How can an employer stop a discretionary match mid-year in the following situation:

Employer has been putting match in on a payroll period basis.

Plan document implies that the match will be determined based on annual deferral amounts.

An employee that had deferrals has terminated employment.

The plan document is silent about true-ups.

The employer is not willing to freeze participant's abilities to make deferrals.

Is the employer stuck with contributing at least the match rate of the employee that terminated to all other employees based on their deferrals for the rest of the year? If so, cite or support?

Could the employer amend the plan to a short plan year, and immediately start a new plan year?

The employer claims to have stopped the match mid-year several years ago without any problem - has there been any change in this area over the last few years?

Issues (some also mentioned in above threads):

1. Following terms of the plan document

2. Discriminatory rate of match [1.401(m)-1(a)(2)]

3. 411(d)(6) - had participants accrued right to a match of at least highest rate made so far?

4. Definitely determinable formula [1.401-1]

A Plan amends lump sum provision from 100% PBGC rates to 120% PBGC rates (dist over 25k). Eff date of 7/22/96, adopted 9/12/97.

Say participant receives lump sum 9/1/96. S/ lump sum use 120% rates or 100% rates?

Say part. receives lump sum 10/1/97. S/ entire lump sum be based on 120% rates or s/ accd ben as of 7/22/96 be based on 100% rates and accrual after 7/22/96 be based on 120% of rates. That is, is there 411(d)(6) protection in this case?

Thanks,

Gary

Does anyone know of a training class or seminar that provides an overall understanding of 5500 filing for a variety of benefit plans?

Thanks for any assistance.

Greetings,

I am a former employee at a university where I participated in the 401(a) plan (until recently, I thought it was a 403(B) plan). TIAA/CREF was/is the custodian. I'm no longer employed. When I left the university, I tried to roll my retirement account into an IRA. However, I was told that my school's plan does not allow a rollover until I'm 55 (I'm currently 38). I find this very paternalistic and annoying.

Anyways, I was looking through a summary of the new tax bill and I read a summary that indicated that there are new requirements of retirmement plan portability for employers. However, I can't seem to make clear sense of what I'm reading.

Does someone know if these provisions will force my old employer to allow me to do a rollover?

Regards,

Jeff

An employee who made insurance and FSA elections at the beginning of the plan year in January would now like to enroll his spouse. The spouse lost her job in March and took COBRA at that time. Now the employee wants to enroll her in insurance and increase his FSA election.

My initial reaction was that the spouse cannot be enrolled because the qualifying event took place 3 months ago, but I am not sure if moving from COBRA would make a difference.

Thanks for the help - I am new to the industry and can use it!

Does military retired pay count as income for the purpose of contributing to a Roth IRA?

Hello out there!

I am reviewing a plan that is currently a standardized prototype, has 1 year and age 21 as eligibility, with a 1000 hours of service requirement on profit sharing and match contributions.

Company sponsoring plan has sold. Trustee is still the former owner.

New owner went to a bank trust department and had a new non-standardized plan designed. Intends to have assets transferred from on to the other as of 6-30-01.

New plan requires end of year employment for employer contributions.

Is this a cut-back of benefits or eligibility? Can they just "start all over" with a new plan design? What type of things can be changed without grandfathering in long term employees? (i.e. can triggering events for distributions be changed, can normal retirement age be changed, shouldn't there be a summary of material modifications, ????)

I am just so confused that the new owner could just run off and start something new, without considering the plan that is in place.

please provide insight.... thanks!

Assuming that my health insurance policy is not underwritten for 100% participation....

Is there anything illegal about allowing an employee to opt out of a non-contributing health insurance plan. Our plan provides FREE health insurance for employees and their eligible dependents. I have a few employees who have declined coverage (even though it is FREE) because they have health insurance already and do not want to deal with co-insurance.

I am being told that employees cannot elect to opt out of a non-contributory health insurance plan. If I am offering it to ALL employees, I am clearly not discriminating under ERISA.

I have also been told that if an employee does opt out, they should be receiving the premium paid to them? Is that true.

Any assistance would be appreciated. Thanks.

One of my clients has recently purchased assets of another company. I can't find anywhere in the document when these employees can begin to participate in my client's plan. Do they enter immediately or are they subject to this plan's eligibility requirements? Any help would be appreciated!

Through an internal audit we(company) have found a participant that took a loan out last year, but has never had payroll deductions withheld. We called our TPA and they said we must default the loan. Do we have any alternatives due to the fact it was the company's error and not the employee? I thought we could just start the payments up and extend the life of the loan.

A defined benefit pension plan participant is 49 years old in May 2000. Plan provides an early retirement subsidy benefit at age 50 and 10 years of service. DB Plan is frozen as of December 2000 and the Plan is subsequently amended to provide for termination. In May 2001, after accruals under the plan have been frozen, but before distribution of the plan assets, participant turns 50 years old. Does the participant still qualify for the early retirement subsidy?

I have not found any IRS guidance.

Any input would be greatly appreciated.

Thank you.

A. Boyd

Does a real estate investment trust (REIT) fit definition of partneship/joint venture interests or real estate in Schedle I, Part 1, question 3? Or, have we caused enough problems for our client by answering yes to Part II, 4 g?

A former employee of one of our clients has passed away. His spouse is his primary beneficiary. This plan is subject to the QJSA rules & they never filled out a waiver. The spouse would like to receive her distribution as a lump sum rather than as an annuity. As the spouse, is she allowed to make this choice after her husband's death?

With regard to "wrap around" plans (ie. non-qualified plan working with a 401(k) arrangment), there are a couple of PLR's out there that state that a participant must make his deferral election by December 31 of the prior plan year in order to "satisfy the 401(k) cash availability rules."

what would happen if a person decided to enter the non qualified plan in the middle of the plan year without making the prior year election?

MODERATOR NOTE: See post dated 7-26-01 entitled "IRC 402(h) Exclusion Limit under EGTRRA"

I understand that EGTRRA - Economic Growth and Tax Relief Reconciliation Act of 2001 - amended Sec. 404(h), the deductibility limit for SEPs, but didn't amend Sec. 402(h), so the maximum contribution permitted is still 15%. In other words, a person could deduct up to 25% but can't make a contribution bigger than 15%.

Can anyone confirm this

I understand that EGTRA - Economic Growth and Tx Reconciliation Act of 2001 - amended Sec. 404(h), the deductibility limit for SEPs, but didn't amend Sec. 402(h), so the maximum contribution permitted is still 15%. In other words, a person could deduct up to 25% but can't make a contribution bigger than 15%.

Can anyone confirm this?

Does the 410(B)(6)© transition relief also apply to ADP and ACP testing, particularly in a spinoff mid year? May the plan continue to test together for the rest of the current year?

I have encountered the following two situations relating to dependent care coverage. I am interested in whether people think these qualify as a change in status, thus allowing the participants in these cases to cease their dependent care pre-tax deductions:

1. A child who the parent thought would be in daycare in August, 2001, now realizes that the child will not be in daycare after all, and signed up to cover the cost at the beginning (1/1/2001) of the plan year.

2. Parents who had a child in day care because both parents worked during the day. One parent has been transferred to the night shift, and now the parents have the ability to watch the child themselves. The child was in daycare, and now due to the change in the one parent's work hours, now does not need to be in daycare.

Any help or assistance would be appreciated.

Thanks.

Under EGTRRA amounts under an eligible 457 plan of a state or local government are includible in income when paid. It also provides that the definition of "wages" for withholding purposes does not include payments under or to such plans. I take all this to mean that payments under such plans are now subject, for income tax purposes, to withholding in the same fashion as 401(a) qualified plans and reporting under Form 1099-R rather than W-2. Is this correct?

Also, I didn't notice any changes in the definition of "wages" for FICA purposes. Presumably then, payments from such 457 plans would still be subject to FICA taxes at the applicable time and these amounts would still have to be reported on a W-2 for FICA purposes. Is this correct?

Bottom line, under such 457 plans, for income tax purposes a payment would be withheld and reported (Form 1099-R, no W-2) in the same fashion as a 401(a) payment. However, such payment would still be subject to FICA taxes and related reporting would be done on W-2.

Thanks for any comments/guidance.:confused:

When a plan is late in submitting their contributions (missing payrolls, etc.), what responsibility does the recordkeeper bear? Should they inform the clients that in their opinion, the regulations are being violated? Should they cancel services for egregious violations? Once a recordkeeper begins to monitor these contributions for compliance with the regulations, do they take on a higher level of responsiblity? We have taken a harder line when providing administrative services (in conjunction with recordkeeping) which entails the completion of the 5500 which asks repeatedly whether contributions have been timely submitted. In egregious cases, we've cancelled administrative services. Should a recordkeeper also take the hard line? I"m curious as to what others in the industry are doing with this.