The IRS has finally done something right. Under the new MRD rules there is no more worries about using recalculation. There are more generous MRD life expectancy tables. You can name a new beneficary after age 70 1/2 and not effect the payout rate. Of course only the IRS can simplify something and take a 108 pages to do so.

Participants in company Profit Sharing Plan with plan year end of June. Annual valuations. Terminated employees are paid their balance from the most recent valuation period. If earnings are due - a second check is issued. What happens if there is a net loss and the participant looks to be overpaid?

I and a friend(not related) are interested in purchasing real estate with our Roth IRA monies. How can we do this? Is there a fund manager that will handle these types of transactions. Any Help?

I have been participating in the 403b7 plan at work and am fully vested in my contributions and my employers. I also have a 403b7 plan from a prior job that I keep since I like the investment options, service etc. much better. I would like to move money (via trustee to trustee transfer) from my current plan to the old one. The current TPA (Fidelity) says that they have no restrictions on such a transfer but my employer doesn't allow it.

When I questioned the benefits office at my employer they said that I need to separate from service or die to get the money transferred. I told them that seemed unreasonable to move my money to an investment that I wanted.

Does the ERISA or any other federal guidlines give me the right to do this?

Thanks in advance for any help you can offer.

Joe Hoffman

Well, forget everything you know about MINIMUM REQUIRED DISTRIBUTIONS. The rules changed on Friday. The new Proposed Regs (available on http://www.irahelp.com and http://www.deathandtaxes.com) are VERY tax-payer friendly and MUCH simpler.

But all the books and software that address MRDs are obsolete.

Just when I was afraid (contemplating possible passage of Estate Tax repeal) that I'd have to get an HONEST job!!

John L. Olsen, CLU, ChFC

Are homeopathic treatments reimbursable/excludible from income under flex or 105(h) plans?

I cannot find them list in IRS Pub. 502.

Is there any way around having to add the DB employee benefit percentages to the DC EBARS for purposes of the average benefits percentage test component of the general test?

Assuming the DC plan does not have all rate groups at 70%, does the DB need to be added?

It appears to me that the DB does not needed to be added if the DC is tested on a contributions basis (1.410(B)-5(e)(3)), but must be added if the DC is cross tested. Correct?

To any of the DB people out there: Isn't this true with a DB general test as well-i.e. if the DB is tested on a benefits basis, the DC can be ignored?

What are the rules for timeliness of deposits of deferrals when an employer has multiple payrolls? For some employers, with weekly, bi-weekly and monthly payrolls, contributions may be coming in all the time. Some service providers record-keeping fees discourage sending in contributions that frequently. Has anyone heard the DOL's opinion on this?

For a discretionary match, if the employer wants a "tiered match" such as 100% for the first 3% deferred and 50% for the next 2% deferred, do you have to perform a benefits rights and features test for each level of match, or does the fact that all ellgible participants could have deferred 5% satisfy this test. If you are making the match after the end of the year, do you really have an "effective availability" problem?

As a follow up, how "loose" do you think you can be in the plan document regarding a discretionary match and still have a "definite predetermined formula"? If you are going to use a tiered match do you think that needs to be stated in the document?

I am employed by a small not for profit agency. Our 403b is with an insurance annuity to which both the employer and employee contribute. Our small nonprofit is merging with a larger nonprofit and we will be using the benefit package of the larger agency which uses a different financial services firm that brokers a different variable annuity and mutual funds. We are no longer allowed to contribute to the original variable annuity but those funds remain in that account. The period for surrender charges for that original annuity is about to expire so I could transfer those old monies without paying surrender charges. Given that the account contains monies from both the employer and the employee, what are my options? Must the money remain in that closed account as long as I work for the employer? Can I transfer the money to one of the new accounts contracted by my employer? Or best of all, can I transfer that money to any mutual fund I choose that accepts 403b7 custodial accounts?

Have a broker telling a client that they can take a plan distribution and have 60-days to return the funds to the account before it's really considered a taxable event. In other words, it's like a short-term loan, even though loans are prohibited. Is he really saying that under the rule of one rollover per year, he can take out the funds, apply the 20% automatic withholding, and return the full amount prior to the end of the 60-day period and have it qualify as the once-per-year rollover? Comments? Suggestions?

Client adopted a Jefferson-Pilot Standardized Prototype 401(k) in 1991. Plan year is June-May. Jefferson-Pilot ("JP") notified client it would no longer be sponsoring the plan. Somehow client wound up with Continental Benefit Administrators, Inc. ("CBA")in Atlanta. Client adopted CBA's prototype 401(k) plan in April of 1997 with the effective date of the amendment and restatement being June 1, 1996. JP's adoption agreement provided for joint & survivior annuities. CBA's adoption agreement provides that joint & survivor annuities are not allowed. This appears to be a 411(d)(6). Any ideas on how this might be remedied via Walk-In CAP?

The plan has failed 401(k) and (m) for 1995, 1996, and 1997 and no corrections have been made. There are also a number of defaulted loans and loans made in excess of statutory limits that have not been addressed in any manner. It appears that DOL audited the plan in 1997 and sent the trustee (who was also the sole shareholder of the corporation)a letter notifying him of violations of various provisions of ERISA. The letter mentioned that DOL would forward the case to the IRS. Trustee basically told DOL to get lost. No action since then from DOL or IRS. Surviving spouse (who inherited all of husband's stock) wants to get the plan cleaned up. Hence, the possibility of going Walk-In CAP to fix whatever can be fixed. Comments???? Thanks.

at last, I have put some custom reports on our web site

(LDA-FCPA.com) they are under custome reports, these are now as ready as I will ever be for 6.0

I offer no promises they will work in every case, but if they help then go for it.

There is a word file that briefly describes them as well, please download that one.

There are the ADP/ACP reports. they sort alphabetical, a column indicating if the ee is excluded from the ACP test and are in landscape.

the adprsult report will do the shift of unused deferrals.

and then the adpacpcr will indicate the corrections needed to pass a failed test. it shows the results using the pre SPJBA rules as proof, along with the actual refund. I had to 'fake' the system out to determine the refund using the shift, but instructions are on the adprsult report.

Please be careful. these reports replace Quantech's, so rename Qtech first.

there are some govt form reprots-

sched I, sched ssa, and a sched T (or at least a brave attempt at sched T.

always compare your results to other Qtechs available, etc.

There are a few allocation reports, and a 15% report that also checks for 415 limits.

There is also even an attempt at a 414(s) compensation test.

ok, maybe I missed a few odd categories that may show up on employees, but the reports seem to be working fairly well for my purposes. again, make sure you read the report notes file and rename the Qtech ADP report first. these will not work under custom reports.

any other comments you can e-mail me directly.

Hi,

I run a small company with three employees. Two of them are myself and my wife and third is a non-us citizen. We currently have a money purchase and profit sharing plan (25% contribution limit). We are not happy with the tax deduction we are getting. I was recommended to start a DB plan. With our ages of (42 and 39 respectively) and salary of $55000 for both of us, what is the maximum contribution I can make to a defined benefit plan on a tax-sheltered basis?

Would I be able to eliminate the non-US citizen employee from coverage to thsi plan?

Would by existing money purchase/profit sharing plans need to be terminated and rolled into IRAs.

Sampat

Is it possible to make an in-service withdrawal from a 457K plan to cover credit card debt or a home equity line of credit?

Can a withdrawal be made from a 457k plan?

I understand that a "hardship withdrawal" can be made, but that probably would not apply in this case. My friend has $45,000 of debt and wanted to have an in-service withdrawal from his 457k plan. Is there any way this can be done?

We have a 401(k) plan & a 403(B) plan. Going forward, we would just like to offer the 401(k) plan. With respect to eliminating the 403(B) plan, what are our options? Should we freeze it? Could we terminate it & pay out all individuals? Is ther new legislation that would allow participants to move their 403(B) dollars into their 401(k) accounts?

We have a 403(B) plan, a 401(k) plan & an integrated MP plan. We plan on eliminating the 403(B) plan, keeping the MP plan & amending the 401(k) into a safe harbor 401(k).

Could we structure the 401(k)match so that it meets the ACP safe harbor & then make the 3% non-elective contribution into the MP plan? If so, could the MP plan still be integrated?

On a calendar year plan a participant terminates with over a 1000 hours before the end of the plan year. The computational 12 month period for a year of service for vesting is the plan year. Does the participant receive another YOS for vesting? Somewhere I think I remember reading that the determination of Years of Service for vesting is made at the end of the computational period. What does that mean? If someone terminates before the end of the computational period, but with over 1000 hours, do they get another YOS or not?

The Pension Answer Book states that the 7th Circuit Court (Coleman v Interco) ruled that an employee would not receive credit for a YOS even though the employee worked over a 1000 hours because the employee terminated employment before the end of the 12 month period.

Our software gives everyone with at least 1000 hours another YOS for vesting, without regard to when they terminated, and that is how we have always administered plans.

Is anyone not crediting employees who terminate with at least 1000 hours with another year of service for vesting?

If a Roth contribution was made in April of 2000 for the year 2000, and then it turns out the AGI is too high to allow the contribution, can the $2000 contribution plus earnings be recharacterized as a traditional IRA and be transferred to an existing traditional IRA? There is no coverage under another retirement plan so there is no issue as to qualifying for a traditional IRA. It's the earnings I am wondering about.