I am trying to quickly verify the timing of the addition of a 3% safe harbor contribution to an existing 401k plan that has profit sharing language.

General question under the new proposed catch-up contributions regulations: can a participant who is suspended from making elective deferrals choose to make catch-up contributions? (Let's assume the plan in general permits catch-up contributions).

My own vote is that a suspension is not a limit, and therefore a suspended participant cannot make catch-up contributions. It's unclear enough that I wanted to collect others' opinions.

Follow-up question is does it matter whether the limit is required by law (where it doesn't seem to have made the list in the regulation) or an employer limit? 4 specific examples designed to explore this:

a) Plan follows hardship withdrawal safe harbor rules and suspends future elective deferrals for 6 months for distributions taken after 12/31/2001. Can participant make catch-up contributions during that suspension?

b) Plan follows old hardship withdrawal safe harbor rules and isn't changed for EGTRRA so the suspension period is 12 months. Can participant make catch-up contributions during the first half and/or second half of the suspension?

c) Plan uses more than one resources test. Let's say it uses the general test relying on the employee's representation but also uses the safe harbor test with the 6-month suspension. Arguably the suspension is not legally required but a matter of cautious plan design. Can suspended participant make catch-up contributions?

d) Suspension is clearly a matter of plan design only. For example, employer contributions may be withdrawn by those with 5 years of plan participation but only if participant is suspended for 6 or 12 months. Can a participant with that type of suspension make catch-up contributions?

I have a plan with investments in a limited partnership. I am provided with unit values for the partnerships that I have used in the past as the mv on the valuation date. This year however, I also rec'd a copy of the K-1s. I assumed that item J(e) Capital Account AT EOY would match the unit value on valuation date multiplied by number of units held, but this is not the case. Anybody know what I should use?

In April of 2001 my status at work was changed from full time to part time on call. This was done for the companies protection as they had no reason to terminate me. I have not worked for them since April. It is now October. I have been attending school to change professions. Today I went to my personal investor (private investment plan and asked him to take over the hospitals retirement plan for me while putting aside an amount for accumulating bills. It is also necessary as the funds they choose have been doing poorly even before the terrible attack on September 11. I was told I could not do so without quitting my employment, claiming hardship or borrowing against it. I dont have much in there, but want to save what I have in addition to pay for further tuition costs. I also have a daughter in college who needs financial aid as well. It is very frustrating to realize that although I have not contributed to the 403 (B) since my "convenient" change in status in the spring, I cannot touch the money I have saved since my beginning employment in October of 1998. Even in a hardship case I was told I would pay a 20% penalty and not get ANY company matched contributions in either case. :mad: Something seems askew... IS THIS MY MONEY? I dont want to sit and watch it dwindle even further...

Any help would be appreciated.

I have a prospective plan that is hung up on a trustee issue. The current administrator is telling the client that they will absorb all liability for the plan and that the plan sponsor will incur no liability. We have told the client that a corporate trustee may harbor some liability, but as a plan sponsor, they are still responsible for the plan overall, which includes any liability that may arise. Does anyone have any cites, cases, etc. that could help us to prove our point to the client that regardless of who they appoint as a trustee, they will still retain some liability?

May a plan with more than 100 participants whose RPA current liability is more than 90% funded or meets the volatility requirements deduct the difference between the assets and the RPA current liability? Or do you have to be actually subject to the AFC?

In the case of an employee who was "covered" by a predecessor plan, you must count the employee's years of service under the predecessor plan when determining vesting service in the successor plan. Would an employee have to be a participant in the predecessor plan to be "covered" or would an employee be considered "covered" if they were working for the employer and would have entered the plan as soon as they met the age and service requirements.

Company A sells substantially all of its assets to Company B. Company B hires most, but not all, of Company A's employees. Some of the employees not hired by Company B are let go by Company A, while a few are retained by Company A to wind-up Company A's affairs. Company A continues its health plan during the wind-up process.

Under the COBRA regs, as long as Company A continues its health plan, that plan is responsible for COBRA for (a) any qualified beneficiaries who were already on COBRA at the time of the sale, (B) the employees who were not hired by Company B and who were let go by Company A, and © any employees retained by Company A who subsequently are terminated.

As I read the COBRA regs, if Company A terminates its health plan, Company B, as a successor employer, will have COBRA liability for the 3 groups of people described above. The regs address this situation, but the answers are less than clear.

With respect to the group described in (a), I presume that Company B's obligation will continue only until the original COBRA period expires. Correct?

With respect to the group described in (B), Company B's obligation will continue until 18 months after the sale/termination of employment. Correct?

Group © is where I get confused. If Company A terminates its group health plan at some point after the sale, what exactly is Company B's obligation?

I can see a couple of possible scenarios. Company A might terminate the remaining employees one or a few at a time while it still maintains a health plan. In that case, I presume that Company A's plan would provide COBRA until the plan is terminated, at which point Company B's plan would pick up the obligation for the rest of the 18 months.

Another scenario is that Company A could terminate its health plan before it completes the wind-up and terminates these employees. In that event, does Company B have to immediately offer coverage to the remaining employees? If so, for how long? Has there really been a qualifying event?

If Company B's obligation does not kick in until these employees are terminated by Company A, then does Company B have to offer a full 18-month period from that date, or from the date of the sale?

Any help on these issues would be much appreciated.

Does anyone know the latest guidance, formal or informal, on SAR requirements for (former) participants who have received their distributions? Assume we have a defined contribution plan.

1. We terminate the plan and make all distributions in 2001 plan year. By the end of the plan year there is no one and no money left in the plan. Do we provide a 2001 SAR to anyone and if so, to whom?

2. We terminate the plan in 2001 but don't complete our distributions in 2001. By the end of the 2002 plan year there is no one left in the plan but we have $100,000 in forfeitures which we use in 2003 for plan expenses. Ignore the question of whether the plan actually terminated because we didn't make distributions within 12 months after the proposed termination date. We file the 2001, 2002, and final 2003 5500, all timely.

For 2001, can we limit the SAR to those persons who had account balances on the last day of the plan year, do we have to send it to everyone who had an account balance at any time during the year, or something else?

For 2002, do we send anyone a SAR and if so, to whom? What about 2003?

Does anyone know what code section the in-service withdrawal for participants aged 59 1/2 rules can be found?

How much historical recordkeeping information should a company keep for participant distribution. I have a participant that would like to know the exact date of his distribution. Since then we have a new recordkeeper and the data is not available?

I was able to give him a copy of his statement but it did not provide the correct information.

Our payroll processing company, The Business Office, has been asked by a number of clients who want to install a program referred to as the Health Incentive Plan or HI Plan.

We are aware of the warnings put out by many benefits and tax experts against using the version of the HI Plan that is marketed by the Redwood Group (TRG) and are lead to believe that the IRS and state Depts. of Insurance will be taking action against that plan.

However, these clients want to use the HI Plan from Burns & Assoc. and not the TRG version and further indicated the Burns plan is the original HI Plan and has a patent pending.

Has anyone had any feedback or opinions from legal advisors on the Burns HI Plan? Our clients have favorable opinions from their legal advisors and we have not been able to get any negative responses from the sate DOI that we contacted nor the IRS.

I am well familiar with the GUST restatement deadlines for qualified plans, but less clear re what the deadline is for 403(B) plans. Can someone please straighten me out? Thanks

What happens if a hospital service district loses its 501©(3) status due to taxing authority? Do they simply stop making contributions to their 403(B) plan and replace it with another type of plan?

An employer has opted out of Social Security and is currently providing the required retirement benefits through a thrift plan. Is there any reason why a 457(B) plan would not satisfy the requirements of Section 3121. 3121 says it must be a defined contribution retirement system and that employee contributions can be used to satisfy the requirement.

An employer has opted out of Social Security and is currently providing the required retirement benefits through a thrift plan. Is there any reason why a 457(B) plan would not satisfy the requirements of Section 3121. 3121 says it must be a defined contribution retirement system and that employee contributions can be used to satisfy the requirement.

We have a client that is in serious financial difficulties & is looking to crash their SIMPLE-IRA. A few questions: Can an employer terminate a SIMPLE plan prior to year-end? Are there any notification requirements to the employees? Also what are the ramifications if the employer does not make their 2001 matching contribution?

Does anyone know the definition of a drug or biological under 213? Also, where is it defined?

Today's (10/23/01) Federal Register contains proposed regulations regarding catch-up contributions for individuals over age 50. Here's a link:

http://frwebgate.access.gpo.gov/cgi-bin/ge...26566-filed.pdf

Long time reader, first time poster. This is a great site. I believe I know the answer to my own question, just wanted to run it by people who see this stuff more than me. I have a client that had a calender year SEP up until August 2001, then ixnaed that and adopted a 401k profit sharing plan. SEP had not been funded for 2001. Client wants to make a contribution to that terminated SEP, mostly because the employees who are now in the 401k plan were not in the SEP due to eligibility requirements (the owners of this S corp want everything going to them)...

Anyhoos, although the deadline for making a deductible contribution for a SEP extends to the due date of the tax return (so conceivably you could have until September 15, 2002), I believe it's implicit that a SEP actually exist at the time that contribution is made. I would recommend that they "really quick adopt and terminate" the SEP so they could do the contribution, but one of the basic req's is no other qualified plan can exist (as now they have a 401k plan).

Anybody disagree with me? Any thoughts appreciated. By the way, you guys really are sicko's for choosing this profession.