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.

I'm doing some research on 401K performance, and I need the history of the 402 (g) Deferral Limits from about 1989.

Does anyone have a source for finding this data?

TIA

Frank

Now retired, my school district contracted with an insurance company for a 457 group annuity in 1996, complete with withdrawal penalties of 20% at year 1 to 5% year 15(no matter the age or retirement eligibility).When the District asked us to sign up for this annuity, there was no mention, spoken or written, of the withdrawal or surrender penalties, or for that matter an annual asset management fee of .25% deducted from the Fund. How does this comply with the provision that, "The plan must be amended to provide that it will be impossible----for any part of the value of the annuity contract to be used for, or diverted to, purposes other than for the exclusive benefit of plan participants and their beneficiaries"?

I know that safe harbor plans using the matching option may discontinue the safe harbor match mid-year, but must provide a 30 day notice to employees before the match ceases.

But there do not seem to be a lot of guidelines on when (and what must occur) in other cases (non safe harbor plans) where a fixed formula match is being amended -- either to no match, a discretionary match, or another fixed formula match.

Are there any special employee notice requirements in these cases? I know 204(h) (now 4980F) does not apply to profit sharing plans...but it seems some type of notice would be necessary. Just a regular Summary of Material Modifications?

I know there are anti-cutback issues to worry about. Therefore I am looking for comments or confirmation on the following approaches:

If the match is determined based on the entire plan year, it generally cannot be changed mid-plan year (unless there is an "employed on the last day of the year" accrual requirement and the amendment is done prior to that date). (Correct?)

If the match is determined based on each pay period, it can be changed effective for a future pay period. (Correct?)

Thanks.

PART I:

Knowing that *new* 401(k) plans (that are not "successor plans") have up until their effective date to get the safe harbor notice distributed...

And *existing 401(k) plans* adding safe harbor provisions must provide the safe harbor notice between 90 and 30 days prior to the beginning of the Plan Year...

And *existing profit sharing plans* adding 401(k) provisions and safe harbor have until the effective date of the 401(k) provisions to get the notices out...

WHAT ABOUT a plan that is being set up in December (with a 12/31 year-end) and wishes to do profit sharing only for 2001, and specify 401(k) provisions and safe harbor beginning 1/1/2002? Does this plan have until 1/1/2002 to get the safe harbor notices out, or should they have been provided by 12/1?

PART II:

Say we are setting up a brand new safe harbor 401(k) plan in June, which has a 12/31 year end. The employer provides the safe harbor notices before 7/1, and therefore specifies a 7/1 effective date for the 401(k) provisions, but it chooses to specify a 1/1 effective date (retroactive) for the rest of the plan. Say they are using the 3% nonelective option. Is the safe harbor contribution for the first year only based on compensation from 7/1 - 12/31? And if so, does this same apporach hold true for a profit sharing plan that adds 401(k) and safe harbor provisions in the middle of a plan year?

Thanks.

A husband and wife are each covered by their own 403(B) plans. They are getting divorced and will have a court order (not a QDRO) to divide their respective 403(B)s. In 2002, will each ex-spouse be able to roll over his/her alternate payee distribution into his/her own 403(B)? Would the answer be the same if there is a QDRO? Cites would be helpful.

Under a benefit formula that provides that average annual compensation means the high five of the immediately preceding 10 years of compensation, can an accrued benefit be reduced on account of decreased compensation late in a participant's career? I am concerned not with 411(d)(6) (regarding cutbacks resulting from amendments) but with 411(B)(1)(G), stating that an accrued benefit cannot be reduced due to an increase in age or SERVICE (this particular individual would have had a much higher benefit under the Plan if she had retired 10 years ago when her comp was high instead of continuing her service with the company).

Now here's an added twist: what if the individual has been receiving workers' compensation benefits for the past 10 years (and therefore has no plan compensation), can her benefit be reduced to zero? This doesn't seem palatable given ERISA's intended purpose of protecting employees' retirement benefits, and yet this is the conclusion I am reaching. Has anyone encountered a similar scenario? Any advice or guidance would be very much appreciated!

Please help? Heres the senario:

ABC company had a SIMPLE IRA for 2000 and 2001. But in the middle of 2001 the company changed it's Tax ID#, and company name. Does the company have to adopt new SIMPLE IRA? If so can the company adopt the plan for 2001 even though it's past the Oct 1 deadline?

I have a prospective client with a current Target Benefit who wants to amend to a Cross-Tested plan.

Can he just amend, or does the Target Benefit need to be terminated, resulting in 100% vesting for all employees prior to setting up the Cross-Tested?

Is it possible to suspend contributions to a Target Benefit (with proper notice to employees) and leave it open but in frozen status, while operating the Cross-tested plan?

Basically, is there any way to avoid the full vesting requirement and still set up the Cross-tested plan?

Thanks

I participate in a SARSEP plan. I have been doing some research and discussing this with Fidelity but believe they are not confident in the answer they have given me. My questions is this, for 2002, does the maximum contribution to the SARSEP increase from 15% to 25%. This is the only retirement plan we have and I would like to make sure all employees get the maximum benefit available to them. Thanks.

does anyone know a good international 401k advisor for Taiwan's situation?

Thank you

Can greater than 2% LLC members participate in a 401k plan under the following scenario:

the LLC that employs the partners and other employees outsource all of their HR benefits to a Professional Employer Organization ("PEO") via a co-employer relationship.

Thanks!

Do any of you all require that the trustee or whoever prepares census data for your clients sign some sort of certification? Namely, to certify that this information is correct, complete and accurate to thier knowledge and this is the information to be used in preparing the annual administration.

If so, what disclaimers or languange do you use?

How are the tax rules different between Roth IRA for Non-Resident & Resident Alian?

Is it better to have Roth IRA, 401k or both?

As I know, there is 30% taxes up front for Non-resident alien to have 401k.

What else should I know?

Thank you

I am putting this on the 401(k) page because nothing else seems appropriate.

We are running our W-2 programs in test and are reviewing the program. The question is regarding who gets the box checked and what the program looks for.

We check the box for active participants in all plans covered under 401(a) {all of our DC and DB plans}. Do we check the box for those employees who are active under a multi-employer plan - such as those in the Sheet Metal Workers National Penion Fund? The W-2 instructions do not say anything regarding who sponsors the plan.

Any experience or even an educated guess??? A cite or an idea of where to start looking would also help.

I was wondering if a plan that does the Safe Harbor 3% amount for 2001 could have a last day rule (they are doing Safe Harbor so they automatically can pass ADP/ACP). Also, are there any special rules for Safe Harbor regarding hours worked? Example: an employee hasn't worked 1000 hours and the document requires 1000 hours for an employer allocation - for normal matching and PS contributions they wouldn't be eligible but would they for Safe Harbor? THANKS!

I was talking to a colleague regarding a situation that he is experiencing on the 401k - side of a transaction. The IRA rollover - side has me wondering if my train of thought is on the right track. Can anyone refute or substantiate a client's ability to request a recharacterization in this type of situation:

Client Daisy Dasher had participated in her ER's 401k plan and exceeded her calendar year deferral of $10,500 in the Plan Year End (PYE) 2000. She separated from service in 2001 and elected to rollover her vested account balance to a rollover IRA. Ms. Dasher is not an HCE.

November of 2001, the Year End testing for the 2000 PYE is complete and reveals the excess contribution by Ms. Dasher.

There are several issues to be taken into consideration: tax reporting requirement (401k admin or IRA Trustee), accounting for correction within the 401k Trust, Rollover of assets that are not qualified to transfer to an IRA, and other individual tax issues to Ms. Dasher.

Please check my thought process in one possible solution that I devised based on my understanding of both IRA and Qualified Plan regulations:

1) No Funds Need Be Distributed, Returned - IRA deposit does not need to be voided

2) 401k administrator should void out rollover distribution. correct systems to reflect a correction/distribution of excess deferrals to participant from the Plan Trust. re-enter request for rollover distribution for the X dollar amount qualified for rollover and enter the Y remainder as a taxable distribution to the participant.

3) As long as EE had earned income in 2001 (or) assuming that she will earn wages in 2002: Ms. Dasher may request the IRA Trustee to Recharacterize the assets received in the rollover. X dollar amount indicated as a rollover contribution and Y dollar amount recharachterized as either a 2001 or 2002 Traditional IRA Contribution (depending on whether max. 2001 contrib. has been made). Pre-2002, this account would no longer qualify as a conduit IRA - but post 2002 will be of no mind.

4) Prior administrator fulfils their duty to correct/report appropriate disposition as to avoid disqualification. Ms. Dasher and IRA Trustee avoid accelerated taxable

status of IRA assets.

5) 401k ER has excise tax issues to be addressed with Plan Admin.

6) Ms. Dasher has tax filing issues to be addressed with her qualified tax advisor or accountant.

Is this too simplistic to be make into reality? Is there an issue with the one check that was sent from the 401k Admin. to the IRA Trustee? Any other issues that I have forgotten to take into consideration? What if the distribution had actually occurred in 2000 instead of 2001 and a 1099 Form has been issued?