I was wondering if I could get some feedback on the following situation: A bank acts as trustee for a 401(k) plan. The plan holds employer stock as an investment option. The bank also owns employer stock and gives recommendations (investment options, administrative, etc.) regarding the 401(k) plan. The bank is clearly a party-in-interest. What liability issues arise from this situation? I am somewhat bothered by the fact that the bank owns employer stock and acts as trustee to a plan where employer stock is an investment option. I'm not sure why though.

I understand that certain states have "right to work" laws

under which employees who are not union members, nor pay union dues, may be covered nonetheless by collective bargaining agreements, and thus are entitled to the all the rights and benefits afforded the union membership notwithstanding their non-member status.

Assuming this is true, may such employees be disaggregated for purposes of nondiscrimination testing? If so, may the employer choose to test this group with the union membership, or by themselves?

Railroad Employees are subject to Tier taxes instead of SS/Med so I am not sure if Section 125 covers them or not.

I have contacted the RRRB. They didn't think they would be eligible, but they were not sure because they were not familiar with Cafeteria Plans. Does anyone else work with Railroad employees who have a Cafeteria Plan to give us an answer to our predicament? Are Railroad Employees eligible for a Cafeteria Plan?

I have a 401(k) plan with a discretionary match and the forfeitures are used to redube employer contribution. The company does not want to make a matching contribution, yet there are forfeitures. Is it ok to hold the forfeitures until some future year when a matching contribution is made?

If a company is laying off more than 20% of its workforce, is there any requirement to immediately vest everyone under the 401(k) Plan? We have a discretionary match and a graded vesting schedule.

How is a 5500 prepared to properly reflect an SCP (fka APRSC) deposit? Contribution is ER contribution and the gain is gain?! Or does it get lumped together?

I've read the previous posts on this issue, but I still need some clarification and/or guidance. How are you handling the partner's 401(k) election that must be made by 12/31 when K-1 data is not available until several weeks later? Any suggestions?

We are considering making a guess and correct after the K1 is computed. The problem w/ this is how to treat the correction.

Can a matching formula be independent of the amount deferred? For example: 3% of compensation contributed to match source if there is any deferral at all, no contribution to match source if no deferral.

Why or why not?

Employer was in the midst of doing an interim valuation of plan assets of a PSP and a MPPP. Participant requested distribution of his account balance 2/28/01. Broker moved the funds based on the anniversary date (9/30/00) balance of participant's account. Interim valuation recently completed and participant presumably would have received less. Does plan have a responsibility to look to participant for the difference?

Employer was in the midst of doing an interim valuation of plan assets of a PSP and a MPPP. Participant requested distribution of his account balance 2/28/01. Broker moved the funds based on the anniversary date (9/30/00) balance of participant's account. Interim valuation recently completed and participant presumably would have received less. Does plan have a responsibility to look to participant for the difference?

I've seen the 12/31 deadline for Roth conversions quoted extensively, but am stuck on a basic question: where in the code/regs does it come from? The only mention I've found of a Dec 31 deadline concerned the four-year plan for recognizing income from 1998 conversions in 408Aa3Aiii. Beyond that, the code/regs & Pub 590 appear to leave the question somewhat open to interpretation.

Pub 590 doesn't actually address it explicitly. It references the tax return filing date as the deadline for contributions but is unclear whether it's referring to standard contribs only or also qualified rollover contribs.

And Code sections 408A©(7) and 219(f)(3) appear to allow you to deem a trad-to-roth transfer made before your tax return filing deadline as having been made 12/31 of the prior year. Which would seem to allow conversions after 12/31. That of course hinges on "contributions" in 408ac7 being interpreted to include "qualified rollover contributions", but I can't see anything to the contrary in the code.

The Roth regs (eg 1.408A-4) say we need to include the conversion amount as income "for the taxable year in which the amount is distributed or transferred from the traditional IRA". But if the above code sections apply, wouldn't a pre-filing transfer be deemed to have been done on 12/31, hence qualify?

But before I hit the seminar circuit with a new loophole, figured I'd bounce it off some pros... ;-)

I am self-employed, make about $6000 a year. Not knowing much about taxes, I thought I don't make enough to file for taxes and I have never filed since I came here as a legal resident in 95.

I opened a Roth IRA on 4/15/2000 and contributed $2000 for tax year 99 and $2000 for tax year 2000. A while back, I found out on the Roth IRA web site that Roth contribution has to be "earned income". My questions are as following:

1)Is my Roth IRA account not valid due to the fact that I did not file for taxes in tax year 99, 2000 and all 3 years after I was in the u.s.?

2)How can I fix this? Which form to use when I back file? Do I need pay taxes on my scholarship when I was in college?I like to solve it before IRS tells me that my roth accout is illegitimate late on.

3)Do I make enough to put $2000 into my Roth?

Thanks for any helpful input.

Can a company supplement executives only for expenses not covered under a medical plan through the company's general assets but not for other employees?

Is it discriminatory to have different waiting periods and benefits for hourly employees and salaried employees. Salaried employees have a 30 day waiting period and hourly employees have a 90 day waiting period. Premiums are pre-taxed. The medical plan is the same for both however, salaried employees have dental and vision coverage under a self-funded plan that the company pays for. Hourly employees have the option of electing dental coverage under a fully insured plan that the employee pays for. When are you required to perform discrimination testing (and how) under a fringe benefit plan/welfare plan? Not sure of the difference. Obviously I need help!

Looking for the 1970 GA Mortality table. I went to the SOA web site and loooked at their index of tables. I however, did not see a 1970 GA table. Any thoughts on where I may find one?

This is a legal question more than a 401(k) question, but our legal rep is out of town and the client needs an answer. Scenario: Son fills out beneficiary designation form, designating beneficiary as 50% Mom and 50% Dad. Dad is witness to Son's signature on beneficiary designation form. Mom & Dad then divorce. Son dies. Mom is executor of Son's estate. Mom thinks because Dad witnessed son's signature, and Dad is a beneficiary, that the entire beneficiary designation form is invalid. Plan document is of course silent on this strange combination of events - it just says that if no beneficiary designation exists, beneficiary is spouse, and if no spouse, beneficiary is estate. Any lawyers out there know if beneficiary also serving as signature witness somehow invalidates the designation?

An employer formally adopted a SARSEP before 12/31/1996; however, no employee contributions were ever funded. Now, there are employees that would like to contribute to the SARSEP. Can the employees do so even though SARSEPs were repealed by SBJPA'96?

Isn't there an exemption to providing a Summary Plan Description if the only participant of the Plan is the owner of the company that sponsors the Plan? I could swear I knew this once; but, have not been servicing plans for quite a while.

Does the IRS impose any restrictions on the type of account into which an electronic funds transfer for FSA reimbursement may be deposited? For example, can EFT be used to deposit the reimbursement directly into a money market account?

Can a Plan make a loan to a participant to help his/her child purchase a home? I guess similiar to tuition clause in many documents