I am working on a plan that has had problems with late deferrals since its inception in 2000. I understand the calculation for the "amount involved" and the excise tax. My question lies with the completion of the form itself:

1) This company deposited late deferrals multiple times during 2000. Is it necessary for me to list each late deposit on Part VII of the 5330 as a separate Prohibited Transaction?

2) If must list them separately, the form only has 4 lines for entry. The instructions do not state whether to attach another page or include a spreadsheet. Any suggestions?

3) Corrections were completed this month (10/2001) for the late deposits relating to 2000 deferrals, and I realize I must file a 5330 for 2001 also. Can I file this NOW or must I wait until after the end of the taxable year (12/31/2001).

Thanks for your assistance.

KAG

I have two pieces of information on the timing of Sep Contributions, One states it must be made by Year End, the second piece states by the employers tax deadline. Can someone help, if it is by the employers tax deadline, say in October, than how does one deal with the 5498 when they are due before the tax deadline.

Thanks

Admin new to Seps.

I have filed a number of Form 5500s under the VCP and had clients pay the reduced penalties for the late filings. I have heard a number of people have filed the forms late and simply sent a statement explaining why the forms are late. Has anyone heard is the government waiving the penalties? I know it is possible to get the penalties waived for a "fringe benefit plan" but it stikes me as odd if the government is going to waive the late filing penalty for a "welfare benefit" if all you have to do is send in a statement.

In other words, it seems unfair to have the VCP and have people pay a reduced penalty if the government is going to completely waive the penalty if you send a statement.

Is anyone reading Section 4.03 to mean that if the new actuary wants to change funding methods he/she can bypass the 5% test & go right to using the rules of Section 3 ??

Hi all,

This is my first posting here. I have two quick questions.

1. Are Roth contribution limits going up to 5K in 2002?

2. My wife and I have a two year ols son and we are considering alternatives for college planning. We are 34 and 31 respectively and will be able to contribute to Roths for the foreseeable future.

Is using our Roth money for his college needs (in 16 years) the best way to go? Are there any tax problems if we withdraw money for his college education?

Hope someone can help.

cheers,

chris

On the form 5500, page 2, question #6 - asks for the total number of participants at the beginning of the plan year.

Can someone clarify this?

If pulled from the previous plan year, would you use question 7f or 7g?

Through my software, it appears that it pulled 1999's answer for 7g, and populated it in question #6 for 2000.

Is this correct?

Thanks in advance!

A business has a SEP plan which allows employees to contribute through payroll withholdings. The employer's fat bookkeper withheld the proper amounts from employees for a whole year... but she never deposited any of the amounts withheld into the employees' SEP accounts. The employer says that she stole the money and that there is nothing that he can do.

The employees intend to sue the employer in state court for breach of contract .... However ....

.... MY QUESTION: Are there any IRS or ERISA penalties that the employer is subject to, for failure to deposit the withholdings (timely) ?

I realize that a SEP is not a qualified plan under ERISA. If anyone can direct me to any specific IRS or ERISA code sections which explain what the employer penalties (criminal or $monitary) might be regarding a SEP ... I'd appreciate it.

Can you have a cross tested DB Plan with a Simple Plan or must the Simple Plan be terminated?

I have a basic expense question.... is a participant required to pay for the day care expense before it can be reimbursed from the dependent care FSA?

Thanks

Are many companies using Section 105 plans and what issues need to be addressed upon implementing and administering such plans?

I'm doing the 410(B) test for a terminated plan that was originally sponsored by a company that was acquired (stock sale). A portion of the excess assets were allocated to the active employees, with the remainder reverting to the new (acquiring) employer. Those employees who received an allocation of excess assets obviously benefitted for the year.

Let's say the acquisition was 8/1/99, and I'm doing the (calendar year) 2000 410(B) test for the entire group. In determining who is an HCE, I need to look at compensation during the lookback period. Can I use compensation for the entire 1999 plan year for this purpose (which would include 7 months of compensation paid by the prior employer and 5 months paid by the new employer).

1.414(s)-1(f)(1), (2) & (3) would appear to say yes. This is a large group (~3000 employees, ~100 HCEs) and passing or failing 410(B) hinges on this question.

TIA for your opinion!

Mark

Does anyone have any UPDATED information about locating missing participants?

What I have is a municipal plan - no minimum funding requirement - and one plan document that describes a different benefit provision for each of 3 groups of municipal employees (firemen,police, & office staff) - the town now wants to create 3 separate plans - for funding purposes, would this have to be treated as a spin-off with the current single asset pool split to each of the groups ? or being a municipal plan, could the single asset pool be retained and just continue to merge the liabilities ??

Assume a 401k plan w/ publicly traded employer stock as an investment option. Trading of the Eer stock is 'temporarily' suspended by NASDAQ. We have frozen the Eer stock option and are communicating situation to Plan participants. QUES:

1. Should Participant statements reflect last trade value (w/ alert it is not current)?

2. If #1 is NO, what value/procedure should be used?

3. Is there a fiduciary duty seek an independent valuation or negotiate a private sale while suspension is in effect?

4. Any other good advice or experiences on this situation?

I was researching an issue the other day and one of the threads referenced an article by Elinor Merl(inor) titled "Plan Administration of Tax Treatrment of Loans at a Participant's Death" -- The reference indicated the article was published in the Winter 1996 issue of Journal of Pension Benefits.

I have not been able to locate the article and wonder by chance if someone might have the article or a link to the article that would help in my search.

Thanks in advance for any insight provided.

Sincerely,

Andmik

With the EGTRRA changes that go into effect next year is my scenario below possible.

one-man company making $100,000 annually establishes a 401k P/S. Since the deferrals are not included in the 25% deductible limit can he defer $11,000 and the company make a 25% P/S contribution for a total of $36,000, since he would not be exceeding the $40,000 dollar cap?

The client has just provided termination dates for the first time in the past six years. Upon this new revelation, it is noticed that at least 20 participants terminated from 1996 - 1998 and still have an account balance without receiving distributions.

The question is this: Understanding the penalties associated with this ($1 per day per participant w/max of $5,000), would you just report them on the 2000 Schedule SSA and make client aware that it is possible they could be hit with these charges if ever audited or would you file each of the respective years SSA schedules which would clearly identify the problem in which case the DOL would issue the substantial fees to be paid? I am leaning with the latter but wanted some other opinions or other options that I may not be aware of. Thank You!

What happens if...

A sponsor with an individually designed plan document signs (before 12/31/2001) a certification that it intends to adopt a prototype. The prototype does not become available (because of IRS timing on issuing the opinion letter) until after 1/1/2002. The sponsor then discovers that its plan features don't all fit into the prototype, and the sponsor amends either the adoption agreement or the basic plan document. I know that the IRS may then come back and determine that this plan is no longer a prototype, but is an individually designed plan. Has this plan sponsor now missed the deadline for timely amending for GUST? I haven't seen anything hard and fast from the IRS, but what is the industry consensus? Thanks.

40 unrelated employers (that practice in the same industry), form a association in order get reasonable medical insurance premium rates for their employees. The "association" contracts with a national insurance company for group coverage and the association hires a professional TPA to process claims & deal directly with the insurance company. All 40 employers send their medical premium payments to the TPA each month.

MY QUESTION:

Each of the 40 employers is the "fiduciary administrator" of its company's medical plan. But none of the 40 employers has a direct policy with the insurance company (There is only one insurance policy contract that the insurance company has in this matter .... namely: the policy is between the insurance company and the "association"). If the TPA refuses to process or pay a claim for a participant ... who can the participant hold legally responsible ?

I would think that he could NOT hold his employer/administrator responsible (even though the administrator is a fiduciary of his plan) because the employer has NO contract with either the TPA nor the insurance company ? Also: Although the TPA gave all participants a copy of the medical plan booklet ...the booklet says that it "is NOT a summary plan description".

Question I've never been asked before: Can a sponsor of a small DB plan make, as part of the required contribution, a contribution to the plan of corporate owned life insurance, presumably taking a deduction for, and credit for, the cash value of such policy?

Presumably the company's owner is the insured.

Is there anything preventing this from being viable?

What are the issues related to the deductibility?

Clearly there are issues such as PS 58 costs, tax issues upon death or distribution, need to provide equivalent BRF's to other participants, need to satisy incidental benefit rules. What else?

I'm not advocating this; just trying to answer a series of questions. Thanks for any comments.