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?

Does anyone know whether any of the prototype plans that are currently being reviewed by the IRS will accomodate a governmental plan? I have a client that maintains a fairly simple money purchase pension "Fica replacement" plan that I would like to put on a prototype document if there is anything out there that would accomodate such a plan.

I am looking for an answer to a question regarding contributions for my wife.

I make an income and my wife does not. Can we still contribute $4,000 to a fund? Or by her not working limit it to only $2,000?

Thanks in advance for any help

Andy

An unmarried participant in a 401(k) plan had a loan outstanding at her death. She did not name a beneficiary, and under the terms of the plan, the default beneficiary was her estate. Most (though not all) of her account consisted of appreciated employer securities.

Soon after her death, the plan treated the loan as being in default, and issued a Form 1099 in her name (not in the name of the estate).

1. What generally happens upon the death of a participant with an outstanding loan?

2. How does this affect the requirement of a lump sum distribution in order to elect NUA treatment?

Mid year entrant gets correct contribution based on half year comp. However discrimination tests show him with $0 benefit( not benefiting). I checked the average NHCE rate and indeed it was included as not benefiting in the test. In other words it was not a "report" bug only. Any ideea why it happened and how it coild be corrected?

Thanks....AC

In the EGTRRA literature I've read I can't find any reference to changes in the IRA phaseout limitations. Are the phaseouts unchanged?

I have two quick questions:

1) The QDRO answer book seems to imply that unless the QDRO so stipulates that the law does not require that the alternate payee ever share in any early retirement subsidy paid to the participant (Q&A 25). Have I read this correctly?

2) Typically a separate interest QDRO will split the participant’s accrued benefit on the earlier of when he begins to receive his benefit or when the alternate payee begins receipt of her benefit. Assume a defined benefit plan pays the participant his unreduced accrued benefit as a disability benefit.

(A) If this is it seems to me that the participant’s accrued benefit would be split when he begins receipt of his disability benefit. At that time we would calculate the portion of the participant’s accrued normal retirement benefit payable to the alternate payee. Since the participant has now separate from service and is in receipt of his benefit, she is now entitled to receive her benefit too.

(B) Must the alternate payee (by law) receive a portion of the unreduced disability retirement benefit or is she only entitled to her portion of the normal retirement age accrued benefit, actuarially adjusted to be paid over her lifetime? You can see how this could make a big difference.

I would think that the answer to the second question would be somewhat analogous to the answer to the first question.

Can ESOPs be drafted to permit in-service hardship withdrawals? I found one authority supporting such withdrawals -- Rev Rul 71-224 -- but it is dated.

Regarding the required vesting schedule change to a minimum of 3-year cliff or 6-year graded by 1-1-2001 (calendar year plan), there is an extension for "plans Maintained under a collective bargaining agreement."

We don't know whether that applies to us. We have a single employer 401(k) for non union employees and for the employees of two unions. One of the unions has a 5-year cliff vesting on the match which was subject to bargaining. All other employees have 5-year graded vesting.

Nothing else about this plan is impacted by collective bargaining. The plan is not created for a union, but for all employees.

Does the extension apply? - Meaning the vesting schedule does not change until the current bargaining agreement expires? Or was this extension meant for Multiemployer plans or some other definition of collectively bargained plan?

:confused:

Can a non-elective Safe Harbor contribution use integration for taxable wage base? Can you stack an integrated contribution on top of a 3% non-elective contribution?

Can't find anything saying you can't, but also can't find anything saying you can.

Does anyone know if there will be a new code on Box 12 of the 2002 W-2 to identify "catch-up contributions?" Or will the catch-up contributions be commingled with 401(k) deferrals as code "D?"

due to the increasing cost of health insurance, an employer would like to shift more financial responsibility for health insurance to employees. currently, the employer pays 100% of the cost for the employee. the employer has a flex plan with a premium conversion/salary reduction component used for dependent care, health insurance for dependents etc.)

Would it be permissable to make such a change (ex. employer pays 85% employee pays 15%) and allow the employee to use the premium conversion/salary reduction plan to accomplish this so the employee can use pre-tax dollars?

Plan provides for annual valuations and interim valuations at discretion of trustee. This is o.k. under Rev. Rul. 80-155 as long as the interim valuations do not discriminate pursuant to 401(a)(4).

However, what are you looking at under 401(a)(4)--benefits rights and features testing? Also, when the market goes down, who are you testing? Are those that are "staying in" the Plan and not receiving a distribuiton actually the ones who are enjoying the benefits right and featrue?

This issue has been touched on in other threads, but I wanted to see if anyone has any additional thoughts on how to handle demutualization compensation distributed to a terminated noncontributory defined benefit plan.

Two specific questions:

1. Where do you intend to park the stock until you allocate the shares to employees (to avoid any reversion under section 4980)? (The plan I am dealing with has a group annuity contract held by the employer.)

2. Is anyone taking the position that the employer can keep the proceeds, and that section 4980 does not apply?

Thanks.

card

(And thanks to Everett Moreland for his assistance.)

All nhces and hces benefited for the 401k part of the test.

There was no matching contribution, so no hces benefited for the 401m part of the test.

On line 3, can I check box 3d for the 401k part and also check box 3b for the 401m part of the test?

Or must I go to line 4 and enter information on each disaggregated part of the plan?

One of our employees has a dependent from a previous marriage that is on her insurance in WA. Her dependent is now living with the father in CA. As I am told by the insurance company, the only way the child can continue coverage is if he changes to the PPO plan, since they cannot have dual state HMO coverage. Is there any life event that would allow such a change? The employee herself is staying put in WA and has not had a change in job status.

Thanks!

I applied for a Hardship withdrawal to prevent eviction. My letter from my ladlord states: PLEASE BE ADVISED THAT YOU HAVE EIGHT (8) DAYS IN WHICH TO REMIT THE BALANCE DUE. AFTER 8 DAYS YOUR ACCOUNT WILL BE REFERRED TO OUR ATTORNEY TO SECURE PAYMENT DUE AS WELL AS REGAIN POSSESSUION OF THE LEASED PREMISES. Please avoid additional fees for attorney and court cost by paying tje Total Balance Due within (5) days from the date of this official notice.

It has the amount on the letter and it is dated. It also has been cc'd to their attorney. Now they're telling me that I need to show them a notice to quit and vacate the premises and that my letter was insufficient because it does not say eviction. It says regain posession. It means the same thing. I live in Missouri. Is this right?