A client of mine has 3 plans, PS, MP, and DB. He wants to consolidate the assets for the 3 plans into a single trust. I have seen this done only once with a combined PS/MP plan trust. I was wondering how common combined plan trusts are for a single employer. Obviously an annual allocation each year would be needed to determine each plan's assets, and the plan/trust documents would need to conform. Any potential problems? Any comments would be appreciated.

Does anyone know if PA has mandatory state income tax withholding on lump sum 401(k) distributions? I've looked and looked and can't seem to find the answer to this - Thanks!

I am trying to determine whether it is worthwhile to file 5500's electronically. As I understand it everything must be filed electronically in acceptable formats, including the accountant's opinion. Does this mean we need to get auditors for the plans filing electronically to send us their reports as Word documents or whatever other acceptable formats are listed? Also, is it true that besides us as transmitters having to file an EFAST-1 that we need one signed and submitted by the trustee (for Schedule P), the plan administrator and plan sponsor (for the 5500 and SSA)? I have gone to the EFAST site and have not found answers to these questions. Finally, as preparer and transmitter should we be the contact person with telephone numbers in Part III of form EFAST-1 or should a representative of the plan sponsor or trustee be the contact?

I have a calendar year Defined Benefit Plan which has terminated. All of the participant’s benefits were paid to them on December 21st, 2000. There is still however assets left in the trust which represent a mistake of fact contribution. These monies were returned to the employer this month.

I feel that I still have to file a 2001 short plan year return, as there were still assets in the plan although all participants were paid. But this Mistake of Fact over contribution is throwing me off. I could not find any definitive sources relating to a case such as this. Anyone have any thoughts/sources?

Thank You.

Our company closed a branch engineering office due to a project that was not getting off the ground. The closure did not have anything to do with downsizing, only canceling a project. With the termination of the project, we also terminated 56 employees. We had a total of 279 employees eligible to participate on the date of the termination. During a recent IRS audit on the 401(k) plan, we were advised that this could constitute a partial plan termination. What numbers should we use to determine if we are over 20%? What other facts should I look at to help make our case? I've been searching on the internet, but am having a difficult time finding any information on what we should look at.

Our company closed a branch engineering office due to a project that was not getting off the ground. The closure did not have anything to do with downsizing, only canceling a project. With the termination of the project, we also terminated 56 employees. We had a total of 279 employees eligible to participate on the date of the termination. During a recent IRS audit on the 401(k) plan, we were advised that this could constitute a partial plan termination. What numbers should we use to determine if we are over 20%? What other facts should I look at to help make our case? I've been searching on the internet, but am having a difficult time finding any information on what we should look at.

The incorrect amount was distributed as a death benefit and resulted in an overpayment. The beneficiary requested an overpayment waiver. What criteria can be used to determine if we should honor it?

The scene:

4 companies, all in one control group. 1 company receives a 5% employer discretionary contribution; the rest do not.

The question:

Does this arrangement have to pass a 401(a)(4) General Test?

The nexus of the question is that by NOT giving the 5% to other participants within the controlled group, you have some employees with one rate (5%) and some with another rate (0%). If the arrangement passes 410(B), are we done? And if the arrangement DOES NOT pass 410(B)....including the Avg. Bene. Test....what next? Do you look at the General Test?

Compensation to use for SE income: Issues the CPA is bringing up -

The document elects not to have 401(k) deferrals reduce compensation. We think 401(k) deferrals still reduce SE comp, but the CPA is thinking because of the document it does not.

What about IRC 179 depreciation? If we just pick up the SE number from Form K-1, does any adjustment need to be made for IRC 179 to get to the SE comp?

Thanks.

An employer has a 401(k) profit sharing plan and has decided to make employer nonelective contributions every pay period (bi-weekly). The employer also wants to allocate the contributions to the employees' accounts when contributed. The employer wants to have the discretion to increase contributions or stop contributions anytime during the year. I am now amending the plan to try to meet the employer's request, but am running into the problem of having to define a predetermined definite allocation formula. The problem is that if the employer contributes 2% of compensation per employee based on the employee's compensation for that payroll period, the employer also wants the 2% allocated to the employee's account. But next month, the employer may decide to make any contributions, then there would not be an allocation. Has anyone come accross a similar situtation? How have you dealt with it?

Is there any guidance on the duties owed to non-english speaking participants in order to comply with 404©? Even if there is no guidance, any thoughts on whether one would fail to comply with 404© if a prospectus is supplied in English to a non-English speaking participant?

In our situation, the employer wants to comply with 404©and has a few employees who only speak Spanish. The employer does not want to go to the expense of having each prospectus printed in Spanish. Any thoughts or experiences in this area?

A Plan provides that NRA is 65. For those working to age 65, they are paid their full accrued benefit. For those retiring prior to age 65, their benefit is reduced 5% per year from SSRA. So for eg. a person has a SSRA of 66, terminates at 61 w/ a vested benefit right. The Plan paid the lump sum based on his age 65 normal ret. benefit. And this benefit was reduced by 5% even though it was as of NR date. Can age 65 NRA base (not excess portions) benefits be reduced at NRA? Especially where it is done for certain participants and not others.

Any thoughts on this?

Due to a computer system error, neither an elective deferral nor a corresponding matching contribution was made for a 401(k) plan participant who had chosen to make a 1% elective deferral. The employer caught the error within a few months and would like to correct the problem. The employer has determined that a corrective contribution that would be based on the employee's selection of a 1% elective deferral (and the corresponding match) and that would be adjusted for earnings would cause the employee to (barely) exceed the 415 limit; if the corrective contribution were to be made without the adjustment for earnings, however, the 415 limit would not be exceeded.

(1) Disregarding for the moment the issue of the earnings, is it correct to base a correction on the elective deferral percentage selected by the employee?

(2) If the correction should be based on the elective deferral percentage selected by the employee, should earnings be credited or not? On one hand is the need to fully correct the violation; on the other is the risk that a "full" correction would create another operational failure. If earnings are credited, the 415 limit will be exceeded, and, based on .08 of Appendix A of Rev. Proc. 2001-17, the remedy would be to place the portion of the excess attributable to the match in a suspense account and to distribute the portion of the excess attributable to employee deferrals. Section 6.02(2)(d) of Rev. Proc. 2001-17 states that "the correction method should not violate another applicable specific requirement of section 401(a)," and this proposed correction arguably would violate Code section 401(a)(16). That same section of the Rev. Proc. goes on to state, however, that any additional failures created as a result of the use of an EPCRS correction method should also be corrected under the Rev. Proc.

Consider a single employer DB plan with $1.5 million in assets. Active PVAB is $600,000 and term vested/retiree PVAB is $300,000, so total PVAB is $900,000.

Assume that all PVAB's are calculated on the appropriate basis.

The active's are transferred to a multiemployer plan. Do we need to transfer $600,000, just enough to cover their PVAB or do we need to transfer $1 million, their pro-rata share of the entire $1.5 million of assets?

What if all participants are transferred to the multiemployer plan? Can we transfer $900,000 or do we need to move all the money?

I realize that IRC 401(a)(12) and 414(l) do not apply here. I also realize that ERISA 4232 addresses transfers between a multiemployer and single employer plan but really pertains to the transfer from multiemployer to single employer.

Hi,

I recently received an offer from a company. The offer mentions that I have been granted an option to purchase 3000 shares of this company. I don't know much about stock options, does any one know what are the usual stock options offered by some good companies for the position of senior engineer. Does a figure of 3000 sound OK?

The offer indicates a Salary of $75000/-, sign on bonus of $7000/-, all relocation expenses will be paid.

Does this offer sound OK.

Please respond with your opinion.

Thanks

Vijay

I'm wondering if it is possible to have a discretionary matching contribution in a prototype plan where the cap on the match is also disrectionary from year to year. For example, one year the employer could choose to match a certain percentage on the first 6% of salary deferred and then only match the first 4% next year.

Thanks for any input.

Does anyone know if there is a "work around" whereby a QDRO can be attached to post retirement medical? My understanding is that welfare/medical plans are not subject to QDRO- but something I read back in October,2000 (Nixon Peabody LLP) makes me think that the possibility exists that the pension and post retirement medical may be subject to marital property, if somehow the medical is referenced in the pension plan. (FYI-The participant has filed for a divorce after 32 years of marriage and his wife is currently covered under his post retirement medical plan and she is his contingent annuitant w/r to the pension benefit.) The publication said "The Department of Labor recently concluded that every benefit payable from a pension plan, even if it's not a pension benefit and even if the plan's terms don't permit its payment to an alternate payee, can be assigned to an alternate payee pursuant to a qualified domestic relations order . ERISA Op. 2000-09A, 2000ERISA LEXIS 9 (7/12/00)."

Is there any laws out there that protects the employee when the employee has hired them under false pretenses? My husband was was heavily recruited, then after 9 months layed off. No benefits, not even accured vacation time. The have agreed to a two week severance package, but with a salary in the 6 figures, this seems like a kick in the pants. Anything we can do?

My client has a safe-harbor 401(k) plan. He contributes the 3% non-elective contribution. He wants to make an additional non-elective contribution and have it integrated. Can someone explain how that works? Can he count the 3% safe-harbor contribution in the base percentage for his integrated contribution?

Do all of the plans of the employers of a controlled group have to be aggregated for top heavy purposes?