I have a loan origination date that is 1/24/01, and the first payment date of the loan is 2/16/01.

This is a 60 month loan, paid weekly.

52 weeks * 5 years = 260 payments.

Based on 260 payments, including the first one on 2/16/01, the final payment will be made on 2/3/06.

With 1/24/01 as the origination date, this loan exceeds 60 months.

Can this be corrected? Is it an issue because of the approx. 3 week difference between origination and first payment?

What options do I have to remedy this?

I did chang the origination date to 2/3/01, but then the client will receive the proceeds before the origination date. Is this permitted?

Thanks You!

there was an item that appeared in the benefitslink newsletter that says that participant account statements can contain a legend that says something like "Please review this report and notify us of any discrepancies within 60 days. After 60 days, corrections will be made on a current basis."

Is a policy like this permissable, particularly if the error was one made by the record keeper?

In 1999 my employer started a Simple IRA. In the body of the "Employee Notice" it reads:

" For 1999, your employer will (employer to complete) {which he did}

match your elective contributions up to 2% of your compensation"

But he has NEVER made a contribution. Is this legal? What are my rights? Does the employer face any penalties & fees? If anyone has any info on this I would greatly appreciate it. Thank you.

I have a plain and simple question. I think . I would like to cancel my 401k and withdraw 100 % of the funds.

I know about the 10 % penalty and 20% withholding. I am well under the age of 59 1/2. What options do I have , if any.

It is typically not the best practice for an actuary to sign a Schedule B if the client (or his advisor) provides only an unsigned plan document. But, it is a violation of ERISA, etc., if an actuary does so?

On takeover cases, I've sometimes seen prototypes (either standardized or nonstandardized) that are unsigned. That doesn't necessarily mean that there isn't a copy somewhere that has been signed. And the actuarial valuation and Schedule B signed by the prior actuary reflects plan terms consistent with the unsigned document. And when I push, a signed document is generally sent to me.

However, what happens if the original signed documents simply do not exist. Assuming (for the moment) that they were truly signed, there is obviously no direct evidence of the existance of a plan. The indirect evidence would be -- the client has been operating assuming he has a valid plan, the prior actuary has been operating assuming he has a valid plan, the investment firm has been operating assuming he has a valid plan, etc.

Now, this would of course become an issue when obtaining a determination letter, but that is often delayed, courtesy of 401(B). Meanwhile, there is an ongoing valuation requirement and a 5500 requirement.

What to do in this imperfect situation --- ideas?

In order to qualify for the exception to the 10% penalty from premature distributions under IRC 72(t), is it alright to begin monthly substantially equal periodic payments in mid-year such that the total of the payments during the initial year would be less than a full year's worth? I believe this question is somewhat corollary to the amount which must distributed in the year in which the taxpayer reaches age 59 1/2. Thus, in the initial year and in the final year of age 59 1/2 (assuming that a full 5 years 60 months minimum has transpired), is it permissible to make the monthly payments effective with a mid-year start date for example July 2000 and the monthly payments cease with the month of June 2005 (assuming age 59 1/2 had been attained by June 2005)?

We annually "liquidate" accounts of former employees. We give them a choice of receiving cash (minus the 20% withholding) or a rollover to another shelter they provide us the account information about.

It is my understanding that there is a dollar amount below which it is not necessary to withhold the the 20%. What is that dollar amount?

Thanks

It seems I may have been under a rock for a while. I just read that the 70-1/2 minimum distribution rule was changed back in 1996 or 1997 to the effect that as long as an employee is still in active service after 70-1/2, there is no age-driven minimum distribution required.

Does that change, if I am understanding it correctly, apply to a Governmental 401(a) plan?

If so, does the change supercede our Plan Document provision requiring that minimum distribution?

If it applies to our Plan, do we have to immediately change the Plan Document to incorporate this change in Federal statute (i.e. is that okay if we wait for some other changes to accumulate, so long as we don't enforce it?)

Thanks

My firm provides recordkeeping services for all types and sizes of plans. It seems that the plan sponsors for some of the smaller plans have a total disregard for ERISA and the repercussions of noncompliance. For example, we have a client who is issuing loans out of the plan to unrelated parties. He is paying his gambling debts out of the assets and he refuses to provide us with the information necessary to prepare 5500s, required communications to participants, etc. We have advised him against this over and over, but to no avail. What is our responsibility and, more important, our exposure?

While gathering information for a new takeover client, we have discovered that their adoption agreement (sponsored by the investment company) from 1993 was never signed and executed. The original effective date of the plan was 1988 and they do have a signed document establishing the plan. However, since 1993 it seems the plan has been operating without a document.

I have never experienced such a problem and am at a loss as to how we correct. Do we use Walk-in CAP?

Education Tuition Reimbursement Policy:

1. What is the maximum dollar amount most company allows for yearly Tuition Reimbursement per employee?

2. What type of agreement or policy does employers have to retain the employees when they pay for the education of an employee who receives a college degree? (Example: Some companies request an employee to remain employed for X amount of years when they pay for the employee's tuition and the employees receives a degree. What is the amount of years? Is it different for an Associates degree vs Master degree?)

I understand that the ADP safe harbor subjects a plan to 100% vesting, withdrawal restrictions , and allocation restrictions (no last day etc.)on safe harbor contributions . It appears that the ACP safe harbor is not necessarily subject to any of these. Can someone clarify how the ACP safe harbor is affected by these items?

If a tax-exempt organization wishes to offer a non-qualified plan, is a 457 plan their only option? Also, with 457 plans, I belive the maximum contribution level (both deferral & match?) cannot exceed a given limit less the deferrals made to a 401(k) and/or 403(B) plan. If a tax-emempt employer already maintains a 401(k) plan, is there any reason to sponsor a 457 plan?

We are giving a talk on "Defned Contribution Health & Welfare Plans";

I would like to include a few real live case studies...in addition to the couple we have experienced...one a total, case book example of what not to do.

Does anyone have case studies they are willing to share?

Thanks ,

Jere Cowden

1099-R coding question...

How do I code a recharacterization of a 1999 employee contribution that was rechar. as a 2000 contribution. I have read, and reread, the instructions and cannot figure out what to do with this one. Please help...

I seem to remember that a public employer (state or local govt) can opt out of HIPAA on a yearly basis. Could someone provide me with a cite or analysis of this provision? Any experience dealing with a group that has opted out? I've got a group that wants to opt out but has no idea how to procede. Thanks

Any amendments around to switch a profit sharing plan to a safe harbor 401(K) rather than amending the profit sharing to a 401(K) and then adding safe harbor language??

Just wondering if someone had a simplified way to do this, like a Board Resolution.

We've successfully trained most of our clients to ask us before doing most things --- to avoid unpleasant surprises. Boy was I surprised to find out what this client did!

This is a 1 person DB plan, covering a married owner, about 45 years old. About $160,000 in plan assets. Nonstandardized prototype.

I find out that his business is doing poorly, so over the last 6 months, he paid about $80,000 from the plan to himself. Gee, that's nice, but now I'm not happy (and he's gonna be less happy when I tell him how deep he is in it).

Let's see. There is a loan provision in the plan (it's a C Corp), but I'm not aware of any loan documents being prepared (let alone spousal consent). Besides, $80,000 is greater than $50,000. And, he hasn't repaid any of the payments, if it even was a loan.

If he is considered to be actively employed, he's made a benefit payment before NRD. Oops!

Maybe he terminated employment before the first payment. (he hasn't taken a salary for several years). Well, the plan does allow for installment payments (as well as a lump sum and QJSA), but the actual payments were in random amounts at random times --- doesn't sound like installments to me. (Again, there's that spouse consent issue.)

So, let's talk about damage control. Disqualifying defects. Penalties. EPCRS. By the way, the brokerage firm is issuing 1099's for the $80,000 just about now.

(How did this happen, you might ask. I figure he called his broker and said "I need $_____ from my pension plan. Please transfer it into my personal brokerage account that you also have. Did they tell him it's not that simple? Did they tell him they'd be issuing 1099's? What do you think?)

So, before I break the good news about all this to him, what alternatives and ideas can we come up with. Yeah, I know they're all bad --- I'm just looking for the least objectionable ones available!

Like I said, we've trained MOST of our clients!

I opened a QRP (keogh) for my corp (California C-corp) at Schwab on 12/29/2000. It is a paired plan (MPP + PSP) with an effective date of 3/16/2000. I am the only employee in my company at this time. I chose MPP % to be 15 and PSP to vary from 0 to 10% based on flawed advice that Profit sharing contribution can only be made if there was 'profit' in the corporation.

It was a mistake and I would like to amend it as an 'error correction' to MPP 10% and PSP 0 to 15%. Schwab is telling me that amending the MP% 'COULD' disqualify the plan and that I should consult a CPA. I haven't deposited the full contributions yet. Just the initial deposit of $500 in each account(MPP and PSP) that Schwab required me to open.

Here are my questions:

1. What would be the grounds for disqualification? It doesn't make sense that a reasonable change should cause any problem, especially considering that I am the only employee at this time. (I have called IRS help line and am hoping for a call back from them in the next few days.)

2. Can I amend it so year 2000 contributions reflect 10% MPP and rest PSP. If not, can I at least change it for 2001.

3. Do the plan documents get sent to IRS? Since I am the plan administrator, could I not make reasonable changes and put it the company file. Isn't the role of Schwab merely that of a custodian? Should they care if it is amended?

4. Any pointers as to where I can get the skinny on what is the common sense approach to QRP and how it all works?

Thanks in advance.

1099R Question. I transfered a Roth Ira from one mutual fund company (Harbor Fund) to another mutual fund company (Vanguard) in 2000. The transfer was a Direct Transfer or sometimes referred to as a Direct Rollover. I did not receive the funds, they were moved direct from one trustee to another. Harbor has now send me a 1099R with a distribution code of 5J shown in box 7 of the form. I believe this is in error. If I was supposed to receive a 1099R is not the code wrong? Please advise. Thanks