Has the IRS opened its determination letter process to sponsors of cash balance plans? Thanks. Ed

ERISA 403(B) arrangement is invested entirely in a group annuity contract (GAC). The arrangement includes salary deferrals and employer matching contributions

Employer wants to restate document and transfer to a custodial account environment (assume there are no issues related to withdrawal from GAC).

Given that in-service withdrawals of matching contributions is allowed under the GAC (and under the existing plan), but is not permitted under a custodial account (see 403(B)(7)(A)(ii)) -- is there any way to move to the custodial account environment without causing a cutback of the in-service withdrawal feature, as it applies to matching contributions, rollovers, etc.

Your comments are appreciated.

I understand that if a controlled group maintains seperate plans, that for HCEs, the ADR is run combining compensation and deferrals from both plans. However, what about NHCEs? It doesn't appear that we combine deferrals. Does that also mean that we do NOT combine compensation. HELP.

If a Dependent care Reimbursement Account Plan is discriminatory (fails the 55% utliziation test) the amounts received as reimbursements under the plan are taxable to HCE's.

If, for example, the plan is discriminatory for the 2001 plan year, and the HCE has expenses that are reimbursed during the run off period in 2002, are those amounts taxed in 2001 or 2002?

It seems to me that the impact of failing the test is that 129 does not apply to the HCE's. Therefore reimbursements for dependent care are taxable when paid. But can the employer use the same rule that is available for reporting dependent care expenses on Form W-2 and treat the estimated reimbursements as taxable income in 2001 (if the employer is comfortable that the employee will in fact have the expenses)?

Thanks-

card

We are trying to calculate a sole proprietor's net earned income. Our problem is the starting point. We have been told to use Schedule C line 31 (for a sole proprietor). We have then been given some conflicting information with regard to adjustments to arrive at the final earned income number. Does anyone have any information they can share with regard to this calculation? We deal with mostly 401(k) plans, so it complicates the issue. Any help would be appreciated.

Can the IRS model forms (5305 series) be used to establish IRA annuities for insurance companies? Or are insurance companies which offer deferred retirement annuities required to put together a prototype plan

I am getting conflicting research. One source says insurance companies cannot use these model forms, but some of these forms themselves refer to insurance companies.

Sooo, which is it? Thanks.....

The plan sponsor is a law firm. Currently the law firm sponsors two qualified retirement plans, one plan for Senior Counsel and another for staff ans associates. The plan sponsor indicated that they are looking to add another plan for the Senior Counsel that they called a "LEO" plan. The plan sponsor indicated that this plan was "created" by PriceWaterhouseCoopers. Does anyone know anything about this so called "LEO" plan?

The plan sponsor is a law firm. Currently the law firm sponsors two qualified retirement plans, one for Senior Counsel and another for staff and associates. The plan sponsor indicated that this plan was "created" by PriceWaterhouseCoopers. Does anyone know anything about this so called "LEO" plan?

The plan sponsor is a law firm. Currently the law firm sponsors two qualified retirement plans, one plan for Senior Counsel and another for staff and associates. The plan sponsor indicated that they are looking to add another plan for the Senior Counsel that they called a "LEO" plan. The plan sponsor indicated that this plan was "created" by PriceWaterhouseCoopers. Does anyone know anything about this so called "LEO" plan?

If a company elects in the loan procedures "any reason" for loan distribution, will this be subject to scrutiny from the IRS should they be audited? Should the company be more strict in their policies?

Does anyone know of a central location/list of states which require a W4P equivalent for state withholding and what they

require? A co-worker is especially interested in whether any

of them use marital status identifiers ('codes') beyond just Married, Single.

I am working on a small 403(B) plan for a church.

In addition to regular staff, there are three pastors that declare a portion of their income as a housing allowance.

Hows does this play into the definition of compensation for the retirement plan? How does it play into any benefit or contribution limits ?( 404,515, etc.)

The church board retirement policy has been to fund 6% of pay, based upon gross salary (including the housing allowance).

Do you see any problems with this approach?

One option in our plan is a separate account managed by PRIMCO. It is called the "Stable Value Fund".

Is using the word "fund" a problem? Does that imply a mutual fund or can it be a generic term as well?

Is this any problem under Sec 404©?

Must an employer amend their plan to specify a new anniversary date **on or before** that date actually passes?

Take the example of a plan with a 6/30 anniversary date (coinciding with the employer's fiscal year end). In December 2001, the employer changes its fiscal year end to 12/31 but does not advise recordkeeper/document provider until sometime in January 2002. Is it too late to amend the plan to have a short plan year from 7/1/2001 to 12/31/2001 (i.e., did that need to be done by 12/31)? If the employer executed some type of board resolution in December, would that suffice?

Follow up question - If that same plan is being restated for GUST effective 1/1/2002, would it be possible to reflect the short plan year of 7/1/2001 - 12/31/2001 in that same document, even though the document restatement is not effective until 1/1/2002?

Thanks.

Client wandted to merge MP into 401k on 12/31. All resolutions and notices were sent 12/27 and lost in mail. This assumed a freezing of the mp cont effective 1/20 in the 204h notice (safe enough to avoid accruing anything in 2002.

Now that this whole package was lost, what recourse do we have? Can resolutions and amendments be signed currently, but retro? Obviously, this notice has to be redated probably out to Feb 20 to give enough time for notise of frozen MP. Thoughts??

I have participant that is 55 years of age with over 20 years and is a participant in an ESOP plan. The stock is not publicly traded. The plan has been in existence for about 7 years. In the SPD it states that a participant that is 55 years of age and has ten years of participation in the ESOP plan can diversify out of the corp. stock. I don't believe I have ever seen it based on participation but rather years of service...although most of the ESOPs that I have dealt with have been older than 10 years.

Can an ESOP plan still require 10 years of plan participation for a participant that has reached 55 years of age and has over 20 years of service....even though the plan hasn't even been around for 10 years? Seems to put those participants that are nearing retirement age in a bad situation. The company is not in the best of financial shape.

with svc pack 8 at 6.0 a change was made to the nondiscrim calculation involving permitted disparity.

first, I will say two things. I have been wrong before, and I will be wrong again, I am merely stating why I disagree.

2nd, I didn't see any indication of this change in the svc pack 8 notes, but I could easily have missed it. It caught me by surprise, but I didn't read every single thing in the notes.

anyway, with svc pack 8, if you impute disparity, the factors are now adjusted for months as well. Reg 1.401(l)-3(e)(3) clearly states that this is required when using an age other than SSRA, so there seems to be a basis for this argument.

however, 1.401(a)(4)-12 definitions says (1) If the plan provides the same uniform normal retirement age for all employees, the employee's testing age is the employee's normal retirement age under the plan.

now, for example using the Corbel document (though I am sure other document are similar) I have

Normal retirement age = 65, normal retirement date = 1st of month coincident or next following.

so now the system no longer tests on normal retirement age, but rather normal retirement date. and that is the crux of the matter.

but, for the sake of argument, lets suppose that I am to use normal retirement date as my testing age rather than my normal retirement age.In that case, I have someone whose mormal retirement is 65, another whose normal retirement will be 65 and 1 month. I no linger have a uniform reirement age.

therefore, I must use 1.401(a)(4)-12 testing age (3) if the plan does not provide a uniform retirement NRA, the employees testing age is 65.

I am back to testing age 65 rather than 65 and 1 month as a testing age.

and 1.401(a)(4)-7©(4)(iii)(B) says the .75 percent adjustment, pursuant to 1.401(l)-3(e) using as the age at which benefits commence the lesser of age 65 or the employees testing age.

Note this is the lesser of 65 or the testing age, so using 65 and 1 month makes little sense to me.

actually, in this case, if one does not have a uniform retirement age, then one could test using SSRA, as permitted under the SPBJA changes (though one has to be careful there because of other testing concerns)

if you agree with the above argument, then you will have to code your plans 'date of event' rather than 'first of the month following'. while this might not quite coincide with your document, it is what I have to do for now. In a DC plan this date is almost insignificant anyway.

FACTS: Sole Proprietor ("SP") has 1 employee ("EE"). SP makes about $120,000 of self-employment income and EE is paid $20,000 per year. SP is 52 and EE is 40.

ISSUE: Can SP set up a Defined Benefit Plan for 2002 that provides for the maximum benefit and also set up a safe harbor 401(k) plan, and deduct all of the contributions?

MY DISCUSSION: Assume that the DB funding is about $60,000 for SP and $5,000 for EE which is clearly more than the 25% limit imposed by §404(a)(7). (Also assume that the DB plan satisfies the top heavy minimum.) If EE elects to defer 8% to a 401(k) plan, then SP can defer $12,000. But if EE does not defer any, then SP can't defer unless he makes a safe harbor contribution of 3% for EE. It seems to me that deduction of this 3% safe harbor contribution would be prevented by §404(a)(7), but the deferrals (SP's and EE's) would be deductible under §404(n) that was added to the IRC by EGTRRA.

Can SP defer the $1,000 catch up regardless of any deferral by EE? Can the safe harbor plan use a matching contribution instead, and if EE does not defer, then have deferrals by SP as the only contributions (since the DB plan is satisfying the top heavy minimum)?

Thanks for your thoughts on these issues.

I want to make sure I understand this correctly. To meet the exemption from User Fee a plan that was first effective on or after 12/9/1989 must file the application for FDL before end of GUST remedial amendment period. This applies to terminations also? If a plan that was first effective in 1994, terminates in 2000 and files F5310 in January 2001, there is no user fee?

One more question- the difference between the Roth and regular is that you don't get to deduct the contributions on your taxes, correct? So it's as if you just put them in a savings account, right? But is that it? You've just payed income tax on it as part of your regular pay, you don't continue to have to pay taxes on the increases in the account, as you do with interest from a regular savings account, do you? I apologize for my ignorance, but I am truly new at this.

Thanks!