We have a plan which had a 402(g) excess (of $36) for 2000 which was not refunded by April 15th. According to Revenue Procedure 2001-17 Appendix A, we need to distribute this amount back to the participant & tax him on this amount both in the year deferred AND the year distributed.

I believe this is a new rule & one we have not encountered before. I wonder if anyone else has had to do this. How would you code your 1099R? Would you send two? Also, traditionally earnings were taxed in the year distributed. Would these also be double taxed? What if they were negative?

I think I'll issue two 1099Rs & ignore the 69 cents of negative earnings in this instance, but I'd appreciate any feedback.

thanks,

Grant

Company A maintains a 401(k) plan with a 9/30 plan year end. The plan has a mandatory 25% match, with 1,000 hours and last day accrual requirements. In May, Company B purchases Company A and elects to continue the Company A plan for at least the transition period for coverage testing, etc. Is Company B reguired to make the match, or can the plan be amended to a discretionary match because:

1) there is a last day requirement and no one has accrued the match,

2) the new sponsor can amend the plan as long as there are no 411 violations

3) some other reason.

Thanks

Money Purcahse Pension Plan maintained by an employer uses a bank trustee. Trustee makes an error in settling a trade that causes a relatively small loss ($1,500) in a participant's MPPP account. Can the loss amount be reimbursed to the participant's account by the Trustee without creating other problems?

A 401k Plan on a calendar year is merged with the plan of the acquiring entity in October of 2000. Is it permissible for the plan of the acquiring entity to test the plans together for the entire year or must the merged plan be tested on its own through October?

Please explain if one can. Thanks..

If I paid LTD premiums AFTER TAX split 50/50% with employer and this was Elective coverage by me, is that the same thing as what I hear others talking about with the 403(B) Plan?

Part 2 : I did pay and select my health and dental as electives also, but they were put on my PRE-TAX pay stub. On my pay stub is does say Cafe 125 Plan... But ABOVE for the LTD premiums it doesn't say, Cafe 125 Plan, on my W-2 or my pay stub. What does this all mean. Is it really ALL Cafe 125 Plan then? Help?

(These were all on the same Form for Open Enrollment.) for me to choose..

I hope this makes sense?

I hope this is the best place for this question. When a person has a LTD plan voluntary under ERISA where premiums are split with employer 50/50%, AND these premiums show up on your pay stub as AFTER TAX, how is a LUMP SUM (Mediation/court) settlement taxed or not?

I realize that if damages on the settlement are compensatory, there is no tax (in general) BUT, how does this premium paid by 50/50 fit in or does it? Is it both or does the 50/50 I must pay tax employer didn't fit in???

I hope this makes sense. Thanks a lot.

Many LTD insurance companies have provisions to take an offset (if that is the correct term) of SSA benefits received by the benificary. (I have other questions on this but will save them of later.) This is usually covered by some boilerplate in the contract.

Some LTDs are claiming credit for SSA benefits paid to the minor children of the beneficiary. (It matters not that the children may not live with the beneficiary)

Regards

Dallas

Many LTD insurance companies have provisions to take an offset (if that is the correct term) of SSA benefits received by the benificary. (I have other questions on this but will save them of later.) This is usually covered by some boilerplate in the contract.

Some LTDs are claiming credit for SSA benefits paid to the minor children of the beneficiary. (It matters not that the children may not live with the beneficiary)

Regards

Dallas

We consult on a plan that is trying to get the number of annuity providers and investment brokers under control (down from nearly 100 to 1). A number of brokers are now complaining, claiming that the employees have 403(B) plans of their own (outside of the plan document sponsored by the employer) that they should be able to place with whatever broker or company they wish. The employer sponsors the only 403(B) plan that I am aware of and I am wondering whether it is possible for employees to start 403(B) plans of their own. In addition, is it not possible for the employer to limit the provider to one which will offer multiple (meaning 15-20) fund options?

I can find no legal support for an employee to make salary reduction deferrals to his or her own 403(B) plan. The plan is non-ERISA and I can find no legal restriction on how many annuity providers the plan can have. Would appreciate any input.

Husband wife calendar year DB plan. Husband and wife divorce in Sep 2000. Wife's benefit willl be distributed in 2001. Re PBGC coverage, professional employer exemption does not apply here. Substantial owner exemption does not apply either (ex-wife has no ownership in the company). Seems pretty clear that the plan must start paying PBGC premiums and can no longer file a 5500EZ for 2000 and 2001. Has anyone approached this situation differently? Would of course like to avoid all this trouble.

A new plan is established June 1 as the result of a spin off. The original plan was not a 401(k) safe harbor, but the spin off plan is. Is this ok?

I would like to know how other practitioners would proceed in the following situation:

A loan policy provides for a minimum loan of $1,000. The vested account balance on the date of a loan request is $2,000, making the loan okay (50% of the balance being $1,000). A day or 2 later when the check for the loan is to be cut, market fluctuation has dropped the balance to $1,900 (Daily world, of course).

Should the loan be given to the participant for $950 (50% of the account balance) since the loan request was available on the request date? Or should the loan be denied until such time as the account balance rises to or over $2,000?

What is your practice in situations like this?

My brother is parapleigic as a result of a single car accident. Can his health insurance company not pay claims made for medical expenses as a result of a car accident because of Blood Alcohol Level? The health insurance company has been directed by the employer to stop paying because of this. What are his rights, where can he go for guidance?

Regarding performing a top heavy test on a defined contribution plan versus a defined benefit plan, I am unsure on one aspect.

In doing the top heavy test on a DC plan I have always used the total account balance, without considering vesting, for either an active or terminated participant. However, I am not sure that same principle should apply for a terminated participant in using the PVAB method for doing the top heavy test for a DB plan. My reasoning is that when doing the valuation, the vested benefit is valued, not the total benefit for a terminated participant.

I am looking for opinions and/or any cites available.

Client wants to terminate its traditional 401(k) and establish a SIMPLE IRA yet this year. Employee salary deferral contributions have been made to date in 2001 under the existing 401(k).

It is my understanding that the SIMPLE IRA program cannot be established in 2001, since contributions have been made in this calendar year under the existing 401(k) plan, and the SIMPLE IRA cannot start any sooner that 01/01/02. However, whoever is helping the client establish the SIMPLE IRA has indicated to them that this is not the case.

Am I correct in my understanding of the SIMPLE IRA rules - or did I blink and miss a change?!

Thanks for any and all responses.

It has been several years since I have had to complete a 5500 form but it looks like this is my lucky year. I think I remember a lot of work going into obtaining market to market information for completing the 5500 report since many trust statements track gain/loss information only on historical cost to market. Is the market to market method still being used? I think I also remember talk of this going away so perhaps I am stressing for nothing.

I know that this topic has been discussed extensively, but there does not seem to be a consensus. We have a plan that allows loans, requires repayment via payroll deduction. Participant wants to stop payroll deductions and default on the loan. Can the employer allow the particicpant to rescind the payroll deduction and default on the loan?

In prior threads, the main concern was state law. Many threads suggested that state law required the payroll deductions to stop at the participant's request. In Advisory Opinion 96-01A, doesn't the DOL suggest that state law is preemepted by ERISA?

When a person has a LTD plan under ERISA where 50/50% premiums are split and the coverage is elective from employee, and these premiums show up on your pay stub as AFTER TAX, how is a lump sum settlement taxed or not taxed?

On my W-2 it only shows the Pre-tax items under the Section 125 and being minus amounts from the gross. I see nothing where my LTD were put. Please help me understand. Thanks so much.

I know that if damages are compensatory there is no tax. BUT, how does this premium paid by 50/50% fit in? or does it?

Boy, my sleep deprevation is showing. Sorry.

When one has a LTD settlement in mediation, and your lawyer took the case on contingency how is that played out in the tax world?

I do understand that the entire LTD settlement is considered NON-TAXABLE if for compensatory damages for physical illness/injury.

Just not sure how that is figured in with the lawyers fee's?

Example: I get $50K. Lawyers expenses/charges $10K, if I had to pay tax would I do it on $40K. Or of course if it is non-taxable totally I wouldn't have to do anything..

I hope this makes sense. Thanks a million.

Sorry, previous post had wrong Subject!