I have a client with a non-standard prototype and a last day of year rule. 2 eligible participants, the owner and an employee who terminates midyear with 1013 hours. The employee is not getting an allocation because of the termination but we fail 410(B). Do we need to give her a contribution to avoid the failure or is there another way out?:confused:

Hi, guys--garden variety reporter here, trying to get a handle on something.

Senators Boxer and Corzine have introduced a bill in the Senate which would sharply limit the amount of exposure workers can have to company stock in their 401(k)s. You know--Enron and all that. Will it work as planned?

If it passes, how many of you might have to actually reduce the amount matched to employees? How might it affect your plans? You're the guys in the trenches. Is there a better way?

Jason Van Steenwyk,

Mutual Funds Magazine

Fort Lauderdale, Florida

What 415 limits would applyfor a short limitation period (due to a change in limitation year) beginning and ending in 2002? Would the post-EGTRRA limits (pro-rated $40,000 and 100% of compensation) since the short limitation period begins on or after 1/1/02? Or would the pre-EGTRRA limits (pro-rated $35,000 and 25% of compensation) apply since the 415 limit applies based on the calendar year limit for the limtation year ending in that calendar year?

We have a plan that chose to have the TPA fees deducted from the participant accounts. After the deduction took place, they realized that the amounts deducted were greater than they anticipated (the participants started to complain). Can the employer reimburse the plan for those fees without them being considered a contribution for the year?

Thanks in advance for any help!

A client has an ESOP with a CODA. The client wants to spin off the CODA piece of the plan into a 401(k) plan (the CODA piece is getting too much money so that the ESOP is having trouble with the "primarily invested" requirement). At the end of the day the client ends up with an ESOP and a 401(k) plan bundled together in one document (a KSOP). The ESOP would provide the match (in company stock) for the 401(k) elective deferrals. I believe particiapnts will have the option of investing their 401(k) elective deferrals in company stock. Is such restructuring permissible? Does it raise any issues as to qualification under the Code? What if the piece that the client wants to spin off includes money from elective deferrals (under the CODA) and money from other plans whose assets have been transferred to the ESOP pursuant to acquisitions? Any additional issues? Any help would be appreciated, as would any suggestions for research references.

Finally, we are converting annually valuated plans to daily. This conversion requires cleanup of large suspense balances caused by years of over - contributions and forfeitures. Can these balances be returned to the employer? OR do they have to stay in the Plan to reduce future contributions? Some of the balances may take months & possibly years to deplete.

With regard to the SOA designations of ASA or FSA, I do not understand their relevence to pension consulting. It is my understanding that to be an EA (i.e. to be able to certify a schedule B or PBGC form) one has to pass the joint board exams.

My question is then: what is the importance of being an ASA or FSA relating to qualified plans? It must be something because I have noticed many jobs in the pension field that are looking for individuals that have obtained that designation.

I have a SEP IRA which I contributed to in 1999. In 2000, my accountant suggested I start a Keogh (Money Purchase & Profit Sharing Plan). Because I am no longer contributing to the SEP, how long do I have to keep my SEP around before I can roll it over to an IRA account? Thanks

My mother and father were married for almost thirty years. Pursuant to their divorce, my mother was entitled to 50% of the value of my father's retirement plan as of the date of their divorce. My mother recently passed away in December of 2001, and I am now wondering if that money she was owed needs to be included in the calculation of the value of her estate (and consequently required to be distributed according to her final wishes). I hope someone can help clear this issue up for me. Thanks!!

I have two clients whose 401(k) plans terminated in 2001. Neither want to pay fees to have the plan document brought into compliance with GUST. Obviously the plans need to be amended, but what are the potential sanctions upon audit for not having udpated? Again, I don't agree w/ this approach, but I think both clients are weighing the cost benefit of the situation. Any advice appreciated.

If I'm taking 72t distributions (pre 59 1/2, Substantially Equal Series), can I take out $2,500 and still use the 60 day rule on a onetime distribution if I redeposit it and not "interupt" my normal SES distribution? Thanks

Can a Chuch Plan (tax exempt trust) be divided with a QDRO?

Has it been determined is the New RMD rule may be used by the beneficiary of a plan participant or IRA owner who died prior to year 2000?

Here's a short summary of regulations recently issued by the Department of Labor to implement a change in ERISA under the Taxpayer Relief Act of 1997.

The regulations are online at

http://www.benefitslink.com/erisaregs/docu...t_request.shtml

TRA '97 eliminated the obligation of plan sponsors to file SPDs with the DOL, but also added a provision in ERISA providing the Department of Labor with the authority to request the plan administrator to provide a copy of a plan's SPD. The regulations implement that authority.

The DOL may request an SPD at any time, not just in response to a plan administrator's refusal to provide the SPD to a participant or beneficiary. The DOL said the law is intended to provide participants with an "independent source" for SPDs. A plan is not permitted to charge DOL a copying fee. Failure to provide the SPD gives the DOL the ability to assess a fine of up to $100 per day starting 30 days after the DOL's request (capped by statute at $1,000 per request). The fine would be the personal liability of the plan administrator, not a charge against the plan.

In the preamble to the regs, the DOL noted that SPDs already on file with the agency under pre-TRA '97 law continue to be available to participants; they have not been destroyed.

The regulation also applies to a second class of documents: those that have been requested by a participant or beneficiary pursuant to ERISA section 104(B)(4) which the plan administrator has failed to furnish. That section describes the right to make a written request for an SPD, the latest annual report (Form 5500), the plan's "trust agreement," and the plan document ("other instruments under which the plan is established or operated"). Upon a plan administrator's "failure" to provide such a document -- presumably meaning the administrator's failure to meet the 30-day deadline required by ERISA 502©(1) -- the DOL has authority under the new regulation to make its own request to the plan administrator. The new regulation hence provides "teeth" to the right of a participant or beneficiary to obtain such documents, because a federal watchdog agency will have the ability to assess a penalty of up to $100 per day in addition to the ability of a participant or beneficiary to bring a suit under ERISA asking a court to award a penalty of up to $100 per day against the plan administrator.

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Were there any parts of the new regulation that took you by surprise or seem especially noteworthy? Please feel free to add a reply to this message thread. Thanks!

Anybody doing anything differently nowadays regarding split-dollar life insurance arrangements, in light of IRS Notice 2002-8.shtml (which revoked Notice 2001-10)?

Notice 2002-8 is online at

http://www.benefitslink.com/IRS/notice2002-8.shtml

Is a hedge fund required to report UBTI to a tax-exempt investor? Alternatively, is it the tax-exempt investor's responsibility to determine whether income is UBTI? I thought there was a proposal about 5 years ago that would have required funds to report UBTI, but the proposal was never adopted. Any thoughts? Thanks. Ed

Question:

Company has two plans: each passes 410(B) test on its own.

Must the company perform BRF testing between the plans (assuming the plans offer different BRFs)?

Thanks in advance!

The National Institute of Pension Administrators (NIPA) offers a great way to gain industry exposure: NIPA is seeking submissions (typically 800-1000 words) for its quarterly newsletter, PLAN HORIZONS.

Contact them at nipa@sba.com, with the subject line "For the Newsletter", for more details or with an article proposal.

Please confirm if the following is correct. My understanding is that catch-ups are based on calendar year, not plan year. Therefore, Plan whose plan year ends 5/31/2002, may permit an employee who attains age 50 during plan year ending 5/31/02 to make catch-up contribution for plan year ending 5/31/02. Plan, of course, will have to be amended to allow this provision.

Thanks.

I would like to know how differing interest rates affect the advantage of a Roth IRA. For example, if I have a Roth IRA that earns 1.89% APR and a savings account that earns 3.5% APR am I still going to save more in the Roth IRA? Doesn't it depend on how long I keep money in there? When do the tax savings "outdo" the interest savings?

Also, can I really take money out of a Roth IRA with no penalty?

Thanks for your help!