I am running 2001 ACP testing. Even though our 403(B) allows employees to participate immediately, if I understand it correctly, I can exclude those nonhighly compensated employees who are under 21 and have less than one year of service when running the ACP test. We use current year testing, so I am still confused as to what I would do with those highly compensated employees who are hired in 2001, but have no income in 2000. I would have to include them, but how?? Could you help me? I'm really confused!

An employer contributed too many matching dollars to SIMPLE IRA's for two employees. All of this was for the 2001 tax year and the employer was doing the dollar per dollar match up to 3% of compensation and the two employees had much less in compensation than expected.

How can we undo this without problems and penalties? The mutual fund company holding the SIMPLE IRA's claims that we have to pull the money out of the SIMPLEs by law but the withdrawal will be considered a taxable distribution from an IRA that's subject to taxes and an extra 10% penalty because the employees are younger than 59 1/2. Isn't there a better way?

Thanks for any help.

I understand that the UAL ESOP is comprised of three component plans. Am I correct that only component plans 1 and 2 form qualified plans. UAL has indicated that component plan 3 is a nonqualified plan, not subject to QDROs. I have been unable to locate a copy of the UAL ESOP. Thanks for your assistance. Ed

Last week an efiling company called regarding the federal employer ID number (FEIN) we used on a 2001 Form 1099-R. They were efiling a former participant's 2001 1040 and the FEIN was rejected because it did not match the employer name. We took this plan over from a bank several years ago and I think we just continued to use the trust ID the bank entered on Schedule P. I suspect that this trust ID number is the bank's, not one applied for in the employer's name. Is anyone aware of a resource I can use to verify the name associated with a particular FEIN/trust number? Thanks. Maverick

Plan excludes an eligible employee for several years. Debatable whether the error is significant. If sponsor decides to be conservative and file with the IRS, what is the filing fee? I have never had to file and I am having difficulty understanding the fee. It seems to me for fewer than 10 participants it is somewhere between $2,000 and $4,000. That seems extremely high.

Assume sponsor is aggressive and just relies on self correction. The IRS later audits and determines error is siginificant and sponsor couldn't self-correct. My research suggests that IRS would probably just resolve under Audit CAP. The correction has already been made. Assuming the IRS accepts the correction already made, what is the potential penalty amount? Cost of correction is about $20,000.

Thanks for any help.

This is the situation: Employer owner, about two years ago, created a subsidiary to have a separation between union and non-union employees. the 401K for the subsidiary was established (I don't know why)only for non-union employees, the same as the other plan. Now the owner(s) want to merge the two plans since they operate exactly the same way. Can this be done? What are the implications? Any comments are more than welcome.

I have a participant that paid for 2002 dependent care expenses in December of 2001. What year does this get filed under?

Is anyone aware of any research/surveys that track the average lenght of time that it takes for pension administration firms to:

1. Remit plan deposits once received

2. Send out participant distribution forms.

3. Pay out participants once distribution forms are returned.

I know what our timeframes are & am curious as to what the "industry" numbers are. If anyone could share their own experiences that would be great also. Thanks!

I have a 401k plan at work and a regular IRA funded through years of self employment. Last year I had 14000k of outside income reported on 1099s (outside commissions). Can I fund my regular IRA up to 3000 this year as I am over 55? (I already did so for 2002 and just want to make sure I am not making a mistake)

apologies if this has been asked but a scan of the threads did not show this variation.

In 1999 we contributed $2000 into a Roth IRA account. The company stock we purchased went bankrupt. Are investment losses in Roth IRAs tax deductible since the contributions are with already taxed money? What are the tax laws on losses in investment retirement accounts?

Thanks.

Can licensed Real Estate agents and/or Independent Contractors participate in an "employers" group health plan and also use the section 125 Cafeteria plan to pre-tax their portion of the premium?

An employee rolled money into our 401(k) plan. We later received notice that she was overpaid from the prior plan - a recordkeeper error. The employee is claiming the amount is correct. We received advice to send a letter to employee and prior sponsor that until we received either legal direction or agreement from the employee and prior employer that the rollover is incorrect, that we'd hold onto the entire rollover. We heard nothing from any party until recently from the former recordkeeper asking for the excess. Our 401(k) plan recently made a change and now allows for inservice withdrawals of rollovers. The employee wants to withdraw the entire amount of the rollover. Do we distribute the money?

I have a client whose pre-GUST prototype reflects a graduated match based on years of service. The document also specifies no HCE's can receive a match to eliminate the obvious discrimination problem. The document specifically states the match formula (e.g. it's not discretionary).

The post-GUST prototype just made available to me two weeks ago does not allow for a graduated match. I don't want to footnote the prototype and risk losing determination letter reliance.

Can I simply check the "discretionary match" box, check the "no HCE's can receive a match" box, and then have a Board Resolution set forth the graduated match formula? I reviewed both the std and non-std adoption agreements and neither one has a specific spot for graduated match.

Can anyone tell me if my suggested approach would cause any problems or cause me to lose determination letter reliance? Any help is appreciated.

Many of the vendors/fund houses I work with are encouraging us/our clients to ACH Contributions (Plan Level). Anybody have an opinion on this? Is it working well? Would you recommend it? Do clients like it?

Can a 5% owner take out his entire balance from a PS plan prior to termination if he is over 70 1/2?

Has anyone heard of a Variable Employee Medical Account (VEMA)?

One company, Professional Benefits Retiree Services (www.retireeservices.com/solutions/vema.html), is marketing this idea. Evidently, it combines the benefits of 401k plans (EE controls investments which grow tax free and health FSAs (pay medical expense with pre-tax dollars).

Supposedly, the EE (and/or the Company) contributes money to a tax-exempt trust. At retirement, the EE can use the accumulation to pay for retiree medical and there is no "use it or lose it" provision as with FSAs.

I've emailed the company asking for more info, but haven't yet received a response. Any thoughts?

Any idea where I can find State laws regarding set up of new 457 plans. Some states have enabling statues however I have found it very difficult to get this information. I have tried the state law sites with limited success. Most states direct you to the state deffered compensation which many times is a provider. I am looking for the autoritative documents that give municipalities the right to set them up. Any help would be great.

The webs we weave to try to keepemployees happy! the employer paid a post 2000 year end bonus(ie in March of 2001), and deducted it in 2000 (the prior year). The employee was allowed to elect to take in cash or defer to the plan as a prior year contribution. Bonus/deferal shows on 2001 w2 for year actually payable. So far I don't think there is a problem with this bit of creativiety.

I believe, without specific exclusion from the definition of compensation, the 2000 bonus which is reported on 2001 current w-2 will be included for determining share in 2001 PS.

For a 2001 safe Harbor 3% must the bonus be included in that caculation ??--

Now for the real kicker: 2 employees terminated in 2000, recieved the 2000 bonus in March of 2001, thus a 2001 w2 but worked no hours. Do we now have to give them the 3% to satisfy the Safe Harbor? Note they worked no hours in 2001.

Thank you in advance for your input.

is there an ERISA problem with a fiduciary charging custody clients based on percentage instead of flat fees?

for example, investment managers charging fees based on percentage of return. performance based fees for corporate action services and the like?

any thoughts???

I have been told this is a "Phased Retirement"-type question, although honestly I have no idea what that means. I have a governmental client that wants to permit participants to receive benefits at a stated age (say, 55) but continue to work. The issue is whether they can say that normal retirement age (NRA) is age 55 and then permit the distributions. My understanding is that, generally, no distributions from a DB plan until termination or retirement.

In addition, as a governmental plan, I know the client is not subject to Section 411 (at least ERISA 411). My real problem with this issue is that the client wants to retain the reductions applicable to an age 55 retirement. Normally, an age 55 retirement (and 15 years of service) would yield an early retirement benefit, which is a reduced benefit. I'm pretty sure this would not be permitted (applying reductions on a benefit someone is getting at "normal retirement age" that is really an "early retirement" type benefit). Since Code section 411 (as amended by ERISA) does not apply to governmental plans, what is the proper way to analyze this situation? Could anyone recommend anything to me? Any thoughts?

Thanks so much!