Does anyone know which plans should file in Puerto Rico and/or Guam? (Ones where x number of participants live there, ones where the sponsor has to pay taxes there, etc.?)

Also, what does getting a favorable determination letter there mean? (If it is "unqualified" in PR, what happens? All PR residents have taxable income?) It seems as though it would not matter as the money is all in a valid trust.

An accountant for a plan sponsor is suggesting that the sponsor can return deferrals to HCEs to avoid top-heavy status. Is this allowable?

What are the consequences if the plan sponsor returns HCE deferrals to avoid being top-heavy (and the deferrals would not have been returned due to ADP testing or any other reason)?

In review of current case, discovered that there was an error on the 1999 Schedule B (interest on Normal Cost didn't stick when entered last year, so charges were understated and credit balance was overstated). I know, I know, one shouldn't make errors, but unfortunately was the byproduct of having to do a ton of forms in a very short period of time last fall.

My question is, how to handle submission of amended 1999 Schedule B under EFAST? The Form 5500EZ and Schedule P were unaffected by the change. How should I submit? Have client resign a new "amended" 1999 5500EZ (showing no changes) along with the amended 1999 B? Submit revised 1999 Sch B along with the 2000 filing? Any help would be appreciated.

Is it mandatory to have the date of birth for a designated beneficiary of an IRA?

I know it is recommended- but the IRA owner does not know the DOB of the individual and wants to designate him as the beneficiary without his knowledge ( for personal reasons)

I have a group that has a 501©(3) designation and has a 403(B) program. They told me they also are a Governmental organization and are interested in establishing a 457(B) plan next year since the coordination between the 2 plans go away. How or what should I ask for or look at to determine if they are truly a Gov't org before trying to implement.

Can a SIMPLE 401(k) accept rollovers from any other eligible plan. IRS sample plan language (including the model amendment in Rev. Proc. 97-9) indicates that it can. Past industry comments I've seen seem to indicate that the answer is "yes". However, I've seen a recent comment from a reputable firm which takes the position that rollovers to a SIMPLE 401(k) from any eligible plan, including another SIMPLE 401(k), have never been allowed (under pre/post EGTRRA). The position is based on the specific language in the Code that basically says a SIMPLE 401(k) plan may only receive elective and matching contributions (Code Sec. 401(k)(11)(B)(i)(III). This firm's position is that the IRS's interpretation exceeds its authority under the statutory provision and that until there is some clarification or further guidance, rollovers to SIMPLE 401(k) plans shouldn't be allowed. I understand this is their interpretation but I'd like to know what interpretations others have on this. What do you tell your clients?

A safe harbor plan is established 1/1/2002. The required contribution will be the basic match. If all the safe harbor requirements are met, is it correct to state that for the 2002 plan year no additional contribution is required for the nonHCE / nonKEY if the only participant that elects to defer is the business owner? Assume no other employees become eligible in 2002.

Can anyone explain how catch up contributions will impact the ADP / ACP test. Is it included in the tests, can you make a corresponding match for the contribution? Is there a good reference for this question?

Is there any official IRS guidance on how the unfunded current liability is computed for tax max purposes under 404(a)(1)(D)?

Questions 11 and 14 from the 1993 EA Graybook indicate that computation includes interest and normal cost accruals to the end of the applicable plan year. Question 7 from the 1995 EA graybook indicates that including CL normal cost is undecided (not sure if "undecided" also relates to interest accruals to end of the plan year) . Question 18 of the 1995 EA graybook asks--if accruals during the year were added to the Unfunded CL as of the beginning of the year and the plan sponsor made the "year end" tax max under 404(a)(1)(D) at the beginning of the plan year, if the full amount could be deducted. (Response was that there was no guidance).

I have a terminating plan with favorable dl, but assets have not been distributed, now corp has been closed. Assets are of a nature quick payout unlikely. I no longer have a sponsor & I'm coming up on a new plan year. What are the rules regarding a plan with no sponsor? How long do I have?

If a turn-key service provider has been terminated, is that service provider under any obligation (legal or otherwise) to ensure the prospective qualification of the plan is assured? In other words, is it necessary to obtain guarantees to that effect from the soon-to-be former client or the stb former client's new service provider?

I've been reviewing some of the posts re: FSAs. Could someone please let me know if I'm on the right track with the following assertion:

1) If an employee has exhausted her FSA benefits prior to the end of the plan year and also terminates employment prior to the end of the plan year, her employer cannot seek reimbursement of any uncollected "premiums" she would have otherwise paid. (e.g., Assume the FSA has a calendar year plan year, and ER is permitted to make bi-weekly deductions from EE's "salary" to cover the EE's contributions to the plan. In January EE incurs $1500 in eligible medical expenses, the maximum allowed under the plan and terminates her employment in June. The ER may not deduct her remaining contributions due the plan from her last paycheck.) Right or wrong? Could the plan document affect the ER's right to recoup losses?

I know that the code requires plans to provide for full vesting of "affected parties" upon plan termination. The plan provides for full vesting of participants upon plan termination. If a terminee is paid out prior to the the plan termination, does the terminee receive accelerated vesting also? I do not think so but would be interested in another opinion.

I have two questions concerning the top-heavy minimum contribution. First, what is the deadline for making the contribution? Is it the same as any employer contribution. That is, does it have to be made by the time the employer files their federal income tax return? Secondly, what if the employer already filed their tax return but still has to make the top-heavy contribution for that plan year? Can the employer still get a deduction for the contribution?

Do passive trustee's (not direct) need to have a schedule P filled out for the 5500?

They do NOT provide any financial information to the plan and do NOT receive any contributions or money at all.

Can anyone point me to data on How long a corporation can sponsor a plan after the corporation ceases? Or does the plan have to be dealt with before the date the corp ends.

I am getting conflicting answers.

Can someone tell me in simple terms what has changed beginning in 2002 concerning elective deferrals? I have been told by our administrator that deferrals will no longer be counted towards the allowable deduction amount. What does this mean to us and how can it benefit our HCE’s. Thanks, JJ

Can someone tell me in simple terms what has changed beginning in 2002 concerning elective deferrals? I have been told by our administrator that deferrals will no longer be counted towards the allowable deduction amount. What does this mean to us and how can it benefit our HCE’s. Thanks, JJ

The new rules say "The term top-heavy plan shall not include a plan which consists solely of - (i) a cash or deferred arrangement meeting 401(k)(12), and (ii) matching contributions of 401(m)(11).

Query: Does a plan that has a profit sharing feature, but no profit sharing contributions, satisfy these requirements?

I'm trying to determine if my existing safe harbor plans were designed in error because we checked the profit sharing feature on the adoption agreement.

Since the statute says 'consists solely of a 401(k)(12) arrangement', I'm thinking that if a plan has a profit sharing feature, even if never used, it will not meet these requirements, and then may be considered a top-heavy plan.

Sal Tripodi's newsletter indicates that "a safe harbor 401(k) plan is deemed to be a non-top-heavy plan if the only contributions to the plan fall into ... 401(k)(12) and 401(m)(11)." This seems to me that a plan with the profit sharing feature could still be considered non-top-heavy.

I haven't seen anything else written about this topic. Any input is greatly appreciated.

mck

Hello

I have a client whom I am filling out form 5500 for. The amount of the fidelity bond is the question.

The agent says the fidelity bond coverage is 10 million dollars. I have never seen coverage for this amount. The plan assets are only 3.5 million. I have seen clients who obtain more than the required bonding coverage...but ten million dollars?

I questioned the amount, including a question about whether perhaps the bond coverage they were giving me represented fiduciary liability insurance instead of a fidelity bond, but the agent said no, that the ten million dollars was the amount of coverage for the fidelity bond.

The answer I got from the agent was that the amount of the coverage represented the client's "crime policy" which includes theft of funds from the plan required by ERISA.

I guess my question is, does this seem odd to anyone else? Does it sound as if the policy includes other things besides the ERISA coverage, and if so, would I put the whole 10 million dollars in coverage on the 5500? or just the part that covers the plan?

I am asking this for my own personal knowledge, as I have gone back and forth with the client, and he to his insurance agent, and I feel I may be becoming a pest!

I am not knowledgeable about insurance so I would appreciate anyone who is answering the question. Thanks a lot!

:confused: