Apparently, IRS has issued a PLR and ruled that the right of an employee to make an election to receive cash in lieu of vacation in the year before the vacation is earned does not trigger the constructive receipt doctine. The PLR is 100130015, 7/30/2001.

Am I the only one who missed this? Does this mean that the door is open to allow employees who choose to sell next year's PTO and recieve cash (or flexible credits) during the next year, and not impact have any impact on those who choose not to sell PTO?

Obviously, PLRs are only valid for the taxpayer requesting it. However, this seems to be much different than the discussions posted on this board over the last couple years. Interested in the "experts" comments.

Is there any way to exclude bonuses from the definition of compensation for a safe-harbor plan?

Notice 98-52 requires that the 414(s) definition be used. 414(s) says compensation means that within the meaning of 415©(3). The related Regs. include bonuses.

Are we just simply out of luck on this one? If there is a way, I need statutory cites in support of your position. Thanks.

When doing form 5330 for reverse deferals taken back after the 2 1/2 month deadline. the HCE has to take back match, Vested portion goes to him, remainder forfeited, Do we list the total amount of the match reverse deferal on form 5330 or just the vested portion.

Thanks

James

If anyone could provide some feedback and rather quickly I would really appreciate it.

I have a 403(B) plan that is excluding independent contractors, union employees, and those who work less than 500 hours per week from deferrals. There is only one plan of the employer.

Does this violate the Universal Availability Rule?

It is my understanding with a 403(B) plan that all "common law employees" must be allowed to defer to a plan of the employer.

Is it allowable to exclude these populations named above from making deferrals?

Thanks Nabiyah

I'm looking for information on church plans--health and welfare benefits only. I know they are exempt from ERISA, COBRA, HIPAA. What then regulates them? Anything special the TPA should require in terms of the ASO agreement? I would appreciate cites to books, etc. if you know of good sources.

Has anyone come across this? I have a non-calendar plan year that failed the ADP test. The employer elected to have corrective distributions for excess contributions completed within the 2 1/2 months. The affected HCE's will have to amend their tax returns now. Because they have to amend their returns, they will get penalized with interest. Is there any relief that waives interest and/or penalties to the HCE? It seems the IRS should allow for some kind of waiver because the HCE would have no way of knowing the final results until after the plan year end. If anyone has come across this, I would greatly appreciate any guidance. Thank you!

Has anyone come across this? I have a non-calendar plan year that failed the ADP test. The employer elected to have corrective distributions for excess contributions completed within the 2 1/2 months. The affected HCE's will have to amend their tax returns now. Because they have to amend their returns, they will get penalized with interest. Is there any relief that waives interest and/or penalties to the HCE? It seems the IRS should allow for some kind of waiver because the HCE would have no way of knowing the final results until after the plan year end. If anyone has come across this, I would greatly appreciate any guidance. Thank you!

If a sole proprietor has schedule C income of 230,000 and 15% contributions to his employees of $6,000. Can his contribution be $25,500 (15% of 170,000)?

Any comments?

Thanks

My client XYZ was organized and established a new individualized Plan in May 2001. XYZ tax year and plan year are calendar years. The general GUST amendment and IRS submission deadline is December 31, 2001. But the general remedial amendment period for this new plan would be due date of employer's 2001 tax return or March 15, 2002 (plus extensions). Does anyone have any thoughts as to whether this Plan would need to be submitted to the IRS by December 31, 2001 or by March 15, 2002 (or extended due date)?

Also do you think it would make a difference if XYZ and XYZ Plan were established in connection with an asset purchase of another company's ABC Division, where all employees of the ABC Division became XYZ employees upon deal closing, and the assets attributable to their benefits in the seller's plan were transferred to the XYZ Plan. The seller's plan had a TRA '86 determination letter, was not yet amended for GUST when the transfer occurred, presumably seller plan will be GUST amended and submitted by the seller by December 31. (Seller Plan is a large plan covereing all the other Seller's employees -- the ABC division was just one division of the Seller Company.)

If anyone else has given thought to this situation, your thoughts would be appreciated. I have 3 or 4 situations similar to this one, and having until the tax return due dates in 2002 would be helpful...but I certainly do not want to miss the GUST deadline!! Thanks.

Some Insurance Co's. won't allow annuitzed 90-24 transfer of individual 403(B) contracts if the employee is under age 59 1/2, and or, still in service. I know you can't take distribution till some key triggers take place, but a) why can't annuity settlement payments be transfered under Rev. Rul. 90-24 to avoid being a distribution, b) If the IRS allows this, how can the Insurance Co. prohibit it?

My mother in law is the beneficiary of her son's ESOP Plan, he recently passed away. Does the beneficiary have to Roll Over that money? Is she taxed on that money if she takes a Lum Sum? Finally; how long does it take before payment is made. There are no rules pertaining to payout for the beneficiary in the Plan Book.

Does a beneficiary pay taxes on a 401K Plan, when it is a mother of a son who passed away?

Which of the "good faith" amendments provided in IRS Notice 2001-57 for EGTRRA need to be adopted before 12/31/02? Do any need to be adopted (if they are to be used for 2002) on or before 12/31/01?

Some EGTRRA provisions apply starting January 1, 2002. Should 403(B) plans be amended prior to such date to comply? Are they required to be amended by such date? For qualified plans the IRS permits the amendments to be made generally by the end of 2002. Is there any simiar rule for 403(B) plans?

Company A purchased the assets of Company B. Company B is terminating its 401(k) plan and will distribute all account balances upon receipt of a determination letter. The Company B employees who are now employed by Company A will be allowed to rollover their distributions into Company A's 401(k) plan.

There are several former employees of Company B who terminated employment with Company B prior to the asset sale. They did not become employees of Company A and have never otherwise been associated with Company A. Company A would like to allow those individuals to rollover their accounts into Company A's plan if they desire.

Can this be done? Company A's plan will have to be amended to provide for this, but is there anything under the Code that would prohibit this?

I've posted before on this subject in the SEP section and have finally realized what my real queston should be. My problem arises when trying to figure the % or amount of contibution alowable for a sole prop when dealing with Social Security integration and a top heavy plan.

For instance, if a sole prop had a PSP and wanted to contribute 15% to all employees, he would be limited to 13.04% for himself due to the special calculations regarding SE tax, etc.

So now if the plan had Social Security integration (or any kind of skewing for that matter), he could actually contibute more than 15% to his account as long as the total is within the 15% of total comp and his is less than 25%. Eg. the employees get 14% and he gets 16% due to the SSI (or any other method). And if the plan is top-heavy he has the 3% minimum for the NHCE.

So my question is how does the self employed reduction come into play and where in the calcs. If for example, the contributions were 5.7% of pay plus 5.7% for the amount over the SSI point, it is pretty staightforward if the person is an owner of a C-corp, but how does it work for the self-employed. Where does that limiting factor come into play? Would he get 5.39% (.057/1.057) for both parts? Or ??????? It seems that you allocated the money in multiple steps but when do you deal with the SE reduction?

Before I set up one of these, I would like to know how to figure it so I can see if it will be worth it under a few different scenarios.

It seems that SSI is not an enourmous benefit depending on comp. levels and it seems that for a SE person the benefit may even be less. I'd just like to figure what to expect or whether I should just keep it simple and save expenses. All this of course helps me decide if I will need a TPA or what custodian may be best, etc.

Thanx for your help and patience. I seem to have educated myself quite a bit on retirment plan matters but this one issue seems to be escaping me.

A real estate agency is requesting us to do a proposal on a 401k for their agency. The realtors only work for this one agency, but each is an independent contractor. Can they do this? I think there may be some kind of exception that applies for insurance agents that may also apply to realtors?, but can't find any data on it. Would appreciate any help.

Employer wants to adopt a Safe Harbor 401(k) Plan for 2001. Employer has never had a plan. It is my understanding that as long as the plan is adopted by 10/01/01 (it is a calendar year plan) we are O.K. My concern is the notice requirement. If we can get a notice to all employees by the 09/10/01 would that be reasonable considering the employer just decides to adopt a plan on 09/06/01?

Could someone please explain how wrap-around health insurance works or a definition? Thanks

In attempting to close out and clean up former employee's accounts, we have a situation where the participant died (age 77/1996) and estate has been closed. Can we still distribute to the estate? or go directly to her 6 grown children (which is how the assets were distributed)? how should tax withholding/1099R be handled?