Does anyone know what steps are needed when a QDRO is ignored? Situation - QDRO revcd April 2000 - ex-wife to get 100% of 401(k) balance - participant already terminated - a distributable event - ex-wife gets distro forms never returns them - Dec. 2000 participant rolls balance to IRA - March 2001 $ still in IRA - June 2001 ex-wife doing 2000 tax return - sees 1099R for rollover to ex-husband - How can situation be rectified?

Can a QDRO be issued now on the IRA - if yes - who files or probably more relevant who pays?

An IRA owner (age > 75) has been receiving required minimum distributions from his IRA since obtaining age 70 1/2. A couple of years ago he invested 1/2 of the assets in the IRA in a "shady" investment which has now become worthless (the entity is in banruptcy with little prospect of recovery). Prior valuations of the "shady" investment asset were most likely fraudulent. Will the owner be required to consider the latest fraudulent valuation of this asset in the valuation calendar year to determine his required minimum distribution for the current distribution calendar year?

I have a client who has a calendar year MPP plan with a 10% contribution formula. It is a standardized plan with no last day rule. Participants must work 501 hours to receive a contribution. The client is wanting to change the contribution to 7% effective July 1, 2001. My position is that he can't do this because the participants have already worked 501 hours this year, and they have "earned" the 10% contribution. Am I wrong, or can the contribution be changed mid-year? Thanks.

looking to see how other TPA's handle the following:

plan has 1000+ participants with 3 sources of contributions in individual accounts.

non-elective forfeitures were previously reallocated to eligible participants resulting in very small balances for those not deferring.

problem:

when distributing small amounts ($1-50), we end up having to charge our termination fee of $25 since we have to process paperwork so the investment company will release the money. there's no getting around the paperwork since the $$ is in individual accounts.

many some account balances are less than $10.

how are other TPA's handling this issue? do your clients complain that they are being charged $x for a distn that is less than the fee?

look forward to input from other TPA's.

bill

We are considering adding a passive 401(k) enrollment option for new hires beginning Jan. 1, 2002. Would be interested in practical ideas on how others have implemented passive enrollment in a fully outsourced 401(k) environment with weekly payroll frequencies. Would like to have the recordkeeper provide the "passive enrollment" notification and collect negative elections through IVR or internet, with no local HR involvement. Timing issues would seem to make elections effective on date of hire impractical, because pay may have already become "effectively available" in cash, to use the IRS' language, prior to notification from the recordkeeper, and the end of a reasonable election period. Has anyone designed a passive enrollment process for new hires that has a delayed effective date, such as "the automatic salary reduction becomes effective on the first day of the first payroll period of the second [or third] month following your hire date" as an example? Is there any problem with this design? Current plan provisions allow you to enroll as soon as administratively feasible following hire date. Any other practical experiences that anyone has dealt with?

Has anyone given any thoughts as to how the new 402(g) deferral limits should be communicated to participants in non-calendar year 401(k) plans?

For example, if an employer has a 401(k) plan with a PY starting 7/1/01, will they be notifying participants toward the end of 2001 that the higher $11,000 limit (and possible catch-up contribution) will be applicable for CY 2002, so that they can change their current deferral election at the start of 2002?

While this may seem to be in the best interest of the participants, it could end up resulting in more ADP refunds for the 2001 PY.

Any thoughts?

When calculating the PVAB's to determine if a plan is top heavy do I take into account each participant's vested percent, i.e. do I calculate vested PVAB's since were are to treat each participant as if they terminated on the valuation date?

What about terminated vested participants? Should we apply vesting to them? How about those terminated who are zero percent vested, do we ignore them?

And finally how about those who are in pay status. Suppose they terminated when were 60% vested and are now in pay status. Do we value their benefit, which is 60% of their total accrued benefit as of their termination?

Do you have any sites to back up an answer?

Is there any information available specifically outlining or at least providing some guidance on how to validate classification of an excluded population within a plan?

There is a Hospital that wants to exclude a population of employees that don't work a regularly scheduled shift. They are not really "on-call" but they seem to be more seasonal employees. Under the age and service requirements, this seems to be a "disguised service condition." Therefore they are trying to come up with another way of identifying these employees. None of the employees in question work for any particular area or department, nor are they salaried vs hourly or anything like that. These employees are considered nonbenefiting and are paid a differential in lieu of benefits, is this allowed? Does anyone know how other hospitals are excluding this type of population? I am not sure they can identify these employees other than by the season they work and that seems to be a service violation.

Please help.

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

I am working on a plan in which the owner has both W-2 and Schedule C income. He deferred from his W-2 wages and now wants me to compute the maximum he can defer from the Schedule C income. I was going to enter the owner as two people but I wasn't sure if that was the best way. There is also a match in the plan with a dollar cap so, thankfully, he doesn't get any more match. Any ideas on the best/easiest way to code this participant in Relius? Thanks in advance for any comments.

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?