Pretty straight forward question: Can a Non-qualified plan be amended and merged into a 401(k) Plan? I suspect not, but was hoping someone could confirm.

A US Employer sponsors a 401(k) Plan for its US employees. The Puerto Rico division of this company also sponsors a separate Plan for employees located there ("PR Plan").

It appears that Plan provisions are similar, if not identical. However, the big differences in the documents include a difference in the name of the employer (US Plan - ABC Company/PR Plan - ABC PR Company), the PR employer is organized under the laws of PR, and the PR Plan references the PR Internal Revenue Code.

The Plan names are identical. However, the PR Plan references salary reduction contributions as 165(e) contributions. The surronding language convinces me that this translates into 401(k) of the US Code.

The employer would like to merge these 2 plans into 1, presumably, merging the PR plan into the US Plan.

Can this be done? I thought that US Plans could not cover employees of companies located outside of the US. But is this really a non-US company? Also, is Puerto Rico a territory of the US or something similar to that in which they are considered US soil for these purposes?

Thanks for any comments!

When a participant terminates employment, how long does he have to repay an outstanding loan balance in full? We have been administering our Plan using 60 days from the termination date (and then the balance becomes a taxable distribution for the year), but are now being told 60 days is incorrect.

With regard to top hat plans, there are a couple of PLR's out there that state that a participant must make his deferral election by December 31 of the prior plan year in order to "satisfy the 401(k) cash availability rules."

what would happen if a person decided to enter the plan in the middle of the plan year without making the prior year election?

(1) Is the employee's life the measuring life for the straight life annuity referred to in 1.401(a)(4)-5(B) for payments to a beneficiary or alternate payee of a restricted employee? 1.401(a)(4)-12 states: "Straight life annuity means an annuity payable in equal installments for the life of the employee that terminates upon the employee's death."

(2) If the employee's life is the measuring life, do 401(a)(11) and 417 override 411(d)(2), and what is the employee's life expectancy after the employee's death?

(3) If the beneficiary's or alternate payee's life is the measuring life, does 401(a)(9) override 411(d)(2), and should the employee's life expectancy be used for a beneficiary that is not an individual?

What is the best way to correct a situation where excess contributions were not refunded (based on failure of ADP test) by the deadline (12/31 of year following the plan year in question) in a 401(k) plan?

In a cafeteria plan where the employer pays the full cost of the short and long-term disability benefits for employees, is there any way for the employees who become disabled to receive non-taxable benefits?

When a 401(k) Plan participant takes a hardship withdrawal, I know they are not allowed to contribute to the Plan for one year. After the year is up and they start contributing again, doesn't their con amount have to be limited in some way? And if this is true, where can I find it in the regs?

Company A buys Company B in October 1999.

Company A has a 401(k) Plan which allows an employee to enter the Plan on the date of hire. For the 2000 Plan Year, can we exclude all of Company B's employees from the ADP/ACP test on the basis of statutory exclusions since they worked for Company A for less than 1 year? Or do we have to use their original date of hire with Company B?

Note that company B's employees did not enter the Plan until January 1, 2000 since this was not a controlled group for the 1999 Plan Year. Prior to 2000, Company B had its own 401(k) Plan which is in the process of being terminated.

Any help would be appreciated.

Top Heavy 401k uses enhanced match (100% up to 4%) for Safe Harbor. (Yes, he should have used the non-elective safe harbor but there are still a few hard headed folks out there.) Plan also provides non-safe harbor fixed match of 50% up to 6%.

Since the fixed match is safe harbored from 401(m)testing, it appears that we can use the non-safe harbor match to satisfy (as much as possible) the top heavy minimum, provided it passes under 401(a)-4. Employer will then fund any unfulfilled top heavy minimums. Does anyone have any experience with something like this?

Does a group health plan have to pay the services of an interpreter at a doctor's office if a participant is deaf? Does anyone know if this is required by the ADA? If so, does anyone know how the reimbursement for these services is to be calculated: 100% or subject to the same copay rate as the doctor, etc.?

If a profit sharing plan chose to have QJSA as normal form of distribution and also allowed a lump sum, do the new 411(d)(6) regs allow the plan to eliminate the QJSA and offer only lump sum? Put another way, do the regs allow you only to eliminate "optional" forms of distribution, such that if your QJSA is the "normal" form, you have to keep it even though the plan would otherwise not be required?

I need info on Section 165 plans, the Puerto Rico version of a 401(k) plan. Any help would be appreciated.

Is there any problem if a defined contribution plan document reads that the DC plan will be reduced for the 415(e) limit and the plan document has not been amended to reflect the repeal of 415(e)?

(1) How do you define an Operational Failure? For example, assume you do an audit of plan loans and discover that a number of them are defective for reasons A, B, and C. Is this one Operational Failure or 3?

(2) Assume you have a single Operational Failure in 1997 that is obviously no longer within the 2 year significant failure correction period. By itself you have determined that this failure is insignificant. But assume you also have similar failures that occurred in 1999 and 2000, and that in the aggregate you have determined that all the failures are significant.

Can you treat the 1999 and 2000 failures separately from the 1997 failure? Ie, correct the 1999 and 2000 failures under SCP, leaving only the 1997 failure, which can now be corrected under APRSC as insignificant? Does this work or have you failed to fully correct since this is all one Operational Failure and you can't correct 1997 under SCP?

2000-17 says that in when determining whether failures are in the aggregate insignificant you ignore failures corrected under SCP.

Thanks for any thoughts.

card

Can a plan document be amended to change a profit sharing allocation formula during the plan year, or does the amendment need to be adopted prior to the beginning of the plan year for which the change will be effective?

I have a client who sponsors a DB/PS floor-offset plan. The DB portion has frozen accruals but contributions are still being made to the PS portion. The top-heavy minimum is being met in a stand-alone MP plan. Can the post-freeze PS contributions still be used to further offset the frozen accrued benefits on the DB side of the plan? This question was asked at the 1998(?) Enrolled Actuaries' Meeting and the IRS representative was non-commital. Has anyone heard anything more definitive since then?

How is ADP/ACP testing done after an APRSC correction in which the plan sponsor made correcting contributions for missed deferrals and match? Are the correcting contributions for missed deferrals treated as QNECs and the correcting contributions for match treated as QMACs? Is interest included in the correcting contributions ignored for purposes of the ADP and ACP tests?

I just encountered a strange conflict with a former insurance company.I retired from work in 1997 for health reasons and continued making monthly patments for the Cobra extension coverage with the same insurance company that I was covered with when I was still working.

After a few months, I qualifyed for SS disability and became eligible for medicare and, as I was instructed, imformed the insurance company I was now on medicare and stopped making payments for the Cobra coverage.

About two years ago I was involved in a serious car accident and was still covered by Cobra. So that information remained in the system.

Recently, I made an appointment with a surgeon I had never met, but another surgeon, who happen to have treated me in the past when I was recovering from the accident, stopped by and asked me a few questions.That was a $150 consult.

Later, I received a bill from my exsurgeon, and they brought up my records from the past and didn't bother to update the info. and sent the bill to my former insurance company. So I called the doctor's office and thought everything was updated. Then I just received a summary of the charges and my exinsurance company and, would you believe, the company processed the claim.

So I called the surgeon's office again and explained I am only on medicare, but the woman insisted that my exinsurance company and medicare are both listed as the primary insurers and I would have to clear that up by calling my former insurance company. Wouldn't you think an insurance company would have received a clear message, that I havn't sent any payments to them for about two years? Why in the world, would I have to clear up a problem, when I don't see any major problem?

Bruce

When an employee is pregnant, can withholding be done for the dependent care plan, or can it only be done once the child is born?