Employer with ERISA-covered 403(B) plan wants to set up cross tested profit sharing plan. The 403(B) had both employer money and employee deferrals. Still has 403(B) deferrals.

For the average benefits test component of the 401(a)(4) test, do the employee deferrals need to be included?

Would the answer be different if the 403(B) plan were non-ERISA employee deferrals only (on the basis that it was sponsored by the employee, not the employer?)

POSTSCRIPT:

I think I found the answer, which is tht the 403(B) is not aggregated with the 401(a) plan under any circumstances for purposes of testing the 401(a) plan.

My daughter (4 yrs old) was the beneficiary of my deceased Aunt's Pension plan, in the form of a lump sum check written directly to her. I've received no 1099-R from the administrator of the pension plan. My question is simply - is the beneficiary of a pension plan liable for taxes on the principle amount if paid as a lump sum at the time of death? (Seems like this must happen all the time, right?)

I have three questions concerning the top paid group election:

1) In the case of an employer with more than one plan, must the employer use the top paid group election for both plans?

2) Does the employer use the totals of employees participating in both plans combined when determining who is in the top 20%? In this case, no one who participates in plan A is a participant in Plan B and vice versa.

3) For the employees with less than 6 months of service, is that 6 months of service for the lookback year or total service?

I would appreciate assistance on any one of these points.

Anyone have any ideas as to what to include in an interim valuation procedure? Profit sharing plan has an Anniversary date of 9/30. Participant(HCE) terminated employment as of 9/30. Participant wants distribution of her account as soon as possible. Value of participant's account now is about 70% of what the value was on 9/30. I think there is a recent case regarding plan trustee's obligation to do an interim valuation in such a case. I need to draft the interim valuation procedure such that discrimination will not be an issue(e.g., later on, if DOW goes up, a terminated participant could get account valued under the interim valuation procedure to the detriment of remaining plan participants). Initial thought is to tie it to fluctuations in the DOW and have it apply to all distributions without pegging it to distributions of a certain size. I understand that the interim valuation procedure can cut both ways. I appreciate any comments... Thanks.

Our client sponsors a DBP for employees under two different collective bargaining agreements. All requirements are met for treating each unit as a separate plan under 410(B).

In determining whether or not a partial termination has occurred, do you look at the entire participant population (both unions) or only the one union population that is experiencing the layoffs and ultimate closing? In other words, to determine a significant percentage, is the denominator the total participants, or the number in the affected portion, which is treated as a separate plan under 410(B)?

What have employers who switch to PTO programs done with employees' accrued sick leave? Converted to PTO in some ratio -- if so what ratio? Or, has sick leave been grandfathered and left on books?

How is the value calculated on a Defined Benefit Plan in a divorce action? Are Health, medical, benefits figured in to it?

I have a question regarding the benefit limits for contributing to a Roth IRA. I converted my IRA to a Roth a couple of years ago, just when the Roth started up. I have $10,868 per year added to my income, to pay for the taxes due on the conversion. I just contributed $2000 for last year, plus another $2000 for 2001. I then remembered that there is a limit of $95000 - $105000 for contributing (i'm single). My initial tax calculations shows an AGI of about $104000 for 2000. If I take out the $10,868 from the conversion, I'll be under the $95,000 limit. I seem to remember some talk about ignoring this when calculating the contribution limits. Is this true? An I OK, or do I have to back out this contribution?

On a related note, suppose I need to back out this year's contribution, the one for 2001? How easy would this be? I suppose I would need to contact Fidelity on this, But I know there is a procedure to back out these contributions. I'm just wondering how easy this is. Are there any penalties involved?

If an IRA owner makes a year 2000 excess contribution to his IRA this year (2001) , what is the deadline for removal?

According to my colleague, the deadline for removing this contribution is April 15 year 2002. However, I have been told differently.

My colleague cites IRC Section 408(d)(4) which states that the taxpayer has until the tax filing deadline for the year IN WHICH ("paid during the taxable year" /"for such taxable year") the excess was made, and not the year FOR WHICH it was made, to make a correcting distribution.

However, when I contacted a very reputable pension institution, they referred to IRC 219(f)(3), which states that the contribution is "deemed " to be made FOR the year for which it is designated. When challenged my colleague stated that 219(f)(3) only relate to the issue of the timing of purposes of taking a deduction for the contribution. My colleague states that a very reputable individual who authors books on the subject and has several qualifications, in addition to being an ERISA attorney backs her response.

Apologies in advance if this has been covered.

I have a (very) small traditional (rollover) IRA account. My past employer created a retirement account for me, when I left they required that I roll it over or take it as income.

I would like to open a ROTH IRA and make a maximum contribution for tax year 2000 (before 4/15/2001). I would also like to convert the above mentioned traditional IRA into the same account. My discount broker seems to think it's no problem. I seem qualified, my AGI is below $95K (I'm single).

1. Does the conversion affect the allowable contribution amount for 2000? for 2001?

2. Do I handle the contribution on my taxes for 2000 and the conversion on my taxes for 2001?

Thanks in advance,

Anna

A plan participant is building house that will become the participant's principal residence, and would like a plan loan with a term greater than 5 years.

Is using plan loan proceeds to pay costs of constructing a primary residence the use of a loan to "acquire" a primary residence within the meaning of section 72(p), such that the loan term may exceed 5 years? What authority supports the answer to the preceding question?

There are two companies: A C-Corp with two owners and an S-Corp with the same two owners. Both owners are 2% shareholders in the S-Corp as well as employees in the C-Corp.

1. Can either owner participate in the C-Corp cafeteria plan if the companies have seperate plans?

2. Can either owner participate in the cafeteria plan if the two companies jointly sponsor a cafeteria plan?

Thanks.

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?