is a custodian/fiduciary of ERISA funds liable for adverse results to plan participants in a hostile takeover/proxy voting situation??

What is (or was) the deadline for amending governmental plans for OBRA '93 compensation (IRC 401(a)(17)) and UCA '92 (401(a)(31) direct rollovers)?

Are these two laws considered part of TRA '86?

Thanks.

ER sponsors 401(k) plan with discretionary matching contribution and uses prior year ADP/ACP testing. The plan docs are Volume Submitter. For 2000 calendar PYE it was no match. ER wants to match for 2001. It is my understanding that under PY testing ER can not match in 2002 if docs are VS ( it seems that for prototype docs there is a break until GUST restatement).

Is there any way ER can make matching contributions without violating thr regs? And if ERtakes advantage of the last extended reliance year and switch to current year testing....would ER have to "stick" w/CYtesting?

Thanks....AC

1. Still not clear about the effective date of GUST resatatement we have to specify in the Adoption Agreement and Corporate Rezolution. The Plan Docs incorporate dates by reference; does it matter then if we specify as effectivre date December 97 or January 01, 2001?

2. The IRS does not allows "fail-safe" provisions in "GUSTified" Volme Submitter plan docs (am I right?).

My question: if I restate plans that used fail safe provisions in the past to pass 410(B)- bringing back and giving allocation to participants with less than 1000hrs or not employed in the last day;Is the plan in non compliance by retroactivelly adopting a plan doc that does not have fail safe language?

And even if I use GUST effective date as January 01, 2001...Istill have plans that used fail safe provisions to pass 410(B) in 2001.

Thanks for your input to these two questions.

I did a search on this but only came up with traditional ira's. ok, if one dies with a roth, and leaves it to a child and a grandchild. 50% to each. the child is 40 and the grandchild is 12. Am i correct that each would take distributions over their life expectancy? If they took out more than that, wouldn't it be a taxable event?

thanks

Dumb question....I hear all these great and wonderful things about Roth IRA's, read articles on them, my only question is.....Where do you get one????? A bank, investment firm, I have no idea....:confused: :confused:

Some companies allow purchase of their stock directly in a Roth IRA at no cost.

I am familiar with Atmos Energy and Philadelphia Suburban, an H2O company.

I'm looking for other possibilities. Can you name any other companies and share them with the board? Thanks.

I checked several oil companies and they do have IRAs, but most charge $10-20 per year handling charges.

Those "small" charges add up over time if you have several.

a cash balance plan provides in its definition of ab, that the ab be based on the cash balance at determination, divided by 200 and payable as an escalating annuity (i.e. built in cost of living adjustment)

the above seems to violate 96-8, in that it appears to be a backloaded cash balance plan (i.e. no automatic interest credits to age 65).

the ab also says that the age 65 benefit is based on the cash balance at current date projected to age 65, divided by 200 and payable as an escalating annuity.

so there seems to be a contradiction here. in one sentence they imply that the ab is the current balance divided by 200 and payable at age 65 (but do not explicitly say this, but their participant benefit calcs support this). and in the next sentence it seems clear that it is saying that the balance is projected with interest to age 65 then divided by 200 (which would be consistent with 96-8).

i see the above definition of ab as meaning that a COLA is part of the ab and when determining a lump sum it s/b part of the ab and included.

the plan also says that the normal form is a 5 year c&c.

the plan also says that as an optional form of payment the participant can convert the 5 yr c&c to an escalating annuity, thus implying here that the benefit is not automatically paid as an escalating annuity. or at least that the ab does not include the cola. what they do on their benefit calc is to use current balance divide by 200 (with no increse for interest) and say that s/b paid as a escalating annuity.

there seems to be inconsistent language.

it appears that a lump sum s/b the pvab where it is based on a 5 yr c&c with a automatic cola.

any comments?

a plan had a formula where it originally computed the ab based on 1.5% of avg pay per year offset by 2/3 soc sec ben ("ssb").

this large offset was apparently violating 411(B) accruel rules.

so they decided to remedy the situation by using a project and prorate ab.

this railroad plan provides that if participant has over 30 years at ret. the front end and the offset would have no reduction for early commencement.

my question is as follows:

a person left with 6 years of svc. the person had over 30 years of projected service when computing the projected benefit. the plan is proposing that when computing the early retirement benefit that there be no reduction to the front end or the offset. my feeling is that when the person retires at say age 62, the early ret factor would be based on the fact that the person had only six years of service not based on the fact that under the project and prorate the person was projected to have over 30 years. as it turns out by having a early ret reduction results in a higher early ret benefit, since the front end was already heavily subsidized, but the offset had previously been reduced.

any thoughts?

Hi

I'm in a low income bracket but I keep reading that the Roth Ira is the best place for someone like me. Now here's my problem, I cannot possibly invest/deposit more than $1000 yearly into my Roth, can I still have a Roth or must I deposit $2000 yearly? Is $2000 yearly mandatory or is it just the maximum. Thanks for any info you can give me.

I know this has been answered before, but I need it applied to the following fact situation:

1. Taxpayer makes an excess Roth Contribution for 2000 during 2000.

2. Taxpayer makes an excess Roth Contribution for 2001 during 2001.

Excess is discovered for both years while preparing the 2001 return. Amounts for both years are removed before 4/15/2002.

Questions:

1. Does the 6% Form 5329 penalty equal $120 or $240 (assuming no losses in the Roth), since the excess 2000 contribution is removed in 2002? If there are earnings on the Roth, are the earnings taxable in 2002? How does the Form 5329 show the distribution of the excess contribution, so that no future excise taxes are owed?

2. Is there no Form 5329 penalty for the 2001 contribution, since it is removed by 4/15/2002? In addition, if there were earnings, are the earnings taxed in 2001?

Thanks for any assistance!

As Pension Administrator, the Plan Sponsor sent me a letter from their terminated participant who has a vested profit sharing plan balance less than $50.00. In the letter, the participant states she "does not want the money". Can the Plan Sponsor direct it as forfeitures, or do they force the distribution?

DB Plan with Unit Credit Funding Method hit FFL last year so all past bases are fully amortized. This year when using the previous assumptions and plan terms there is still no unfunded accrued liability therefore I do not create a gain/loss base. However, there was a plan amendment effective this year that does create an unfunded liability.

Is the base I establish for my amendment equal to the change in liability due to the amendment, or do I limit it to the unfunded liability so my equation of balance holds?

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.

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