Question regarding a partnership's Profit Sharing Plan.

Facts:

a) Only discretionary contributions are made to the PSP.

b) The plan has 8 participants ...(3 are partners & 5 are regular employees).

c) The plan year end is 12/31/00.

d) No contributions are made during year 2000.

e) In January 2001, the contribution $amount for year 2000 is determined ($ 8,500). Also, its allocation among the 8 participants is properly computed ($ 2,000 for each partner and $500 for each regular employee). [3 @ $2000 = $6000 and 5 @ $500 = $2500].

QUESTION (concerning the payment of the contribution).

Can the partnership contribute $2500 to the plan trust in January 2001 for the 5 regular employees .... and then in March 2001 each of the partners write a personal check for $2000 to the plan trust ? (In other words: Can a partner fund his Keogh with a personal check ....or must an employer check be used ?).

Anyone know of a tax code or reg that addresses this issue?

A plan I am working on only allows for a terminated employee to receive a lump sum payout after a break in service has been incurred. This means that some former ee's must wait a lengthy period of time (some more than 1 year) before receiving their final distribution.

My question is whether a terminated participant, who is not yet eligible to withdraw his account because of the break in service rule, may still be eligible to use the hardship withdrawal as a means to get to their money (as long as they qualify on account of immediate and heavy financial need).

I cannot find anywhere in the Plan document that says this is disallowed, however, I was always under the impression that a hardship was only an in-service withdrawal, and that in-service meant the participant was employed. What are your thoughts on this?

I received a call from a client who said they want to terminate their 401(k) plan and start a 403(B) plan because it will be better for them. I am not familiar with 403(B) plans and I am hoping that someone on these boards who is familiar with them can fill me in a little bit about why a 403(B) plan would be preferable to a 401(k)? I have a feeling that this client has been approached by a salesperson to make this change and I want to make sure they are making the right decision.

Thank you.

I understand from Section 4302(a) of USERRA that USERRA does not supersede, nullify or diminish any Federal or State law that establishes a right or benefit that is more beneficial to, or is in addition to, a right or benefit provided under the specific provisions of USERRA.

My question is this: What if you have an employer who sponsors an ERISA plan and the state statute provides that continuation coverage must continue as long as the employee is out on military leave? USERRA would only grant the individual 18 months. Suppose an employee is out for 4 years.

In this case, does the state law apply so that the employee gets to elect continuation coverage for the entire 4 years? Looking at 4302(a), you would think yes, but what about COBRA? COBRA, as a federal statute, in my opinion, would preempt the state law. If preemption did not work here, then any state health or welfare laws having anything to do with military service would ALWAYS preempt an ERISA rule. How can this be? Has anyone had this issue come up?

As always, thanks for any comments.

Does anyone know of a company that sells insurance to cover the loss which might occur when a participant terminates with a "balance due" on their medical reimbursement account. I have a law firm client that won't consider the medical FSA unless they can be assured of not incurring a loss.

I need an answer yesterday, if anyone can help. Thanks

Under the proposed Reg's issued 1/17/2001, 1.401(a)(9)-7 Q-1 and 2, it clearly indicates that the RMD may be rolled over from a qualifed plan to another plan and that the receiving plan does not consider this amount in the determination of the amount of RMD to be issued by the receiving plan. There seems to be quite a bit of confusion here. Clearly in IRA's, the rollover of an RMD is not permitted. It seems that the proposed Reg's, recently upheld, now allow for qualified plans to rollover the RMD. This effectively "buys" a year for the participant from taxation, and is basically a tax dodge in the early years. Anyone have any thoughts on this. If correct, this is a major "loophole" in the issuance of the RMD from a taxation point of view from qualifeid plans.

We have a plan that has traditionally been top heavy. In 2001, the president of the company, who had always been considered a key employee, terminated employement. His 2001 compensation was under $130,000. It is a calendar year plan. It seems to me that he would not be considered a key employee in the top heavy determination for the 2002 plan year, as he doesn't meet any of the three definitions during the determination year ending 12/31/2001. My colleagues & I have some reservations though, as he was a key employee in 2001. I think I remember reading about "ex-key employees" somewhere. Can anyone else give me a second opinion here?

thanks

Grant

A money purchase plan was frozen 2 years ago. Now the plan is going to be terminated. The participants were given a notice when the plan was going to be frozen. Is a notice to participants now required for the plan termination?

My firm is contemplating adding to our program for our clients to offer special discounts on mortgage loans to their employees that people don't normally receive. The company can use this as an employee "perk", "benefit".

Is this something that companies would be interested in offering to their employees?

What would some of the critical points be that an HR Director would be looking for from the mortgage company in order to create this kind of partnership?

I don't want to come to the table unprepared. I appreciate any input. Thanks.

I have been asked whether it is lawful for a self-insured medical plan to charge different premiums to employees on the basis of their incomes: the higher the income, the higher their premiums. It seems to me that nothing prohibits this practice as it discriminates against the highly compensated employees. Any thoughts?

As I always undertood it the reason for excluding 125 Plan salary reductions under the definition of compensation for deductibility under 404 was that since 401(k) elective deferrals were employer contributions and therefore excluded from the definition of comp under the language of 404 and 1.404(a)-(9)(B)(2) and since amounts under a 125 salary reduction were kinda-like 401(k) deferrals they should also be excluded in the definition of comp. The only thing I ever found on this was PLR 9225038 Was there ever anything else?

Now, under EGTRRA it is clear that elective deferrals are not taken into account in determining the amount of contribution subject to the 15% limit, but I assume the rule relating to the definition of compensation remains the same--elective deferrals and salary reductions to a 125 plan are excluded from the definiition of compensation for 404? Is this correct?

Hi,

I wasn't sure where to post this, but thought this would be a good place to start as I see other agents/broker's posts regularly. I currently work at an agency and am building my book of business. I primarily do group health but also ancillaries (dental, life, disability). I came into the agency two years ago having spent the prior 18 with a major health carrier. The agency principal is nearing retirement and we have discussed me taking over the business. His book is also primarily group health with many of his clients my old clients when I was at the carrier. The current income breaks down approximately 55% group, 20% individual health, 15% P&C, and 10% life commissions.

I've done some research and most of what I see on the internet focuses more on buying p&c agencies or finacial planning practices. Does anybody have experience either buying or selling a practice where the bulk of the income is group health. One time fee / multiple of income? Percent of renewals? I'm open to any advice.

Thanks

While reading the thread about whether to withhold tax on a distribution in satisfaction of a tax levy, I received a demand from a U.S. Attorney that a plan distribute part of a participant's account to pay a judgment under the Mandatory Victims Resititution Act. There has been at least one (lower court) case that concluded ERISA plans are NOT exempt from MVRA liabilities. Like federal tax levies, MVRA judgments seem to be a liability to the federal government and, under the Federal Debt Collection Procedures Act and can be extracted from the ERISA Plan. However, Reg 1.401(a)-13 mentions federal judgments but really describes tax levies. Also, the exemption from the 10% penalty also seems to apply only to tax levies. Does anyone have any hands-on experience w/ MVRA judgments regarding enforceability and the 10% penalty??? Thanks

1.Is alternate value the same as

date of death value on jointly held property,

POD Accts, and IRA's with named individuals as beneficiaries?

2. which alternate value for 401(k) is used where estate is named beneficiary?

a.the same as date of death; or,

b.the value on the date account is transferred to estate, if within 6 months of death; or,

c.the value on date six months after death.

Question 7c on the new IRS Form 5300 asks if a plan is a "collectively bargained plan" and refers to Regulation section 1.410(B)-9. I don't see a definition of that term in the cited Regulation.

If a plan covers all employees (bargaining and non-bargaining), and certain provisions of the plan apply only to bargaining employees pursuant to a collective bargaining agreement, is the plan a "collectively bargained plan" for purposes of question 7c of Form 5300?

Employer A was a controlled group member with Employer B under Plan #1. Controlled group no longer exists and Employer A wants to establish their own plan and spin-off the assets attributable to Employer A and merge them into their new plan. Employer A workforce is aprox. 40% of A & B. Plan #1 will still exist for Employer B.

Do you think this would be a partial plan termination requiring 100% vesting in Plan #1 for Employer A's participants? Or given the fact they are merging their portion of Plan #1 into their new plan, and vesting can continue for them, they don't have to vest them 100%.

I have a plan that started 1/1/01. Do I still use 2000 compensation in determining HCEs, or since it's a new plan are they considered as not having look-back comp in the first plan year?

Plan Document excludes moving expenses and other fringe benefits from definition of compensation (satifies 414s). For the 2000 plan year, Employer includes those items in calculating the safe harbor match, but did not allow deferrals on those items. Thus, the Employer has made too much of a match for 6 ee's.

Plan also failed to follow eligibility in document and allowed all ee's in plan to defer.

Possible solutions include:

1. VCP (expensive?) to amend plan for 1 year to include fringe in comp and amend retroactively for eligibility.

2. forfeiting excess match and using to reduce future contributions and amend plan for eligibility under EPCRS.

Any comments on either of those solutions or any that I may have missed? I've looked at the notices, but nothing seems to address the compensation issue. The eligibility problem (by itself) is quite clear on the solution.

Thanks.

Ervin Barham

Hello,

Does anyone have a sample year end benefits compensation analysis they can send me?

Greatly appreciated,

Maria Markis, PHR

Ablest Inc.

I've been asked to find some information on how to implement an integrated SEP and I've found very little guidance. This is what I know so far...SEP experts, please feel free to comment:

1. An integrated SEP is a non-model SEP, meaning Form 5305 may not be used.

2. If all disclosure requirements are met (to participants), there are no reporting requirements to the IRS or DOL (meaning no 5500 need be filed; same as a model-sep).

3. There are two ways get started with an integrated SEP: draft an integrated SEP from scratch, or purchase a prototype from a financial services co.

Are these assumptions basically correct? Have you come across any good resources online that I could take a quick look at?

Here's another question:

Depending on whether you draft an integrated SEP, or purchase one from a bank, et al., would it be prudent to seek a Determination letter?

Thanks,

Maxwell