An employee had a baby 4 months ago. She thought the change forms would be sent to her automatically ( ha ha ) so the employee would now like to enroll the baby in the group health care and increase both the FSA and the DCAP.

My thought is the employee can't do any of the above because of the time lasp from the date of birth.

However, I cannot find anything that specially says the employee has 30 days from the qualifying event ( is that a HIPPA item? )

I would appreciate any help!!

Does anybody have an opinion on the following situation? An employer has a 7/01/00-6/30/01 fiscal year. We adopt a plan today with a 2/1/01-1/31/02 plan year-limitation year. under section 1.404(a)-14©1 , he intends to take a deduction for the defined benefit plan for the plan year commencing within the taxable year. We will use plan year compensation limited to 170000. He will extend his corporate return to 3/15/02 and make his contribution at that time. Can we do a 1/31/02 valuation based on the new law section 415 limitations and take the deduction on the 6/30/01 return?

Independent contractor would work 36 weeks out of the year (>1000 hrs), and the remainder she would work other places. Her income would be reported on a 1099. Could this employee be excluded from the plan since she is not being paid any W2 income?

A non-profit client sponsors a 403(B) plan, to which it makes employer contributions. It has recently acquired a for-profit subsidiary which has a 401(k) Plan. I understand that under EGTRRA, signed on June 7, 2001, eligible rollover distributions from a 403(B) may be rolled over into a 401(k) and vice versa.

The client would like to consolidate the two plans into one, but I am not sure that the new law gets me there. The problem, as I see it, is that if I terminate either plan, the rule that prohibits distributions of deferrals while the individual still works for the control group and maintains another defined contribution plan would prohibit the distribtuion and rollover. Is it possible to do a plan merger now - i.e. freeze the 403(B) plan and transfer the assets to the 401(k)?

Distribution date is the August 1st of the plan year following a participant's separation from service. Can the plan sponsor payout earlier than the distribution date as long as they do this on a consistent basis?

One of our clients failed their discrimination test and had to have money returned. By mistake, the asset company made two distributions instead of one. That is, the participant received twice the amount he should have received. The checks were issued a week or two apart and the participant cashed each check. My question is, what is the solution for this? Can the participant return the amount that was issued to him by mistake? Can he keep the money and just pay the taxes on it? Is there some other solution?

Spouse beneficiary is electing to treat the deceased's IRA as her own. He died after his required beginning date, but before he satisfied his 2001 RMD (he died earlier this year). I understand that the amount that represents his RMD must be reported under the spouse beneficiary's social security number. However I am being challenged on this because the rules state that the spouse beneficiary cannot rollover the amount that represents the deceased's RMD. . Can you provide me with a citation (regulation etc.) which states the amount representing the RMD of the deceased, if distributed after the deceased dies, must be reported in the SS# of the spouse beneficiary?

Thanks

My plan failed top heavy testing using determination date 3/31/98 which means we were top heavy for the 4/1/98 to 3/31/99 plan year. I understand the 3% top heavy contribution for non-key employees is based on the compensation earned from 4/1/98 to 3/31/99. But, are the non-keys that are entitled to the 3% the non-keys from the 4/1/97 to 3/31/98 plan year or those from 4/1/98 to 3/31/99 plan year? Exactly who gets the 3%?

Facts: A DC plan merged with another existing plan 12/31/99 and thus was terminated effective 12/31/99. The 1999 form 5500 had required the IQPA because the participant count was over 100 as of 1/1/1999. The 1998 filing also required the IQPA so the plan was consistantly over 100 lives (>120 rule). The assets of the terminated plan were not physically transferred to the new plan, Trust, until April 2000. As of 1/1/00 there were no "participants" in the terminated plan however the terminated plan held the assets until they could be moved in April 2000. There will be a beginning balance in the terminated plan however for 5500 purposes.

Question: Do you feel the terminated/merged plan would be required to file an IQPA with the 5500 for the 2000 plan year? DOL seems to be "gray" on this matter. Do you feel the DOL would include in its definition of the participant for Form 5500 purposes people with an account balance who are not eligible under the plan since it is terminated? We do assume that the new plan will be filing a 5500 with an IQPA for 2000 on it's plan.

I have heard something about a plan sponsor taking two plan years worth of deductions in one tax year for a new plan with a plan year which is not the same as the tax year. Does anyone know if this is valid and if so, how it works?

DOES ANYBODY HAVE AN OPINION ON THE FOLLOWING SITUATION? AN EMPLOYER HAS A 7/01/00-6/30/01 FISCAL YEAR. WE ADOPT A PLAN TODAY WITH A 2/1/01-1/31/02 PLAN YEAR-LIMITATION YEAR. UNDER SECTION 1.404(a)-14©1 , HE INTENDS TO TAKE A DEDUCTION FOR THE DEFINED BENEFIT PLAN FOR THE PLAN YEAR COMMENCING WITHIN THE TAXABLE YEAR. WE WILL USE PLAN YEAR COMPENSATION LIMITED TO 170000. HE WILL EXTEND HIS CORPORATE RETURN TO 3/15/02 AND MAKE HIS CONTRIBUTION AT THAT TIME. CAN WE DO A 1/31/02 VALUATION BASED ON THE NEW LAW SECTION 415 LIMITATIONS AND TAKE THE DEDUCTION ON THE 6/30/01 RETURN?

Participant is terminated from Company and subsequently becomes lost. Participant's beneficiary (wife) is requesting distribution of account balance - $500. Participant has been missing for approx. six months and even the State Department can't find him. He was last known to be in India. Wife has Power of Attorney for husband. Can the Plan distribute?

Due to a recordkeeping error, there were 3 participants who were underpaid their defined contribution benefits in the first quarter of the plan year. I was going to draft a letter to the client to explain the error and request that she obtain new distribution forms for the three participants since it has been over 90 days, when I spoke to a colleague that said “if a supplemental distribution is required due to a error in calculation, they can be paid out without obtaining new distribution forms”. She could not provide me a site. Has anyone heard of this? If so, can you direct me to a site? :confused: :confused:

Does anyone know what steps are needed when a QDRO is ignored? Situation - QDRO revcd April 2000 - ex-wife to get 100% of 401(k) balance - participant already terminated - a distributable event - ex-wife gets distro forms never returns them - Dec. 2000 participant rolls balance to IRA - March 2001 $ still in IRA - June 2001 ex-wife doing 2000 tax return - sees 1099R for rollover to ex-husband - How can situation be rectified?

Can a QDRO be issued now on the IRA - if yes - who files or probably more relevant who pays?

An IRA owner (age > 75) has been receiving required minimum distributions from his IRA since obtaining age 70 1/2. A couple of years ago he invested 1/2 of the assets in the IRA in a "shady" investment which has now become worthless (the entity is in banruptcy with little prospect of recovery). Prior valuations of the "shady" investment asset were most likely fraudulent. Will the owner be required to consider the latest fraudulent valuation of this asset in the valuation calendar year to determine his required minimum distribution for the current distribution calendar year?

I have a client who has a calendar year MPP plan with a 10% contribution formula. It is a standardized plan with no last day rule. Participants must work 501 hours to receive a contribution. The client is wanting to change the contribution to 7% effective July 1, 2001. My position is that he can't do this because the participants have already worked 501 hours this year, and they have "earned" the 10% contribution. Am I wrong, or can the contribution be changed mid-year? Thanks.

looking to see how other TPA's handle the following:

plan has 1000+ participants with 3 sources of contributions in individual accounts.

non-elective forfeitures were previously reallocated to eligible participants resulting in very small balances for those not deferring.

problem:

when distributing small amounts ($1-50), we end up having to charge our termination fee of $25 since we have to process paperwork so the investment company will release the money. there's no getting around the paperwork since the $$ is in individual accounts.

many some account balances are less than $10.

how are other TPA's handling this issue? do your clients complain that they are being charged $x for a distn that is less than the fee?

look forward to input from other TPA's.

bill

We are considering adding a passive 401(k) enrollment option for new hires beginning Jan. 1, 2002. Would be interested in practical ideas on how others have implemented passive enrollment in a fully outsourced 401(k) environment with weekly payroll frequencies. Would like to have the recordkeeper provide the "passive enrollment" notification and collect negative elections through IVR or internet, with no local HR involvement. Timing issues would seem to make elections effective on date of hire impractical, because pay may have already become "effectively available" in cash, to use the IRS' language, prior to notification from the recordkeeper, and the end of a reasonable election period. Has anyone designed a passive enrollment process for new hires that has a delayed effective date, such as "the automatic salary reduction becomes effective on the first day of the first payroll period of the second [or third] month following your hire date" as an example? Is there any problem with this design? Current plan provisions allow you to enroll as soon as administratively feasible following hire date. Any other practical experiences that anyone has dealt with?

Has anyone given any thoughts as to how the new 402(g) deferral limits should be communicated to participants in non-calendar year 401(k) plans?

For example, if an employer has a 401(k) plan with a PY starting 7/1/01, will they be notifying participants toward the end of 2001 that the higher $11,000 limit (and possible catch-up contribution) will be applicable for CY 2002, so that they can change their current deferral election at the start of 2002?

While this may seem to be in the best interest of the participants, it could end up resulting in more ADP refunds for the 2001 PY.

Any thoughts?

When calculating the PVAB's to determine if a plan is top heavy do I take into account each participant's vested percent, i.e. do I calculate vested PVAB's since were are to treat each participant as if they terminated on the valuation date?

What about terminated vested participants? Should we apply vesting to them? How about those terminated who are zero percent vested, do we ignore them?

And finally how about those who are in pay status. Suppose they terminated when were 60% vested and are now in pay status. Do we value their benefit, which is 60% of their total accrued benefit as of their termination?

Do you have any sites to back up an answer?