Here's a good quiz for all pension people!

I have a client whose plan is handled elsewhere. Their current TPA firm indicated they could pre-fund by placing monies into the forfeiture account, and take the deduction on the prior years return. Then they would allocate the monies during the current year. (Wrong?)

I know that all monies should be allocated at the end of every year. Is that the issue here, besides the fact the monies are not forfeitures?

Can anyone point out the 70's ruling indicating monies should be allocated? Thanks so much; have fun researching this one!!

I have a client that has an integrated Profit Sharing Plan. It is a calendar year plan. They want to add a Safe Harbor 401(k) for 2002.

By what date must the plan be amended?

By what date must the notice to employees be giving?

I've looked at Notice 2000-3 and Notice 98-25. It is my understanding that they have up until October 1, 2002 to amend their Profit Sharing Plan to a Safe Harbor 401(k). However; I am uncertain as to when the notice must be given.

Also, is there any where I can find a sample notice which contains the required language?

Any clarification is greatly appreciated! Thanks.

Corporation A acquires B on 1/1/2001. Assume that B does not have a qualified plan. With B comes employees who have all been employed full-time more than 5 years. My question is how is the nondiscrimination testing (401(k) and 401(a)(4)) conducted?

If B does not adopt the existing plan of A, are the employees treated as zeroes for the nondiscrimination testing? Does the intent of 410(B)(6)© where a plan is deemed to pass coverage during the transition period apply to nondiscrimination?

Anyone?

I am working for a 403(B) non-profit (ERISA) organization. and there is an ACP failure for '99 that could still be corrected though the end of 2002 by self-correction. However, when I read about self-correction, I saw that in Revenue Procedure 2001-17 only one correction method is permitted - the one found in Appendix A that seems very unfavorable. If I understand it correctly, I must now include those employees with less than one year of service, and run the ACP test that way which would warrant a huge return to highly compensated employees and a huge contribution to all non-highly compensated. Because of the huge turnover at this organization, when the ACP test is run and excludes those with one year of service only about $30,000 has to be returned, where the other way the amount is much greater. Any suggestions? Why isn't the correction method in Appendix B - allowed for 403(B) plans? That method would be so much more inexpensive?

Does anyone have any referrals for a domestic and international relocation management company that also handles expense management? We currently relocate about 80 employees each year, all of which have different relocation needs, as well as different packages.

If you could also provide some details of your past experiences with certain vendors, that would be great.

Interested in referrals for Deferred Compensation Vendors. Any information would be much appreciated!

A woman is 32 years old and has developed severe carpal tunnel problems in her right arm. She has been employed by the same company in various positions for over ten years (since graduation from college). Her injury is likely due to daily typing and writing on the job. If her condition is certified by a physician, what benefits is she entitled to from her employer? Can the employee sue the employer and be awarded money by a court of law?

A woman is 32 years old and has developed severe carpal tunnel problems in her right arm. She has been employed by the same company in various positions for over ten years (since graduation from college). Her injury is likely due to daily typing and writing on the job. If her condition is certified by a physician, what benefits is she entitled to from her employer? Can the employee sue the employer and be awarded money by a court of law?

Several questions in the SEP/SIMPLE thread ask about having more than one plan in a year. I encounter the question of coordination between SEP/SIMPLEs and the 401K 403b arena as well and could use general philosophical guidance.

Some common questions.

Fred divides his basket business into basket weaving and basket marketing to create two SEPs and maxes out on both. (This would seem prohibited because a controlled group rule would aggregate Fred's contributions under one limit.)

George who is seasonally employed (teacher, snow plow operator in Buffalo NY) participates in the employer's 401k or 403b plan during the winter and successfully guides canoe trips in the summer as a sole proprietor or sole owner of an LLC or Sub S . Is there anything to prevent George from creating a SIMPLE or SEP for the canoe business and contributing the maximum under that plan for his summer work?

Harriet the hard working realtor is an idependent contractor with a SIMPLE plan. Late in the year she lands the sale of a lifetime and decides to drop the SIMPLE as of Nov 1 and start a SEP to defer as much as possible from a year end $200,000 commission. Anything to prevent Harriet defering the SIMPLE maximum on her early in the year $50,000 of earnings PLUS the maximum SEP on the year end $200,000 earinings?

( Tom Poje on another board advises a SIMPLE must be the exclusive plan for the year and that if a qualified plan is established after the SIMPLE plan is funded, the SIMPLE is invalidated and contributions must be returned by the due date of the employee's tax return. This particular question is cited in The ERISA Outline Book as well - 2001 edition , page 12.21

Remember, the exclusive rule for SIMPLEs includes 403(B)s, 457s and SEPs as well. )

Does the prohibition against double dipping of contribution maximums arise only in contolled group situations as with Fred and Harriet? Is George OK in what he is doing? Is there a consistent overall philosophy that controls such situations?

The ADEA, as amended by OWBPA in 1990, allows an employer in limited circumstances to off-set long-term disability payments with retirement benefits, provided the retirement benefits are attributable to "employer contributions." Neither the Act, nor the legislative history, (nor anything else, for that matter) shed any light on this question: Are pick-up contributions under Code Section 414(h) treated as "employer contributions" for purposes of the age discrimination offset rules?

I would appreciate any thoughts.

I realize how a nonqualified deferred comp plan basically works. A business sets aside monies in an investment account with the intent of giving those monies to an employee someday. The business owns the investment until the day that it gives those invested funds to the employee ....at which time the business deducts the payment as salary and reports it to the employee as W-2 gross.

What about a partnership ???

Are partners allowed to participate in such a plan? A partner does not get a W-2.

Some more common questions. In general there seems an IRS philosophy against double dipping to get around contribution limits. For example I saw reference to a controlled group proposed reg that would prevent Fred from dividing his basket business into basket weaving and basket marketing and having two SEPs and maxing out on both.

So it seems likely one cannot have two of the same kind of plan.

Question One

What about George who is employed seasonally (teacher, snow plow operator in Buffalo NY) who participates in the employer's 401k or 403b plan during the winter and successfully guides canoe trips in the summer as a sole proprietor or sole owner of an LLC or Sub S ? Is there anything to prevent George from creating a SIMPLE or SEP for the conoe business and contributing the maximum under that plan for his summer work?

Question Two

Harriet the hard working realtor is an idependent contractor with a SIMPLE plan. Late in the year she lands the sale of a lifetime and decides to drop the SIMPLE as of Nov 1 and start a SEP to defer as much as possible from a year end $200,000 commission. Anything to prevent Harriet defering the SIMPLE maximum on her early in the year $50,000 of earnings PLUS the maximum SEP on the year end $200,000 earinings?

Does anyone know where I can find specific details on what life insurance can be run through a cafeteria plan? Thanks!:confused:

I administer a 457 Plan in which the employer contributes for certain executives. These employer contributions are in addition to these executives' base salaries. Should these contributions be considered in determining these executives' Final Averge Earnings in the defined benefit plan in which they also participate? FAE in the defined benefit plan is defined as the highest consecutive 36 months of earnings excluding bonuses and other allowances.

We're looking at implementing a plan for 2003. Any suggestions? Does the program have to be an ERISA program or can it be a payroll practice?

Can anyone suggest draft policies? Thanks

Kerryb@waushosp.org

I know that EGTRRA reduces the length of time that a participant is prohibited from making 401(k) salary deferrals after taking a hardship withdrawal, from 12 months to 6 months.

Did EGTRRA also remove the requirement that the 402(g) limit for the year in which the salary deferrals resume be reduced by the amount of salary deferrals made during the year in which the hardship withdrawal was taken? I can't seem to find mention of this in the EGTRRA information that I have at hand. Thanks!

I have a DB plan that terminated and distributed all assets by the end of 2001. Three people elected annuities, 2 will be getting monthly payments immediately and the 3rd will be deferred until age 65. Do I need to provide them with a 1099-R and put the value of the annuity contract in Box 8 or is this for another purpose?

Thanks to anyone for their help.

Sue

I have the following questions from a participant:

"Is my son's Bris (circumcision) covered under the cafeteria plan? It is performed by a Rabbi, and Virginia BC/BS will not cover it (even though they cover in hospital circumcisions). It is an operation, and some states (i.e. Maryland BC/BS) do cover it under ordinary insurance.

Also, I pay for a long term care policy for my mother (i.e. insurance to cover nursing home fees, home health care, etc.). Can I be reimbursed for this?"

My initial thought was that both these things could be reimbursed under the cafeteria plan but I am getting mixed responses from others in my office. Anyone have any thoughts on these questions?

:confused:

The ESOP Answer Book states that an employer must show profits/earnings in order to have dividends be deductible. However, there is no reference to guidance. Any help?

The company has a Simple IRA plan with only 10 employees. It elected non-matching 2% contributions. Two eligible employees had elected not to defer income. The only contribution is the 2% by the employer into their Simple accounts. Do you mark Box 13 "retirement plan" even if they do not participate since they receive a contribution from the employer? The instructions say to mark the checkbox if employee was an "active participant" but it does not define active. I can not find an answer. Does anyone know the answer? Thanks.