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!

If one receives a check for a settlement,for lump sum LTD, through mediation and the check comes, when does the clock start ticking as far as when you received this income? I hope this makes sense? In otherwords, when you cash the check is when this income in considered received (as far as welfare, SSI etc), or is it when you actually receive the check into your mail or your hands? Any ideas Please. Thanks.

If I max out my pre-tax contributions to a 401k before year-end, I have to cease pre-tax contributions which also ceases company matching.

Will I be missing out on free company match money if I max out before the end of the year?

For example, If I were to make $105,000/year (it's a hypothetical salary which works out well for calculations). If I contribut 10% I will reach the IRS max of $10,500 on 12/31 and receive company match all year long. But If I contribute 15% I willl max out sometime in the third quarter and only get company match for part of the year.

Am I missing out on free money?

Has anyone seen anything granting a blanket exemption from "Privacy Notices" under GLB to qualified plans ?

It seems to us that all 401(k) plans MIGHT be covered by these rules, and it seems VERY likely that any plan which is obtaining financial information to support applications for loans and hardship distributions could be covered.

Thanks for your thoughts.

TCF

I am in the process of redesigning a traditional defined benefit plan into a cash balance plan. For starters, it would be very helpfull to have a survey of the benefit programs offered by my client's competition (basically large insurance companies).

Can anyone direct me to such a survey?

Thanks

Kirk or anyone else monitioring this board - have you seen anything granting a blanket exemption from "Privacy Notices" under GLB to qualified plans ?

It seems to us that all 401(k) plans MIGHT be covered by these rules, and it seems VERY likely that any plan which is obtaining financial information to support applications for loans and hardship distributions could be covered.

Thanks for your thoughts.

TCF

I have an S Corp owner/employee who wants to get money out of his 401(k) plan. Obviously, he cannot take a loan. However, the plan does allow for hardship withdrawals. He has a sizeable amount he rolled into the current plan from a previous employer, and I am curious as to whether he may withdraw his rollover funds as part of the hardship withdrawal. Thanks!

I have a group who would like to start a retirement plan, however they have a very high turn over rate among most of their staff. They would like to be able to have just the managers be eligible. Is this possible? The managers are salaried and the rest paid hourly-could the hourlies be considered an excludable group? Any help would be appreciated! Thanks!

We have a number of participants in our church plan who are Canadians who have worked in the US and participated in our pension plan. When they move back to Canada, they request that we transfer their retirement money to a Canadian RRSP. My response has always been we can't do that. Has anything changed in the US tax treaty with Canada, or have any other laws been passed that would allow a tax free transfer?

On the Schedule I, where do I put life insurance premiums paid during the plan year? I was always under the impression it would be listed on line 2(h) as other expenses, but now I'm not so sure. The instructions for Line 2(e) seem to indicate that it should be called a benefit paid.

Any guidance is appreciated.

Plan year is 10/1 thru 9/30. On 6/15/2000, plan sponsor failed to make accrued contribution, resulting in a funding deficiency retroactive to 9/30/99. Sponsor paid the 10% excise tax (under IRC 4971). I think the IRS has stated they do not have authority to waive that tax.

Assume the deficiency is 100K. The contribution for the 1999/2000 plan year is due 6/15/2001. Assume that contrbution is 300K, including the prior funding deficiency.

1. If the sponsor cannot make the 300K by 6/15/2001, but does make 100K (plus interest), then does that correct the prior funding deficiency?

2. If less than 100K plus interest is contributed by 6/15/2001, then clearly the prior funding deficiency is not corrected. Section 4971(B) imposes a second excise tax of 100%. My understanding of 4971(d) is that the IRS might waive this second excise tax. Does the sponsor have to apply for such waiver in advance? If the sponsor knows it will not make the 6/15/2001 contribution, any other action necessary in advance?

Client has a terminating defined contribution plan and is unable to locate more than a few former employees who resided in Puerto Rico. What should the client do?:confused: