My mother in law is the beneficiary of her son's ESOP Plan, he recently passed away. Does the beneficiary have to Roll Over that money? Is she taxed on that money if she takes a Lum Sum? Finally; how long does it take before payment is made. There are no rules pertaining to payout for the beneficiary in the Plan Book.

Does a beneficiary pay taxes on a 401K Plan, when it is a mother of a son who passed away?

Which of the "good faith" amendments provided in IRS Notice 2001-57 for EGTRRA need to be adopted before 12/31/02? Do any need to be adopted (if they are to be used for 2002) on or before 12/31/01?

Some EGTRRA provisions apply starting January 1, 2002. Should 403(B) plans be amended prior to such date to comply? Are they required to be amended by such date? For qualified plans the IRS permits the amendments to be made generally by the end of 2002. Is there any simiar rule for 403(B) plans?

Company A purchased the assets of Company B. Company B is terminating its 401(k) plan and will distribute all account balances upon receipt of a determination letter. The Company B employees who are now employed by Company A will be allowed to rollover their distributions into Company A's 401(k) plan.

There are several former employees of Company B who terminated employment with Company B prior to the asset sale. They did not become employees of Company A and have never otherwise been associated with Company A. Company A would like to allow those individuals to rollover their accounts into Company A's plan if they desire.

Can this be done? Company A's plan will have to be amended to provide for this, but is there anything under the Code that would prohibit this?

I've posted before on this subject in the SEP section and have finally realized what my real queston should be. My problem arises when trying to figure the % or amount of contibution alowable for a sole prop when dealing with Social Security integration and a top heavy plan.

For instance, if a sole prop had a PSP and wanted to contribute 15% to all employees, he would be limited to 13.04% for himself due to the special calculations regarding SE tax, etc.

So now if the plan had Social Security integration (or any kind of skewing for that matter), he could actually contibute more than 15% to his account as long as the total is within the 15% of total comp and his is less than 25%. Eg. the employees get 14% and he gets 16% due to the SSI (or any other method). And if the plan is top-heavy he has the 3% minimum for the NHCE.

So my question is how does the self employed reduction come into play and where in the calcs. If for example, the contributions were 5.7% of pay plus 5.7% for the amount over the SSI point, it is pretty staightforward if the person is an owner of a C-corp, but how does it work for the self-employed. Where does that limiting factor come into play? Would he get 5.39% (.057/1.057) for both parts? Or ??????? It seems that you allocated the money in multiple steps but when do you deal with the SE reduction?

Before I set up one of these, I would like to know how to figure it so I can see if it will be worth it under a few different scenarios.

It seems that SSI is not an enourmous benefit depending on comp. levels and it seems that for a SE person the benefit may even be less. I'd just like to figure what to expect or whether I should just keep it simple and save expenses. All this of course helps me decide if I will need a TPA or what custodian may be best, etc.

Thanx for your help and patience. I seem to have educated myself quite a bit on retirment plan matters but this one issue seems to be escaping me.

A real estate agency is requesting us to do a proposal on a 401k for their agency. The realtors only work for this one agency, but each is an independent contractor. Can they do this? I think there may be some kind of exception that applies for insurance agents that may also apply to realtors?, but can't find any data on it. Would appreciate any help.

Employer wants to adopt a Safe Harbor 401(k) Plan for 2001. Employer has never had a plan. It is my understanding that as long as the plan is adopted by 10/01/01 (it is a calendar year plan) we are O.K. My concern is the notice requirement. If we can get a notice to all employees by the 09/10/01 would that be reasonable considering the employer just decides to adopt a plan on 09/06/01?

Could someone please explain how wrap-around health insurance works or a definition? Thanks

In attempting to close out and clean up former employee's accounts, we have a situation where the participant died (age 77/1996) and estate has been closed. Can we still distribute to the estate? or go directly to her 6 grown children (which is how the assets were distributed)? how should tax withholding/1099R be handled?

Does anyone know of a plan sponsor that maintains 2 separate 401(k) plans that have different plan years? Why would an employer do this? How is ADP testing done? If the two 401(k) plans normally had no employees in common, but some of the participants from one of the plans had to be added to the other in order to pass 410(B) coverage requirements, would the ADP test be done using all participants from both plans, or could the ADP tests be done separately for each plan, aggregating the ADP for only the participants who deferred (or were eligible to defer) to both plans?

I have a client who is interested in a Cash Balance conversion. The new plan will feature a flat 13% pay credit and tie interest credits to 30-year Treasuries.

In transitioning to the new plan, the opening balances are calculated as the PVAB under the prior plan using the applicable GATT rates. On top of this, if a participant's projected PVB (yes, PVB) on the new plan is less than the projected PVB under the old plan, the client wants to give a transition credit equal to the dollar shortfall.

The problem is that 59 of the 66 HCE's (89%) in the plan are eligible for this very generous transition credit while the NHCE percentage is very small, about 19%. Does anyone have any suggestions on how to handle the discrimination testing? The intent is that all participant's will not be hurt by this conversion.

Thanks

Anyone have thoughts on clarifying the application of new Code section 414(v) to section 457 plans? Section 414(v)(6)(A)(iii) defines "applicable employer plan" as an eligible deferred compensation plan under section 457 of an eligible employer described in section 457(e)(1)(A). Section 457(e)(1)(A) states "a State, political subdivision of a State, and any agency or instrumentality of a State or political subdivision of a State."

This definition specifically excludes section 457(e)(1)(B), which would include section 457 plan maintained by "any other organization (other than a governmental unit) exempt from tax under this subtitle" (i.e., tax-exempt organizations. This distinction is not mentioned in the house, senate, or conference committee reports.

What is the rationale for not providing for catch-up contributions for participants of section 457 plans maintained by tax exempt organizations?

Can someone tell me in a nutshell what the issues are when an HCE is terminated, withdraws his/her funds from a plan and rolls the funds into an IRA BEFORE excess deferrals for the prior year have been returned. It would seem that some of his/her funds would not be qualified for a rollover into an IRA.

Any suggestions on how one would correct this if at all? What are the problems the plan would face?

Thank you.

[This message is also posted in the DB message area]

I was wondering if anyone has insight into the following:

Company sponsors a DB plan. The plan was frozen July, 2000. The Company is in the process of filing for a GUST determination letter. The Company would like to file with the 1998 Form 5300 forms and not with the proposed forms. The question is must the entire Schedule Q (including demonstrations) be completed?

The instructions to Schedule Q provide that only Parts I and II need to be completed if "the plan does not benefit any highly compensated noncollectively bargained employees. " It seems reasonable to take the position here that this is true and that no further information is necessary.

Is this a position that the IRS will buy?

Thanks in advance!

A client currently maintains an ESOP as well as a 401(k) profit sharing plan. The ESOP contains a money purchase feature.

I believe the client could merge the two plans into a "KSOP" if they want to contribute the match in stock.

If, however, the client doesn't wish to contribute the match in stock, can they still merge the two plans together?

Also, at this time, thier ESOP forfeitures are reallocated to participants. Are there any ESOP rules which would prevent them from using forfeitures as a credit for plan expenses?

Does anyone believe that retirement plans and/or administrators of retirement plans are subject to the Gramm-Leach-Bliley notification requirements?

Does anyone know of any good source of information on how to handle loans in DC plans? Specifically, I am looking for guidance in handling interest on late payments and distributions for participants w/ deemed loans.

Thanks

I see in the Instructions for Schedule Q that it is no longer required in conjunction with Form 5310. Are there any reasons for filing Schedule Q for a terminating money purchase pension plan with no significamt hidden issues???

I am looking for any information on the following questions:

1) Is it possible for 401(k) plan participants to pay the administrative fees associated with their account directly (with after tax dollars) rather than out of their plan assets?

2) If so, is the amount paid considered a contribution to the plan or is the employee still permitted to receive the full $35,000 for that year?"