The employer did not withhold the correct amount as elected by several participants in a 401(k) plan. This also caused the employer matching contribution to be incorrect.

Rectifying the employer under-contributions I understand. With respect to the missed elective deferrals, how should this be rectified.

To qualify under the safe harbor definition of hardship withdrawal, an employee must first have exhausted all other available sources of money, including plan loans.

Is there, or was there ever, an exception to the above requirement (to first take a plan loan) if the hardship is being taken to purchase a principal residence?

Say a U.S. Employer employs Canadian citizens who are earning U.S. income and are participating in 401(k) plan. A Canadian employee is transferred overseas but is still earning U.S. income. Can he/she continue to participate in Plan?

Second, say that the Canadian employee is transferred back to Canada and is still employed with Employer, but is no longer earning U.S. income, and wants to transfer his/her account to a Canadian retirement plan. Is that possible?

Obviously these are probably issues to be referred to their client's legal counsel, but a first guess may be that the account (in the second case) cannot be distributed until a distributable event occurs.

I am working with a governmental employer who is considering establishing a top hat plan to benefit certain management. The problem is that they want the plan to be vested before it is payable, for instance that it vest at age 50 but not be payable until age 65. Therefore, no substantial risk of forfeiture. Can the plan have a "gross-up" provision that states that if contributions are taxable then the plan will immediately distribute the amount necessary for the beneficiary to pay any tax? I understand that the earnings in the plan are taxable when paid, not when earned, notwithstanding the taxable nature of the contributions.

Somehow I just recently found out that my employer (was) the Plan Adm. and Plan Fiduciary for my LTD plan.

In a mediation/court proceedings does this mean anything to me or the settlement it self? As opposed to the LTD Ins. company beng the Plan adm and Fiduciary?

Just curious of any differences, good , bad, or whatever ?

I also found a Major decrepancy (spelling?) from their Summary Plan Paperwork vs. what they give out to employees regarding their LTD benefits... From everything I have read it looks like they say that what is in their Plan Summary at the home office is what stands up and not the booklet given to employees. Is that correct?

After this settlement is all over ie $50K ($40K me, $10K lawyer) I will need to pay the 50% tax on it(per my AFTER-TAX split contributions with employer). So what IRS forms or procedure do I use to pay this tax NOW and not in April 2002?

Do I do a reg. 1040 and itemize with my personal exemption etc. and then deduct the $10K (example only) from lawyer? Do I do some sort of estimated tax on it and pray it is close to what the IRS would want?? I don't have a clue how to do this one..

Thanks so much.

An employer maintains a SIMPLE-IRA. For the last year, the employer has withheld SIMPLE-IRA salary deferrals from the employees' paychecks, however, the employer did not forward these contributions to the SIMPLE-IRA. Rather, the employer erroneously maintained these assets in a "holding account." Upon discovery of their error, the employer would like to take the necessary steps to remedy their error. What should be done to rectify this situation?

very strange question: Facts: Employer participates in state retirement system db plan. Under the plan, sick leave credits may be used to purchase additional service credit. There are a number of participants who have accumulated sick leave credits, but cannot use them to purchase additional service credit under the plan because they have already accrued a maximum service level under the plan. Thus, such participants want to "pool" their accrued sick leave credits and allocate the credits among all participants who can benefit from such credit (ie, to those who have not maxed out the service credit allowable under the plan)and the employer wants to allow the participants to do this. They have not yet decided how they would allocate the credit, but let's assume it is allocated in a non-discriminatory manner. Can this be done? The state statute that governs the plan does not, on its face, contain any prohibition on doing this. A few thoughts: first, I assume this would/could affect funding obligations under the plan; second, we would want to get the approval of the state retirement system. Would this be a violation of the anti-alienation provisions of ERISA or any other ERISA rules/regulations? I doubt there is any absolute answer to this question. I would appreciate any thoughts on the issue.

I work at a college and am considering leaving the college to start my own small business. I have a 403(B) with funds invested in Fidelity and an SRA with funds invested in TIAA/CREF. I would like to take some of the funds upon my termination to cover my salary for a year, pay my health insurance costs until I am settled in business.

Is there a way I could work this to avoid the penalties associated with early withdrawl? The balance of the funds I would roll over into another retirement vehicle, but I'm not sure which kind would be best. Any suggestions.

Unusual situation (not sure how it happened) but... Participant received $500,000 distribution FIVE years ago. Original 1099R indicated entire distr. as eligible for rollover, which participant did. Now determined that $100,000 of the distribution was not eligible for rollover and should have been reported as TAXABLE distribution five years ago. Are there 1099R rules that deal specifically with reporting in this situation? How does one deal w/ the mandatory withholding at this late date? Thanks in advance for any info/suggestions.

On first read, the annual additions limit for a PS/K plan for a 51 year old in 2002 appears to be $51,500 for 2002 ($40K + $11K + $500 catchup), or 100% of pay if less.

Is that correct, or have I misread something?

Is an employer responsible for covering the delivery expenses of an employee who is acting as a surrogate mother? The employee is otherwise covered under the employer's group health plan.

I would think that the delivery is not a covered expense since the surrogate motherhood is a "business venture" outside of the employee's employment. Any comments or experience with this issue?

I see that for the daycare credit starting next year, you can consider $3000 of expense for 1 child and $6000 for 2 or more. But the limit for cafeteria plans is still $5000. What would then be the advantage of someone with 2 kids using the cafeteria plan? Will you be able to run the first $5000 through the cafeteria plan and the last $1000 as a tax credit? thanks.

We have a plan which had a 402(g) excess (of $36) for 2000 which was not refunded by April 15th. According to Revenue Procedure 2001-17 Appendix A, we need to distribute this amount back to the participant & tax him on this amount both in the year deferred AND the year distributed.

I believe this is a new rule & one we have not encountered before. I wonder if anyone else has had to do this. How would you code your 1099R? Would you send two? Also, traditionally earnings were taxed in the year distributed. Would these also be double taxed? What if they were negative?

I think I'll issue two 1099Rs & ignore the 69 cents of negative earnings in this instance, but I'd appreciate any feedback.

thanks,

Grant

Company A maintains a 401(k) plan with a 9/30 plan year end. The plan has a mandatory 25% match, with 1,000 hours and last day accrual requirements. In May, Company B purchases Company A and elects to continue the Company A plan for at least the transition period for coverage testing, etc. Is Company B reguired to make the match, or can the plan be amended to a discretionary match because:

1) there is a last day requirement and no one has accrued the match,

2) the new sponsor can amend the plan as long as there are no 411 violations

3) some other reason.

Thanks

Money Purcahse Pension Plan maintained by an employer uses a bank trustee. Trustee makes an error in settling a trade that causes a relatively small loss ($1,500) in a participant's MPPP account. Can the loss amount be reimbursed to the participant's account by the Trustee without creating other problems?

A 401k Plan on a calendar year is merged with the plan of the acquiring entity in October of 2000. Is it permissible for the plan of the acquiring entity to test the plans together for the entire year or must the merged plan be tested on its own through October?

Please explain if one can. Thanks..

If I paid LTD premiums AFTER TAX split 50/50% with employer and this was Elective coverage by me, is that the same thing as what I hear others talking about with the 403(B) Plan?

Part 2 : I did pay and select my health and dental as electives also, but they were put on my PRE-TAX pay stub. On my pay stub is does say Cafe 125 Plan... But ABOVE for the LTD premiums it doesn't say, Cafe 125 Plan, on my W-2 or my pay stub. What does this all mean. Is it really ALL Cafe 125 Plan then? Help?

(These were all on the same Form for Open Enrollment.) for me to choose..

I hope this makes sense?

I hope this is the best place for this question. When a person has a LTD plan voluntary under ERISA where premiums are split with employer 50/50%, AND these premiums show up on your pay stub as AFTER TAX, how is a LUMP SUM (Mediation/court) settlement taxed or not?

I realize that if damages on the settlement are compensatory, there is no tax (in general) BUT, how does this premium paid by 50/50 fit in or does it? Is it both or does the 50/50 I must pay tax employer didn't fit in???

I hope this makes sense. Thanks a lot.

Many LTD insurance companies have provisions to take an offset (if that is the correct term) of SSA benefits received by the benificary. (I have other questions on this but will save them of later.) This is usually covered by some boilerplate in the contract.

Some LTDs are claiming credit for SSA benefits paid to the minor children of the beneficiary. (It matters not that the children may not live with the beneficiary)

Regards

Dallas