If a participant in a DC plan turns 70 1/2 in December of 2002, it was my understanding that age 70 should be used to calculate the first RMD regardless of whether the distribution occurred in 2002 or by April 1, 2003. Someone has told me that if the first distribution occurs in 2003 it should be based on the age the particpant turns in 2003, in this case 71. I don't think that is correct, but couldn't find anything definite in the regs for either case. Any help would be appreciated.

Are loans for key employees in a top heavy plan prohibited??? Thanks!

NQDC Plan provides for payment to a Company's President when he steps down as President. The Ex-President will keep working for the Company as an executive after he steps down. Significantly, the NQDC is between a private foundation and the President -- rather than between the Company and the President -- even though the amounts to be paid from the NQDC are clearly being paid to the Ex-President in connection with his excellent service as President for the Company. Therefore, the private foundation, rather than the Company, will be paying the deferred compensation. The deferred compensation will be paid to the Ex-President at a time when he is also receiving wages subject to employment tax and income tax withholding from the Company in his role as Company executive.

Is the deferred compensation from the private foundation "wages" that are subject to employment taxes and income tax withholding? The private foundation is not, and has never been, the employer.

Any thoughts?

Is the “Payer’s state no. the same EIN they use for their Federal ID Number? Os is the state required to issue these ID numbers to payer’s?

A few of our employees have called in asking that our healthcare provider omit their SSN's from display on medical & prescription id cards (apparantly they have had a problem in the past with identity theft). Our healthcare provider cannot do this currently.

Do the employees currently have a legal recourse to require this ?

I know that CA has a law in place currently SB 168 for CA residents effective in the next 2 years for current group insured plans

Are there any other states out there with simialr laws to CA?

What about federal law(s)?

Thanks

Company A has a flexible benefits plan where Company A employees can use "pre-tax dollars" towards the payment of premiums for a group medical and dental plan that is sponsored by Company B. Company B is not part of Company A's controlled group. Does Section 125 require that the underlying plans in a flex benefits plan be sponsored by the employer or a member of the employer's controlled group? Put another way, would Company A employees here recognize income and essentially lose the pre-tax benefit under Section 125 since the group medical and dental plan is not sponsored by the employer? Is there something in the regs and/or statute that covers this question?? ANY thoughts would be highly appreciated. :confused:

Due to EGTRRA I want to amend an existing Money Purchase Plan to a Profit Sharing Plan, for the calendar year 2002. What documentation is needed? What is the deadline, to avoid a 2002 contribution to the money purchase plan? Document is non-std. prototype with end of year employment requirement. Is 204(h) notice needed?

Can a financial institution who is NOT a "designated financial institution" impose a minimum contribution requirement in order to open a SIMPLE IRA account at that institution?

As I read Notice 98-4, Q & A D-2, it mentions that the employer cannot impose a maximum.

I'm thinking that since the SIMPLE is not w/a DFI, any financial institution can impose a minimum contribution in order to open the account. Some financial institutions may want to impose a minimum contribution amount to circumvent having to open a SIMPLE IRA account for an individual who elects to have only $5/$10/$15 withheld per pay period. For some financial institutions, the account would not be profitable to administer.

My second question is if you are aware of financial institutions who do in fact require a certain minimum contribution, how do they handle disclosure to the participant of that fact?

If a plan sponsor is 9 months late in depositing 401(k) deferrals, and chooses to use the Federal short-term rate + 3 interest rate option, how is this applied? The Federal short-term rate changes quarterly. Should the changes be taken into account?

For example, say the Federal short-term rate + 3 is 8% in the quarter in which the deferrals should have been deposited, 7% for the next quarter, and 9% for the next quarter. Should the 8%, 9% and 7% rates be used? Or should the 8% rate be used for all 9 months?

Has anyone had experience with the DOL on this issue that involved more than one quarter?

We have taken over a plan with a 30 year history. At one time the plan allowed for after-tax contributions, before adding a 401(k) feature and doing away with the after-tax option. The prior recordkeeper will not provide us with an after-tax basis for those participants who still have after-tax balances. My gut feeling is that it was never properly record-kept, so there are no records.

My question is, who is ultimately responsible for this reporting and to what degree should the trustees pursue the information (obtain legal council)? The Trustees are very concerned that Participants may revert to them as not doing their job because these numbers are not available .

Is it ultimately the participant's responsibility to tell the IRS what's taxable and what's not taxable when they finally recieve a distribution?

Thank you.

We have two cross-tested profit sharing plans that for their 2001 calendar plan year, want to retroactvely amend their discretionary contribution allocation formulas. In each case an addtional group would be 'carved out".

One will result in an addtional contribution for a Non-Highly Compensated Employee (over and above the 3% Safe Harbor contribution) and the other results in an additional contribution for a Highly Compensated Participant (over and above a 3% of pay across the board contribution). Neither employer has made a formal approval of the contribution for 2001.

If an employee terminates just prior to the end of a plan year but has deferrals taken out of the final paycheck, which is received in the next plan year, how is testing completed? Say the years are calendar year 2001 and 2002. Are the deferrals received in 2002 counted for ADP testing for 2002 even though the employee terminated in 2001? Are the deferrals counted in the 2001 ADP test even though the paycheck was in 2002? Does the answer affect employees who were eligible to defer during the payroll period, terminated in 2001, and did not defer from the final paycheck (which year's ADP test should include them)? Should the 2002 410(B) coverage test include either of these types of employees? Has the IRS ever provided formal or informal guidance on this issue when a payroll period crosses over a plan year end?

An employee who was terminated for cause won reinstatement along with back pay for all of last year. The question: Can he contribute to 403b and have it count to last year when we pay him his back pay this year? And if he can, how do you report it on his W-2?

Is it legal to have several different Roth IRA's from different providers (started in different years)? Any big benefits to keeping them all together?

A partnership has a profit sharing plan. Each partner participant makes his own Keogh contribution. Each partner participant is free to find & use any broker and investments that he so chooses. The partnership makes a annual discretionary PSP contribution for the regular employee participants..... however, the regular employee participants are not allowed to choose where their share of the discretionary contribution will be invested (the partnership decides where to contribute the discretionary contribution).

Is this an ERISA violation? Can it disqualify the plan ?

Has anyone heard anything on GUST & EGTRRA restatements for DB plans? At ASPA the Service was adamant that apporval would be no later than 1/31/02, however I have not seen any anouncement. I quess we will now have have until at least 3/31/03 to restate DB plans, on prototypes and specimen documents( volume submitters).

Employer checked off (X) NONE on standardized adoption agreement for employer discretionary profit sharing contribution to their 401(k) plan, but then went ahead and made profit sharing contribs for two prior years anyway. What should they do now to correct, if anything. New restated doc is all set going foreword...

Top heavy K plan with discretionary contribution uses the match to satisfy top heavy minimum.

The match used for the top heavy minimum must be tested under 401 (a)(4). Exactly what does this mean?

I understand that the match used for 416 is not a match for 401(m) testing.

Clearly the match used for 416 would be subject to general testing in amounts.

Does it also mean that the match is not a match for benefit, rights, and features, in which case there would be different rates of match?

Can the §415© contribution limits be applied separately for an individual that participates in two unrelated defined contribution plans? For example, John Doe participates in Corp X's Profit Sharing Plan and Corp Y's 401(k) Plan. Corp X and Corp Y are unrelated entities. Assuming Mr. Doe's salary at Corp X is $50,000 and at Corp Y is $75,000 Y for 2002, can $40,000 be contributed to his account in Corp X's Profit Sharing Plan and another $40,000 be contributed to his account in Corp Y's 401(k) Plan for the 2002 plan year?

I have a partnership in which a partner left during the plan year. His profit and capital interests were distributed to the remaining partners. Also, at the same time, the entity changed from a "regular" partnership to an LLP.

According the plan document and IRC Section 708, the partnership has not terminated, thus the plan remains an on-going plan.

My question centers on the measurement of earned income for the plan year. For those partners that remain, I have two K-1's for 2001. One for the "old" partnership and one for the new LLP. Would earned income for the plan year simply be the earned income for each short period during the plan year added together? This seems too simple, but I cannot seem to find any guidance on this.