Under the EGTERRA changes a design based Safe Harbor Plan that consists of elective deferrals and Safe Harbor match or non-elective contributions only is exempt from the top heavy rules. Does this mean that an existing Plan that has made regular Match or Profit Sharing contributions in the past but is now going to fund only deferrals and Safe Harbor contributions will still have to be tested for top heavy?

[ Yes, see Moderator's comments and discussion later.--gsl ]

At the present time, any SEP participant in year 2002 will only be allowed to EXCLUDE (from his year 2002 taxable income), his year 2002 SEP contribution up to a maximum of 15% of his eligible year 2002 compensation. Reason: Because EGTRRA (the Economic Growth Tax relief Reconciliation Act of 2001) ... never amended IRC 402(h)(2). In other words ... the maximum exclusion is still 15% for year 2002.

EGTRRA did amend IRC 404(h))(1)© and IRC 415©(1)(A), to allow the SEP's employer to deduct 25% for year 2002 (up from 15% for year 2001) .... and .... to allow a SEP participant's year 2002 SEP account to have 25% of his year 2002 eligible compensation put into it.

A lot of people have said that they feel sure that IRC 402(h)(2) will soon be amended to allow exclusion of 25% .... but so far I have seen nothing on this matter by the IRS.

Has the IRS addressed this matter yet ? Where might I read what the IRS has to say about it

I have set up a new 401(k) plan with 3 accounts. 101 is Profit Sharing, 403 is EE Deferrals and 503 is ER Match. There are 3 sources to correspond with this. I have deferral and match transactions for participants already posted, so there are now 403 and 503 balances. When I try to add individual Gain/Loss transactions for participants, the only account selection I get is the Profit Sharing-101. 403 and 503 are not available on the G/L Trans screen.

I have Relius looking into this. Help; what have I done wrong???

Are premiums for Long Term Care reimburseable under a Health FSA? The employer does not offer the LTC plan but an employee wants to have his family's premium on an individual LTC policy reimbursed through the FSA the employer offers. Is this permissable?

Can I roll over a Simple IRA contribution made this year to a 401(k) plan in January 2002 (the employer is contemplating terminating the SIMPLE plan to start a 401(k) plan on 1/1/2002) or does the two year rule on contributions still apply? Does EGTRRA change the rules for rollovers from SIMPLE IRAs? I am getting conflicting advice?

I know Quantech has the DCM, which requires an additional license - we do not have it at this time and the cost seems rather absorbetent. So I am trying to import data from and Excel spreadsheet, but don't know how to save it in Excel in the correct format.

I could use some help from those with experience. Thanks.

Has anyone out there heard of any 401(k) plans that use the safe-harbor definition of a hardship withdrawal that do not require back up documentation for that withdrawal other than the employee's self-certification?

If an employer adopted this approach (no backup) what risks would the plan take? (The employer would make sure that all other provisions of hardship withdrawals were followed, just not requiring documentation.)

Thanks

Is there anything statutorily to prevent an employer who has an ERISA governed Short-term disability welfare plan from offering a difference in plan coverage to employees at one location in comparison to that offered employees in all other locations?

Has the IRS issued an updated explanation since http://www.benefitslink.com/IRS/notice2000-11.shtml?

Going back thru the old files, I discovered several plans that have been terminated (assets = $0) without being amended to pick up GUST provisions, some going back to 1997 and 1998. Is it too late to have the former plan sponsor sign something like the Ohio Key District's GUST wording? I doubt that we'll be able to bill for this work, but I'm just wondering if this is a "better late then never" situation.

Thanks for the help. Tom

I heard in passing today that there changes coming to the 457 plan. Does anyone know what changes to expect in 02?

Company A has an established 401(k) Plan. Has been making PS contributions to paln for years. Company is "dying" (their words not mine) to put in more than 15% this year, preferably the 25% max.

Obviously my first thought would have been MPPP. With EGTRRA it will not be necessary (read, it would be stupid) to implement MPPP.

Issues:

If Company A starts a MP plan for 2001 and then merges the two plans, do we have a problem with the plan not being "permanent"?

Several threads have said the correct date to merge the plans (assuming two exist) would be 12/31. Can I "merge" the plans on 12/31/01 and make all deposits to the 401(k) plan?

Will I need a document for the MPPP? (I think yes but need back-up)

Do I file 5500 for the MPPP for 2001?

I should probably know this stuff, but any and all help will be greatly appreciated. If I have missed any important points that will trip me up, please speak up.

Where is it specified that a plan must satisfy cross-testing requirements as of a certain day in the plan year (other than the methods available under Treas. Reg. 1.410(B)-8(a), for minimum coverage rules)?

Is L/D of plan year always acceptable?

And can cross-testing (new comparability) be performed based on a short plan year, including a short year of compensation?

A profit sharing plan allocates profit sharing contributions based on the following formula: participant's compensation for the plan year divided by the toal compensation for all eligible participants for that plan year.

Is this a uniform allocation formula within the meaning of 1.401(a)(4)-2(B)(2)? I'm confused! :confused:

I have a doctor that purchased an office building. He wants to know if he can use the property as an investment inside his Defined Contribution Plan. My first reaction is that he can not. Can anyone point me in the right direction as far as research? Also, any input is greatly appreciated. Thank you. Mary

I would like to know if there is a 10% early withdrawal penalty for selling all or part of your company common stock owned.

Is an acquiring corporation required to recognize and credit deductibles paid by participants under a prior group health plan following a corporate acquisition? For example, if following the acquisition the prior plan were maintained, the answer is obvious ... things would continue under the terms of the group health plan. What happens in an asset deal where the group health plan is not transferred to acquiring company? Do employees start all over with respect to deductibles under the new plan? I would guess that a company could do whatever it wanted with respect to this issue. Any thoughts? Thanks. Ed

I administer a multiple employer plan that added an additional participating employer this year. The new member is a newly established company. A couple of the HCEs from one of the existing employers went to work at the new company.

My feeling is that this new company will have no HCEs (based on compensation) in their first year of existence because no one earned any wages during the prior year. I have had someone tell me I am mistaken on this, that compensation earned at another participating employer would be used in determining HCE status. I've been looking for some guidance of a less anecdotal nature, but haven't found much. Anyone have any cites that would help me?

We recently acquired another company and merged the 401k plans. After the merger, the previous plan's administrator presented me with a domestic relations order they had received prior to the merger. Nothing was done with the order. Because the order indicates the name of the plan before it was merged into our plan, does the order have to be amended to reflect the current plan's name before we can accept it?

Based on the following information, what is the non-taxable portion of the IRA distribution made in 1997 (rounded to the nearest dollar)?

1,500 Aggregate deductible contribution

2,000 Aggregate non-deductible contribution

3,800 Aggregate IRA account balance as of 12/31/97

1,000 IRA distribution made in 1997

Answer is 417 - help!!!

Thanks!