Is it common for outdated social security wage base amounts and IRS annual compensation limits to be referenced in SPD's with respect to how partipant's plan contributions are calculated? I have an SPD that uses 1999 amounts in their description of how my Plan's contribution is calculated. Is a notation that "social security wage base and federal limits are adjusted periodically for inflation" sufficient?

I have a client who wants to change health ins. carriers mid plan year. They have a PPO, and it looks like they will be getting a PPO. They are changing because the employees are complaining.

I do not believe that there is either a curtailment or the addition of new coverage here. So, the question is, can employees add spouses, children, or enroll themselves when the new carrier's plan is effective and pay on a pretax basis? I do not think they can (pay for newly enrolled family members pretax or drop anyone without a real status change). The health agent is saying they can do whatever they want.

What are the individual tax ramifications to a former qualified plan participant of an invalid IRA rollover contribution? (A portion of the rollover is invalid because the employer failed discrimination testing several years ago and is now correcting the errors via EPCRS.

How and when will the excess contribution be taxed to the former plan participant?

Will the IRC Section 4973(B) 6% excise tax be assessed against the former plan participant for each year that the invalid rollover was not corrected?

What forms does the former plan participant have to file to correct this error?

Scenario: QP plan participant dies and names son as sole beneficiary. Son begins taking RMD's according to his life expectancy within appropriate time frame. Can Son now change investment elections in the plan to reflect his risk profile? If a 403(B) account, could Son do a 90-24 and transfer assets to another contract? Basically, what are the beneficiary's "rights" or limits to their control?

For estate planning purposes, what are the tax consequences if a person names a revocable trust as the beneficiary of their IRA? I am not familiar enough with all of the estate tax issues & IRA distribution issues that come into play here. Someone asked me this question, and I really need a resource to go to rather than a simple answer. Help!

I think I already know the answer to this one, but I'll give it a whirl to see if there are any comments . . .

We have a couple of employers that employ only physicians that have annual compensation in excess of the $100,000. These plans used to pass nondiscrimination/coverage "automatically" because they were considered employers that employed no NHCEs. However, under the newer HCE definition, we end up with NHCEs in some case in some years. For example, let's say a physician is hired towards the end of the year and his compensation for that first "short" year is $60,000. Let's say he becomes eligible the following year--even though he's making $200,000 or more on an annual basis, he's technically an NHCE for that first year of participation. This is really screwing us up for such a plan that previously excluded non-shareholder physicians. Any comments regarding the automatic passing of 401(a)(4) and 410(B) where "no NHCEs" are employed? Does that even work anymore?

Another question: If the plan year and limitation year for a defined contribution plan are both 4/1/01 to 3/31/02, is the maximum annual addition limitation for the plan $35,000 or $40,000? It sounds as if EGTRRA states that the new limitation is for years beginning in 2002, thus not including non-calendar year plans ending in 2002?

Can anyone verify what the 415 limit is for a 4/1/01-3/31/02 plan year??

Thanks.

I'm sure this has been discussed before, but would appreciate any comments.

Starting a 401(k) plan mid year(2001) and making the effective date 1-1-2001. This is a small group consisting of husband & wife with 3 ee's. The Husband makes well over the 170K limit. If the enrollment does not get done until late in year and lets assume none of the ee's participate, we can assume a 3% for the NHCE and therfore the husband & wife can contribute an average of 5%. Assume no Match.

My question is, can we use current year testing in 2002 or do we use prior year testing? Does the assumption of using the 3% average constitute prior year?

Thanks!

A plan which has Joint & Survivor Annuities as the normal form of benefit - is there any good language to provide to a layman on the reason they are required (especially unmarried) to complete the J&S Beneficiary Form. Any suggestions would be appreciated.

Two corporations (A and b) form a brother-sister control group. Each corporation has a 401(k) plan that benefits only it's employees. Each plan is identical. Each plan has the same employer contribution rates. Each plan will pass 410(B) on it's own or aggregated.

Must the plans be aggregated for the ADP test or may they be tested separately. If they may be tested separately, are only the employees of Corp A in the ADP test of Corp A.

Our interpretation of the instructions of last year's W-2 forms has come under fire from participants, and having reviewed the 2001 forms and instructions, I expect that to happen again next January/February.

Our main defined benefit plan specifies participation at the entry date following attainment of age 21, and one year of Eligibility Service (where one year of eligibility service is an employment anniversary with 1000 hours of service). It excludes union employees,but not temporary or seasonal employees.

Up through 1999, our interpretation had been that if they did not work enough hours to meet the eligibility criteria, then the Pension Box would not be checked.

All the guidance that we have found says that someone who has met the age and service requirements and an entry date, but who has not met the hours requirement should be coded as a Pension Plan (or Retirement Plan for 2001) participant. Tax Management for example says" Even a participant who accrues no benefit because he or she has not completed the required number of hourswill be considered an active participant."

We have a group of employees who work for us and other similar employers on a "substitute" basis. They might only work one day in a given year, or many more days, but probably not 1000 hours.

They claim that even if they receive 8 or 10 W-2's for a given year, we are the only ones that are checking the Pension Plan box on the form.

Continuing to check the Pension Plan box will interfere with our ability to hire and retain these people.

Anyone with comments/clarifications?

RCK

I've heard that the new tax bill has repealed the exclusion allowance limitation of 403(B)(2) but have not been able to confirm it yet. Would appreciate any comments and or references.

Plan sponsor funds and allocates its profit sharing contribution monthly. However, plan requires employment on last day as a condition for receiving an allocation. What are the pitfalls of which sponsor needs to be aware?

We have a prospective client who's prior company had a money purchase plan that terminated (maybe) with a deficiency for at least the final year and maybe more. He is interested in setting up a new plan with his new company. What must be done regarding the original company and plan in order to set up a new plan with the current company??? Thanks.

For a short plan year the DOL allows plan sponsors to defer attaching the auditor's report until the subsequent year. My question is, does this deferral also apply to the Schedules of Reportable Transactions and Assets Held for Investment which are usually included as part of the auditor's report?

Can a Rabbi Trust be assigned to another employer (a subsidiary of the original plan sponsor/grantor)? Would this situation be any diffenrent then the assignment of a qualified plan trust?

Are there opinions out there about a plan which flunks the ADP but whose HCEs are 50 y.o. and get a match on their catch-up contribution. Isn't it likely the plan would flunk ACP as well?

Exactly when do the new top heavy rules kick in for calendar year plans? Since the determination is made at year-end for the next plan year, would the new calculation actually affect the 2003 plan year rather than the 2003 plan year?

I've seen numerous banks and mutual fund companies through their trust banks, offering "full service" pension plans, particularly 401K's. They provide trust or custodial services and TPA services, and offer various mutual funds of money market funds which are sponsored and administered by related companies. Given a relationship of mutual fund and trustee, shouldn't an asterisk appear in column (a). Further, I would assume with so many such arrangements being offered that there is an exemption from prohibited transactions for such investments. I've seen First Union/Evergreen Fds, Fidelity/numerous Fidelity funds and Dreyfus/again numerous funds, and assume there would be more. I would appreciate any insight into this reporting issue.

Where are the requirements for the privacy notice being sent by banks, etc. prior to June 30? I'm trying to determine if a TPA is required to provide one. Or, if anyone has looked at this already, please provide answer...!

Thanks.