Can someone please help us figure out what is considered excluded stock for purposes of determining controlled groups and how such excluded stock is treated. For example, if 25% of the total outstanding stock is held in an ESOP, it was my understanding that 100% is now replaced with 75% when determing brother-sister ownership. I am hearing people say that the ESOP stock is included in each owners ownership percentage, but I never thought it worked this way.

Any clarification would be greatly appreciated.

Thanks

For the 2002 plan year, if the hce gets $40,000 (20% of $200,000) and the rank & file gets 5%, I thought that the plan passes? I'm getting feedback that this scenario doesn't automatically ensure that the plan passes. What do I have to check on the software results to ensure that the numbers (projected for 2002) will be O.K.?

THAKS FOR YOUR HELP!!!

I know these threads are mainly for employers however, I have a co-worker who has been trying for over four months (almost five months) to have her 401k withdrawn from her previous employer. The $$$ is way under $5k. She just wants a check sent to her. Seems she keeps getting the runaround. What can she do? Is there anything under ERISA that she can do?

I have a solo Dr. and his father, who is the investment broker and an independent contractor with Raymond James on the son's plan. I explained that this is not allowed as the father is a party-in-interest. Besides appointing another broker or appointing a third party trustee (ie a bank), are there any other ideas of how to break up this problem without taking the father out of control over the assets? Thanks

Payments have been received pursuant to a settlement with Executive Life over the last three years. The employer previously paid for related expenses because there was not sufficient funds in the plan. A small final payment has been received. Could the plan now reimburse the employer for the otherwise proper expenses it paid. The plan document permits such expenses to be paid from the plan. Is there any problem with these expense having been paid for as long ago as 3 years?

It seems if it was originally an expense that could have been properly expensed, then the mere passage of time shouldn't have turned this into a prohibitive reimbursement.

May a plan be amended to provide that the sponsor shall be reimbursed by the trust for administrative expennses previously paid by the sponsor. I'm guessing the answer is no, but how is this any different from the trust paying the expenses directly? Any thoughts? Ed

In a new comparability money purchase plan would the following contribution be difinately determinable?

Class 1: 3.5%, however if non-discrimination will not be passed at 3.5%, the percentage for Class 1 will be increased up to the point where non-discrimination testing will pass.

Class 2: 25%

We administer a one participant DB (sole proprietor). The plan was effective 1/1/2000, has assets of about 100K and PVAB of about 90K. He worked less than the required hours to accrue a benefit this year and wishes to freeze the plan.

Is there any problem with freezing benefits, switching to end of year and avoiding required contributions this year? Is it even necessary to switch to end of year to avoid the contribution requirement? He expects the business will be profitable 2-3 years down the road. What happens if he is profitable next year? Is that too soon to unfreeze benefits?

We have communicated that a DB cannot be amended / altered every year and must generally be permenant in its design.

Thanks!

I have been reviewing this forum and have noticed that there is little to the effect of marketing to either employees or employers the benefits of 401ks or 403bs...especially considering the tax changes coming into effect here in the next couple of weeks, though there is plenty about the mechanics and legislation of them.

Reason I am curious about this is because I have been asked to consider creating an informational/marketing resource to be shared with HR depts and employees concerning the tax law changes...and ways to self-direct investment allocations using current technologies.

A friend of mine has created a very nice graphical web-interface (similiar to bigcharts.com but prettier) which can detail exact holdings as well as market momentum and indices. (He is an investment advisor and represents one branch of a multi-tiered presentation sheduled for a large coporation next month, education would fall into my lap with the other tiers being law and accounting.)

Before I really get involved with this concept, I thought I might submit a question or three to the floor:

What is the pain behind marketing 401k plans to employees or is that typically left for the HR dept? Recently PlanSponsor.com surveyed their visitors and found almost no employees had more than 4 holdings in their 401k Click Here for the Press Release which they claimed wasn't good diversification.

Is there any real service to realistically educate employees and HR personell about the ins and outs of 401ks and 403bs? I know that most employees regard 401ks as a pain- even my wife refuses to look at hers to see how it works, and I think we all know deep down that most people would rather not be bothered by their 401k or 403b at all, but current events may be shaping an increased awareness as more americans are nearing retirement and the whole social security fund debacle.

Finally- is anyone willing to share insights about a project concerning the education and marketing or 401k/403 plans?

Many thanks for your time. Feel free to email me for a more private discussion as needed. christian@advisorpage.com

The Roth IRA allows for tax-free deductions if made after 59 1/2 and if the account has been active for a minimum of 5 years. What are the exceptions for first time home buyers? Is there a penalty if I make a withdrawl to buy my first home after 5 years before age 59 1/2??

does anyone know of any tax regs that would permit a direct rollover from a US 401(k) to a Canadian "Qualified" plan?

Son is the bene of multiple IRA's of his deceased father.

Son wants to consolidate inherited IRA's under one custodian (by means of custodian to custodian direct transfer).

Can son also consolidate ALL the inherited IRA's (from father) to ONE aggregate inherited IRA?

I don't see why not. All IRA's from father; all MRD taken with same LE. But I'm uncomfortable with aggregating different inherited IRA's. Obviously safe harbor is just to keep them separate IRAs (custodian was unsure). I know that a bene can not contribute to an inherited IRA but if one is only combining inherited IRAs that is not a contribtion (I think).

Has anyone done this? If accounts need to be kept separate what did you title the different inherited IRA's?

Reg Jones

A couple, whose income exceeded the $100,000 AGI limit, received permission from the IRS to recharacterize their 1998 conversion. The deadline to recharacterize is 6-months after the date the letter was issued.

Our district currently offers only part-time employment to kindergarten teachers (0.7 FTE) but is thinking of running a pilot program to turn a few classrooms into full-day kindergarten. That would make those teachers 1.0 FTE.

If the program fails and those teachers are returned to part-time service after only one or two years, how will this affect their service credit?

Currently, as we understand it, changing one time from 0.7 to 1.0 would allow the teachers to continue to count all their .7 years as full years.

Must the 3% non-elective safe harbor contribution in a 401(k) plan be made to all "eligible" employees or only to those eligible and particpating by making elective deferrral contributions.

Can anyone supply a list of ESOP provisions which must be added to a 401(k) plan when the plan is converted to a KSOP?

An employer offers a 403(B) program to its employees, but matches and makes profit sharing contributions to a qualified plan. If the employer did not make matching contributions or profit sharing contributions, I would conclude that no 5500 was necessary. But since the employer is now providing funding with regard to the 403(B) arrangement, is this fact enough to create a situation where the employer involvement is enough that the 403(B) plan should file a Form 5500? Yes, the qualified plan does file a 5500.

I have a 401(K) plan requiring a QNEC along with a comparability plan. Both plans have different eligibility dates, 401(k) permitting immediately eligibility and comparability having a one year wait. When determining 15% of eligible compensation, which plans compensation would be used? Any help would be appreciated.

Karen

How would an FSA be handled in this case?

Our company recently won a contract that has an expected

start date of Mar 1, 2002. To clarify my employment

situation for this scenario, my employer will remain the

same (Company #1) until the new contract begins and we

become part of a joint venture (Company #2). Company #1 is

providing a 2002 benefits package which has a larger FSA

provision than either the existing package or the future

package at the new company:

2001 - Company #1 - $2500

2002 - Company #1 - $4000

2002 - Company #2 - $2000

I'm interested in the medical portion of the FSA, not the

dependent care. Here are my questions:

1. If I choose to participate at the $4000 level for Jan/Feb and

use all of it in Jan/Feb, what is my liability to Company #1 when

I begin employment with Company #2?

A. $4000/12 months * 2 months participation in plan =

$666.66

B. $4000/2 months participation =$2000

C. other - please explain

2. What happens if the start date slips to Apr 1, 2002?

3. Where can I find legal guidance in the IRS codes? I know

it's under Section 125 but where exactly? I've researched their

web site to no avail and have called them but they don't

expect to get back to me within 2 weeks.

4. If I choose to seek legal guidance, who should I use? I

talked to my tax preparer(EA) and he didn't know much

since this isn't his specialty.

Thanks,

Dan

Under the 2001 EGTRRA my employer now qualifies for and is offering a 457(B) plan beginning 2002 through Fidelity Retirement Services.

We have a pre-exisitng 403(B) retirement plan and a defined benefit retiurment plan.

My employer is a not-for-profit organization and a NON-governmental organization.

Our staff offered this plan are highly compensated employees and participate in NONqualified retirement plans.

I understand the IRS has not yet provided guidance regarding rollover of 457(b)distributions for NONgovernmental employers.

Therefore, this plan is written such that at retirement or termination of employment the 457(B) account balance is distributed in a LUMP SUM to the employee...a taxable event.

I compared 457(B) PRE-tax dollar investment accrual vs. AFTER-tax dollar investment accrual over 15 years with an 8% return.

Because we will be in the highest income tax bracket (assuming current 2001 rates) the tax on the 457(B) LUMP SUM distribution will essentially wipe out any tax advantaged savings of the plan when compared to investing PRE-tax dollars.

Therefore, enrolling in this new 457(B) plan does not make sense unless distributions can be spread out throughout retirement assuming my income tax bracket falls.

What are the prospects for NONgovernmental 457(B) plan distributions to be either spread out over retirement or rolled over to other plans (ie. 403b) to avoid LUMP SUM pay outs?

Thanks.