I have a client who maintains an irrevocable rabbi trust in connection with their nonqualified plan. The rabbi trustee, a bank, has recently decided that they don't want to make benefit payments any longer to participants; rather, they want to return the money to the employer and have the employer make the benefit payments. This seems to me to defeat the purpose of maintaining a rabbi trust, but we are faced with very few alternatives if the bank is insistent and so far they are. Of course, we could switch trustees but the employer does not wish to do this because the bank also is the trustee/recordkeeper of the qualified plan which works in tandem with the nonqualified plan. I am curious to know whether the bank's position is common or whether this position is unique to this bank or this particular situation, and what, if any, problems this would raise if we went along with the bank's position. Any comments would be appreciated. Thanks.

Since I'm over the threshold of AGI and cannot add money to my Roth IRA, may I use the accumulated dividends within the Roth to buy stock, which would remain in the IRA ?

In a leveraged ESOP with a "mirror" loan, can the interest rate(the AFR 5.59%)paid by the ESOP to the corp. be lower than the interest rate(8%)paid by the corp. to the bank? Loan proceeds went from the bank to the corp. to the ESOP. The bank charged the corp. 8% while the corp. charged the ESOP only 5.59%, the AFR at the time. This will allow the ESOP to pay off the loan faster.

The IRS auditor currently auditing the corp. says the rates

have to be the same(8%)under IRC Sec 482-2(a).

We are arguing that ERISA and Sec 4975 take priority over 482 and that the ESOP can pay a lower rate(which will benefit all participants in the ESOP).ANY HELP WOULD BE

GREATLY APPRECIATED--THANKS!!

In 1998, I took advantage of 4 year averaging by rolling a number of IRAs to Roth IRAs. The tax on these roll-overs is spread over 4 years.

In 2000, I moved out of Ohio to another state. The Ohio State Tax Report, Fall 1998, page5 states:

"With respect to individuals who are Ohio residents at the time they make the roll-over but then become nonresidents during any portion of the four year period: such individuals must file the IT-1040 for the four year and "situs" to Ohio (for purposes of computing the nonresident credit) the "spread-out-over-four-years" income." Ref: Ohio Revised Code, section 5747.01(A)

It is not clear to me if this "situs" means that I will have to file to Ohio for a credit because I'm now a nonresident. I can imagine that I would have to pay tax on this roll-over income in two states. Any comments you might have would be appreciated.

raf5de6k@yahoo.com

This is a question about processing payroll when an employee participates in both a cafeteria plan and a 401(k).

Does the amount of cafeteria plan contribution reduce compensation for the purpose of calculating the 401(k) deferral amount. For example, employee makes $20,000 a year and puts $2000 into a DCAP. The 401(k) deferral election is 10%. Is the 401(k) amount $2000 or $1800?

Further, if there is an employer match in the 401(k), which amount is it calculated on?

Very new to 403(B) world! Can you have definition of compensation in doc to exclude salary deferrals? What would be advantage to this if there is no p/s and match is capped at 4% of comp? Also, I assume adp/acp testing is basically like 401(k)testing? Thanks!

Does anyone have a plan in which the only compensation is commissions? How does the plan operate? What special considerations should be given to a plan that has irregular compensation because all compensation is based on commissions?

For any of you that deal with several plans that invest in an institutional account, how do you allocate interest from the "float" in the brokerage account for the minimal time that money is in the brokerage account before getting invested in funds? Does all money in every fund share equally in this interest? Does it matter what source (profit sharing, deferral, etc.) the money is in as to whether or not it shares in the brokerage account interest?

I have a client who says the regs have changed regarding reimbursing expenses for weight loss and visits to the nutritionist. We have not been reimbursing for weight loss unless there is a previously diagnosed medically related condition.

Does anyone know where I can find the regulations on the Graham-Leach-Bliley Act that is coming online this Spring/Summer or what it pertains to?

Does anyone know where to find data on the average vesting period and method for small (<50 employees)businesses?

I am working with a 73 year old Doctor who has never had a DB plan and is making approx. $130,000/ yr. I was contemplating a plan design which would have a NRA of age 65 or 1 Year of Participation and would allow for in-service distributions after NRA.

I would calculate the value of his max 415 ben at his age, he would make the contribution equal to that amount (ie:pure Unit Credit w/ funding assumptions equal to current GATT rates) and immediately roll the contribution out to his IRA.

All Min. Req. Dist's would be paid from his IRA's.

Does anyone see anything wrong with this? I realize that it may not be the traditional way of doing it, but I can't put my finger on any real problem with it?

If a calendar year Plan uses prior year testing for 2001 and wants to switch to current year in 2002 (and assuming no further extension of the remedial amendment period) what is the deadline for an amendment to change the method for 2002--12/31/01 or 12/31/02?

If an ADP/ACP failure is corrected after March 15, there is a requirement to withhold taxes on the distributions. Since these amounts are not eligible for rollover treatment, they are subject to the 10% withholding rules. What are TPAs, etc. doing with respect to these rules? For example, are participants actually being given the election (via Form W-4P) to have withholding apply before the refund is made. Is withholding being done automatically, without an election by the participant? Is withholding being done regardless of the size of the refund? There is a $200 de minimis exception under the direct rollover withholding rules, but there does not appear to be a similar provision under the 10% withholding rules.

Any input would be helpful.

An individual who turned 70 1/2 in 2000 is preparing to take his first required minimum distribution sometime before April 1, 2001. Under the new proposed regs, however, 2000 remains the individuals "distribution calendar year" as defined in 1.401(a)(9)-5 A-1(B).

The new proposed regs provide that "For determining required minimum distribuitons for calendar year 2001, taxpayers may rely on these proposed regulations..."

My reading would be that the April 1, 2001 distribution for someone turnding age 70 1/2 in 2000 would still be a "required minimum distribution for calendar year 2001" even though it is based on a "distribution calendar year" of 2000?

Do you think that I can apply the new regs in this situation?

New to the 403(B) world. We currently have a 403(B) plan with employer matching feature that is only offered to a certain group of employees. This plan also allows after tax contributions (immediate participation). There is a one year wait for the employer match.

We are currently performing the ACP test for the matching portion of the plan. It is my understanding that I need to include "all of those employees eligible to made after tax contributions" and not just those who are actually making the contributions. If I am reading this correctly, won't my ACP test now include all participants eligible for the plan and not just those eligible for the match (the one year wait would not come into play since there is no wait for the ability to make after-tax contributions.

I would appreciate any feedback I can get.

An employer timely filed a Form 5500. The DOL recently rejected the filing as incomplete under ERISA Section 104(a)(4), informing the employer that a revised filing must be made within 45 days. The employer plans to file a revised Form 5500 within that time period.

Is there an obligation to distribute a new Summary Annual Report to participants? Does it depend on how significant an impact the Form 5500 changes would have on the SAR? Is anyone aware of any DOL position on the issue?

From my understanding of the 403(B) regulations state that investments are limited to mutual funds and regulated investment companies. However, one of our clients who was unaware of this rule purchased stocks, AOL etc. in his 403(B)(7) account. How can this be corrected? Does it disqualify the account? I the customer liquidates the stocks, does this resolve the issue.?

Does anyone know of a publication that covers all 50 States health care continuation laws?

I am withdrawing part of my Roth Ira for a first time home purchase. Do I need to do anything special when I take out the funds to avoid penalty and taxes or is this handled at a later date. I will be getting an accountant or financial planner in about 3-6 months. Thank you,