Say a 2000 calendar limitation year is changed to a limitation year of 7/1/00 to 6/30/01. Is the 415 dollar limit prorated for the period 1/1/00-6/30/00 or 1/1/01 to 6/30/01? Before you answer, please read the following excerpt from IRS Reg. 1.415-b(4):

(4) Effect of change of limitation year.

...

(ii) Any change in the limitation year must be a change to a twelve-month period commencing with any day within the current limitation year.

(iii) For purposes of this paragraph, the limitations of section 415 are to be applied in the normal manner to the new limitation year. Moreover, the limitations of section 415 are to be separately applied to a “limitation period” which begins with the first day of the current limitation year and which ends on the day before the first day of the first limitation year for which the change is effective. The dollar limitation with respect to this limitation period is determined by multiplying (A) the applicable dollar limitation for the calendar year in which the limitation period ends by (B) a fraction, the numerator of which is the number of months (including any fractional parts of a month) in the limitation period, and the denominator of which is 12. This adjustment of the dollar limitation only applies to a defined contribution plan.

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It appears to me that "the day before the first day of the first limitation year for which the change is effective" in my answer above is 6/30/00.

What is the point in giving historical information about ADP/ACP testing in a GUST document?

If that information is not completed in a protoype and the plan is audited or submitted for a determination letter, what are the likely consequences?

Note that I am not saying that testing wasn't completed but, at this point, it cannot be determined if current or prior year data was used.

Thanks.

I need info on how to terminate a 403b and move it over to a 457 plan. I have a copy of Rev Proc 2001-17. I could use some help in gleaning what I actually need to submit for correction. The problem is that the 403b is with a city which is an ineligible employer. Thanks.

I need info on how to terminate a 403b and move it over to a 457 plan. I have a copy of Rev Proc 2001-17. I could use some help in gleaning what I actually need to submit for correction. The problem is that the 403b is with a city which is an ineligible employer. Thanks.

If a Participant terminates employment, and wants a lump sum distribution from a 403(B) plan, are there any joint and survivor annuity requirements? Or are those requirements only triggered if a Participant elects a life annuity? The Employer is a tax-exempt subject to ERISA. I understand the preretirement survivor annuity requirements.

Has anyone seen any recent guidance that addresses electronic signatures as it relates to Beneficiary Designation and Election Forms? Thanks.

I am familiar with significant dates for DC plan updates, but I've run across a couple of DB plans that have dates in the mid to late 80s. Were they not required to do anything in '94?

Does anyone know if vacation/sickday payouts at termination can be used for elective 403(B) or elective 457 deferrals?

I have a glossy brochure from one of the major fund managers suggesting that this is possible post SBJPA '96.

My recollection is that other interpretations were more restrictive...suggesting that it was only amounts earned for vacation and sicktime in the year of termination could be used.

And it's unclear to me right now how EGTRRA affects all of this.

Any ideas would be appreciated.

Thanks,

Johnny

I have a client that answers YES to the question, "Did the ER get the deferrals into the trust on a timely basis". However, I know they did not get them in under the legal limit of 15 business days. Does anyone know of any guidance from the IRS regarding the 5500 preparer's responsibility in this situation?

I have a client with a non-standard prototype and a last day of year rule. 2 eligible participants, the owner and an employee who terminates midyear with 1013 hours. The employee is not getting an allocation because of the termination but we fail 410(B). Do we need to give her a contribution to avoid the failure or is there another way out?:confused:

Hi, guys--garden variety reporter here, trying to get a handle on something.

Senators Boxer and Corzine have introduced a bill in the Senate which would sharply limit the amount of exposure workers can have to company stock in their 401(k)s. You know--Enron and all that. Will it work as planned?

If it passes, how many of you might have to actually reduce the amount matched to employees? How might it affect your plans? You're the guys in the trenches. Is there a better way?

Jason Van Steenwyk,

Mutual Funds Magazine

Fort Lauderdale, Florida

What 415 limits would applyfor a short limitation period (due to a change in limitation year) beginning and ending in 2002? Would the post-EGTRRA limits (pro-rated $40,000 and 100% of compensation) since the short limitation period begins on or after 1/1/02? Or would the pre-EGTRRA limits (pro-rated $35,000 and 25% of compensation) apply since the 415 limit applies based on the calendar year limit for the limtation year ending in that calendar year?

We have a plan that chose to have the TPA fees deducted from the participant accounts. After the deduction took place, they realized that the amounts deducted were greater than they anticipated (the participants started to complain). Can the employer reimburse the plan for those fees without them being considered a contribution for the year?

Thanks in advance for any help!

A client has an ESOP with a CODA. The client wants to spin off the CODA piece of the plan into a 401(k) plan (the CODA piece is getting too much money so that the ESOP is having trouble with the "primarily invested" requirement). At the end of the day the client ends up with an ESOP and a 401(k) plan bundled together in one document (a KSOP). The ESOP would provide the match (in company stock) for the 401(k) elective deferrals. I believe particiapnts will have the option of investing their 401(k) elective deferrals in company stock. Is such restructuring permissible? Does it raise any issues as to qualification under the Code? What if the piece that the client wants to spin off includes money from elective deferrals (under the CODA) and money from other plans whose assets have been transferred to the ESOP pursuant to acquisitions? Any additional issues? Any help would be appreciated, as would any suggestions for research references.

Finally, we are converting annually valuated plans to daily. This conversion requires cleanup of large suspense balances caused by years of over - contributions and forfeitures. Can these balances be returned to the employer? OR do they have to stay in the Plan to reduce future contributions? Some of the balances may take months & possibly years to deplete.

With regard to the SOA designations of ASA or FSA, I do not understand their relevence to pension consulting. It is my understanding that to be an EA (i.e. to be able to certify a schedule B or PBGC form) one has to pass the joint board exams.

My question is then: what is the importance of being an ASA or FSA relating to qualified plans? It must be something because I have noticed many jobs in the pension field that are looking for individuals that have obtained that designation.

I have a SEP IRA which I contributed to in 1999. In 2000, my accountant suggested I start a Keogh (Money Purchase & Profit Sharing Plan). Because I am no longer contributing to the SEP, how long do I have to keep my SEP around before I can roll it over to an IRA account? Thanks

My mother and father were married for almost thirty years. Pursuant to their divorce, my mother was entitled to 50% of the value of my father's retirement plan as of the date of their divorce. My mother recently passed away in December of 2001, and I am now wondering if that money she was owed needs to be included in the calculation of the value of her estate (and consequently required to be distributed according to her final wishes). I hope someone can help clear this issue up for me. Thanks!!

I have two clients whose 401(k) plans terminated in 2001. Neither want to pay fees to have the plan document brought into compliance with GUST. Obviously the plans need to be amended, but what are the potential sanctions upon audit for not having udpated? Again, I don't agree w/ this approach, but I think both clients are weighing the cost benefit of the situation. Any advice appreciated.

If I'm taking 72t distributions (pre 59 1/2, Substantially Equal Series), can I take out $2,500 and still use the 60 day rule on a onetime distribution if I redeposit it and not "interupt" my normal SES distribution? Thanks