What is the employee 401(k) contribution limit for 2001? Did it change from the 2000 limit of $10,500?

Treasury regulation 301.6057-1(e) requires that statements be provided to terminated participants with a vested account balance no later than the date when the SSA is due. The plan administrator must provide participants with a statement describing the deferred vested retirement benefit to which the participant is entitled. The description provided the participant must include the information filed with respect to the participant on schedule SSA.

I am having a difference in opinion of what should be disclosed to the participant in this statement. The regs. indicate that the statement contain the "participant's information" in the SSA, that being: SSN, Name, if DB plan - Form of Benefit, frequency and the payment amount; if DC plan - vested account balance and, if applicable, # of shares.

This information is found in the Participant Financial Statements (PFS) provided to all participants. To the extent the PFS is provided within the applicable timeframe the requirements have been met. Right?

However, another person thinks that the employer information must also be disclosed in the participant's statement, i.e., SSA Items A, B, C, D, 1 through 3c. I don't concur. However, if this too is required, this information is contained in the SPD and as only as participant has the PFS within the timeframe the requirements have been met.

Thanks!

An employer maintains an ESOP and 401(k) plan. The ESOP diversification rules allow participants to diversify their assets by transferring ESOP funds into another DC plan maintained by the employer. Two questions:

1. Does the ESOP need language to allow a transfer out of the funds and does the DC plan need to have language to allow the transfer in?

Do any protected benefit rules apply to these funds or do they come over to the 401(k) "clean" as rollovers do? The ESOP does not allow withdrawals, so when the funds are transferred in to the 401(k) are withdrawals not allowed from those funds?

I know that IRC Section 401(a)(11)© exempts the money purchase plan portion of an ESOP from the J & S annuity requirement, which is generally applicable to pension plans, so spousal consent is not required with respect to the ESOP diversification election (unless otherwise provided in the plan document).

During 1999 I contributed 2k to Roth IRA. Because of my income level, I was in-eligible to make the contribution and I withdrew the investments purchased with the contribution on 4/17/2000. The value of the investment at time of withdrawal was $700, a loss of 1,300 (ouch!). I received a 1099-R showing a distribution of $700.

1. Do I show $700 on Line 15a and zero on line 15b (taxable amount)of Form 1040?

2. How do I reflect the loss on my return?

What if I had made a gain on the investment – would I show the gains on line 15b of Form 1040? If under age 59½, am I subject to 10% early withdrawal penalty?

I am getting different answers from different experts, so please give cite if possible.

Thanks for help.

Can a non-resident, legal alien, on a temporary working visa start a Roth IRA? Considering that I pay all required taxes as a US resident.

How do you set up a SEP using the 5306-SEP form?

A self-insured medical plan provides that the portion of contributions required to be paid by retirees is dependent on service. (e.g., if normally a retiree who had longer service had to pay only 25% of the premiums, a shorter service retiree had to pay 50% of the premium). Is this provision discriminatory under 105(h)?

The Regs under 105(h) (1.105-11) provide that providing different contribution levels for employees in a cafeteria-plan can be discriminatory under 105(h). See 1.105-11©(3)(i) ("A plan that provides optional benefits to participants will be treated as providing a single benefit with respect to the benefits covered by the option provided that (A) all eligible participants may elect any of the benefits covered by the option and (B) ... the required employee contributions are the same amount.")

For retirees, the regulations merely require the "type, and the dollar limitations of benefits provided to retired employees who were highly compensated individuals" to be the same for all other retired participants. Reg. Sec. 1.105-11©(3)(iii). Thus it appears that the inclusion of such a provision would not be discriminatory.

Does anyone have a different opinion?

Husband and wife work for different employers and are covered under their cafteria plans. Husband terminates employment. Since termination of the spouse's employment is a change in status event, can the wife (a) reduce or eliminate optional life, AD&D and (B) increase dental and still satisfy the consistency requirement?

With daily plans, should the non-vested portion of a participant's account balance remain in the investment funds chosen by the participant or moved to a money market fund after the participant has been paid out?

The situation is as follows: Participant has exceeded the 402(g) limit in two unrelated employers' plan. The NHC participant has requested the refund from his current employers' plan. Based on the research I have done - "if a non-highly compensated employee makes elective deferrals in excess of the annual cap to one or more plans of the same employer, then the excess deferrals are not taken into account in calculating that NHCE's actual deferral ratio". Does this hold true for plans of different employers? Any guidance would be appreciated.

Can anyone recommend a good investment company/TPA alliance program that is available for small plans? We currently have a relationship with an investment company whereby we do the administration (i.e. nondiscrimination testing, 5500, document, etc.) and the investment company does daily valuation record keeping, provides a toll free number, internet access, etc. The program is good, but its not avaiable unless certain asset/contribuion requirements are met. We are looking for similar type programs available to small plans.

Any help is appreciated.

Company A is the plan sponsor of a multi-employer plan. There are seven companies currently under the umbrella of the multi-employer plan. Company A no longer wishes to be the plan sponsor. Hence Company A wants to spin off all the seven other companies into separate 401(k) Plans.

What is the best way for Company A to get out of the administrative cost of not having a 401(k) plan?

How would company A report on the final 5500 form?

Who would take care of the non-discrimination testing Company A or the newly formed individual plan sponsors?

If all the seven companies do not wish to set up a 401(k) plan how do you handle the pay out of the employees from Company A? If we call it plan termination then we may run into successor plan issues. Is that correct?

I would appreciate if anyone has dealt with a multi-employer plan spin off to share some light on these issues.

Thank you and Happy Spring!

Did your company establish a 401(k) Investment Committee to meet the 404© regs? What exactly does your committee do and how often do they meet? Who makes up your committee - did you include an outside, independent advisor? What Investment Policy did you create?

Can a service provider charge an asset-based fee to the Plan and not be considered a prohibited transaction? I know that Investment Managers can justify doing this for managing the Plan's assets, but it doesn't smell right for a straightforward service provider to do so. In addition, they are receiving a per participant fee for recordkeeping services.

Does the "no more than reasonable compensation" exemption apply in this case? In addition, the TPA does not have any revenue sharing agreement with the mutual fund companies to do this. I feel this may be problem, but I am hoping someone can tell me otherwise.

Thanks

Remedial Amendment Period.

Q: The regulations under Code section 401(B) state that the remedial amendment period applies to a plan provision, designated by the Commissioner, as a disqualifying provision, that is "integral to a qualification requirement" of the Code which has changed.

How much latitude does that give the employer?

For example, would the law change that requires 401(k) deferrals to be included in the definition of 415 compensation allow other retroactive amendments to the definition of compensation? {e.g. to change from a definition of compesnation permitted under section 415 to another)

Thanks, Casey

Has anyone heard if the IRS is planning to publish Publication 571 for use in preparing 2000 tax returns? The most recent version available on their web site is the 1999 version.

Thanks!

I'm sure I'm not alone in facing a number of problems with small plans with lump sum provisions that cannot meet the 110% funded current liability percentage requirement for a lump sum to an HCE.

Does anyone have a solution to this? Does anyone know a financial institution that is informed enough to handle the escrow or bonding requirement at reasonable cost?

With the low GATT rates and tanking stock market, this is going to get much worse before it gets better. Most of the plans that I handle that have lump sum provisions have this problem, even the ones that have been at the Full Funding Limit recently! How do you explain this to the small (10-40 employee) client, that's there's not enough money but they can't put the necessary money in?

It's been hard enough to convince these clients not to terminate their DB plans in recent years. Now the owners get older, they've provided benefits for employees, but they can't take lump sums!

Now I can't justify this ridiculous rule. Any suggestions?

Who do you think would win in a fight? IRA's or Hulk Hogan? I'm guessing the crazy IRA's will win by a TKO!!! Anyways if anyone knows any girls that want to talk IRA's please email me.

Mr. T loves IRA's. He invests in IRA's and thats how he affords his gold jewelry! He pitys any fool who doesnt have an IRA!

IRA's RULE