If forfeitures are reallocated in a Profit Sharing Plan, can a portion be used to pay administrative expenses (assuming the document allows this as an option)?

If an independent contractor has only one employee (himself), can they have a Simple IRA plan? If so (I believe it can be done but a Federal tax ID is needed), what unique items are needed and how is the employer contribution handled? Are there any special tax implications on the individual's 1040 or special federal reporting requirements?

Does anyone see any potential problems with the following scheme. In theory it allows multiple 415© contributions to multiple profit sharing plans:

1. Investment advisor (herein "IA") manages money for 5 separate non-affiliated clients.

2. IA can get an advisory fee from each client (as a sole proprietor) or become an employee of a given client (and thus draw a salary as a fee).

3. He decides to do the following:

a. Sole proprietor to client 1

b. Employee under clients 2-5.

4. Thus IA is a sole proprietor and an employee to 4 different employers (IA gets a different W-2 from each employer)

5. Each of the 4 employers sets up a profit sharing plan for only the IA. The IA is an HCE and each employer is an HCE. The employee and employer are the only employees of the company.

6. IA contributes up to 415© for each profit sharing plan.

So assuming the IA gets $160K salary from each employer he can contribute $160K in total ($40K x 4) on an annualized basis plus any sole proprietor contributions.

From the employer's perspective it has the added benefit of allowing the IA's fee to now be deductible (ee'r downside is now responsible for FICA etc.)

Does anyone see a problem with this scheme from either the IA's or the employer's perspective?

I have a few clients who have SIMPLE (k)'s, and I'm looking for a vendor who can help me restate them - either by using a volume submitter or prototype. Any ideas? Thank you!

The new limits will eliminate a large portion of my client's exisiting Non-Qualified payments; the client recoups the FICA taxes from the Non-Qualified benefit after submitting it to the IRS. THe dilemna is that as of 1-1-02, a percentage of the population will cease to have a Non-qualified benefit and there will be funds left to recoup from the employee. The dilemna is: Can we still apply the old limits to the 1-2-02 check becuase it reflects a December payment, or does the fact it is being paid after 12-31-01 bring it under the new regs?

Is an employer required to allow employees to continue to contribute to a medical FSA after they have been furloughed/terminated? How does this work?

Currently we are allowing employees to continue their contributions to a medical FSA to the end of the benefit year

We are sponsoring a document for the first time. Essentially we are putting our name on a document of a major provider. Although the provider applied for IRS approval prior to 12/31/00, we did not apply until last month. The provider tells me we can still use the Certification specified in Rev. Proc. 2000-20 becuase they applied prior to 12/31/00. The provider says it is irrelevant when we applied for IRS approval.

Is this correct?

If a safe habor plan (match method) offers catch-up contributions is it required to match those catch-up contributions to stay within the safe habor of 401(k)(12)?

A "super-integrated" plan allocation currently integrates at $70,000 and has a " last day" requirement.For the 12/31/01 allocation the plan sponsor wants to increase the integration level to $85,000 and eliminate the last day requirement.I don't think I have a 411(d)(6) issue with the prior allocation basis. Anyone agree/disagree?

We are in the developmental stages of creating a salary administration plan. Can anyway point me to useful resources in our journey (for example salary surveys, how to create salary ranges etc).

I have a client who left a company a number of years ago and rolled his sizeable retirement plan balance to an IRA. He will be 70 1/2 in mid 2002.

He started a new company, which started a profit sharing plan in 1996. We have just done our GUST/EGTRRA amendments, and the plan allows a participant to defer minimum distributions until the participant actually retires. He is no longer a 5% owner but is still employed by the company.

Would a rollover of that conduit IRA into the plan allow him to defer RMDs to actual retirement?

A side issue is that in the event of his death, the distribution options in an IRA might be more favorable, but does anyone know any reason this would not work?

Thanks.

Client employed new tpa to handle 401(k) plan. All plan funds to be moved to new investment manager/company. Employer directed old investment co to cut check to move the funds. Employer sent check to tpa so tpa could get money to new investment co as per tpa's request. TPA lost the check and did not tell employer for some time. Employer talked to tpa and tpa gave excuses as to why the money had not shown up. Meanwhile, employer got stop payment orders for the checks and had the old investment co to cut a new check. The funds have been uninvested in any manner for 2 months. Also, deferrals have not been invested for that same 2 month period. Besides the tpa liability, would it be worth it to go through the dol vfc program regarding the noninvesting of the deferrals?? Also, would the IRS take the position that a prohibited transaction has occurred with respect to the deferrals??? Any other comments or suggestions appreciated.

Any proscription on contributing "matching" contributions to a governmental 401(a) profit sharing plan based on participant deferrals to a governmental 457(B) plan? This would be similar to matching 403(B) deferrals in a 401(a) plan.

I know that the 401(m) regulations say that the contribution is not a matching contribution if the "match" is based on the 457 deferral. But I cannot find a reason for disqualification. Government 401(a) plans don't need 401(m) to be able to contribute different amounts to different participants.

The company I work for is a getting ready to spin off from the parent company. In doing so they are changing our retirement from and ESOP to a 401k. They are telling us that they are only going to roll over the vested amount from the ESOP to the 401 which is my case will only be 10%. Is this legal? Are there any government guidelines that I could reference?

Must all plans in a controlled group match catch-up contributions if catch-up contributions are matched in one plan maintained by the controlled group? What is your interpretation of the proposed Regs?

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?