A fund company requires us, as a condition for receiving revenue sharing, to upload to them monthly certain census data on Plans and/or participants detailing such data as name, address, plan balances, etc. They inturn mail out semi-annual reports and propoganda semi-annually. To generate this data requires a special report from Relius.

Has anyone developed reports for this purpose?

If an employer has multiple cafeteria plans, and an employee is changing jobs with the same employer thereby transferring plans, can the employee's flexible spending account follow the employee from one cafeteria plan to another cafeteria plan?

Can a foreign corporation sponsor a 401(k) plan in the United States without doing it through a U.S. subsidiary? Has anyone addressed this situation?

We have a plan that has been setup as a KSOP. The plan allows for contributions to be made in qualifying employer securities or cash. The plan is participant directed among employer stock and mutual funds and is intended for the Trust to hold more than 10% of plan assets in the form of qualifying employer securities.

The debate we are having is whether the KSOP plan must follow the rules of 409(e)(2) in regards to proxy voting. Do all defined contribution plans have to allow pass through voting because the company is publically traded, or only ESOPs?

Any insight would be helpful, thanks!

It is my understanding that for plan years beginning after 12/31/01 we will include participant deferrals as compensation. Does this also include cafeteria deferrals?

e.g for 404:

Compensation: 40,000

Deferrals: 2,000

Cafeteria: 3,000

Old way Comp: 35,000

New way Comp: 40,000

Generally, if you have an active DB plan and a DC plan the DC contributions are not deductible because of the 404(a)(7) 25% deduction limit. The non-deductible contributions are generally subject to an excise tax.

Under 4972©(6)(B), there is an exception to the excise tax for elective and matching 401(k) contributions, but the statute clearly states it applies only to plans with more than 100 participants. However, after pointing this out to a client with a small plan in this situation, I was told by the plan attorney that the excise tax doesn't apply. The attorney's position is that the intent of the 1997 law change that added this exception was to apply it to all plans, not just those with more than 100 participants, and he cites the legislative committee reports and Publication 560 which do not mention the 100 participant requirement. Who is right here? Does anyone know of any other citations from IRS material, or statements from IRS officials that confirm or deny?

May the plan forfeit account balances less than $1.00 for terminated participants?

I need a refresher... I know the plan document has to allow for adjustments in 415 in order to adjust existing retiree payments to the current limit or nonforfeitable benefits for terminated vesteds (not in pay status) that were limited by an earlier 415(B) limit.

Assuming the plan does not allow for 415(B) updates for former employees, would you say that a person terminating on 12/31/2001 with an ACD of 1/1/2002 is subject to year 2001's

415(B) limit (i.e. last working day in 2001)? The plan year and limitation year are calendar years.

Thanks

I've had an employee ask me a question concerning what would happen to their funds if the company were to "go under." I'm not entirely sure as the reasoning behind the question and am fairly new with 401k but without looking at the plan documents yet, which I will do, I thought I'd shoot you the question too. It is my understanding that the employee's funds are guaranteed but the employer's match is where I'm not certain. If the employee is already 100% vested in the funds, would there be any reason, some type of law that states they would not be entitled to those funds?

They mentioned the possibility of transferring out the funds from their current account, stopping all deductions and restarting their deductions in October. I don't believe this is possible but since I'm not an expert...I'm thinking other than a loan, hardship withdrawal or a termination, an employee can't just withdraw/transfer the funds as they want.

Any help is appreciated!!

I've had an employee ask me a question concerning what would happen to their funds if our company were to "go under." I'm not entirely sure as the reasoning behind the question and am fairly new to 401k but without looking at the plan documents yet, which I will do, I thought I'd shoot you the question too. It is my understanding that the employee's funds are guaranteed but the employer's match is where I'm not certain. If the employee is already 100% vested in the funds, would there be any reason, some type of law that states they would not be entitled to those funds?

They mentioned the possibility of transferring out the funds from their current account, stopping all deductions and restarting their deductions in October. I don't believe this is possible but since I'm not an expert...I'm thinking other than a loan, hardship withdrawal or a termination, an employee can't just withdraw/transfer the funds as they want.

Any help is appreciated!!!

I had a traditional IRA that I rolled over

from a 401k in 1993. I did nothing with

the account until late 1998, when I converted

it to a Roth and made a $2000 contribution.

I paid the taxes the following year in full.

At the peak of the market the account was

worth nearly 10,000 dollars but now is about

65% of that and losing ground steadily.

I am heavily in debt and need to withdraw

the account.

I've been trying to read up on the parameters

and it's very confusing. It seems to me

that I should not owe tax, just the 10%

penalty. After calling my broker who was

virtually no help! and reading the IRS

pubs, I am still not clear. Do I have it

right? What about the 5 year rule on

contributions, does it apply in this case?

Earl Baker

A few weeks ago, Brian Graff of ASPA gave a very brief overview about WHY the sunset clause was included in the most recent pension legislation - having to do with the number of votes needed to pass a piece of legislation of such a large tax reprieve.

Can someone provide a more detailed explanation?

401(k) plan also provides that ees may make after-tax contributions. The ER incorrectly treated all of the elective deferrals as after-tax contributions. This happened for three or four years before it came to our attention.

I'm looking for suggestions as to the best way to correct. There have been distributions that have been rolled over to IRAs by participants. Seems to me these amounts did not qualify for rollover and in addition to the Plan's problems, we have IRA/Excise tax problems.

Hi. I recently tried to withdraw the funds from my Roth IRA account but was told by my online broker that I had to fill out a special form and submit it to them in order to do so. Upon receiving the form and analyzing it it doesn't seem that I fit into any of the categories listed.

I started the Roth IRA in late 1999, and made a $2000 contribution in both 1999 and 2000 (total of $4000). (By the way, I am 31 years old). It seems from the form that I will have to incur a penalty if I want to withdraw the funds, but I can't see how that should be since the total value of the account is less than I contributed to it (it is worth a little less than $4000).

Any insight someone can offer would be most appreciated.

Thank you.

Craig

Here is a dumb question: if a DB plan provides for a lump sum payment option, and specifies that actuarial factors in general shall be computed on the basis of a specified interest rate and mortality table, does that mean that mortality is actually or necessarily taken into account in determining the lump sum amount to be paid where a participant who is retiring elects that option? I would have thought that the interest rate alone would apply in determining the lump sum value. Any help is greatly appreciated from someone who is definitely mathematically-challenged! :confused:

Can a 401(k) plan document include inservice withdrawals at age 55? If so and a participant rolls to an IRA is there a penalty?

I have been told that it is permitted under the Internal Revenue Code for an active employee to contribute, on a pre-tax basis, toward the cost of retiree health insurance.

I do not believe that this is true.

Can someone supply me with information on this topic? Rulings or documents that I could find would be appreciated.

Thanks!

Ben Schutzenhofer

Can anyone confirm whether an individual with an account under a SEP will be able to rollover those funds to a qualified plan under the new EGTRRA rules? The new law does not make specific reference to rollovers from SEPs to other types of plans. However, since SEPs are generally subject to the same distribution rules as IRAs, can we now assume that a rollover will be permitted between a SEP and a qualified plan beginning in 2002?

We are a public college system. We are considering contracting for the administration of our 401(a) DC Plan.

The contract would be for virtually all administration except on-site enrollment and offering investments. (The on-site enrollment would be done by the colleges' H.R staff. The investment options and participant account record-keeping would be provided by separate "Fund Sponsors" that the TPA would help select).

We need sample contracts for the above--especially information about the manner and amount of compensation to the TPA.

Thanks

In the prior year, the sole assets of a defined contribution plan were allocated insurance/annuity contracts. Therefore, there was no audit requirement and the contracts were only reported on Schedule A of the 5500.

In the current year, the plan has both allocated and unallocated contracts and an audit will be required. The allocated contracts will still be excluded from the plan financial statements and only be reported on the Schedule A.

Does this change the testing of participant data? Since the allocated insurance contracts are excluded from the plan's financial statements, they will not be covered by the auditor's report. Do I need to perform any testing on the individual participant's holding these allocated insurance/annuity contracts?

Also, is the fact that the plan allows these investments usually footnoted and, if so, with or without amounts?

Please provide any references/sources that you have found on this subject.