Anyone taking the spring 2001 C-2 (DB) exam?

Let's exchange thoughts on the exam.

ADP/ACP failures with prior year tests should not happen but --- happens. As we all know some clients don't pay attention! Need feedback from the experts, Thanks.

Problem:

Failed ADP/ACP tests using prior year test.

Fail even worse using current year.

december,2000 plan

1 If we make a QNEC of 3%, we still apply last year test? It is now more than 12 months after the 1999 year end.

2 If yes, can we use this 3% to satisify top heavy for this year at the same time?

3 If QNAC that takes care of the current 3% TH is more than needed can we use MUT to satisify ACP/ACP or do I need QMAC also?

4 I assume I use last year pay to caculate QNAC? What to do about Terminated participants? I guess I need to give them the QNAC also!

5 From a record keeping basis I assume the QNAC shows on the particitants accuount for 2000 and I dont have to redo any 1999 work?

thanks

Please bear with me...I was laid off from my job January11, 2001. I was given a written letter offering me two weeks severance pay. When I asked about my earned vacation, first I was told the policy changed. Then I was told that they wanted to lay me off on the 9th (one day before I earned my vacation)but because I went home sick, I screwed up their plans. I was told that if I pushed the issue on the vacation, they would rewrite the letter and take back the severance! Well, I pushed and they did. I filed a small claims case after consulting with a lawyer.

I believe that I have been paying one month in advance for my medical benefits (at the very least, I was paying for the current month. Yesterday I find out that they cancelled my insurance effective on the 12 of Jan.

They issued my final check to me on the 12th and had deducted my insurance!Can they do this? I never received any notification. They are a small employer (10-15 employees) so cobra does not apply. I figured I would have coverage through this month at the very least. Now I have nothing?

Because I filed the small claims case, do I have to amend it or something? I'd like to have the insurance back, but if I can't do that I want my money back. Will my case be moved out of small claims because of this.

I also suspect that they purposely marked me as deceased on my W-2, although I can't prove that. Sorry this is so long winded. Please help if you can. Thanks....Stacie

I am taking over a plan in which the 401(k) safe harbor notice that was distributed to the plan participants says that the employer will not make any other contributions. (only contributions will be deferrals and safe harbor contribution).

The employer now wants to make a discretionary non-elective contribution. The document allows discretionary non-elective and discretionary match contributions.

If the employer makes a discretionary contribution after distributing a safe harbor notice that says that there will be no other contributions, can the safe harbor still be used? Or must ADP/ACP testing be done because of the discretionary contribution? Is there any guidance on this?

What if the notice says that the safe harbor will be the basic match, but later the employer wants to do an enhanced match? Would that be allowed?

My thinking is that in order for the plan to have safe harbor status for a particilar year the employer must abide by what the safe harbor notice says, even if what the employer later wants to do is more generous than the contribution specified in the notice.

Is anyone using software packages that are web-based for employee benefits and other HR areas(such as: ARIOSO.net). For example: the employee can enroll him/herself via the web into all the insurance programs, 401(k), change some personal data in employee database (address, phone, dependents, etc.). Supposedly eliminates a lot of administrative work an HR Asst. type of person does--because the employee is doing their own.

The proposed amendment to 1.417(e)-1 (published 1/17/01) allows for a retroactive annuity starting date. A retroactive annuity starting date requires a make-up payment plus interest to take into account the missed payments.

If the plan does not provide for a retroactive annuity starting date and a missing participant turns up after his or her NRD (and the plan does not provide for lump-sums or actuarial adjustments for delayed retirement) does this participant have to be paid the actuarial equivalent of his or her NRD benefit anyway?

Could the plan now just begin payment of what would have started years ago at NRD?

I need to find information regarding employee contributions to medical plans.

Hi,

The scenario:

I'm 40 years old and I have put $2000 per year in my Roth IRA the last 2 years ($4000 worth of principal).

At this point in time the value of the Roth IRA is $4500.

What are the penalties and/or taxes if I withdraw:

(A) $4000

(B) $4100

Thanks, Terry Shaw

My employer, with a 403B plan, was just taken over by a

for-profit company, with a 401K plan.

Can I move the 403B$$ into the 401K plan??

Thanks...........

Can a Plan establish some parameters on who is eligible for self-directed brokerage accounts? Are there any standards out there that have been approved and are not considered discriminatory? Could a plan use the SEC definition of an "accredited investor" even though that is someone who has relatively high net worth? Or is the answer no to all of the above due to the current and effective availability tests for benefits, rights and features?

If a calendar year Money Purchase Plan (25% of comp formula) terminates 11/15/2000, is the $30,000 415© limit pro-rated?? I'm almost positive it is, but i cannot find a site.

Besides Hyatt Legal, Pre-Paid Legal, and Lawstar are there other pre-paid legal plan providers?

I HAVE A FISCAL 401K PLAN WHERE A PARTICIPANT DEFERRED 12000.00 IN CALANDAR YEAR 2000. HE DID NOT EXCEED THE 10500 LIMIT IN PLAY YEAR, BUT DOES IT APPLY ON CALENDAR YEAR BASIS. REG 1.402(g)-1(d)(1) CONFUESES ME. i HAVE NEVER SEEN A W-2 WITH A DEDUCTION OVER THE CAP LIMIT.

We have a client who is inquiring about the possibility of implementing a special contribution based on years of service. They presently have a standard 401(k) plan with a match. How would they go about doing this? Is the points system the only way it would work? If so, what all would be involved with implementing the points system?

i converted a traditional ira to a roth ira in 1998 and planned on paying the taxes over 4 years. this year in doing my taxes i see that i have made 150,000 and i was wondering if that disqualifies me from converting?

I am reviewing a plan that wishes to use their matching contributions to help satisfy their Top-Heavy minimum. The plan is a non-standardized prototype and the matching is discretionary. I realize that the matching can no longer be used in the ADP or ACP test for the non-keys which will most likely cause a problem passing the discrimination test. Can anyone think of other pitfalls or hidden catches that may hurt this client if they do in fact use the matching to help satisfy the Top-Heavy Minimum?

When you offer a cash incentive to opt-out of health insurance...if you roll the cash amount into the employees 401k or flexible spending account, would you still need to have a cafeteria plan in place or is a flexible spending account sufficient to handle that form of cash incentive?" The other side of the coin is "what if you give cash back directly to the employee" does a cafeteria plan need to be in place?

Is there a limit (% of assets) that a plan sponsor can pass through to ESOP participants for administrative fees? It appears that our plan was charged 5% of plan assets!!

Any help would be appreciated.

Thanks

What action should be taken to terminate a SEP?

Recently, we've had a small Money Purchase Plan dropped in our laps. As we cannot ignore this any more, we must give the client some advice. I am not at all familiar with the correction programs and would appreciate any guidance.

Client did not fully fund the plan in 1997, 1998 and 1999. A 5500 for 1999 was not filed. A 5500 for 1998 was prepared after IRS inquiry (5500 noted the funding deficiency). Client says a 1997 5500 was prepared, but cannot produce a copy.

Any suggestions? (Besides running far, far away, very quickly-we've fired this client once already).

Thank you.