After 1/1/02 a SEP distribution can be rolled to a qualified plan (401a). Can someone confirm that this includes a SARSEP distribution? Thank you.

What would be the consequences of the following:

Participant defaults on loan and does not cure within the allowable grace period; TPA does 1099's at the end of the year; prior to 1099 being issued, participant decides to bring the loan current; TPA allows this and does not issue a 1099. Could this cause a problem for the plan or just the participant/Taxpayer if the IRS catches this on audit?

Company just came into existence in June 2001. Want to establish a plan this year (7-1-01). Highly paid employees and don't want to be limited by the pro-ration of compensation for a short plan year (7-1 to 12-31-01)for allocation purposes.

Can the effective date of a plan pre-date the existence of a company? Establish the plan effective 1-1-01 with a full 12 month plan year to avoid pro-rating comp.?

If not, can the plan be effective 7-1-01 but define the compensation period be as the entire calendar year to avoid pro-rating?

Anyone have anything from the IRS re- this?

I have an additional question in regards to EGTRRA changes with 457(B) catch ups.

Does anyone know if the Age 50 Catch up is available for both governmental 457(B) plans AND tax-exempt employers sponsoring 457(B) plans? I have been reading conflicting publications in regards to the ability to offer the Age 50 Catch up provision on tax-exempt employer 457(B) plans, and am curious what is correct.

Thanks for any opinions.

James

Can anyone advise about any defensive tactics one could incorporate into a plan to afford the greatest protection of benefits in the event of merger or acquisition of the employer? Info is needed ASAP and would be gresaly appreciated. Thank you. blackacre

Assume Company A acquires Company B, and both have similar (but not the same) nonqualified plans.

Under both plans, you receive a distribution when you terminate emloyment or retire, and you make an annual election for "how" you want your benefits distributed (this is NOT a class year election, it applies to all of the employee's contributions). There are some subtle differences between the two plans regarding the frequency and period of installment payments available.

I understand that the change of corporate control may "trigger" accelerated benefits, vesting, etc. I also understand that generally, the buyer will decide to either terminate, freeze, or adopt the sellers plan. My question: is it possible to merge the two plans? If possible, what issues should be addressed prior to merger?

Thanks, everyone, for the responses to my questions on moving my 401K to my IRA accounts (can't do it). The gist that I'm getting is that there is a lot less (read: no) flexibility on moving a 401 than there is with IRA's.

The next question is, can I withdraw the money from the 401K, subject to income taxes and penalties such as those imposed on early IRA withdrawals? I'm that fed up with the plan that I (we) have, to the point that I would rather pay any taxes and penalties to get at the money. It's beyond my imagination that the government won't let you have your money, penalty or no penalty.

Carl C

I'm looking for suggestions on how to proceed with a new client who "doesn't know" if their 1999 5500 was filed or not for one of their 401(k) plans.

Their internal staff person, who used to do this plan's 5500s, retired well over a year ago, their previous recordkeeper passed away earlier this year and their auditor insists that they did not do it (the plan is not audited, but the client has other plans that are audited and the auditor does those 5500s. Sadly, the client thought that the auditor filed the 5500!)

For the record, the 5500 in question IS for 1999. Obviously, the 2000 5500 has not been filed and we know this for certain!

I am wondering if I should contact the PWBA and ask for a copy of the most recently filed 5500 for this plan or if I should just proceed as if the 1999 5500 has not been filed and see what happens. Interestingly, they have not received any correspondence, yet, from the DOL indicating that a return was missed. The last 5500 that we have on file is for 1998, which was timely filed.

Any suggestions will be greatly appreciated.

Just a general HR question...for a staff of approximately 100, how many HR people would you suggest a company have, assuming HR functions include benefits, payroll, recruiting, etc. etc.

Is there anything that I need to be concerned with regarding a rollover from a Federal Retirement Thrift Savings Plan into a 401(k) Plan? Is this permissable? How do I account for it? What are some problems that might arrise from this? Any information would be appreciated!

Thanks!

Company has two plans one for Union Employees, one for Nonunion Employees. The Union plan has over 100 participants, the nonunion plan does not. Does the audit have to encompass both plans or just the union plan?

Thanks in advance for any guidance.

We have a defined benefit pension plan that wishes to allow employees who have reached the age of 70.5 to continue working and earn a salary while at the same time begin receiving their pension benefits. How would we amend the plan to allow for this? In particular, how would benefits continue to be accrued while pension payments are being paid?

I was wondering whether someone can clear this up for me:

Pursuant to IRC section 414(s), a plan must have a nondiscriminatory definition of compensation. Therefore, if a 401(k) plan's definition of compensation, for example, counts all pay but not overtime, the plan's definition of compensation must be tested under section 414(s).

My question is this: Does a plan automatically pass 414(s) if it tests ADP/ACP on a safe harbor definition of compensation (like W-2 compensation).

The answer to this question will determine whether a Demo 9 must be submitted for plan that excludes overtime from its definition of compensation.

Thanks in advance.

I read in a brochure that for employer stocks, the following can be done:

Say the basis is $10,000

The value at distribution is $50,000

The $10,000 ( stock) may be rolled to an IRA and

The $40,000 ( NUA) can be held in a regular cash account or in hand.

The $40,000 (stock) will receive the long-term capital gains treatment when sold.

Is this true?

I thought that in order to get the NUA treatment, none of the assets could be rolled to an IRA.

Can an ESOP be the contingent beneficiary of a life insurance policy on the life of one of the owners of the plan sponsor if the ESOP is not the owner of the policy? On the owner's death, if the death benefit is paid into the ESOP, is it treated as an employer contribution? If not, what is it treated as?

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Subject: Convert 403b to 401k

Author: Brad

Date: 10/17/2001 11:18 am PST

I am a third party administrator who is trying to consult a client on the advantages of switching their company's entire retirement plan from a 403(B) structure to a 401(k) structure. I am not dealing with an individual participant who wants to roll their money into a 401(k); I am talking about restating the entire Plan to switch it's structure over to a 401(k).

Do you have any advice or information that would be beneficial to me in this endeavor? What I am really looking for is a precise comparison chart (or something of that sort) that I could use to communicate the advantages or disadvantages of making the switch.

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Convert 403b to 401k

Brad 10/17/2001 11:18 am PST

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For a participant with a spouse more than 10 years younger, the preamble to the 2001 proposed regs says that a participant is "permitted" to use the longer period. The reg itself [1.401(a)(9)-5 Q&A 4(B)] says that a participant will use the longer period.

Does a participant have a choice, as implied by the word "permitted" in the preamble, or must the participant use the longer period, as implied by the reg itself?

I'm looking for regulatory or article references. Any case law references would be ideal.

The basic situation is in an automated system that produces accrued benefit calculations that could be used to initiate actual benefit payments, but without any review by an actuary or his/her designated representative (qualified administrator, etc.). The system is designed to automatically find such benefit calculations according to flags set in the database records for the calculation.

Many thanks,

Franklin

Is there any correction procedure such as EPCRS for 401(a), 403(B) and SEP's for dealing with excess deferrals in a 457 plan? It doesn't appear that EPCRS would apply to a 457 Plan. Is it just a matter of distributing the excess deferrals and adding the amounts to the participants' W-2's? The employer is a non-profit healthcare organization which maintains a 457 and a 401(k). It just recently found out that a number of participants have exceeded the 457(B) limit for a number of years. Is there anything from the plan side with respect to the IRS' overseeing the correction to insure qualification is maintained?

Is there any correction procedure such as EPCRS for 401(a), 403(B) and SEP's for dealing with excess deferrals in a 457 plan? It doesn't appear that EPCRS would apply to a 457 Plan. Is it just a matter of distributing the excess deferrals and adding the amounts to the participants' W-2's? The employer is a non-profit healthcare organization which maintains a 457 and a 401(k). It just recently found out that a number of participants have exceeded the 457(B) limit for a number of years. Is there anything from the plan side with respect to the IRS' overseeing the correction to insure qualification is maintained?