I am reviewing a plan that wishes to use their matching contributions to help satisfy their Top-Heavy minimum. The plan is a non-standardized prototype and the matching is discretionary. I realize that the matching can no longer be used in the ADP or ACP test for the non-keys which will most likely cause a problem passing the discrimination test. Can anyone think of other pitfalls or hidden catches that may hurt this client if they do in fact use the matching to help satisfy the Top-Heavy Minimum?

When you offer a cash incentive to opt-out of health insurance...if you roll the cash amount into the employees 401k or flexible spending account, would you still need to have a cafeteria plan in place or is a flexible spending account sufficient to handle that form of cash incentive?" The other side of the coin is "what if you give cash back directly to the employee" does a cafeteria plan need to be in place?

Is there a limit (% of assets) that a plan sponsor can pass through to ESOP participants for administrative fees? It appears that our plan was charged 5% of plan assets!!

Any help would be appreciated.

Thanks

What action should be taken to terminate a SEP?

Recently, we've had a small Money Purchase Plan dropped in our laps. As we cannot ignore this any more, we must give the client some advice. I am not at all familiar with the correction programs and would appreciate any guidance.

Client did not fully fund the plan in 1997, 1998 and 1999. A 5500 for 1999 was not filed. A 5500 for 1998 was prepared after IRS inquiry (5500 noted the funding deficiency). Client says a 1997 5500 was prepared, but cannot produce a copy.

Any suggestions? (Besides running far, far away, very quickly-we've fired this client once already).

Thank you.

Is there a limit (other than annual additions) to voluntary after-tax contributions to a 401(a) plan?

If I turn 60 while I am enrolled in the initial 18 months of Cobra, am I eligible to continue this coverage past the 18 months, until I reach Medicare age?

Is this a state-to-state issue. We live in IL. Thanks.

Does a 457(f) plan need to file an annual return on IRS Form 5500 or just a DOL top-hat filing, if appropriate. I think 457(B) plans don't need to file 5500s, but not sure. Any thoughts and cites? Thanks. Ed

If the parent of a 5% owner becomes a plan participant at age 74 and is immediately 100% vested, when must the plan make the first required minimum distribution? For example, participation begins on 12/1/98 and the participant has an account balance as of 11/30/99. Is the first distribution made by 12/31/00 or 4/1/01?

Employees contributed to two dependent care plans (de-merged companies whose payroll systems don't talk to each other) during 2000. Now, there is the possibility of an overcontribution beyond the $5000 annual limit.

I realize the employee is responsible for monitoring this, but, in case they don't, what are the penalties (if any) that the IRS would impose or what are the other tax liabilities to the employees?

As a Goverment Employee, I have a 401k plan called the TSP. And shortly, there will be no maximum limit (other than the Federal limit of $10,500). Therefore my contributions are not taxed until I withdraw the contributions when I retire.

My question is, due to all the taxable income I'll receive when I retire - a military pension, social security benefits, civilian retirement pension and 401k distribution, I believe that I'll be in the same tax rate when I retire as I am now, so why should I open a Roth? Then I'll be contributing both to the 401k (pre-tax) and a Roth IRA (after-tax).

I'm considering opening a Roth but I like not paying the tax on the contributions to my TSP. So should I even bother opening the Roth and just keep making all the contributions to my TSP?

I figure I'm probably going to pay the same amount of tax either today on the Roth or 20 years from now on my 401k plan.

I'm just trying to get some alternate points of view that maybe I'm not seeing.

Thanks!

Looking for some advice here... XYZ client has a 401(k) Plan that contains after tax contributions. Recordkeeper B takes the plan over from prior recordkeeper A. The client nor the prior recordkeeper (no longer in business) cannot provide data that separating the amount of after-tax contributions from earnings prior to recordkeeper B taking the plan over. Because of this, distributions from the after-tax source cannot be processed as the cost basis is unknown.

What options does the client have in this situation? Since the required data isn't available to correctly determine the taxable and non-taxable amounts, are after-tax monies distributed 100% taxable? Are there any other options?

Have very few Plans which allow after tax contributions and would appreciate any assistance.

It is my understanding that after tax (voluntary nondeductible) contributions may be made either via payroll withholding or by an employee writing a personal check to the Plan. Furthermore, Plan contributions made within 30 days of the due date of the Employers tax return (+ extensions) may be treated as annual additions for the prior Plan Year.

Is there a deadline for making an after tax contribution for them to be considered as the prior year's contribution for ACP and 415 testing?

A non-HCE would now like to make an after tax contribution for PYE 12/31/2000 to avoid 415 problems in 2001. (10% deferral, 10% after tax, + match and p/s) May he do so and would that help the 2000 ACP test?

PPD Plan Document allows after tax contributins but appears silent re: timing of contributions (except those withheld from pay: administratively reasonable period after withholding ...)

I currently have a Roth IRA with a brokerage company. I am dissatisfied with the way the company handles my account and would like to terminate with them. How can I "take control" of the mutual fund stock in my account?

A plan provides that a lump sum is paid based on the PBGC male rates and factors as of 1/1 of a plan year.

With respect to mortality rates, some may say this means UP 84 + 1. However, PBGC rates include a unisex UP84 table with no age adjustment. So where does the rational to use UP84+1 for males come from? If anyone knows this. Otherwise I might argue to use the GAM83 PBGC table (Table 1, Appendix A, Part 4044 of ERISA).

Thanks, Gary

POP Plan provides that an employee will be eligible as soon as they are eligible for health benefits. The employer has a substantial number of 20-25 hour per week employees who will never meet the 30 hour requirement for coverage under an insured plan. Most of these employees would not be excludable under 410(B) coverage testing Would these individual have to be included in a 125 eligiblity test?

Could you simply design the Plan to provide for eligibility at the first day of hire? It seems silly to provide for participation in a 125 Plan if the employee can never qualify for non-taxable benefits under the plan.

I have a client that has recently discovered that his office manger has embezzled company funds. This client maintains both a Money Purchase Pension Plan and a Profit Sharing Plan for his employees. This employee is a participant in both plans and is currently 60% vested in both account balances. Can the client use the vested balances in the plans to "offset" the total amount that was embezzled? My initial thought is that the vested portion is the employees, regardless of criminal misconduct. Have any of you ever had this situation arise and what advise did you give the client?

I've been asked for advice on the following situation.

An IRA owner under 59 1/2 begins receiving equal periodic payments when the account value is $1,000,000. He receives two or three years of payments under the amortization method.

Through poor investing, he drives the account value down to $80,000. If he takes this year's payment, the account will zero out.

Next year, there's no money to take his required payment. Is this a modification subject to recapture?

In the state of Pennsylvania a law was enacted in 1975 making newborn coverage mandatory for the first 31 days of life. Can any one tell me if Coordination of Benefits would start on the 32 day or immediately within that 31 days. I have a newborn that we are unable do determine which carrier is primary due to this law.

For those of you that offer a stock brokerage window in your qualified plan, are there any specific 5500 reporting requirements to report either summary or detail balances of each stock held? A stock brokerage window allows participants to pick and choose specific stocks they want held within their qualified plan. I would like to know to what extent the reporting requirments are. Is a one line summary total required or does it get so ugly that individual stock values must be reported?