Did the Economic Growth & Tax Relief Reconciliation Act of 2001 (H.R. 1836) replace the Comprehensive Retirement Security and Pension Reform Act (H.R. 10)?

I have a client who wants to adopt a Safe Harbor 401k Plan using the following match: 100% on the first 3% and 50% on the next 3%. It definitely meets the first two Safe Harbor Enhanced Matching Formula requirements - that the match can't exceed 6% of compensation, and that the matching rate doesn't increase as the rate of contributions increases. I'm not sure I understand the third requirement: "the match rate at any rate of elective deferrals may not be greater for an eligible HCE than for an eligible NHCE." Could someone please explain this last requirement? Thanks.

Should a deceased participant's unpaid loan balance be deemed distributed to the participant's estate or to the participant's beneficiary?

Let's see if the file attachment feature works.

If a participant is 55+ I understand they can avoid the 10% penalty. However, would they be subject tot he annualized equal installments?

Opinions please. I've seen many self-funded plans that exclude coverage for injuries incurred as a result of committing a felony. What about claims that are incurred while the enrollee is incarcerated? The inmate could still be covered as a dependent of the employee or continuing COBRA coverage. In Ohio, the facility is required to provide access to health services and also required to submit bills if there is any coverage. If there is no coverage, the inmate is ultimately liable for the care except the govt entity (state, county) usually ends up paying. Do we need to rethink plan language or is a plan obligated to pay if the enrollee is incarcerated. Or am I missing some sort of exception here?

I would like to find out what the Lump Sum Factors for the 30 year GATT rates are for 2/2001 & 5/2001?

The employer did not withhold the correct amount as elected by several participants in a 401(k) plan. This also caused the employer matching contribution to be incorrect.

Rectifying the employer under-contributions I understand. With respect to the missed elective deferrals, how should this be rectified.

To qualify under the safe harbor definition of hardship withdrawal, an employee must first have exhausted all other available sources of money, including plan loans.

Is there, or was there ever, an exception to the above requirement (to first take a plan loan) if the hardship is being taken to purchase a principal residence?

Say a U.S. Employer employs Canadian citizens who are earning U.S. income and are participating in 401(k) plan. A Canadian employee is transferred overseas but is still earning U.S. income. Can he/she continue to participate in Plan?

Second, say that the Canadian employee is transferred back to Canada and is still employed with Employer, but is no longer earning U.S. income, and wants to transfer his/her account to a Canadian retirement plan. Is that possible?

Obviously these are probably issues to be referred to their client's legal counsel, but a first guess may be that the account (in the second case) cannot be distributed until a distributable event occurs.

I am working with a governmental employer who is considering establishing a top hat plan to benefit certain management. The problem is that they want the plan to be vested before it is payable, for instance that it vest at age 50 but not be payable until age 65. Therefore, no substantial risk of forfeiture. Can the plan have a "gross-up" provision that states that if contributions are taxable then the plan will immediately distribute the amount necessary for the beneficiary to pay any tax? I understand that the earnings in the plan are taxable when paid, not when earned, notwithstanding the taxable nature of the contributions.

Somehow I just recently found out that my employer (was) the Plan Adm. and Plan Fiduciary for my LTD plan.

In a mediation/court proceedings does this mean anything to me or the settlement it self? As opposed to the LTD Ins. company beng the Plan adm and Fiduciary?

Just curious of any differences, good , bad, or whatever ?

I also found a Major decrepancy (spelling?) from their Summary Plan Paperwork vs. what they give out to employees regarding their LTD benefits... From everything I have read it looks like they say that what is in their Plan Summary at the home office is what stands up and not the booklet given to employees. Is that correct?

After this settlement is all over ie $50K ($40K me, $10K lawyer) I will need to pay the 50% tax on it(per my AFTER-TAX split contributions with employer). So what IRS forms or procedure do I use to pay this tax NOW and not in April 2002?

Do I do a reg. 1040 and itemize with my personal exemption etc. and then deduct the $10K (example only) from lawyer? Do I do some sort of estimated tax on it and pray it is close to what the IRS would want?? I don't have a clue how to do this one..

Thanks so much.

An employer maintains a SIMPLE-IRA. For the last year, the employer has withheld SIMPLE-IRA salary deferrals from the employees' paychecks, however, the employer did not forward these contributions to the SIMPLE-IRA. Rather, the employer erroneously maintained these assets in a "holding account." Upon discovery of their error, the employer would like to take the necessary steps to remedy their error. What should be done to rectify this situation?

very strange question: Facts: Employer participates in state retirement system db plan. Under the plan, sick leave credits may be used to purchase additional service credit. There are a number of participants who have accumulated sick leave credits, but cannot use them to purchase additional service credit under the plan because they have already accrued a maximum service level under the plan. Thus, such participants want to "pool" their accrued sick leave credits and allocate the credits among all participants who can benefit from such credit (ie, to those who have not maxed out the service credit allowable under the plan)and the employer wants to allow the participants to do this. They have not yet decided how they would allocate the credit, but let's assume it is allocated in a non-discriminatory manner. Can this be done? The state statute that governs the plan does not, on its face, contain any prohibition on doing this. A few thoughts: first, I assume this would/could affect funding obligations under the plan; second, we would want to get the approval of the state retirement system. Would this be a violation of the anti-alienation provisions of ERISA or any other ERISA rules/regulations? I doubt there is any absolute answer to this question. I would appreciate any thoughts on the issue.

I work at a college and am considering leaving the college to start my own small business. I have a 403(B) with funds invested in Fidelity and an SRA with funds invested in TIAA/CREF. I would like to take some of the funds upon my termination to cover my salary for a year, pay my health insurance costs until I am settled in business.

Is there a way I could work this to avoid the penalties associated with early withdrawl? The balance of the funds I would roll over into another retirement vehicle, but I'm not sure which kind would be best. Any suggestions.

Unusual situation (not sure how it happened) but... Participant received $500,000 distribution FIVE years ago. Original 1099R indicated entire distr. as eligible for rollover, which participant did. Now determined that $100,000 of the distribution was not eligible for rollover and should have been reported as TAXABLE distribution five years ago. Are there 1099R rules that deal specifically with reporting in this situation? How does one deal w/ the mandatory withholding at this late date? Thanks in advance for any info/suggestions.

On first read, the annual additions limit for a PS/K plan for a 51 year old in 2002 appears to be $51,500 for 2002 ($40K + $11K + $500 catchup), or 100% of pay if less.

Is that correct, or have I misread something?

Is an employer responsible for covering the delivery expenses of an employee who is acting as a surrogate mother? The employee is otherwise covered under the employer's group health plan.

I would think that the delivery is not a covered expense since the surrogate motherhood is a "business venture" outside of the employee's employment. Any comments or experience with this issue?

I see that for the daycare credit starting next year, you can consider $3000 of expense for 1 child and $6000 for 2 or more. But the limit for cafeteria plans is still $5000. What would then be the advantage of someone with 2 kids using the cafeteria plan? Will you be able to run the first $5000 through the cafeteria plan and the last $1000 as a tax credit? thanks.