Is it a prohibited transaction for a plan to purchase property from a trust for cash where the grantor of the trust is the spouse of the plans trustee?

I know it is a prohibited transaction for the plan to purchanse real estate from a party in interest/disqualified person (spouse). However, I am thinking that if the spouse is merely a grantor of the trust, whether or not there was a PT might depend on whether the beneficiaries of the trust are actually disqualified persons.

Does the following sound like a legit plan design?

For its annual profit sharing contribution, employer wants to contributes company stock for participants until they hit both age 25 and have 3 years of service. At that point, the contribution gradually involves less company stock and more company dollars. Eventually, at say age 35 and 10 years of service, the participant no longer receives any company stock for the profit sharing contribution, just all dollars.

Is this acceptable and if so, how would it be tested for non-discrimination?

Thanks

If a 401(k) plan allows its participants to take a distribution from employer sources (i.e. profit sharing and/or regular match) "on account of hardship", is there a minimum amount of time that the employer money must be in the plan before it may be withdrawn? If so, does it apply to all pre-retirement/pre-separation withdrawals from employer sources (i.e. inservice and on account of hardship)? Where is this referenced in the Code/regs?

I thought this had been discussed before, but I cannot seem to find the appropriate thread.

Can a 1999 5500 Form to be used to file for a short plan year beginning and ending in 2000 (and due by March 31, 2001)?

Do you cross out the 1999 and write in 2000?

Company A is comprised of 3 divisions, X, Y, and Z.

Company A wants 1 401(k) plan to cover eligible employees in all 3 divisions. However, company A would like certain provisions to be different for participants in the 3 divisions. Little things, like PS contribution allocation.

I know that for the above to fly, plan will have to pass 410(B) and 401(a)(4), which will ensure (if passing) non-discrimination.

However, they also want different vesting schedules to apply to the divisions. This is a BRF issue and will also need to be non-discriminatory, but how is this actually tested?

Any help is appreciated.

Do Section 457 plans have a required due date for employers to deposit employees payroll deductions? Is there a legal timeline as there is with 401(k) contributions? Thanks for any info - I know nothing about 457 plans.

The use of the early distribution events of sections 403(B)(7)(A)(ii) and 403(b)11 to also govern eligibility for rollover treatment renders the triggering events under section 403(B)8, the rollover provision of section 403(B), which were repealed under the Unemployment Compensation Amendments of 1992, meaningless.

Moreover, insofar as 403(b)11 went into effect on January 1, 1989 the application of section 403(b)11 to rollovers has the result of bifurcating the employee's account balance between pre-1989 and post 1988 amounts with reference to their eligibility for rollover treatment.

Example:

Assume a 12/31/00 balance of $500,000.00 with a balance of $200,000.00 on 12/31/88. The employee is free to rollover only $200,000 at will because the triggering events under section 403(B)8, the rollover provision, were eliminated. The employee may only rollover the post 1988 balance of $300,000.00 upon satisfying one of the early distribution events under section 403(b)11 because section 403(b)11 went into effect on 1/1/89.

Congress never intended that a bifurcation would be the result of its repeal of the distribution events under section 403(B)8, the rollover provision of section 403(B). Is there anyone out there that believes that Congress wanted to repeal rollover distribution events for just pre 1989 amounts? Apparently the United States Court of Appeals for the 2nd Circuit does. See FRANK V. ARRONSON at: http://laws.findlaw.com/2nd/969456.html.

I call on all the pros in the 403(B) community to request a Congressional clarification on this issue.

Joel L. Frank

Can the assets of a terminated Money Purchase Pension Plan be transferred to a defined benefit plan sponsored by the same employer?

My father passed away in 2001 and left three IRA's with 3 children as beneficiaries. As executor (and a child). I would like to do the following:

1) Create 3 sub-accounts for each of the IRA's with equal amounts. Each one titled "DEC John Doe, FBO Jane Doe". (or Jack Doe, or Jim Doe) assuming John Doe as the father and Jane Doe as one of the beneficiaries.

2) Each beneficiary then does a Trustee-to-Trustee Transfer to a new account with the same title.

3) Each beneficiary continues with the minimum withdrawal's using whatever rule is in place that day.

It appears to a Grey area reading all the posts, but right now, that's my plan.

What was allowable deductible contribution into an IRA in 1982?

Client maintains a unfunded welfare plan for payment of small medical and dental claim. Do the COBRA continuation requirements cause this plan to file a form 5500 if someone elects it? There are fewer than 100 employees in this situation.

If someone elects to take COBRA coverage, then the plan has now accepted contributons and thus becoming a "funded" plan, which requires a 5500 form. At least that's the way I read the 5500 instructions.

Anybody know a way out of this?

David:

I had a "bad" year, though I do have the "luxury" of some tax-free disability monies we live off of.

I made a $4000 traditional IRA contribution in Jan 2000 for year 2000.

My taxable AGI is just $7600, and with $23000+ itemized deduction (medical bills!), I owe no tax.

My wife and I have $16,000 each in traditional IRAs (including the $2K added last year).

My question: does it nake sense to take advantage of this year and:

1. recharacterize the year 2000 trad IRAs ($4000) to Roths?

2. convert the trad IRAs ($28000) to Roths and "pay the tax?"

I estimate this might make my tax refund of $600 become a tax bill of $1600; but $1000 out-of-pocket to shield $32,000 from taxes forever sound pretty good, do you think?

I just need some back-up...my wife says it sounds TOO good...

Rick

If an employer makes deposits of "more" than a what participant actually deferred, how do you correct that? Transfer to forfeiture account? Is this a correction under EPCRS?

Must employees of a company purchased by the plan sponsor during the current plan year be included in the determination of the Top Paid Group for the look-back year?

Is there any disadvantage to a plan sponsor to making the top-paid group election to determine HCEs? The only one I have been able to think of is that it introduces some additional complexity to the HCE determination, conceivably raising the chance of errors. Are there any other disdavantages?

I guess I wasn't thinking. Of course, at least in a 401(k) plan, whether or not the top-paid group election is helpful or harms the plan depends on the amounts the participants who would be changed from HCE to NHCE by the election are deferring. Anything else I should have thought of?

Do Viator Policies in a profit sharing plan meet the definition of "qualifying plan assets"? Are they an acceptable investment for a qualified (401 a) plan?

How is a SIMPLE-IRA plan terminated? What if it was not properly funded in the past and there have been no contributions for the past year or two? The employer set up a profit sharing plan for 2000 and did not contribute to SIMPLE. It is the employer's intent to make a profit sharing contribution for 2000. Any issues with that?

If a participant properly rolls over an amount well within 60 days, but the company receiving the rollover does not cash the check for 4 months because the company did not realize it was a check (evidently thought it was a receipt), is the rollover still proper (can the check be cashed now as part of a "60-day" rollover)?

A large plan recently recognized that it has 350 participant loans in default. Some defaults go back 4 years. None have been treated as a "deemed distribution" as of yet. Some of the defaults occurred because of employer payroll errors, such as the loan withholding from compensation was stopped prematurely, others due to confusion as to the proper handling of loans when a participant goes on disability, etc. The employer has made the decision to "clean up" the situation at this time and is looking for available alternatives. I know that the straight forward answer is to treat these outstanding loans as "deemed distributions." I have also heard of situations where the employer has made a "walk-in" CAP filing and has negotiated other possibilities. I am interested in whether any of the readers have had experience along these lines relative to a "walk-in" CAP in this situation. I would also be interested in learning of other solutions that employers may have used in this situation recognizing tht they may be on the more aggressive side.

A large plan recently recognized that it has 350 participant loans in default. Some defaults go back 4 years. None have been treated as a "deemed distribution" as of yet. Some of the defaults occurred because of employer payroll errors, such as the loan withholding from compensation was stopped prematurely, others due to confusion as to the proper handling of loans when a participant goes on disability, etc.The employer has made the decision to "clean up" the situation at this time and is looking for available alternatives. I know that the straight forward answer is to treat these outstanding loans as "deemed distributions." I have also heard of situations where the employer has made a "walk-in" CAP filing and has negotiated other possibilities. I am interested in whether any of the readers have had experience along these lines relative to a "walk-in" CAP in this situation. I would also be interested in learning of other solutions employers may have used in this situation regognizing that they may be on the more aggressive side.