Presuming it is possible to restate an individually designed plan on a volume submitter document without any cut-back violations, will the sponsor of an individually designed plan meet their GUST restatement deadline by executing, on or before 2/28/02, a certification of intent to timely adopt the volume submitter document?

Also, I believe it was stated by the IRS, perhaps at the last ASPA conference in LA or elsewhere, that a plan that currently is on a prototype or volume submitter document, but that is deemed to be an individually designed plan due to specialized plan language or amendments, can still meet the GUST restatement deadline by executing, on or before Feb. 28, 2002, the certification of intent to restate on a volume submitter or prototype plan document. Does anyone recall who said this, and when?

We have a takeover plan in which the participants previoulsy were allowed to have multiple outstanding loans. The plan administrator would like to amend the loan policy to allow only one outstanding loan for existing and new loans. They have requested for the multiple outstanding loans be consolidated into one loan per participant. The participants seem to agreeable to this.

My question is how do we do this. The only time I've done loan consolidation is when a new loan is taken.

Can I consolidate the loans being certain not to exceed five years from the first loan? What interest rate should I use? Current prime plus 2% (as stated in the loan policy) or an average of the previous loan rates? Any suggestions or advice will be greatly appreciated.

New 401(k) Plan established 1/1/2000. Plan fails ADP in '00. Correction method was a QNEC. Prior to contribuition of QNEC, plan was Top-Heavy. Plan made QNEC and 3% top-heavy contribution to those not eligible for QNEC. After QNEC and '00 top-heavy contribution, top-heavy % drops to 47%.

Question: Do you determine top-heavy status before or after the QNEC was made? Is Plan top-heavy for 2001?

(This is a plan a colleague is taking over so I don't have many more details)

All responses are greatly appreciated!

How would you handle this employee's eligibility? Hire date 10-15-99, waived coverage when initially offered. Had proof of other coverage from May '01 to Sept '01, enrolled in company plan at open enrollment Oct 1 '01. Would there be any pre-x?

Here is a situation that I have recently encountered that I have never seen in my years in the business. Any comments would be appreciated!

Companies ABC and XYZ are in a controlled group situation, and currently all eligible employees of each company participate in a Money Purchase, Profit Sharing, and 401(k) plan (3 plans total). Unknown to our firm, the client's attorney adopted a 4th plan in 1997 (or so), a Profit Sharing plan strictly for the employees of XYZ. However, the plan has $0 in it, as XYZ has been making its profit sharing contribution to the combined profit sharing plan.

Skip forward to 2001, where ABC has encountered a loss year and does not wish to make a profit sharing contribution (it will fund its mandatory MP plan contribution). XYZ is profitable, however, and desires to make a Profit Sharing contribution for 2001. The attorney has now come in, and is advising the client to move XYZ's portion of the combined plan assets out of the combined PS plan and into the 1997 plan set up strictly for the XYZ employees. The XYZ employees will remain in the combined MP and 401(k) plans. The attorney also wishes to take the PS plan forfeitures attributable to terminated XYZ participants and transfer it over to the XYZ plan as well. The plan assets are not segregated by employer, they are commingled. The attorney feels (and we agree) that a profit sharing contribution can be made and still pass IRC section 410(B), as the majority of HCE's are employed by ABC.

We are uneasy with this situation. Concern #1 is whether the separate XYZ plan still exists, or was terminated due to lack of substantial and recurring contributions. Concern #2 is if the assets of the plan indeed transfer from the combined plan to the separate plan, are we creating a partial plan termination in the transfer.

I don't know if there is anything to worry about, but this situation does not feel right. Any thoughts? Thanks.

I have a PSP, no contribution to be made for current PY. There are forfeitures to be reallocated, integrated at 100% SSWB. Plan is top heavy. When allocating the forfeitures, participants are getting 1.9%. One key is getting 1.9% plus 1.9% on excess.

Does the allocation meet the top heavy minimum requirement even though the key is getting 1.9% on his excess? Or should I just allocate 1.9% and ignore the integration?

I just love this stuff...

Suppose you have a plan with 50% of it's assets in a Real Estate Limited Partnership. The preamble to the DOL regs (2520.104.46)

gives an example where such a partnership is NOT a "qualifying plan asset." My question is, does this necessarily have to be the case? For example, suppose the Limited Partnership is purchased through a registered broker-dealer, or through an organization authorized to act as Trustee for IRA's under section 408 of the IRC? These are "regulated financial institutions" for purposes of the SPAW requirements. Would the Limited Partnership then count as a qualifying plan asset, or not? I'm inclined to think that the "held by" requirement doesn't simply mean "purchased through" and that therefore these wouldn't qualify, unless you had, say, a bank as Trustee. Since the bank is a a regulated financial institution, and would hold title in this case, then it should qualify. Any opinions out there? Thanks!

Employer provides health insurance; employees pay 20% of premium, employer the remaining 80%. Employer has a Code § 125 cafeteria plan, so employees pay their share of health insurance premium pre-tax.

I recently found out that if employees do not take health insurance, at the end of the year the employer pays them a "buy back" bonus (bonus is less than the amount employer would pay for the insurance). Apparently there is no official structure to this buy back program. I strongly suggested running the buy back through the cafeteria plan.

Employer's plan provider said the buy back is set up as "deferred comp" (no further detail on what that means at this time) and is not able to go through the cafeteria plan. Provider's suggested alternative is that the buy back should be a stand alone program, with a separate plan document.

Q: Does the provider's suggestion work? Should I insist the employer's current cafeteria plan be amended so that the buy back goes through it? Any comments or suggestions appreciated.

A retired participant in a 401(k) plans turns age 70 ½ on 5/25/2001, making his 2001 RMD date 4/1/2002. The participant wants to rollover his vested balance in his 401(k) to an IRA. Is his company required to pay him out his 2001 RMD before he can rollover his 401(k) to an IRA? I say that the 2001 Required Minimum Distribution is not an eligible rollover distribution. The Plan Consultant is saying that the company can rollover the full amount into the IRA and then take the 2001 from the IRA before 4/1/2002. Which was is correct, and where can I find the IRS code to back it up. Any help is greatly appreciated.

Sincerely, Anthony J. Milano

Before the IRS released the 2002 limits in IR 2001-115, it was conjectured that the pre EGTRRA old law comp limit under 401(a) (17) for 2002 would increase to 180,000 [based on old law COLA adjustments]. Since there was no announcement to this effect, it is pretty clear that old law means the comp limit for 2002 is 170,000.

Given that, if clients want to reflect the 180,000, would you agree that the plan doc would have to very explicit in that regard and clearly define how COLA will be applied. Do you see any 411(d) issues if COLA is prospectively removed from the language and say the comp limit is frozen at 180,000 for all future years.

Looking for opinions.

Thanks

We had a bunch of furloughs late last year

These employees have recall rights for 3 years.

For those that are over age 70 1/2, are they required to get a minimum distribution

distribution by 4/1?

Active employees over age 701/2 are not required to take a minimum distribution from our plans.

I see this as a grey area. Is anyone aware of any guidance out there where it defines what "terminated"is?

Thanks

Must all 401(k) plans allow an active participant to continue to make elective deferrals after age 70 1/2 ?

Under what circumstances might such a participant (over age 70 1/2) be prevented from continuing to make elective deferral contributions ? (Would such prevention be mandated by IRS, ERISA, or simply at the desire of the plan sponsor ?)

Is there a tax code section or ERISA section that addresses this matter ?

Is it required that the "Special Tax Notice Regarding Plan Payments" be given to participants who are rolling their SEP money into a 401(k) Profit Sharing plan?

How is a short plan year recognized for non-discrimination testing,specifically with regard to compensation, and the 500 hour exclsion of 1.410(B)-6(f)(3)(v)?

In our firm, we periodically "test" vested %'s for each participant computed by Relius for employer contribution accounts. In the past, we performed the tests by exporting (through Census DER and/or custom reports) the relevant data to determine vested %'s, including prior year vested %, current hours of service, status codes, etc. That made the process fairly automated. In addition, most of our Participant Certificates, and many of our Summary of Accounts and other employer reports have historically reported vested % for each participant.

With v7.0, we are finding (and Relius support has confirmed) that it is virtually impossible to get accurate vesting information on a report. None of Relius' Reportwriter employer or participant statements seem to show the vested %'s either.

1. Is it just me, or do other firms "test" vesting computations and report vesting to participants and employers?

2. Has anyone found a way to export vested %'s from Relius 7.0?

3. Does anyone have any custom participant statements and/or employer reports with vested %'s that they would like to share?

I'm really curious if other firms see this as a serious product flaw. Thanks.

A company terminated a SIMPLE IRA plan and began a regular 401(k) plan.

It seems that contributions under the SIMPLE IRA would not be required to be included for 401(k) top heavy testing, as Reg § 1.416-1, Q&A T-8 indicates that SEPP IRAs are not required to be aggregated. But I can't find any guidance specifically relating to this issue with SIMPLE IRAs.

Would the fact that SIMPLE IRAs are not subject to top heavy rules preclude them from the aggregation requirement?

I appreciate any input.

I hope somebody will help me

I read publ. 590 but could not find definite answer. I have traditional IRA in stoks and its value is way down. The income for the 2001 is also down so i get all paid taxes back. I thoght its a good time to convert my IRA into ROTH IRA and avoid paying a lot of taxes. Can i do it before April 15, 2002? Do i treat it as rollover

Thanks

We are a small insurance agency with 14 employees and do not fall under the FMLA guidelines. We are in need of sample verbage regarding an "unpaid leave of absence". Can anyone help us?

Thank you for your responses.

Please help me answer the following question:

An individual makes only $40,000 in 2001. On 12/15/01, she gets married and files a joint return for 2001 with earned income of $200,000 ($40k from her + $160k from new spouse) Can she make a Roth IRA contribution for 2001 because she was single most of the year and only made $40k? Or because she was married by 12/31/01 does that put her over the limit ($160k) for making a contribution? Thanks.