I have had to turn to my 401k plan for help. My wife has become disabled causing us to lose income, as well as extra medical bils and housekeeping expense , baby sitting and eating out often. I had to file bankruptcy chap 13 and now I would like to take 401k and pay it off. I have 2 401k loans and ample money in 401k to satisfy those loans and discharge bankruptcy, clear all debt and start over. My automobile just died (a.k.a. work transportation) and I have enough money in 401k to purchase a dependable used one. The trouble is they won't let let me have the money to purchase work transportion, they won't let me pay off the loans which would ease payroll deductions, they won't let me have it to payoff bankruptcy and maybe finance a car, and I can't get financing as long as I am in bankruptcy. The ironic thing is if I am fired for absenteeism(no transportation) , I can cash it (401k) all in and also take my company pension plan in lump sum (worth

thousands) Why does it have to come to this? Any feedback?

PJS

If a plan sponsor reimburses a plan for expenses paid out of the plan, is that payment to the plan considered a contribution?

Here are the facts:

Client sees August 2000 trust statement with investment fees of $1,000 charged to the plan. So, in September 2000, the plan sponsor deposits $1,000 to the trust to reimburse the plan for expenses paid by the plan.

Is this a contribution? If so, here's my problem: The plan is going to be terminated. There is only one participant in the plan (owner of the plan sponsor). He had no compensation in 2000.

What are the rules on being in a 401k and opening a ROTH IRA? Is this allowed?

Can anyone suggest a book or other resource to get a good basic understanding of cross-tested theory as well as some good case study/examples? We work with a lot of doctors in small groups and occasionally partnerships of PCs. We have done a number of "plain vanilla" ctp, but don't know enough to get more sophisticated/aggressive. We need to understand the capabilities of defining different classes to meet different HCE doctor's objectives (old, young, owner,non-owner).

Thanks!

What would you say about this situation:

A participant was paid a distribution in May 2001 based upon valuation dated 12/31/99. Subsequently, the 2000 val was done, and administrator realized that due to losses in 2000, they paid out 50,000 too much.

The distribution was rolled over to an IRA. If the plan documents stated that payouts are based upon "last val date", must the IRA custodian return the overpayment claimed by the plan? Or, can the participant refuse to authorize any give-back, since it was based upon figures prepared by plan administrator?

If the participant is obligated to return the "overpayment", what happens if the funds lost money since they were rolled ino the IRA, and now are worth less than amount received. Does the participant still have to return the entire overpayment, or can it be adjusted for the loss?

If anyone has sources for the answer to this problem, they will be greatly appreciated. Thank you!

What is involved in forming an association 401k plan for the sponsors that are members of the association? The the administrative "nightmare" the 5500s or are they fairly easy?

We have a client with late contributions to their plan. They correctly filed a Form 5330 but did not complete line 26a. We understood that late contributions were considered loans to the Plan Sponsor, but I recently heard from the plan's custodian that they were considered loans only of the plan sponsor's bank account went below the amount of the contribution. Is this so? What is your definition of discrete v. other?

Also, the plan's third party administrator believes that you only have to make a plan whole with regards to late contributions if the participants were hurt by the late contributions. I.e. if the market went down during the time the company held the participants' money, the participants were not hurt; therefore, the plan sponsor would only contribute the withholdings and not additional "lost" earnings. We understood that you must make the plan whole regardless of the market and pay the participants the going federal rate.

Any comments would be appreciated.

If an employer establishes a self-insured plan to reimburse former executives and their spouses for medical expenses, is there any way around the Section 105(h) discrimination problem, other than to make the plan available to all former employees?

Or, if the employer simply treats the reimbursement amounts as taxable income to the former employee, would this avoid the Section 105(h) problem entirely?

Are there any situations where a plan does not need to have a sponsor?? Thanks.

I am seeing a wide variety of charges for the GUST Restatement.

Does 1000.00 for a standard document and $2000.00 for a non standard document sound right?

A c-corp with a 401(k) is terminating to create an s-corp. Can the 401(k) be amended or must it be termed and a new plan created?

A corporation sponsors a money purchase plan as well as a 401(k) plan. Both run on a 10/1-9/30 year.The corporation's fiscal year is also 10/1-9/30. Normally the increased EGTRRA contribution and deduction limits would not apply until the year ending 9/30/03.Can the plan/fiscal years be amended to accelerate the application of the EGTRRA limits,and therefore the elimination of the MP plan by merging it into the 401(k) plan?

Does anyone out there have experience with the Relius "user-defined" fields? I have a plan where I have data in the user defined fields 1-10 and am trying to create a report with that data. I spoke with Relius tech support and was advised that the ud fields in database PLANEE2 for rows 1-5 are the only ones available at this time. She advised me that I could use the PARTUDF database and create a sub-report with reference to the lines after line 5 (ie., 6 - 10) but it was rather a complex operation and she wasn't even sure I could get it to work. There is a variable in the PARTUDF database that references the row number of the user-defined field. I've been trying to incorporate that and get Crystal to look, for example, at row #6 and print the data in row 6 and beyond but to no avail. I'm not super proficient in Crystal, but any advice would sure be appreciated. Thanks in advance.

Is the following permissible with respect to a cafeteria plan:

An eligible employee may make an election to participate within 30 days of employment, the election becomes effective retroactive to the employee's date of hire and the employee's salary is reduced after he makes the election to pay for the retroactive and prospective coverage.

Suppose a cafeteria plan permits an employee to change his elections mid-year due to a status change event if he/she submits a new election form within 30 days of the event. May the new election be effective retroactive to the date of the event (especially in light of the modification made to Example 2 in the January 10, 2001 final cafeteria plan regulations)?

I have a final 5500 to complete for the 2001 plan year. With the new forms, can I complete the 2001 5500 on the 2000 forms?

I have an employer who currently sponsors a Money Purchase Pension Plan. We are establishing a new 401(k) plan and the employer wants to merge the assets of the MPP to the 401(k) rather than terminate the MPP. I have advised the client that this merger could be looked at as a "termination" of the MPP and 100% vesting would be required. Since they don't want to 100% vest, I advised that they apply for a determination letter and let the IRS determine if full vesting is required. In the meantime, I have heard that the IRS is now of the opinion that the 100% vesting is not required in this situation. Is there anyone out there with a reference for this opinion????

Plan Sponsor has been filing 5500's in the past, but now has no employees other than the owner.

I believe that 5500EZ may now be filed, since there are no employees.

Is the final return marked for the 5500 and/or first return marked for the 5500EZ when making this switch?

John G's recent response on high turnover funds in an IRA brought to mind a few thoughts.

John's response was--I thought-- thoughtful and correct in that for MOST people focusing on the long term with conventional, diversified investment strategies in an IRA is the best policy.

But if one had a succesful short term strategy [a BIG "IF"!!] from soley a growth perspective there would be no doubt that it would be better in the IRA than in a taxable account.

If we take this ST strategy as a given are there any issues in particular that one should be aware of to maximize such a strategy and to avoid any future problems associated with a BIG IRA?

For Example:

1. Leverage. It's intruiging to me that it is a prohib. trans. to use

your IRA as security for a loan (ie to margin your IRA assets) but you CAN have a very similiar effect by buying a mutual fund that uses leverage. In the last 5 years there are a few funds that have come out that have beta's > 1 using swaps and futures on indices that are very popular with ST traders. Does anyone know any other ways to leverage a ST strategy via an IRA?

2. Big IRA's. What's the biggest IRA anyone has seen or heard of?

Are there any case studies that have gotten over say $100M.

This sounds stupid (and trite) but I'm curious as to how big IRA's have become in the past. Since we no longer have to strategize against the excessive accumulation tax are there any other issues that one should be aware when your IRA get's really big?

[by the way, as a whimsical side note how can IRA's get really big? I can think of three key factors and one special situation:

i) growth through a long stretch out (e.g. an inherited IRA by a grandchild)

ii) rollovers from company plans into conduit IRAs (ie taking advantage of the larger contribution in company plans)

iii)asset performance

iv)special loopholes (big FSC dividends)]

3. Obviously, the designated bene. is an important issue and if the IRA was really that significant compared to the over all estate various qual. trust ideas could be proposed. (With a sharp eye on the trust's affect on a sps rollover and the LE to use for MRDs)

Reg Jones

What Form if any must be filed with the IRS/DOL when one employer in a multiple employer plan decides to terminate participation. Also is there an issue with GUST amendments, if the participating employer is not the sponsoring employer?

Anyone ever give negative enrollment elections to individuals before they become employees? Employer A is buying the assets of Employer B. A large number of employees will become Employer A employees as of January 1. Employer A's 401(k) plan allows immediate participation. In order to ease the recordkeeping during the transition Employer A wants to provide 401(k) enrollment material in November (while the individuals are still employed by Employer b). If an employee does not return the enrollment material, then the negative enrollment will take effect January 1.

This is similar to the fact pattern in Rev Rul 2000-8 except, of course, that the employees aren't employees yet.

I see no reason why the rationale in Rev Ruls 98-30 and 2000-8 should not extend to this situation. Here an individual will actually have more time than usual to consider their options.

Would anyone have any concern with this?

Thanks-

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