anyone aware whether the above act has been invoked and if so, whether that means all plan loans to active military personnel are limited to a 6% interest rate?

Does anyone know where I can get a sample employee notice for deleting Joint and Survivor annuity options from a 401(k) Plan?

If a self-employed person wants to establish a SEP-IRA or MP/PS plan but is also a participant in a 403b through an employer (for example, a professor receives self-employed income for giving speeches or writing books). Is the overall $35,000 limit in place, or could the person max out both the 403b deferral and the SEP/ Keogh contribution?

For example, defer $10,500 to the 403b and contribute $25,500 to the SEP (total $36k)

Or defer $10,500 to the 403b and contribute $35,000 to the MP/PS plans (total $45,500).

If anyone has a good reference on this issue, I would be very interested. I only have a very old article called "Beware the 403(B)-Keogh Pitfall" by Mary Rowland. It's from at least 1995, and I don't know if there is any impact on this with legislation since then.

ACCESS RESTRICTIONS AS A BAR TO ROLLOVERS?

By: Joel L. Frank

Under the Code prior to UCA '92, a distribution could be rolled over from a TSA to another TSA or IRA only if (1) is was a total distribution or a partial distribution equal to at least 50% of the balance to the credit of the employee, (2) the distribution occurred because of specified triggering events (death, disability, separation from service or attainment of age 59.5) and (3) the distribution was rolled over in 60 days. Code Section 403(B)(8)(A)-(D), prior to UCA '92.

In general, UCA '92 simplified the rollover rules for TSAs by eliminating (1) the distinctions between total and partial distributions, (2) the mandatory triggering events upon which a rollover could be made, and (3) the requirement that distributions must be made within one taxable year of the employee. Code Sections 403(B)(8)© and 402(a)(5)©, prior to UCA '92.

CONFUSION:

In its Information Letter of May 19, 1995 the IRS laid out its position that the access restrictions found in Code Section 403(B) 11 are a condition precedent to a distribution ---and therefore a rollover---of salary reduction amounts.

On May 21, 1999, however, in its IRM Handbook 7.7.1, Chapter 13, 403(B) Plans, the IRS says at 13.9.2 (1) c.

“Unlike transfers, there must be a distribution event under

the plan or contract to have an eligible rollover distribution”

The various 403(B) issuers have been using the Information Letter and not the Handbook guideline. The early distribution events as enumerated in the Information Letter are quite specific because section 403(B) 11 is quite specific. This contrasts sharply with the Handbook where it says “there must be a distribution event under the plan or contract.”

The Handbook Guideline recognizes that the specified distribution events under section 403(B) 8, the rollover provision of section 403(B) were repealed effective with the UCA '92. The Handbook Guideline further recognizes that section 403(B) 11 is the early distribution provision and, as such, has no application to eligible rollover distributions. The Handbook Guideline, therefore, properly assigns the nature of the distribution event, for rollover purposes, to the “plan or contract”.

The clear intent of the statutory repeal of the rollover events under 403(B) 8 was to eliminate the universality of these specified rollover distribution events by leaving it up to the individual 403(B) plan or contract to decide on the specificity of the distribution events in order to have an eligible rollover distribution.

Is it not ludicrous to require an early distribution triggering event (death, disability, separation from service, attainment of age 59.5 or in the case of hardship*) under Section 403(B)(11) in order to effectuate a rollover distribution to another TSA which is subject to the same early distribution triggering events under Section 403(B)(11)? Is this not the very reason why the UCA '92 eliminated the mandatory triggering events under section 403(B) 8 (death, disability, separation from service or attainment of age 59.5) upon which a rollover distribution could be made?

BIFURCATION:

The use of section 403(B) 11 to govern rollovers results in two sets of rollover rules for section 403(B) 1 annuity contracts:

Rule 1: Pre-1989 Amounts:

The early distribution events under section 403(B) 11 did not go into effect until January 1, 1989, therefore, section 403(B) 1 contract balances prior to that date may be rolled over without a rollover distribution event because the rollover distribution events under section 403(B) 8 were repealed under the UCA '92.

Rule 2: Post-1989 Amounts:

Contract balances subsequent to December 31, 1988 may only be rolled over upon satisfying an early distribution event under section 403(B) 11 because the effective date of section 403(B) 11 is January 1, 1989.

CONFLATION:

Section 403(B) 8 is the rollover distribution provision of section 403(B) while section 403(B) 11 is the early distribution provision; they do not conflate. The use of the early distribution events under section 403(B) 11 to govern eligible rollover distributions under section 403(B) 8 renders the repeal of the rollover distribution events under section 403(B) 8 meaningless.

Is there anyone out there that agrees with my position?

Peace,

Joel L. Frank

rollover@optonline.net

*Hardship distributions are no longer eligible for rollover treatment. Code Secs. 402©(4) and 403(B)(8)(B). Internal Revenue Service Restructuring and Reform Act of 1998.

I have a question on Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA). I would like to know what companies are actually doing now for their employees who are being called into active duty for the National Guard. How are you handling compensation, benefits, etc. I read up on USERRA, but my company would like to know what some actual companies are doing.

Thank you.

Sharon

A controlled group decides to spin off one of the companies in the controlled group. The spun-off company will adopt its own DC plan, and all of the DC accounts in the controlled group will be transferred to the new plan.

Must the new plan credit vesting and eligibility service with the controlled group prior to the spin-off?

Are non-qualified plans subject to minimum distribution rules??

When making my cafeteria election for 2001 we did not know we would be having our third child this year (born 9/11/01, I'm happy to say there was some good news for that day).

Needless to say there are substantial medical expenses we did not consider when making the cafeteria election for 2001.

My wife, who was working part time, is no longer working.

Do either of these events allow us to change the cafeteria election for the remainder of 2001 (so we can get reimbursed for the out of pocket expenses related to the birth of our child)?

A Plan with a Final Average Pay formula defines average compensation as the highest 5 consecutive years within the last 10.

A Participant has the following salaries during the last 10 years:

2000 50,000

1999 45,000

1998 0

1997 0

1996 40,000

1995 35,000

1994 35,000

1993 0

1992 0

1991 30,000

What would you use for the average compensation?

Would it be 1994 - 1998? $74,000 / 5 = 14,800?

Or do you have to recognize that there are years where no salary was earned?

Any sites would be appreciated.

Thanks in advance for any help.

I've read some prior post regarding 404 deduction limits and annual addition timing and would like some clarification.

Example:

12/31/00 Plan Year & Tax Year (corp ext until 9/15/01)

Match contribution would be due 9/15/01 to be deducted on 2000 tax return.

Match contribution would be due 10/15/01 (??) to be counted as 2000 annual addition?

I am clear on the due date for deductibility purposes but am unsure regarding the due date for counting as an annual addition.

I would appreciate any input.

do you need to obtain a salary reduction agreement from an employee in order to take money out of there paycheck for health insurance costs (pre-tax)?

anyone hear anything about an actuary firm called kowalchuk associates? they're near ground zero and their phones are still down. I have no reason to believe that they won't be back to business as usual but i haven't been able to get in touch with them. any info would be appreciated. thanks.

When the market was roaring and the internet soaring, the trend was market indexed defined contributions and stock options. Is anyone seeing a renewed interest in interest credited defined contributions and perhaps even defined benefits?

Confession, I am collecting information for the COLI Administration confernece in Chicago next month.

Plan sponsor (an LLP) has several partners which are a mixture of PCs and Sole Props. What happens when the only employee of the PC (a doctor), leaves the LLP but continues to maintain his PC. It doesn't appear that we have a distributable event since he is still an employee of the PC. Same question when a Sole Prop. partner leaves. Since there is no "separation from service", how can you justify making a distribution to these participants?:confused:

Has anyone set up a 401(k) for a governmental water/irrigation district/agency under 401(k)(7)(B), as amended under TRA 97? We're going to set one up for a client, but I'd like to know if anyone has done it and submitted to IRS yet?

Also, Carol, I noted that your "Choose Among" chart on your website doesn't list the new exception for establishing a 401(k). Is there something I should know before delving in here?

Has anyone set up a 401(k) for a governmental water/irrigation district/agency under 401(k)(7)(B), as amended under TRA 97? We're going to set one up for a client, but I'd like to know if anyone has done it and submitted to IRS yet?

I'm looking for some help on a plan document issue related to a safe-harbot 401(k) plan. As simply as I can state the question: Is it permissable to have a plan document which includes a "contingent" safe harbor feature and which, therefore, does not have to be amended, from time to time, to invoke or deactivate the safe harbor approach? I'm thinking along the lines of language that is "activated" or "deactivated," if you will, by, for example the delivery of the safe harbor notice(s). Any thoughts on this approach would be appreciated. Reference to any such "approved" language would be appreciated even more. Apologies if this has been hashed out before.

Thanks!

Individual replies to mhughes@rhoadeslawfirm.com or 412-765-2449

If anybody has the actual formula for determing Personal Rate of Return, please post it as a reply to this message. I am familiar with many approximations (Modified-Dietz, etc); however, I want an exact formula which fully takes into account the timing and value of participant's contributions/disbursements. Any information which you can provide may be helpful.

thank you, Mark

Dear Attorney Reineke:

Re: Inequitable Property Settlement

What can I do? Who can I consult? -- (Same song . . . 2nd verse)

I was married to a Michigan State Police Sgt. for 26 years and raised two children. I worked outside the home as well, but due to his five transfers, had to leave each job I secured to follow him to his new assignment. When, as an 18-year-old bride, the State Police recruiter came to our home to explain the details of "police life", he explained, of course, the dangers, the relatively low pay, and psychological stress -- but in exchange, "we" would be involved in an organization filled with pride, civic contribution, and gratification. I was, then, and continue to be now, very proud and appreciative of my husband's police accomplishments, as well as my contribution in support of our family and his career. The recruiter explained, that in exchange for our commitment to the Michigan State Police, we would be rewarded with and excellent life-time retirement and health/prescription/vision/dental benefits package. Unfortunately, my husband is an alcoholic -- when I met him, and to this day. I stayed in the marriage because I could not tolerate the thought of the children, subsequent to divorce, having unsupervised visits with their dad, as he was a drinking driver and had an unpredictable and sometimes violent temper. My failure to escape the marriage was solely due to the four-letter "F-word" --- FEAR.

My husband retired in 1994. In 1997 my husband returned to reside in Michigan. Our Florida divorce was final in 1998. Through mediation, I was awarded 50% of our assets, which included 50% of the Michigan State Police monthly retirement benefit. If he should die, the benefit would cease. I own a 20-year, term life insurance policy on my ex-husband at the cost of $2300 per year (during mediation I was quoted $700 per year -- WRONG!). Upon our divorce, my health insurance package ceased. When asking the mediator about health benefits I was told "its never been done". I now pay approximately $3000 per year to cover health insurance ($2500 deductible), prescriptions, vision care, and dental visits. I am currently being treated for deep depression and panic disorder, which came to a crisis last year, although it had been manifesting itself as far back in my marriage as I can remember. This year I have spent a total of $7800 for healthcare and life insurance.

This inequity is discriminatory. The mediation was under duress, (and misinformation) insofar as I was told by my attorney “settle today or go to trial tomorrow”-- not to mention my ex, against whom I had to file a restraining order, was lodging 1/2 mile away from me, while in Florida to finalize the property settlement! Questions posed to the mediator and my attorney relative to insurance to indemnify the pension award was inaccurate and incomplete. My questions regarding compensation for health insurance was rejected out-of-hand by the mediator. I cannot be the first divorced women to experience this inequity. What are the remedies?

Thank you.

Disquirrel@msn.com

I am unclear as to how a participant's benefit under a traditional profit sharing plan would be calculated if there is a period of military service.

As an example, let's consider an employee who is earning $2k per month and is in military service for 2 months and returns to employment with the employer. How would the employee's allocation be determined? Based on income of $20k (income actually earned by employee) or $24k (assuming there is a requirement to impute income as there is for a defined benefit plan)?

USERRA is clear that employees must make up missed contributions to receive matching contributions under a 401(k) Plan.

USERRA is also clear that compensation must be adjusted under defined benefit plans for periods of military service.

But I'm not sure how to handle the profit sharing plan.

Any thoughts on it?