Has anyone found a smooth work around for the 2000 SAR since the software will not be available until June? We are thinking of setting up something in word as a template and typing in the data for 2000 or using the 1999 and changing. It will take 45 work days to load the upgrade here once we receive it from PEAK1 and really do not want to go back and do this all over again.

Here's a scenario I need some guidance on:

A participant in a 401(k) Plan is here in the USA on a work visa. The work visa expires and they must return home. Does the participant have to take their money out of the plan? What if they have $5,000.00+ in their account can they leave it even though they're returning home? Can they put it into an IRA here in the USA? What does the US Government say about all this????

I am a 21 year old college kid that knows very little about investing and finances (except what I've learned in class), and I am a little intemmidated. I opened a Roth IRA account last year with my mom's small-town bank. I did this so that I could already be earning interest until I decided where I wanted to invest my money more permanently, later. I am currently earning 6.7% interest, and I would like to be able to earn more. I was wondering which type of fund or bank I should transfer my money to in order to get a higher rate of return on my investment with a low amount of risk (no stocks) and no annual fees. I would appreciate your advise.

Thanks,

Paige

Employer currently has both a Money Purchase Plan and a 401(k) Plan. They use the MPP to satisfy safe harbor requirements for the 401(k) Plan. Plan years are the calendar year. As of 7-1-01 (mid plan year) they now say they only want 1 plan and want to merge the MPP into the 401(k).

The MPP requires funding the 3% for all eligible employees for the total plan year's compensation. Can they (maybe should is better) even merge the 2 Plans mid-year without jeopardizing safe harbor status for the 401(k)?

Can they fund the 3% nonelective via the MPP up to 6-30-01 and if they do merge, transfer the 3% contribution obligation they had under the MPP for safe harbor, to the 401(k) Plan and still have the 401(k) be considered a safe harbor plan (provided all other requirements continue to be met)? Amendments, final 5500s, 204(h) etc. to be done for the MPP. Change the Safe Harbor Notice to reflect being made to the 401(k) now. Would creating a short plan year for the MPP and the 3% contribution to all eligibles preclude this?

Or, too late - must keep the MPP for the remainder of 2001, use it to satisfy Safe Harbor for the 401(k) and then effective 1-1-02 merge the 2 plans and go Safe Harbor strictly via the 401(k).

2000-3 says guidance is being developed but wondering if others have come across this in the meantime.

If Company A buys Company B in the middle of the year, what compensation is used for employees of Company B now with Company A for 415 purposes in Company A's DC plan?? Can I use total comp between both compies or must I only use comp from Company A. Company B is not an adopting employer and did have a SEP in place. Thanks.

My understanding is that the deduction is available for fiscal year in which plan year ends.

With a safe harbor contribution, since it accrues as employees get paid, can a 6/30/01 fiscal yr end return claim safe harbor amount for the first 6 mos of year?

Maybe the answer is no since employer can back out up to commitment notice in November? Is the answer different for a plan subject to 412?

thanks

What are the legal responsibilities of an employer in regards to "orphan" account. Example: ER has 401(k) plan. He has several employees who have left the company but have not made any effort to contact the company about their vested retirement money. The company has mailed a notification but many of the notifications have been returned because of a bad address (i.e. they have moved). What can the employer do? Does the ER have to keep these accounts and continue paying the per participant charge? Can he forfeit the money? What are his legal responsibilities and limitations? How long does he/she have to wait?

A client of mine has 3 plans, PS, MP, and DB. He wants to consolidate the assets for the 3 plans into a single trust. I have seen this done only once with a combined PS/MP plan trust. I was wondering how common combined plan trusts are for a single employer. Obviously an annual allocation each year would be needed to determine each plan's assets, and the plan/trust documents would need to conform. Any potential problems? Any comments would be appreciated.

Does anyone know if PA has mandatory state income tax withholding on lump sum 401(k) distributions? I've looked and looked and can't seem to find the answer to this - Thanks!

I am trying to determine whether it is worthwhile to file 5500's electronically. As I understand it everything must be filed electronically in acceptable formats, including the accountant's opinion. Does this mean we need to get auditors for the plans filing electronically to send us their reports as Word documents or whatever other acceptable formats are listed? Also, is it true that besides us as transmitters having to file an EFAST-1 that we need one signed and submitted by the trustee (for Schedule P), the plan administrator and plan sponsor (for the 5500 and SSA)? I have gone to the EFAST site and have not found answers to these questions. Finally, as preparer and transmitter should we be the contact person with telephone numbers in Part III of form EFAST-1 or should a representative of the plan sponsor or trustee be the contact?

I have a calendar year Defined Benefit Plan which has terminated. All of the participant’s benefits were paid to them on December 21st, 2000. There is still however assets left in the trust which represent a mistake of fact contribution. These monies were returned to the employer this month.

I feel that I still have to file a 2001 short plan year return, as there were still assets in the plan although all participants were paid. But this Mistake of Fact over contribution is throwing me off. I could not find any definitive sources relating to a case such as this. Anyone have any thoughts/sources?

Thank You.

Our company closed a branch engineering office due to a project that was not getting off the ground. The closure did not have anything to do with downsizing, only canceling a project. With the termination of the project, we also terminated 56 employees. We had a total of 279 employees eligible to participate on the date of the termination. During a recent IRS audit on the 401(k) plan, we were advised that this could constitute a partial plan termination. What numbers should we use to determine if we are over 20%? What other facts should I look at to help make our case? I've been searching on the internet, but am having a difficult time finding any information on what we should look at.

Our company closed a branch engineering office due to a project that was not getting off the ground. The closure did not have anything to do with downsizing, only canceling a project. With the termination of the project, we also terminated 56 employees. We had a total of 279 employees eligible to participate on the date of the termination. During a recent IRS audit on the 401(k) plan, we were advised that this could constitute a partial plan termination. What numbers should we use to determine if we are over 20%? What other facts should I look at to help make our case? I've been searching on the internet, but am having a difficult time finding any information on what we should look at.

The incorrect amount was distributed as a death benefit and resulted in an overpayment. The beneficiary requested an overpayment waiver. What criteria can be used to determine if we should honor it?

The scene:

4 companies, all in one control group. 1 company receives a 5% employer discretionary contribution; the rest do not.

The question:

Does this arrangement have to pass a 401(a)(4) General Test?

The nexus of the question is that by NOT giving the 5% to other participants within the controlled group, you have some employees with one rate (5%) and some with another rate (0%). If the arrangement passes 410(B), are we done? And if the arrangement DOES NOT pass 410(B)....including the Avg. Bene. Test....what next? Do you look at the General Test?

Compensation to use for SE income: Issues the CPA is bringing up -

The document elects not to have 401(k) deferrals reduce compensation. We think 401(k) deferrals still reduce SE comp, but the CPA is thinking because of the document it does not.

What about IRC 179 depreciation? If we just pick up the SE number from Form K-1, does any adjustment need to be made for IRC 179 to get to the SE comp?

Thanks.

An employer has a 401(k) profit sharing plan and has decided to make employer nonelective contributions every pay period (bi-weekly). The employer also wants to allocate the contributions to the employees' accounts when contributed. The employer wants to have the discretion to increase contributions or stop contributions anytime during the year. I am now amending the plan to try to meet the employer's request, but am running into the problem of having to define a predetermined definite allocation formula. The problem is that if the employer contributes 2% of compensation per employee based on the employee's compensation for that payroll period, the employer also wants the 2% allocated to the employee's account. But next month, the employer may decide to make any contributions, then there would not be an allocation. Has anyone come accross a similar situtation? How have you dealt with it?

Is there any guidance on the duties owed to non-english speaking participants in order to comply with 404©? Even if there is no guidance, any thoughts on whether one would fail to comply with 404© if a prospectus is supplied in English to a non-English speaking participant?

In our situation, the employer wants to comply with 404©and has a few employees who only speak Spanish. The employer does not want to go to the expense of having each prospectus printed in Spanish. Any thoughts or experiences in this area?

A Plan provides that NRA is 65. For those working to age 65, they are paid their full accrued benefit. For those retiring prior to age 65, their benefit is reduced 5% per year from SSRA. So for eg. a person has a SSRA of 66, terminates at 61 w/ a vested benefit right. The Plan paid the lump sum based on his age 65 normal ret. benefit. And this benefit was reduced by 5% even though it was as of NR date. Can age 65 NRA base (not excess portions) benefits be reduced at NRA? Especially where it is done for certain participants and not others.

Any thoughts on this?

Due to a computer system error, neither an elective deferral nor a corresponding matching contribution was made for a 401(k) plan participant who had chosen to make a 1% elective deferral. The employer caught the error within a few months and would like to correct the problem. The employer has determined that a corrective contribution that would be based on the employee's selection of a 1% elective deferral (and the corresponding match) and that would be adjusted for earnings would cause the employee to (barely) exceed the 415 limit; if the corrective contribution were to be made without the adjustment for earnings, however, the 415 limit would not be exceeded.

(1) Disregarding for the moment the issue of the earnings, is it correct to base a correction on the elective deferral percentage selected by the employee?

(2) If the correction should be based on the elective deferral percentage selected by the employee, should earnings be credited or not? On one hand is the need to fully correct the violation; on the other is the risk that a "full" correction would create another operational failure. If earnings are credited, the 415 limit will be exceeded, and, based on .08 of Appendix A of Rev. Proc. 2001-17, the remedy would be to place the portion of the excess attributable to the match in a suspense account and to distribute the portion of the excess attributable to employee deferrals. Section 6.02(2)(d) of Rev. Proc. 2001-17 states that "the correction method should not violate another applicable specific requirement of section 401(a)," and this proposed correction arguably would violate Code section 401(a)(16). That same section of the Rev. Proc. goes on to state, however, that any additional failures created as a result of the use of an EPCRS correction method should also be corrected under the Rev. Proc.