USERRA requires employers to allow make-up contributions. I haven't seen any guidance on how these contributions are to be handled. I assume they must be made through salary deferral. Is that correct? I also know that they must be included on the W-2 box 13 with the year they are being made up for shown. So I also assume that the make-up deferrals would be excluded from the Box 1 wages on the same W-2. Is all this correct?

Is their a chance that the employee could be allowed to make up the deferral though a lump sum payment? If so how would this be handled with W-2 reporting?

I have a participant who is rolling over his balance to a traditional IRA. This participant is over 70 1/2. Can the RMD for 2002 (based on the 12/31 balance) be paid after it has been rolled over or does it have to be paid before the account is transfered?

When a plan sponsor amends their plan to freeze accruals, how much information do you have to provide the participants in the 204(h) notice under EGTRRA? I have heard three opinions from ERISA attorneys:

1. Don't need to show benefits, just describe the amendment;

2. Show the frozen accrued benefit only.

3. Show the projected benefit before the freeze AND the frozen accrued benefit.

I have a plan administration client whose attorney is advising them that they can pay employee bonuses and then have the individual employees turn around and cut checks to the plan for elective salary deferral purposes. This seems to be a viloation of Tres Reg 1.401(k) - 1(g) (3) which says the deferrals need to be made by the employer (on a payroll deduction basis) based on the employees' elections. Are there any circumstances where having the employees cut personal checks to the plan, or to the employer for deposit into the plan, would be an acceptable practice?

My client has never obtained a determination letter since the plan was established-- two decades ago. The client is now contemplating whether to submit a determination letter application. Has anyone ever requested an EP conference (under Rev. Proc. 2001-6 section 19.02)? If we request a conference, will the GUST clock stop, so that we don't need to file by 2/28/02? Has anyone obtained IRS approval to amend back two decades?

In order to use the disability exception to the 10% penalty for an early withdrawal from an annuity, must the individual "become" disabled after entering into the annuity contract? Restated, may an individual who has already been deemed disabled by the SSA enter into an annuity contract then take withdrawals and not be required to pay a 10% penalty?

Can anyone provide a cite for me that says that when the profit sharing contributions of a 401(k) plan are being tested for nondiscrimination under 401(a)(4), the Average Benefit Percentage test is done using elective deferrals and match? I know that the rate groups are determined using only profit sharing contributions and forfeitures, and the average beneft percentage test is done using those plus deferrals and match, but I cannot find where in the regs, Code or other guidance this is explained. Can anyone point me to the right place in the guidance?

A 401(k) plan has a five year graded vesting schedule and provides that a YOS is granted if the participant completes one hour of service.

Can the plan be amended to change the provision to 1000 hours?

(My concern is that 1.411(a)-8 applies.)

Any thoughts?

Thanks!

Our income was $150,090 (over by $90!!) so we have to recharacterize some of our Roth IRA, which I know how to do.

However, with the children's Education IRA's, I cannot find the formula for determining how much we'll have to withdraw. Does anyone know what that formula is?

Other than the cafeteria plans for medical and dental expenses, is there one for legal expenses?

I contributed $2000 to my Roth IRA on 1/1/2001 for the 2001 tax year. My wife changed jobs midyear and our income will exceed $160,000, therefore I must either recharacterize to a non deductible Traditional IRA or withdraw the contribution.

Question: The Roth is in a tech. mutual fund and the FMV at 12/31/2001 was $1200. What amount should I recharacterize or withdraw. If I withdraw $1200 can I deduct the $800 loss, as I would have to include any gain in income?

What are some of the potential claims/causes of action that may be brought against a custodian or trustee of pension assets in the case of hostile take overs or Leveraged Buy Outs?

Client has existing option plan (that does not include ISOs) and a plan that allows employees to purchase stock from the Company (not a 423 plan). Client wants to amend existing option plan to include ISOs and amend existing stock purchase plan so that it qualifies under 423, but does not want to go to shareholders for approval of either plan. The shareholders approved the existing plans two years ago.

Should the client have the shareholders approve the amended plans (the amended plans will be substantially different that the existing plans)? Do Code Sections 423 and 422 require shareholder approval for material amendments to plans?

Can both my husband and I each invest in a Roth IRA if his company contributes money into a profit sharing pension plan for him every year and if he earns more than 100,000/year

Is is considered insider trading if an employee would re-allocate his 401(k) investments to our company stock fund based on confidential information? I know it is illegal to do this on the open market, but not sure how it applies to company stock within our retirement plans.

Last week I posted a question re: how to verify a TIN. I was referred to freerisa.com, where I registered and was able to use their EIN finder. So far I'm 3 for 3; each number I entered came up zilch. Researching some old threads on TIN's I discovered that the IRS purges trust ID numbers after several years of inactivity. Is there a way to reactivate a TIN? If not, I can just see it now -- I file a SS-4 to get a new TIN and the IRS comes back and says one was already issued. But if you use it on 1099-R and 945 forms they reject the filings. Thanks all. Maverick

We have a partnership with approximately 20 partners and staff of 100. The company wants to put in a cash balance plan for the partners only (already have a xtested and 401(k) plan) and then loan monies from the plan to the partnership. In reading the definitions of who is a party in interest we believe this is truly a prohibited transaction. Two of the partners are attorneys who argue that the definition is not clear on who are the employees of the employer? Any thoughts regarding this is appreciated.

One of my clients has a 401(k) plan which also permits after-tax contributions. Traditionally, participants separating from service and seeking to avoid taxes would elect to roll over 100% of the distribution to an IRA. The plan administrator would segregate the after-tax contributions, roll over the remaining amounts, and issue a check (non-taxable) for the amount of the after-tax contributions only. Great result--some cash for the separating participant, no taxable event.

Following the new rollover rules for 2002, the administrator is now rolling over the entire distribution, including the after-tax contributions. The IRA custodian is saying that the 10% penalty tax applies to a pre 59.5 withdrawal of these after-tax contributions. This doesn't seem right to me, but I'll be the first to admit that I don't have a lot of IRA experience. I'd appreciate any insight that could be offered, as well as any cites or links that might be appropriate.

Thanks in advance for the help.

I have been told by the Plan Administrator of a governmental thrift plan (similar to a 401(k) plan) that it decided to collect new beneficiary designation forms. It supposedly sent a letter in 1998 to all participants, including retirees, advising them that the prior beneficiary designation forms were revoked, and that if the individual did not submit a revised form, then the terms of the plan would apply. The plan provides that the beneficiary is the spouse, if surviving, then the estate.

Has anyone heard of a plan doing such a thing? Was that action in the best interest of the participants?

In my client's situation, the Plan Administrator is telling us that the 84 year old aunt did not return the correspondence in 1998, so she had no named beneficiary, and payment must go to the estate. The Plan Administrator's position is that the beneficiary designations signed at the time of the participant's retirement were revoked by its 1998 correspondence.

Oh, and, by the way, the plan administrator also mentioned that the 2000 correspondence from the record keeper that said that minimum distributions are based on the niece as beneficiary does not matter, since the beneficiary for minimum distribution purposes could be different than that for death benefit purposes.

Just wondering if anyone has heard of other Plan Administrators doing this.

Thought everyone ought to see this, and be made aware of what some are trying to do...

SCAM - Loaning deferrals to participants