A 57 year old retired client took a 200k distribution from his IRA earlier this year, then "replaced" it within 60 days. A few months later, he took another 200k distribution, and again tried to re-deposit the $$ within 60 days, but the broker refused to accept the funds. The client was told that only 1 of these transactions is allowed per year. Does anyone have a cite that addresses this situation?

Thanks. Maverick.

p.s. He took the distributions to invest in the market.

The employer has a cafeteria plan that provides for health insurance. The employer pays a portion of the premiums and the balance of the premiums are paid by employees with before tax dollars as part of the cafeteria plan. Because the plan failed discrimination in years past, the employer has taken to paying the entire premium for the owners (4 doctors). The employer claims that since nothing flows through the cafeteria plan for these HCE's there is no discrimination and this benefit does not need to be included when testing for discrimination. This just doesn't smell right. Can they do this? Does this present some other problem?

Anyone heard of a provision that disallows eligibility in a DC plan AFTER a certain age? Does anyone have any cites or specifics, or is this ERISA Mythology?

Looking at whether QSLOB status can be met. I have some question as to whether client can pass the administrative scrutiny test. Under the Treasury regulations, a separate line of business satisfies the safe harbor if it is in a different industry from every other separate line of business of the employer. In Revenue Procedure 91-64, the IRS sets forth the industry categories referenced by the Treasury regulations.

One company in controlled group is in Group 51 while the other company falls into Group 30. Under the Revenue Procedure, Groups 13, 28, 29, 30, 46 and 55 are grouped together into one industry category. However, Group 51 is not listed in the Revenue Procedure at all. It is unclear how this Group would be categorized.

It appears that if Rev. Proc 91-64 does not require industry code 30 and 51 to be combined, then they should be treated as different industries. I think it would be hard for the IRS to argue some implied rule that those separate industry codes are combined without a formal ruling to that effect.

Anyone else dealt with this issue of industry codes not being named in this Rev Proc?

Is it legal to hold distributions from an ESOP until the acquisition loan is paid in full?

We are trustee of a leveraged ESOP where the plan sponsor is questioning the administrator's request to process 70 1/2 minimum distributions, because the document states no distributions until the note is paid. Is this legal? I have not researched the document yet, but was curious if this was even possible.

Any insight helpful. Thanks.

Don't know if I ought to name names here but I'll just refer to this PPA as Florida's Big Boy- y'all should know who that is. Well, the word around town is that ol' Big Boy is taking some heavy hits. They might even be downsizing the empire a little bitty. I just swung two plans out of there before they even signed on. Main reason? They let go of their only- top-flight- administrator! Guess they can't afford one. These joes tried to play it off to my broker like its no big deal but let me tell you, when the parish loses it's pastor the flock is sure to follow.

If a sole prop. sponsors a 401(k) plan in 2002 and defers $11,000 of his/her earned income is the 25% deductibility limit for a PS contribution based on his/her adjusted earned income (after SE tax) which includes or does not include employee deferrals?

Please help, I am writing this for my husband who is the member. He is mentally ill and was first placed on a one day suspension due to coming to work on medication. While in the meeting for this he requested a union rep and management said he didnt. He has not received any type of pay for 10 weeks. He was on medical leave approx. 4 wks. prior to this due to surgery. While on that leave he was continually harrassed by H.R. After this leave was forced, H.R. kept trying to get him to show documentation from a psychiatrist that was not available. He was told no short term money to be paid until he went to specific Doctors H.R. requested. We told H.R. we did not have the finances,and some of the places requested had 1-2 month waiting for appointments. Now he has gotten the appropriate medical attention and H.R. refuses to back date the date of the disability beginning. They are breaking us financially and have caused my Husband to have a nervous breakdown. Union in the local aren't even concerned, nor have they contacted my husband. This local union has a very fine line between union/management. Management tells the local that no one is to speak to my husband but the H.R. man. One extra piece of info. The H.R. man was the H.R. person for me, the wife in the H.R.'s previous non-unionized job. Today we received a certified letter stating my husband has been non-compliant with paper work, which is not so. We cannot turn in paperwork on something we dont have. There are so many other details to this. I have document past harrassments and told the local union I have this. When we were going to turn this in before they told me to hang onto it. Where is the help My husband is supposed to be getting?

I hate to bring race into this issue but if my husband were black or a woman at the position he would have already received the help. This is cross discrimation. He does have a mental illness that can be controlled. He is Bipolar. I have called H.R. and he tells me he wont speak to me. He is rude and has even hung up.

PLEASE HELP US> they are bankrupting us and ruining our childrens holidya.

Does anyone know what the 2002 limits are for transportation plans?

May a 403(B) arrangement that makes a variety of annuity fund and custodial account providers available to employees, prohibit employees from switching deferrals from one annuity provider to another, in the course of the plan year? (I.e., stopping deferrals to original provider and making new deferrals to different provider.)

Does it make a difference if the plan is subject to ERISA?

If a plan amendment changes the eligibility and vesting from 2 years/100% to a 1 year, dual entry, 1000 hours/2-20 vesting effective 11/1/00, when do the amended provisions actually take place? In other words, if someone was hired 09/01/00, is that person following the eligilibity rules prior to 11/01 or after 11/01 or does it depend on when the amendment was signed? Or does it depend on another factor? Thanks so much.

Do the family attribution rules apply to 401(a)(9) Distributions? In other words, does a father and mother who are over 70.5 but who have no ownership interest have to take a MRD because their son owns the company 100%? The parents both obviously have an account balance and is on the payroll. Thanks for your help.

A small employer who has maintained a Top Heavy Profit Sharing Plan for a number of years decides that he would be better off with a Safe Harbor 401(k), using the Basic Matching contribution. While starting in 2002, Safe Harbor plans using the basic match are not subject to Top Heavy minimums, are there issues since he has been Top Heavy in the past if:

1. He terminates the existing Profit Sharing Plan and establishes a separate new Safe Harbor 401(k)?

2. He amends the existing Profit Sharing Plan into a Safe Harbor 401(k)?

Any comments or observations would be appreciated.

BTH

Can a non-profit association offer a self-funded dental benefit plan to the association members? The members will pay 100% of the cost of the plan.

What are the current differences between an Age Weighted DC plan --and-- a New Comparability DC plan ?

I realize that new comparability plans will be subject to new rules in year 2002 ... but that's not my concern at the moment.

I thought that for years prior to 2002, an age weighted plan and a new comparability plan were exactly the same thing. But a year 2001 adoption agreement (which I just saw) gives a choice of either an age-weighted allocation OR a new comparability allocation.

Please don't laugh at my ignorance (I'm just confused ... very confused!)

THANKS

Has anybody focused on states that have income tax codes that are not automatically updated for changes in the federal income tax code -- specifically, what steps a retirement plan sponsor might need to take if the plan uses the higher EGTRRA contribution limits but thereby causes some participants to have taxable income?

An article with details is here:

http://www.benefitslink.com/articles/egtrrastate.shtml

I'm particularly interested to know whether anybody has seen a state income tax authority threaten a plan with "disqualification" for state income tax purposes due to a mismatch between the plan's current operation or terms and the terms of the federal income tax code as of the earlier snapshot date used by the state for incorporating federal income tax rules. Fidelity raised this possibility in a report I saw. It would seem to be a draconian penalty but in theory the argument seems to hold up.

Did anyone take the exam on 12/5?

What did you think?

Has anyone done a self correction for an employer who mistakenly made 401(k) contributions (deferrals and match) for non-union employees to a union plan? The employer would want to move the accounts from the union plan to the non-union plan. Is anyone comfortable with this approach? The mistakes have been made for about 18 months (so under 2 year self correction period).

Could anybody recommend a company for producing plan documents for self-funded health plans? I know of Corbel, and am wondering if there are any other companies that produce plan documents, amendments, etc.

If an employee is terminated, can the employer, with the acceptance of the employee, take on his/her last paycheck the remaining FSA benefits for the full plan year? This would allow the terminated employee to use FSA benefits through the plan year. If so, can you furnish an IRS ruling or court case to back this up.