified plans (described as 401(k), "thrift," 403(B), governmental plans, plans that the insured "pay for entirely themselves," and IRAs). This is a particular situation where the individual is going to work for a not for profit organization ("NFP org") and the only existing plan is a straight deferral 403(B) plan (no employer match).

The NFP org can only pay the individual a relatively small amount without incurring offsets from his disability benefit. In order to make up the difference between his artificially reduced salary, and what he would ordinarily earn, they would like to institute a private pension arrangement for him.

Problem is, the only way I know how to do this for a NFP org is through a 457(B) plan, and the LTD policy appears to offset, from the disability benefits, amounts that represent salary deferrals or waivers (other than 401(k)/403(B) contributions), even if the money going into the plan is styled as "employer contributions,"

Thus, I believe the question is, is there any way to institute a Section 457(B) plan for the individual, without a de facto waiver or deferral of compensation, and, if the answer is "no," are there any other options for a private pension arrangement in this setting?

If there are no fees paid from the trust and no termination of accountans and enrolled actuaries, does a Schedule C still have to ge attached to the Form 5500 for a large plan?

I am looking for useful information or "best practices" used in various states and municipalities around the nation that effectively links employees' premium contribution with salary categories. As health care costs have risen out of control, my organization is searching for equitable strategies to spread out the increases over a range of salaries. Any feedback to what mechanisms you may apply in your organization or direction to where I may find this type of information would be appreciated.

Thank you.

Participant took HW to prevent eviction from primary residence (was in default on mortgage). Plan allows for safe-harbor withdrawals only. Participant submitted a 2nd hardship request to pay back taxes which, I believe, does not meet the safe-harbor definition. Here's the wrinkle: when the participant depsoited the HW amount in his bank, the bank froze his account due to a relative forging his name on a credit card app & charging a great deal. The bank is holding the participant responsible. he cannot access the funds to pay the mortgage lender.

With the bank account being frozen, can the plan "re-issue" the original hardship amount? My concern is that it's alrteady been paid from the plan & it may be viewed as taking more than what is needed to meet the hardship. The employer really wants to help out this participant but we don't them to be deemed as going against the safe-harbor rules & plan document. Any guidance is appreciated.

Brian

The new final 401(k) loan regulations allow a participant to suspend loan payments for up to one year while on leave of absence. However, "the suspension of payments cannot extend the term of the loan beyond 5 years." Treas. Reg. 1.72(p)-1 Q/A-9(a). I understand that participants can either increase their payments when they return or make one large payment at the end of the loan term to make up for the missed payments during the leave.

Question. Suppose a participant takes out a loan with a 3 year term. After 2 years he goes on a leave of absence and stops making payments for one year, at which point he returns to work. Upon return, can the sponsor and participant agree to extend the term of the loan for one year (total loan term is now 4 years -- still less than the 5-year limit), or must the participant pay the entire balance at the end of the original 3-year term (when the leave ends and he returns to work)?

The regulation seems to indicate that the term of a loan that comes due while on leave of absence can be extended (up to 5 years), but is unclear as to whether the original term must be reinstated upon return to work. By contrast, the proposed regulation for military leave is clear that the original term of the loan can be extended by the period of military service. Prop. Reg. §1.72(p)-1 Q/A-9(B).

Two potential problems I see are the level amortization requirement (although the dollar amount of the payments could remain the same upon returning to work, the term would be extended from 3 to 4 years), and the possibility that extending the term could be a refinancing that should satisfy the proposed refinancing reg's in order to have comfort.

Thanks in advance for any thoughts on this.

My wife received a 1099-R for excess 401k contribution. The 1099-R shows 2001 as the year with a "P" distribution code(I assume this means it is for 2000). Where do I include this income amount for my 2001 taxes? I used Turbo Tax and entered this amount and code, and it did nothing to my taxes. Do I need to file some type of amendment for 2000? Any help is appreciated...

Does ERISA or any other regulation require a company to explain in the SPDs that the retirement benefits are "different" from the benefits employees receive as actives? Specifically, does there need to be a statement to the effect that the benefits cost more and are more restrictive (cover less, higher deductibles, copays, etc.) than the benefits they received as active employees? If so, is there a specific regulation code someone can point me to - Any input appreciated!

i have a lawyer who was self-employed for part of the year (2001) and then went to work for a firm. he was not an owner of the firm. the firm had a 401(k) profit sharing plan in which he maxed out to $10,500 on deferrals and reached $35,000 with the firms additional contribution. can he now make a sep contribution for 2001 based on his compensation earned while he was self employed? if so what is the maximum contribution into the sep? any input is much appreciated.....

If someone rolls over after tax contributions from a qualified plan to an IRA

1. Should the after tax amount be kept separate from other pre-tax assets?

2. Can this amount be converted to a Roth IRA?

3. If the amount is in a separate IRA, can only the amount be converted or does the form 8606 treatment apply as it does to non-deductible contributions?

Thanks

Our prototype plan document was restated for GUST in 2001 and the Service issued opinion letters on 11/30/01. Is the due date for GUST SPDs on all the restated plans in July, 2002 (210 days after the end of the plan year in which the amendment was adopted)?

Or can we defer until January 1, 2003, the date by which summary plan descriptions have to be rewritten to comply with the DOL regs that became final on March 8, 2002?

If neither, does ERISA have a "hardship" provision that would allow us, the pitiful, beleagered, overwhelmed trustee of 6,000+ plans, to defer SPD distribution?

Is this possible? My wife's plan offer limited number of funds. Does she have to leave the job to move this money somewhere more productive?

Thanks!

Tim

Have any of you "backed into" the terms of a private retirement benefit for an executive, in such a way that the existence of the private retirement plan would not result in offset of long term disability benefits to the executive.

Employer in question is not-for-profit, and the private retirement benefit would likely fall under Code Section 457(B).

Employer excludes bonuses from its 401(k) plan definition of comp for contribution purposes. During 2000 employer inadvertantly permits deferrals from bonuses and matches these contributions.

The variation on the theme is that the employer has determined that if the participants' accounts are retroactively corrected back to the date of the error (the employer's recordkeeper has the capability of doing this) then (1) certain employees will have received a loan higher than they should have received (ie, in excess of 50% of the revised plan balance) and (2) other employees will have received hardship distributions in excess of the amount permitted under the plan.

If the employer corrects the improper bonus deferral (either by forfeiting the deferral and making the employee whole outside the plan, or by distributing the excess deferral), and forfeits the match, do the loans and hardship distributions need to be corrected as well?

Thanks-

card

I am familiar with the concept of the qualified sign-on bonus whereby a newly hired employee who will be an HCE next year (he or she is not currently a 5% owner) is allocated a large contribution in a profit sharing plan during the first year of service. This is done via an amendment that specifies the contribution for this person and since he or she is not yet a 5% owner, there is no discrimination in favor of an HCE.

If the profit sharing plan requires a year of service before entry, can this also be waived for our new-hire? I suspect this may be allowed.

And finally, can a qualified plan provide immediate vesting specifically for an individual who, will be an HCE? This I suspect will be prohibited not in the year the person is hired, but in the following years when he or she is an HCE.

My understanding is that financial planning programs are not considered ERISA welfare benefit plans. Can you pre-tax contributions? If the benefit is 100% employer paid, are there any discrimination testing requirements for these plans? Any information or referral for a research source would be appreciated.

HELP! I really messed up. I have a mutual fund account and since I already paid taxes on it, I decided to contribute some money to a ROTH IRA. So instead of writing a check for the amount, I just had the money transferred from my existing acct. I have received a FORM 1009-B and need to know what to do. I don't want to pay taxes on money that was already taxed before. How do I avoid that in the future?

Also, I would like to contribute for the year 2002 (~3K). Can I just write a check for the amount and send it in without penalty?

Thank you in advance for your help.

Barbra

I am almost certain that I read somewhere that the 5 year forward averaging method of paying out a qualified plan participant is no longer permissable after 2000. I have this question because I know 10 year averaging is certainly still an option under 72(t). Is 5 year averaging still available?

Thank you in advance for your help.