An employee rolled money into our 401(k) plan. We later received notice that she was overpaid from the prior plan - a recordkeeper error. The employee is claiming the amount is correct. We received advice to send a letter to employee and prior sponsor that until we received either legal direction or agreement from the employee and prior employer that the rollover is incorrect, that we'd hold onto the entire rollover. We heard nothing from any party until recently from the former recordkeeper asking for the excess. Our 401(k) plan recently made a change and now allows for inservice withdrawals of rollovers. The employee wants to withdraw the entire amount of the rollover. Do we distribute the money?

I have a client whose pre-GUST prototype reflects a graduated match based on years of service. The document also specifies no HCE's can receive a match to eliminate the obvious discrimination problem. The document specifically states the match formula (e.g. it's not discretionary).

The post-GUST prototype just made available to me two weeks ago does not allow for a graduated match. I don't want to footnote the prototype and risk losing determination letter reliance.

Can I simply check the "discretionary match" box, check the "no HCE's can receive a match" box, and then have a Board Resolution set forth the graduated match formula? I reviewed both the std and non-std adoption agreements and neither one has a specific spot for graduated match.

Can anyone tell me if my suggested approach would cause any problems or cause me to lose determination letter reliance? Any help is appreciated.

Many of the vendors/fund houses I work with are encouraging us/our clients to ACH Contributions (Plan Level). Anybody have an opinion on this? Is it working well? Would you recommend it? Do clients like it?

Can a 5% owner take out his entire balance from a PS plan prior to termination if he is over 70 1/2?

Has anyone heard of a Variable Employee Medical Account (VEMA)?

One company, Professional Benefits Retiree Services (www.retireeservices.com/solutions/vema.html), is marketing this idea. Evidently, it combines the benefits of 401k plans (EE controls investments which grow tax free and health FSAs (pay medical expense with pre-tax dollars).

Supposedly, the EE (and/or the Company) contributes money to a tax-exempt trust. At retirement, the EE can use the accumulation to pay for retiree medical and there is no "use it or lose it" provision as with FSAs.

I've emailed the company asking for more info, but haven't yet received a response. Any thoughts?

Any idea where I can find State laws regarding set up of new 457 plans. Some states have enabling statues however I have found it very difficult to get this information. I have tried the state law sites with limited success. Most states direct you to the state deffered compensation which many times is a provider. I am looking for the autoritative documents that give municipalities the right to set them up. Any help would be great.

The webs we weave to try to keepemployees happy! the employer paid a post 2000 year end bonus(ie in March of 2001), and deducted it in 2000 (the prior year). The employee was allowed to elect to take in cash or defer to the plan as a prior year contribution. Bonus/deferal shows on 2001 w2 for year actually payable. So far I don't think there is a problem with this bit of creativiety.

I believe, without specific exclusion from the definition of compensation, the 2000 bonus which is reported on 2001 current w-2 will be included for determining share in 2001 PS.

For a 2001 safe Harbor 3% must the bonus be included in that caculation ??--

Now for the real kicker: 2 employees terminated in 2000, recieved the 2000 bonus in March of 2001, thus a 2001 w2 but worked no hours. Do we now have to give them the 3% to satisfy the Safe Harbor? Note they worked no hours in 2001.

Thank you in advance for your input.

is there an ERISA problem with a fiduciary charging custody clients based on percentage instead of flat fees?

for example, investment managers charging fees based on percentage of return. performance based fees for corporate action services and the like?

any thoughts???

I have been told this is a "Phased Retirement"-type question, although honestly I have no idea what that means. I have a governmental client that wants to permit participants to receive benefits at a stated age (say, 55) but continue to work. The issue is whether they can say that normal retirement age (NRA) is age 55 and then permit the distributions. My understanding is that, generally, no distributions from a DB plan until termination or retirement.

In addition, as a governmental plan, I know the client is not subject to Section 411 (at least ERISA 411). My real problem with this issue is that the client wants to retain the reductions applicable to an age 55 retirement. Normally, an age 55 retirement (and 15 years of service) would yield an early retirement benefit, which is a reduced benefit. I'm pretty sure this would not be permitted (applying reductions on a benefit someone is getting at "normal retirement age" that is really an "early retirement" type benefit). Since Code section 411 (as amended by ERISA) does not apply to governmental plans, what is the proper way to analyze this situation? Could anyone recommend anything to me? Any thoughts?

Thanks so much!

Can someone over age 70 1/2 receiving his annual minimum required distributions from a standard IRA convert to a Roth IRA, and if so, under what circumstances, i.e. AGI? When would such a conversion (assuming it could be done) be advantageous?

Small Company - Owner and 7 employees, 2 of which are HCE.

Client already has a DB Plan. The two HCE's will enter the Plan in 2002, but due to thier ages, will be very expensive. Client would like to set up a separate Plan just for the HCE's.

I know that we can exclude the HCEs from the DB plan.

I think we can set up a PS Plan just for the HCE's with a 3% ER contribution. -- the NHCE's will be receiving the top-heavy minimum benefits under the DB Plan, and if we aggregate plans for testing, they will pass 401(a)(4).

Can the new PS plan include 401k deferrals for the 2 HCE's?

Thanks for any help.

To update an individually-designed plan for GUST, is it permissible to submit a PROPOSED amendment to the IRS by 2-28-02 and then, following IRS approval, to have the proposed amendment formally adopted by the plan sponsor?

An active employee age 67 has been disabled for 6 months. Under her plan she was considered active for the 1st 6 months of her disability, however, she has now exceeded her 6 months of being considered active under her health plan. The question is whether or not she eligible for COBRA since she is also eligible for Medicare? If she is eligible for COBRA, would she be eligible for 18 or 29 months?

We have upgraded to 7.0 (SP 2), standalone verison. On one of the stand alones Crystal Report Writer is dropping a digit from the year, 2001 prints 201. Does anyone know what causes this and how to correct it? Relius support has been pondering it for nearly a month and can't come up with anything.

I'd like to hear from people experienced in discretionary class plans and client communications regarding same.

I've worked mostly with cross tested plans with hard wired formulas and am trying to get a large block changed to discretionary class plans. One downside would seem to be that more back and forth might be required with clients before the desired allocations are finalized and tested.

How is this typically approached when there are multiple groups? Is it efficient to have written guidelines in terms of how relative contributions are determined, i.e. class two gets 1/2 of class 1 and class 3 gets 1/3 of class 1?

The context is not a small, local-only operation where regular client meetings are held. I'm talking about a wide geographical spread of clients.

What are people's experiences with how to make this process most efficient? All opinions are welcome.

A. Company has a MP and PS on a calendar year basis.

B. Company wants to merge the MP into the PS plan.

C. Company hasn't made the 2001 MP contribution yet.

D. Can the company put the MP contribution into the PS plan or

does it have to maintain the MP until the contribution is made

and then merge?

Is calendar year 2001 the deciding year for selecting the current or prior year testing or has that been extended to 2002?

Can an employer limit the compensation subject to a match; for example, match dollar for dollar up to 3% and $100,000 of compensation

A plan has 3 month eligibility for deferrals and 12 month for employer contribution. There has been a number of terminations during the 2001 plan year.

In counting the number of participants, in order to determine if there has been a partial termination, do I count only those that are participants in the employer portion of the plan (met 12 month eligibility)? Or, must I also count those that are eligible for deferrals, but not eligible for the employer portion of the plan?

Has anyone seen any guidance on the practice of taking an individual's personal brokerage account fees and his IRA account fees and charging the total of both fees to the IRA account? The idea is to decrease future taxable income from the traditional IRA by reducing net gain, since the fees charged to the personal account would be too little to deduct on a 1040 - miscellaneous deductions subject to the 2% floor. This doesn't pass the smell test, but I don't know if I can find specific guidance to prove it.