We have terminated our plan and are ready to distribute benefits. I want to take advantage of the 411(a)-11 reg that says we can pay out benefits without participant consent. The plan does not provide for annuities, it only provides for lump sums and we don't have any other plans. We have participants who have accounts over $5,000 and are not returning their election forms. It's been about 6 months since we sent out the election forms and the tax notice.

My question is, do we have to re-send the notice and wait 30 days before forcing them out, or is that not necessary because we are not asking for their consent. Since we are not asking for their consent, they don't need a notice of their rights.

Is it permissible for a qualified plan loan to be refinanced, say at a lower interest rate?

We have a client who is an LLC owned by 2 entities. One of these entities (Entity A) is owned by approximately 10 individuals and 5 or fewer individuals do not own 80% of this entity. In determining if the LLC is part of a controlled group with another corporation, do we consider that Entity a is not owned by at least 5 or fewer persons so the LLC is not part of a controlled group since they fail the 80% test? Or do we only consider that the LLC is owned over 80% by only 2 corporations? In other words, do we look through the entities and compare the indivudal ownership and deem that they own the LLC?

My issue relates to whether spousal consent is required for a loan under the following circumstances:

A money purchase pension plan has been merged into a profit sharing plan (with or without a 401(k) feature). Separate accounts were established for the balances attributable to the money purchase pension plan; these accounts will be adjusted for earnings and losses. Assets attributable to the money purchase pension plan will not be used as security for a loan.

Section 401(a)(11)(B) and Q&A 5 of Section 1.401(a)-20 are clear that the J&S rules apply only to participants with the transferred assets and only to the transferred assets if there is separate accounting.

Section 417(a)(4) provides that "if section 401(a)(11) applies to a participant when part or all of the participant's accrued benefit is to be used as security for a loan, no portion of the participant's accrued benefit may be used as security for such loan unless" the spouse consents. Q&A-24 of Section 1.401(a)-20 contains similar language and also provides that "spousal consent is not required if the plan or the participant is not subject to section 401(a)(11) at the time the accrued benefit is used as security".

If a participant is obtaining a loan using only the non-money purchase plan assets as collateral for the loan, no spousal consent should be required because neither the plan nor the participant is subject to the J&S rules for the benefits being used as collateral.

I understand that Dick Wickersham has informally confirmed this approach.

Nonetheless, some persons are viewing the literal language of Section 417(a)(4) and Q&A-24 without the context of separate accounting approach for merged assets and concluding that no portion of the account can be used as security for a loan without spousal consent.

As a service provider, whichever interpretation is correct obviously has system implications as to whether loans can be processed in a "paperless" manner without spousal consent.

I am particularly interested in hearing the approach other service providers are taking, but all opinions are welcome!

Company sponsors DB plan with 45 employees covered, 8 of which are HCEs. I want to consider adding a profit sharing plan covering just 2 owners, and aggregating for 401(a)(4) and 410(B).

I've already determined that below a certain DC contribution level the general test will pass.

What other issues should be considered?

Seems to me this will not be subject to the DB/DC gateways since the combined plan is primarily db in nature (less than 1/2 of NHCEs benefit more from DC).

404 will not be a problem because the combined contribution will not approximate 25% of pay.

What about benefits, rights, and features? If the DC plan is self directed, and the only two participants are HCEs, is this a problem? Any other BRF issues?

Other issues?

This situation would be in lieu of a QSERP because I want the extra contribution to be completely discretionary.

The new tax credit for retirement plan contributions -- I have seen that they apply to IRA contributions and 401k's. I wonder if they also apply to 403b salary deferrals.

Thank you for the info!

Stephanie

USERRA requires employers to allow make-up contributions. I haven't seen any guidance on how these contributions are to be handled. I assume they must be made through salary deferral. Is that correct? I also know that they must be included on the W-2 box 13 with the year they are being made up for shown. So I also assume that the make-up deferrals would be excluded from the Box 1 wages on the same W-2. Is all this correct?

Is their a chance that the employee could be allowed to make up the deferral though a lump sum payment? If so how would this be handled with W-2 reporting?

I have a participant who is rolling over his balance to a traditional IRA. This participant is over 70 1/2. Can the RMD for 2002 (based on the 12/31 balance) be paid after it has been rolled over or does it have to be paid before the account is transfered?

When a plan sponsor amends their plan to freeze accruals, how much information do you have to provide the participants in the 204(h) notice under EGTRRA? I have heard three opinions from ERISA attorneys:

1. Don't need to show benefits, just describe the amendment;

2. Show the frozen accrued benefit only.

3. Show the projected benefit before the freeze AND the frozen accrued benefit.

I have a plan administration client whose attorney is advising them that they can pay employee bonuses and then have the individual employees turn around and cut checks to the plan for elective salary deferral purposes. This seems to be a viloation of Tres Reg 1.401(k) - 1(g) (3) which says the deferrals need to be made by the employer (on a payroll deduction basis) based on the employees' elections. Are there any circumstances where having the employees cut personal checks to the plan, or to the employer for deposit into the plan, would be an acceptable practice?

My client has never obtained a determination letter since the plan was established-- two decades ago. The client is now contemplating whether to submit a determination letter application. Has anyone ever requested an EP conference (under Rev. Proc. 2001-6 section 19.02)? If we request a conference, will the GUST clock stop, so that we don't need to file by 2/28/02? Has anyone obtained IRS approval to amend back two decades?

In order to use the disability exception to the 10% penalty for an early withdrawal from an annuity, must the individual "become" disabled after entering into the annuity contract? Restated, may an individual who has already been deemed disabled by the SSA enter into an annuity contract then take withdrawals and not be required to pay a 10% penalty?

Can anyone provide a cite for me that says that when the profit sharing contributions of a 401(k) plan are being tested for nondiscrimination under 401(a)(4), the Average Benefit Percentage test is done using elective deferrals and match? I know that the rate groups are determined using only profit sharing contributions and forfeitures, and the average beneft percentage test is done using those plus deferrals and match, but I cannot find where in the regs, Code or other guidance this is explained. Can anyone point me to the right place in the guidance?

A 401(k) plan has a five year graded vesting schedule and provides that a YOS is granted if the participant completes one hour of service.

Can the plan be amended to change the provision to 1000 hours?

(My concern is that 1.411(a)-8 applies.)

Any thoughts?

Thanks!

Our income was $150,090 (over by $90!!) so we have to recharacterize some of our Roth IRA, which I know how to do.

However, with the children's Education IRA's, I cannot find the formula for determining how much we'll have to withdraw. Does anyone know what that formula is?

Other than the cafeteria plans for medical and dental expenses, is there one for legal expenses?

I contributed $2000 to my Roth IRA on 1/1/2001 for the 2001 tax year. My wife changed jobs midyear and our income will exceed $160,000, therefore I must either recharacterize to a non deductible Traditional IRA or withdraw the contribution.

Question: The Roth is in a tech. mutual fund and the FMV at 12/31/2001 was $1200. What amount should I recharacterize or withdraw. If I withdraw $1200 can I deduct the $800 loss, as I would have to include any gain in income?

What are some of the potential claims/causes of action that may be brought against a custodian or trustee of pension assets in the case of hostile take overs or Leveraged Buy Outs?

Client has existing option plan (that does not include ISOs) and a plan that allows employees to purchase stock from the Company (not a 423 plan). Client wants to amend existing option plan to include ISOs and amend existing stock purchase plan so that it qualifies under 423, but does not want to go to shareholders for approval of either plan. The shareholders approved the existing plans two years ago.

Should the client have the shareholders approve the amended plans (the amended plans will be substantially different that the existing plans)? Do Code Sections 423 and 422 require shareholder approval for material amendments to plans?

Can both my husband and I each invest in a Roth IRA if his company contributes money into a profit sharing pension plan for him every year and if he earns more than 100,000/year