We have a case where the beneficiary was contested through an interpleader action. Our question revolves around the withholding rules on the plan distribution. If the funds are paid into the Court and then paid to the beneficiary and the attorney (us), at what point, if any, do the withholding rules apply? Is it viewed as a plan distribution when the money is paid to the court? Or when the proceeds are paid from the Court to the bene? What about if the bene had intended on rolling over?

I have seen one question on this on the board, but not much response. Does anyone have any good info. We have tried to research it but are coming up with dead ends.

Thanks

Three individual registered invesment advisors form an LLC for the purposes of providing investment advice. Those same three individuals are also the only members of another LLC (a large hardware store... which has 25 employees).

The hardware store LLC has a 401(k) plan (& employer matching) with 22 participants. All accounts are "participant directed". The three members of the hardware store LLC are participants in the hardware store's 401(k).

The hardware store 401(k) needs a trustee and an investment advisor .... so it appoints one of the hardware store LLC members as trustee and he hires the RIA LLC (which he is a member of) as the 401(k) plan's investment advisor.

MY QUESTION:

Is the fact that the trustee and or RIA, LLC are being paid by the 401(k) considered a prohibited transaction .... or does the fact that all the 401(k) accounts are participant directed prevent this arrangement from being prohibited ?

Question -

If a 401(k) has an early retirement provision, does that mean that anyone terminating after the early retirement age is fully vested at that time?

Even if they were involuntarily terminated?

Thanks!!

Robyn

On Form 5500 question B Part 1. Plan is new. Effective date of plan is Feb 2000. Plan has elected 12/31/2000 as the plan year end. Would you check off box B(1) first return and b(4) short plan year or Just Box (1)

I had coverage under Cobra Law after resigning to a company in December 2000. In February, I started to work with another company that had a group insurance with the same Health Ins. Co. I did not asked to be removed from the Cobra Plan nor requested it, but the insurance company canceled my participation in the Cobra plan at the moment they activated me with the new group insurance policy. I was terminated by the end of March by my employer and now I find that the insurance company excluded me from Cobra and doesn't wants to reinstate me in the plan. I have an ongoing medical condition that requires treatment and would be excluded from an individual plan. What can I do?

I am looking for some guidance and good reference material to teach me how to calculate a bottom's up and "straight" QNEC. Any suggestions?

For tax purposes, how do your plans report qualified payments made to a participant's estate?

Specifically, we're questioning:

For benefits paid a participant's estate, does the pension plan administrators have the responsibility to report the payments using the estate's EIN or can it report the benefits using the deceased's SSN/EIN?

Does the answer change if the benefit is paid as an annuity or lump sum distribution (IROD) vs. life insurance payment made from the pension plan?

IRS Publication 559 has some information on the duties of payers of interest and dividends. However, I'm unclear on the duties of db plan administrators.

When determining the maximum 5-year repayment period for a participant loan, does the 5-year period start on the day of the first payment, on the origination date of the loan, or on some other date?

Certain entities have claimed that cash-balance pension plans are illegal because of age discrimination due to the "reduction of the rate of an employee's benefit accrual, because of age." Would this same challenge apply to a Money Purchase Pension Plan? It appears that a Money Purchase Plan has this same age discrimination attribute because the benefit formula is basically the same.

Has anyone been receiving DOL notices on 1999 5500s regarding the fact that the plan did not fill out Schedule R information regading minimum funding when the plan is clearly not subject to minimum funding?

We have received these on 3 of our ESOP clients so far. We called the DOL and they said that any 5500 that did not indicate a code 2E for profit sharing will be expected to be subject to minimum funding and they will be looking for that information on Schedule R.

So now, to avoid a notice, we are supposed to include a profit shairng code of 2E for our ESOPS! Doesn't make a lot of sense to me.

Anyone else?

Help- need to prove to my client (or find out now rather than later if I am wrong) that a welfare plan sponsored by a U.S. corporation to cover U.S. citizen employees who are posted abroad (plan does not cover U.S. based employees) is subject to ERISA. I believe it is- but I can't find any cite for direct support- I need a cite!

Thank you

BACKGROUND: 401(k) Plans are subject to an Average Deferral Percentage (ADP) test. Test failure usually results in Excess Contributions being distributed to "Highly Compensated Employees". 12/31/2000 test corrections – refunds - made before 3/15/2001 exempt Employers from paying excise tax on excess. If refund is made within 2-1/2 month correction window, Recipient must report excess for year deferred (2000 this example.)

Payor reports the refund of excess contributions on year 2001 IRS FORM 1099-R which isn’t issued to Recipient until January 31, 2002.

To avoid Recipients having to go back and amend the 2000 tax return, we advise Recipients of prior year tax liability at time of distribution, giving identical information that will appear on the 2001 IRS form 1099-R. This information usually includes the IRS Distribution Code "P", identifying on the 2001 Form 1099R that the distribution is taxable in the prior year, 2000.

PROBLEM: We have received complaints from Recipients (or their CPAs) that some 2000 tax software packages do not accept the "P" code. Has anyone else experienced this problem and if so, which software and what was the solution?

I am currently on short term disability from work. My employer says I am liable to pay my entire monthly premium on my health insurance. I feel as if I should only have to pay my normal monthly deduction.Are there any laws about this issue?

A Plan adopts the safe-harbor hardship definition.

The plan has allowed elective contributions to a 401(k) arrangement for a participant that should have been suspended due to hardship reasons.

I think as long as the hardship suspension of one year OCCURS it is okay that elective deferrals are allocated to the participant's account subsequent to taking the hardship w/d. But how long can contributions keep coming?

When looking at the regs. I believe it states that the suspension must occur as soon as administratively possible.

What is the timeframe for as soon as administratively possible?

At what point would the elective deferrals be treated as prohibited transactions?

Anyone know where I can get a copy of a sample cafeteria plan claim form?

I am currently analyzing the feasibility of changing our 401(k) vendor. With respect to vendor solicitations, including broker sponsored introductions, what are some of the top questions/priorities/concerns you have when meeting with prospective 401(k) vendors? Have you implemented the Plan via a broker, or independent negotiations? Why have you changed 401(k) vendors? Can you also share your employers match methodology, including vesting and deposit cycle.

Does anyone know of a financial institution that will accept an involuntary rollover from a terminated 401(k) plan to an IRA, where the participant does not sign anything establishing the IRA (either because the participant can't be located or doesn't respond to requests to take his/her distribution). The 401(k) plan has the individual's name, address, Social Security number, etc, but doesn't have a signature authorizing the establishment of the IRA. The IRS issued guidance in 2000 permitting the concept of involuntary rollovers to IRAs, but we are having difficulty locating a financial institution that will create an IRA without the owner's signature. Any references would be appreciated. Thanks.

Can employee charitable contributions to an employer (a 501©(3)) be excluded from taxable wages under the employers cafteria plan?

Does anyone have a good source (loose-leaf service, etc.) for sample IRA documents, IRA disclosure forms etc.?

We have a 7 life case with 5 TV's and 2 active (key). There is enough $ to pay out the 5 TV's . I'm assuming we can't waive benefits to keys to satisfy minimum funding. Somehow on this takeover case the plan "misplaced" $500,000. I'm also guessing the for PGBC termination the keys can waive benefits to the extent necessary to satisfy the assets left in the plan after the TV's are paid.