for "Participant receives a hardship w/d in cash in 2001 (before pension reformis effective) that includes a payment from his after tax account,his 401(k) account and company matching cont. account. Basis (after tax cnt.) included in the distribution is less than the amount distributed from his after tax acount. The participant wants to rollover the entire eligible amount of the distribution to an IRA. Can the prticipant do this??????/"

Does anyone use Pro Business' HRMS system? We're interested in their payroll/HRMS system and would like feedback regarding the product itself and ProBusiness' support.

Can a money purchase pension plan permit in service withdrawals after the attainment of the plan's normal retirement age? Isn't there a revenue ruling that discusses this?

Plan terminated and is currently being audited. All assets have been distributed except for some artwork that they were unable to sell through various dealers and auctions. In order to expedite closing out the plan, could several employees of the TPA purchase the artwork from the client or would this be considered a prohibited transaction.

Does anyone know of what planning techniques are becoming popular?

We have received a quote of $12,000 to perform the audit on our 401(k) plan of 175 participants. Does anyone know if this is a reasonable amount? It seems quite high for the plan size. We are currently in search of other competitive quotes. Any suggestions on the range we should expect?

I am looking for some help in finding a sample document for a wrap-around plan document that will allow you to file 1 Form 5500 for the Cafeteria Plan and its component welfare benefit plans. How detailed do they have to be? Does the Plan Sponsor have to list each and every welfare benefit by name? Or, can you simply refer to "all benefits offered by the Employer?" I am presuming that the contents of the wrap-around document are relatively brief and can be incorporated into the Cafeteria Plan document itself.

During the ASPA webcast in the chatroom the following question was asked and the response was given at a later time:

Do the new vesting schedule apply only to matching contributions made after 12-31-01?

Yes, only to contributions made after that date.

My understanding was that for anyone who worked at least one hour during 2002 the new minimum vesting schedule (3 year cliff or 6 year graded) would apply to ALL employer matching contributions in the plan (existing, current and future contributions).

What do other people think?

We are currently reviewing our benefit broker/consultant selection and would like to obtain a sample request for proposal to send out to potential consultants. Anyone's help would be greatly appreciated. Also, if you want to include who your current broker is, that would be greatly appreciated.

Is it essential that Schedule Q be filed along with the 5307 application for determination letter? It seems that this is not pertinent to the application process and is an operational aspect of the plan as opposed to a review of the plan in form. What are your thoughts?

I am asking for someone's help clarifying some of my interpretations regarding minimum benefits for all Top Heavy defined contribution plans for which a participant is covered.

And I have a couple of questions following...

We are testing a companies' Profit Sharing and Money Purchase Plan. These are paired plans. If I interpret correctly the minimum benefit for all defined contribution plans maintained by an employer is 3%. So, if someone is covered under more than one Top Heavy Defined Contribution Plan the minimum benefit is satisfied by either the non-elective cont. in Profit sharing plan or the required cont. in the MP Plan, provided it is at least 3%.

It is not required for each plan to make 3% cont.

1. So, is it always the case that the 3% minimum can be satisfied in either the MPP or the Profit Sharing Plan for any year in which either plan is Top Heavy?

2. Does it need to be stated clearly in Plan Document which plan the minimum benefit will be allocated provided either or both paired plans are Top Heavy?

What does it really mean to have a paired plan? Are there some kind of testing advantages for having paired plan or is this just a referrence type of notation indicating that the plans are maintained by the same employer?

Any help is much appreciated!

Plan provides that an employee becomes eligible to participate 6 months after his or her employment commencement date. There is no hours requirement. How is this administered for employees who are hired, terminate before becoming eligible, and then are rehired? When can we disregard the initial period of service?

Company A & Company B form a controlled group. Each company has its own plan. I have each plan set up separately on Quantech. Is there anyway I can get Quantech to do the 410(B) testing without me manually going an adding Company A's employees to Company B and vice-versa?

Thanks for any guidance.

If a client provides their attribution check to an agent of a company prior to the April 15 deadline, and the agent puts it into the mail to send to the processing area.

The check gets lost. Can the company allow the client to provide a replacement check - dated of course after 4/15?

Is there any Private Letter Rulings to substantiate this?

Thanks

J

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.

This is a two part scenario:

(I.) It is my understanding that an standized prototype does not allow entitlement or excluded class provisions; However, I have a basic document (with a section specific to the profit sharing plan, under standardized document) that says "Any participant who is actively employed by the employer and all terminated participants who performed less that 501 hours of service during any plan year shall not share in Employer Contributions," written into the document. While the Employer does not have an opportunity to elect an entitlement provision, this seems to be an entitlement provison.

*Would someone please clarify this for me. Basically, I am stuck on the statement that says "any participant who is actively employed."

(II.) It is my understanding the 501 hour requirement for terminated participants as described in Part I. above, is a statuatory exclusion from a compliance standpoint, for example the 410(B) Ratio Percentage Test/Actual Contribution Percentage Test, which allows you to remove anyone in that population from your denominator when your Plan has entitlement, increasing the chances for better results.

However, in the case of a standardized plan that should not have entitlement, why would this language be there? Is this considered and entitlement provision and are the IRC regs. written to include "active employees," as well as terminated? This document also has a determination letter. What am I missing?

Thanks Nabiyah

This is a two part scenario:

(I.) It is my understanding that an standized prototype does not allow entitlement or excluded class provisions; However, I have a basic document (with a section specific to the profit sharing plan, under standardized document) that says "Any participant who is actively employed by the employer and all terminated participants who performed less that 501 hours of service during any plan year shall not share in Employer Contributions," written into the document. While the Employer does not have an opportunity to elect an entitlement provision, this seems to be an entitlement provison.

*Would someone please clarify this for me. Basically, I am stuck on the statement that says "any participant who is actively employed."

(II.) It is my understanding the 501 hour requirement for terminated participants as described in Part I. above, is a statuatory exclusion from a compliance standpoint, for example the 410(B) Ratio Percentage Test/Actual Contribution Percentage Test, which allows you to remove anyone in that population from your denominator when your Plan has entitlement, increasing the chances for better results.

However, in the case of a standardized plan that should not have entitlement, why would this language be there? Is this considered and entitlement provision and are the IRC regs. written to include "active employees," as well as terminated? This document also has a determination letter. What am I missing?

Thanks Nabiyah

It is my understanding per a 9th Circuit Court Opinion that if a lump sum was received (ERISA or NOT) it is considered Exempt from levy (or exempt from creditors). That is only on disability benefits received. I believe it is Standard Ins. co. v Saklad in 1997. Basically it states that in almost all states that disability benefits are exempt from levy. Does anyone know much about this? I also understand that it can refer to the "offset" or "setoff" of SSDI benefits too. In otherwords, they can't take them out..

Any thoughts would be of great help and interest. Thanks.

Employer adopts a restated Plan containing all GUST admendments in 2001. The plan year is the calendar year, as is the Employer's tax year. The last day of the GUST remedial amendment period (RAP) applicable to the plan is December 31, 2001 (per Announcement 2001-12). I need the answer to the following two questions:

1) What is the latest date Employer can file for a determination letter that covers all of the GUST RAP? Is it: a) December 31, 2001; b) the time prescribed by law, including extensions, for filing the income tax return for 2001; or c) some other date.

2) What is the latest date Employer can file for a determination letter so that, if the IRS requires changes to the plan, those changes will relate back to the entire GUST RAP? Is it: a) December 31, 2001; b) the time prescribed by law, including extensions, for filing the income tax return for 2001; or c) some other date.

Do the answers above change if the restated plan was adopted in 2000 rather than in 2001?

Thanks for any cites and advice you can give me.

Yuck!!!! We've got a potentially ugly situation. We have a cross-tested plan that also has an excluded class of employees. The excluded class includes NHCEs. Obviously, the plan has passed 401(a)(4) previously with these NHCEs not benefitting, but in 2002, I don't see any way to keep these previously excluded ees out! Any comments?