The partners of a partnership sponsor a 401k plan. They are planning on making only the 3% top heavy minimum contribution to the non-keys for 2000. They prefer to make the contribution in the second half of 2001, but would like to file their individual Form 1040s on a timely basis. Since the partners are not getting a contribution can they file their individual returns before making the plan contribution??

Hi there. Does anyone have knowledge about loan origination fees and 1099-R reporting?

Specifically, I have a client that is coming on board in the Fall. The plan allows for the recordkeeper to deduct a loan origination fee. We intend to deduct $50 from the participant accounts at the time a new loan is issued.

The client is now asking, and in fact is even suggesting, that this $50 loan origination fees amounts to an in-service withdrawal that must be reported on a Form 1099-R.

Any thoughts or guidance?

Does anyone know of any studies, sources, or stats, that shows the impact of voluntary benefits on employee satisfacion, loyalty, or recruiting and retention? Thanks!

Has anyone using Quantech had to set up a 401(k) plan with dual eligibility? I recently attended Quantech training and was not satisfied with the answer given. I was advised NOT to code the 12 months, 1000 hours under the

"Allocations Requirement" screen because it would require those criteria every single year for all participants. I didn't think it was that unusual for a client to have dual eligibility for deferral and match/employer monies!!??

My question involves a 401(k) plan and application of the same desk rule.

One of the exceptions involves the sale of substantially all of the company or a separate division, unit, etc. of the company. What if the part of the company being sold is not all an identifiable unique part of the company? For example, 70% of the sale involves one division, but 5% is from a second division, 10% from a third division, 15% from a fourth division.

Would it be more defensible to say that the divisions en masse don't really meet the requirement to be a separate division, since there is more than one part of the company involved, so there is not an exception to the same desk rule?

Or would it be more plausible to parse the single sales transaction and look at each of the divisions separately, so that each of them is less than 85% of a separate division, therefore the sale actually constitutes a separation from service for the affected employees (i.e. falling under last year's IRS ruling)?

Help.

Hi, I am going to relocate from Illinois to California next summer. My question is: if I convert my regular IRA to a Roth IRA one or two month before I move to California, do I have to pay California income tax or Illinois income tax on the conversion for that tax year?

also, in case the conversion occurs 1 month after I move to California, should I pay California or Illinois income tax on the conversion?

Thank you

Ed

Facts:

C Corporation has two separate plans; 401(k) and a new MP ESOP, which they are currently attempting to heavily fund in preparation for an upcoming purchase of stock. The 401k has a 1000 hour and year end requirement to receive emloyer match as does the ESOP (to receive stock allocation). The plans have identical eligibility and thus have the same participants in each.

Using the guidance of Rev Rul 65-295, I am fairly safe in assuming two things:

1. If I only had the ESOP, to determine the maximum contribution of 25%, I could not use the compensation of those participants who terminated or did not complete 1000 hours, since they are not eligible for an allocation and thus not "benefitting"; and

2. If I had only the 401(k), to determine the maximum contribution of 15%, I would use the compensation of those participants who terminated or did not complete 1000 hours, because they were eligible to defer and thus "benefitting" (even though they are not eligible for an employer match contribution).

QUESTION:

What compensation would you use to determine the combined 404 limit of 25% when both plans are in place with the same participants in each plan?

(1) Would you include compensation for all participants including those benefitting in the 401(k) Plan but not in the ESOP. If so I would assume you would reduce the maximum contributions to the ESOP by the 401(k) contributions made by those not benefitting in the ESOP.

----- or ------

(2) Would you exclude the compensation of those not benefitting in the ESOP. If so I would assume that you would NOT reduce the maximum contributions to the ESOP by the 401(k) contributions made by those not benefitting in the ESOP.

I can find lots of commentary that addresses the issue of "benefitting" for 404 purposes, but everyone says there is "no guidance from the IRS". I want to hear what stance others of you take.

Company sponsors 401(k)plan effective 1/1/98, with a 1000 hour service requirement. 7/15/98 they amend service requirement to 3 months of service. No employees were ever excluded. They have previously only reported 40-50 employees for testing purposes. This year during a conversation the plan sponsor indicated that she provided almost 9,000 W2s because this company is a temporary agency. How could such a problem be corrected? It appears that if QNECs would be required for all of these individuals, it would cost much more than the current value of the plan. Any suggestions?

If an employee in a 401(k) plan designates minor children as the beneficiaries under the 401k plan, what would happen in the event of the participant's death? Would the money go into an account in the children’s' names, which they could then access once they came of age? Could a legal guardian access the money before they came of age? Does this vary by state? If it varies by state, is there a good resource to research state law?

If a government sets up a self-inusred medical reimbursement plan, is it subject to the nondiscrimination rules of IRC 105(h). I don't see an exemption, but it seems unlikely that a governmental plan would be subject to a nondiscrimination rule. Am I missing something? Thank you.

I work for a unionized steel company that employees 1375 and is close to filing chapter 7 bankruptcy. Is an ESOP a viable option for keeping the company operating? It is being discussed by company and union officials. Much of our operations have been shutdown already and mothballed. To restart these departments and bring in the necessary supplies and equipment would cost millions. We are currently operating under Chapter 11 (since January 12) and could file for chapter 7 as soon as February 13th. From what I have learned about ESOP programs, it is not used primarily to save a failing company. However, there is a local steel mill that did so over 15 years ago, and it is still operating with a profit. However, it did not start up all operations - it was a much reduced work force. So, again, is an ESOP a viable option to pull a failing company out of bankruptcy and how might it work with all the money required to do so successfully?

I've contributed last year to our new 401-K. I'm filing single (not married), gross income $50K, adjusted $31K. Is it allowable to also contribute to my existing Traditional or Roth IRA (would like to put $2k in either IRA before I file, for TY-2000)?

Carl

Employee who is getting "divorced" revealed to employer that he had never actually been married but had assumed he had a common law marriage. Employee is in state that does not allow common law marriage but that recognizes common law marriages from other states. Presuming employer offers COBRA to employee and to his three children (who had been covered as dependents), what does the employer offer the "common law" spouse??

The 1099-R instructions seem clear that, in the case of an excess deferral refund of $400 ($500 excess deferral with a $100 loss) paid in January from deferrals in the prior year, the 1099-R would show $400 in boxes 1 and 2a, with a code of P in Box 7. However, the instructions also indicate that the participant must show $500 on their 1040 for the prior year (the year of deferral), and may show the $100 loss on the 1040 for the year the distribution was made. How is a participant supposed to know that their 1040 is supposed to disagree with the amount shown on the 1099-R? Does anyone out there have a standard notice that is sent with the 1099-R to the participant?

My college age son "grossed" $900 this year and, let's say $100 was withheld in taxes. Can he contribute the full $900 to a Roth IRA or only the $800 "after taxes" amount?

Thanks ahead of time for sharing your expertise. This is my first attempt at a message board, hope it makes sense. I'm mostly cofused -- this is the third time I'm typed this message. (And what are all those antimated icons about, anyway? Nevermind.)

A 401(k) plan currently allows "participant loans" for "parties-in-interest" participants. By this I mean that loans are only available, basically, to participants who are also employees. This approach is described as being permissable in DOL Information Letter to Gordon H. Mattson dated May 4, 1995.

The Sponsor is exploring the idea of opening the availability of "participant loans" to retirees. Retirees are not "parties-in-interest." Again, referring to the Mattson letter, the DOL does not have a problem with opening the participant loan availability to "non parties-in interest" as long as it is available to all "non parties-in-interest" participants.

I sort of remember hearing or reading something for DOL stating that DOL felt it was imprudent to have a participant loan extend beyond a participant's normal retirement age without pledging outside collateral. I cannot find anything in print on this point. I was hoping that someone could shed some light in this for me.

Can Title I 403(B) assets be held under a trust agreement or are they required to be held in only annuities or under custodial accounts? Cites would be VERY helpful.

We have a client, who is a non-profit organization running a SARSEP plan. Their accountant has told them that they were not allowed to accept employee deferrals into the plan since 1997. He said this was a rule that came down for non-profits only. Is this true? If yes, where can we get more information? IRS Pub 590 does not mention anything like this.

If a governmental money purchase plan has only employer contributions is participation in the plan mandatory or may employees elect not to participate in the plan? I've heard that participation is mandatory in this case, but I haven't been able to find any supporting authority.

Can someone tell me (or direct me) to what information I must capture to be sure I have everything I need for 401k/403B discrimination testing?