When "recycling" shares, must all cash in the plan be used, or is it okay to use just the contribution amount, and leave any existing cash in the plan alone? Is consistency required, or could all cash be used at one time, and only the cash from the contribution another time?

Regarding the Model Amendments for CRA 2000, must Govt. Plans amend for both? Is the amendment for 414(s) really necessary since that section is of limited applicability to Govt. Plans?

401(k) Plan has 1 year eligibility for 401k & 2 year eligibility for its P/S. In 1999 the plan allocates a 3% top heavy minimum for all 1 year ee's thinking it is top heavy.

Plan discovers in 2001 that the plan was not top heavy in 1999, thus those employees should not have received that contribution.

What is the best correction method - reallocate the 1999 profit sharing to those who met the 2 year requirement and have the employer make up any losses for distributions, etc? Is there another way to put this plan back on right road that I am missing?

Thanks.

Ervin Barham

I am trying to determine if a Roth IRA would be a suitable vehicle for my retirement funds.

I have received conflicting advice as to whether or not I am eligible to establish a valid Roth IRA.

Because my income is above the maximum allowable, and the fact that it is entirely capital gains I appear to be ineligible on two counts. However it would not be too difficult to arrange for a small amount of earned income to be generated and placed in a Roth IRA. I would of course have to pay a 6% annual penalty on those funds which I am willing to do in order to gain the tax benefits of a Roth IRA. If the contribution was not more than $4000 per annum for myself and my wife, and the penalty was paid annually, would this constitute a valid Roth IRA?

An employer terminated their SIMPLE IRA in May, and they want to start a 401(k). Do they have to wait for January to start, or can they start now since the IRA is not open for new contributions anymore?

Can an employer set up a plan where there is a medical opt out provision that only salaried employees can take advantage of?

If QDRO procedures are silent on this issue, when would a plan administrator be permitted to honor participant requests for permissible withdrawals/loans/distributions pending QDRO determination? The DOL publication indicates a separate account should be set up for an alternate payee upon receipt of a DRO. What if the plan administrator gets a request in writing for employee information (e.g. subpoena) with the stated purpose of preparing a DRO?

Now that Schedule Q is optional under Announcement 2001-77, is there any real good reason for including it in a determination letter request? I don't see much benefit in getting a determination on the operational aspects of the plan, particularly as compared to the time and expense involved in preparing Schedule Q. A determination would be based on a one-time demonstration under Schedule Q, but a plan has to pass those tests every year, so how beneficial would that determination be? Am I missing something? Is there a significant downside to not submitting Schedule Q?

To the practitioners out there, on what side of this decision are most of your clients coming down?

Client wants to adopt a safe harbor 401(k) plan with a short plan year beginning October 1, 2001. Client currently maintains no qualified plans. If the plan becomes effective on October 1, 2001, then the 3 month plan year requirement will be met. As to the notice requirement, wouldn't the following language from Notice 98-52 allow for the safe harbor notice provided to employees on September 5, 2001(today) to be deemed to be reasonable:

b. Deemed Satisfaction of Timing Requirement

The timing requirement of this section V.C.2 is deemed to be satisfied if at least 30 days (and no more than 90 days) before the beginning of each plan year, the notice is given to each eligible employee for the plan year. In the case of an employee who does not receive the notice within the period described in the previous sentence because the employee becomes eligible after the 90th day before the beginning of the plan year, the timing requirement is deemed to be satisfied if the notice is provided no more than 90 days before the employee becomes eligible (and no later than the date the employee becomes eligible). Thus, for example, the preceding sentence would apply in the case of any employee eligible for the first plan year under a newly established section 401(k) plan , or would apply in the case of the first plan year in which an employee becomes eligible under an existing section 401(k) plan.

??? Thanks.

What is the best way to withdraw company stock from a 401(k) so that it maintains the favored tax status (i.e. The growth is taxed at capital gains rates when the stock is sold, not at ordinary income tax rates).

If a portion of the 401(k) is company stock and a portion is in mutual funds, can a partial withdrawal be done for the company stock while the remainder is rolled directly to an IRA? Or does the entire amount have to be withdrawn, taxes withheld, and the participant must come up with the balance of the tax withholding to roll the entire amount to an IRA?

Does anyone have a good website for this information?

If one plan covers 3 participating employers (all in the same controlled group) can they choose to have different matching and profit sharing contributions for each employer? If the answer is, yes, what additional testing must they do?

We have a 401(k) plan that is self directed. During 2001, we have found that one of the 2000 payroll contributions was not deposited within the applicable time frame. We are trying to determine what interest rate to use in order to calculate the interest associated with the late contributions. These are the options we are looking at:

1. Take a blend of all rates associated with all investments

2. Take the rate of the investment that earned the most during the year

3. Take the going rate of loans

Thanks in advance for any input - please let me know if I need to clarify anything for anyone.

Thanks!!!

LLC with H and W as the only members owns and operates rental properties. LLC wants to set up a 401(k) Plan such that W, who will be the one running everything, can begin to save for retirement. H has significant retirement account in current employmer's PSP and will opt out of the LLC's 401(k) Plan. Any significant issues to be aware of going forward regarding the 401(k) to be maintained by the LLC??

What are the considerations in offering a 401(k) plan to members of an association under a MET?

How do you file the 5500?

Thanks,

Barry

A client mailed employee deferrals for a 401(k) Plan timely for all 12 months of the plan year. The custodian deposited these funds timely for 11 of 12 months. One month was one day late going into the trust. Are there any exceptions to filing the Form 5330 and restoring the plan when it is not the fault of the plan sponsor, or is the rule when the funds go into the trust?

Can a Safeharbor plan use a last day of the plan year provision provided under a non-standardized prototype? My thinking on this is no....but not sure.

Does anyone know if plan documents restated for GUST may be submitted for favorable determination letters in proposed forms?

Opinions with or without legal authority welcomed and begged for.

Thanks.

Recently my mother passed away and left two TSA accounts. I don't have the paperwork in front of me, but I believe they were 403b plans (she did work in a non-profit hospital). It's undetermined at this moment whether I am the beneficiary or the estate is. The question is, does the estate or the beneficiary have to pay any income taxes on these amounts inherited? I'm not concerned with inheritance taxes.

TIA, Carl C

I am a broker. We set up one of our group clients on a section 125 plan last summer (7/1). The service which provided the plan document now wants to charge the client again to "update" the plan. I know the sec 125 regulations were revised in 2000. Do the new regs require an extensive rewrite? This is a simple POP plan to shelter the employees's share of medical and dental premiums.

IRAs must pay tax on its unrelated business taxable income (UBTI) of $1,000 and over.

Can the IRA owner reimburse the IRA for this tax?