If we're merging the mp into an existing ps and preparing the amendment and 204(H) in a timely fashion, any need to do a SMM (summary material mod.)?

Does a 3% safe harbor non-elective contribution count as part of the total allocation for an HCE when comparing total allocations for the 1/3 allocation gateway? For instance, if a plan was providing the 3% safe harbor non-elective contribution to all employees (the only contribution for NHCE's), the HCE's then would be limited to 9%. Does that 9% include the safe harbor contribution the HCE's receive or can they get 3% safe harbor plus 9%?

I work for a non-profit 501©3 organization that has a 403(B) plan with employer contributions, as well as a voluntary employee contribution plan. Can we convert to a 401(k) plan? Are there any advantages to having a 401(k) plan instead of a 403(B) plan? I am so confused.

Calling all actuaries! My question pertains to a plan using the FIL funding method. Once the FIL is fully funded, I know the plan is then operated as if the funding method is aggregate.

However, if the plan then becomes "underfunded", what is the course of action (i.e. does the plan continue to be funded as if the funding method were aggregate or is there an alternative)?

Employee A is hired January 2, 2001. During her first employment year which ends January 1, 2002, she works more than 1,000 and turns age 21.

Adoption agreement states "an employee will become a Participant on the Plan Entry Date immediately following or coincident with the date Employee completes the eligibility conditions."

If Entry Dates are January 1 and July 1, when does this employee enter the plan?

When did the Employee complete the eligibility conditions: January 1 or January 2?

This might seem a lame question but I'll torture you with it anyways.

If an employer offers more than one carrier for an insurance,can a COBRA participant change carriers? If so, are there any limitations put on this?

Thanks for any info.

Motor

We use a well-known software package to generate Volume Submitter documents. Now that approval has finally been received by our provider and language released, starting to generate volume submitter documents for our clients to comply with GUST II.

Given that IRS has now allowed sponsors utilizing volume submitter doucments to rely on the VS opinion letter (and not file for an individual DL), would like some input on dealing with the following:

Say your plan made an amendment effective 1999 to change a provision also available in the body of the VS document, but does not coincide with the GUST restatement year of 1997. What we have done in the past is to generate document using the pre-amendment provision, and then add "special language" to the document stating "Effective 1/1/99, . However, this is now a change to the VS document and I'm assuming that we would now need to file for a DL letter (although all language taken from VS source). What we were proposing to do instead is the following:

1) Generate first document with GUST effective date.

2) Generate second document incorporating change with amendment effective date.

Killing more trees this way, but now we have two documents that totally rely on VS language. Any ideas on whether this is a good idea?

It appears to me that the new Pub 590 has a fairly significant error in it regarding the new RMD rules. On page 30 near the bottom of the second column, it states that all beneficiaries should reduce their life expectancy by 1 for each year after the first distribution year. My understanding is that a sole beneficiary surviving spouse would use his or her current age to determine life expectancy in each year.

Which is correct? If my interpretation is proper, wouldn't this error be significant enough to require a corrected reissue of Pub 590?

An INSURANCE AGENCY partnership (with 3 partners) has a 401(k) plan for its employees.

The same three guys are also the partners of another partnership (INVESTMENT ADVISORY FIRM XX). All three of them are registered investment advisors.

The "Administrator" of the insurance agency's 401(k) is the INSURANCE AGENCY PARTNERSHIP (the employer itself).

The "Administrator" appointed one of the insurance agency partners as the "Trustee" of the insurance agency's 401(k) plan.

The "Trustee" then hired the INVESTMENT ADVISORY FIRM XX, to perform the investment advisory services for the insurance agency's 401(k) plan.

QUESTIONS:

1) Is there a conflict of interest in the above example?

2) If there is a conflict of interest ... then is it a conflict violation under the Internal Revenue Code --or-- a conflict under ERISA ?

3) Who is the "party in interest" in the above example?

In the current issue of the PPD ERISA NEWSLETTER devoted to cross-testing, an example is given inwhich the allocation fails the Ratio Percentage Test but passes the Average Benefits Test. It notes that the rate group tested satisfies the nondiscriminatory classification test because the NHCE benefitting ratio "at least equals the safe harbor percentage."

Given the NHCE concentration ratio in the example, PPD used the safe harbor percentage, not the midpoint. In the ERISA Outline Book, Tripodi states that the coverage ratio "must be at least equal to the midpoint between the applicable safe harbor percentage and the unsafe harbor percentage..."

I've always used the midpoint, but PPD's comment gives me caution. Can anyone explain the difference in the statements?

Before the stock market went down an individual started taking substantially equal periodic payments from an IRA of about $200,000 for 2000 and the same amount for 2001. He turns 59.5 next year and the IRA can no longer support the large withdrawals. I understand that he will owe the 10% penalty plus interest on the two payments that he has taken but I have some questions about procedure:

1. The modification to the payments occurs in 2002, by not taking the large payment. Is Form 5329 filed with the 2002 Form 1040?

2. Since Form 5329 is a form that can be filed separately from the Form 1040, can it be filed earlier?

3. What period does the interest cover? My first thought was from April 15, 2001 to April 15, 2003 on the first withdrawal BUT if we can file Form 5329 early the interest term should be shortened.

4. Our state (CA) has a similar penalty but no interest (that I'm aware of). The penalty might as well be included with the 2002 return if there's no interest. Agree?

5. Does anyone have experience with this?

I believe K-1 income for an owner of an S- Corp can not be used as active income in determining the contribution for the owner. Pension Answer Book as well as RR 59-221 seems to bear this out.

Recently, I was told that as long as the K-1 represents compensation for services rendered to the coproration, it is ok to use the K-1 for pension contribution.

Isn't this in direct conflict with the Revenue Ruling and Penson Answer Book??

I was just informed by my HR that when I ran out of unpaid leave 10 weeks and became eligible for LTD benefits that my status with the company is terminated. In some states like ca, the employer can only terminate after 4 months on LTD.

I also was never told this until after i ran out of leave and despite my numerous eforts to get info on ltd, i was refused. I was notified by e-mail 2 days after.

? In texas is there any laws for employers recading work status when on ltd? I am diabetic and 47. The FMLA doesn't apply as i have been with the company for 12 months. thx for reply

In 2002 when calculating the maximum contribution possible for a self-employed individual, will one need to subtract elective deferrals from gross income? When determing the maximum deduction for a corporation in 2002, one no longer subtracts elective deferrals from gross comp. I'm wondering with this latter change if there's a change for the self employed.

I am looking for a company that provides brochures with details on New Comparability and Age-weighted plans. We have used the brochures from Corbel for GUST Restatement and Safe-Harbro 401(k) Plans but need something comparable for these cross-tested plan. Does anyone know of a company that prepares these or will our retirement plan department need to create our own?

In California, for State employees adding a domestic partner, the employee is subject to additional tax withholding on the differential premium/contribution as ti is deemed as taxable income. Is there any IRC reg., interpretation of reg. of ruling that would lend itself to allow the relief of this imputed tax liability either in and of itself or based on the enacting of State tax law relieving this imputed tax on the State level? We're trying to see whether of not there is a way, should it exist, to relieve this part of the imputed tax for State employees in this situation.

In California, for State employees adding a domestic partner, the employee is subject to additional tax withholding on the differential premium/contribution as ti is deemed as taxable income. Is there any IRC reg., interpretation of reg. of ruling that would lend itself to allow the relief of this imputed tax liability either in and of itself or based on the enacting of State tax law relieving this imputed tax on the State level? We're trying to see whether of not there is a way, should it exist, to relieve this part of the imputed tax for State employees in this situation.

Hello. This is my first time posting a question on this board.

A PS plan has a whole life policy for the principal. The pension firm that set up the policy used a method of calculating the maximum employer contributions available for premiums by taking 100% of the PS contributions that had been in the plan at least 2 years.

What are the risks in using this method to calculate the Incidental Death Benefit limits? FWIW, the plan allows for in-service distribution, but the premiums are paid by the corporation.

Thanks for your assistance.

With the new EGTRRA rules, a person can now roll over IRA balances into qualified plans. I have heard from a client who wishes to do the following:

1. Set up a new profit sharing plan

2. Roll over into the plan a substantial IRA account balance

3. Take that balance and purchase life insurance with it (within plan limits, i.e., 50%). The insurance will have a low CSV until year 5 (springing Cash value policy), and then increase.

Ignoring the "recurring and substantial" contribution requirement for profit sharing plans, is this something that anybody has run across, and if you have, do you think it would fly? Any answers appreciated. Thanks.

Can someone please help? We are involved in a disagreement with a CPA who insists that Publication 590 be used to determine life expectancy for a 70 1/2 distribution. Is Pub. 590 intended solely for IRA's? Has anyone heard of using any table other than the MDIB table intended to be used under the new regs. ????