I have a plan with a 401(k) piece - no eligibility, immediate entry. It also has a match and profit sharing piece with 1 year, age 21, dual entry. I want to set up 2 different plans, one for 4k and one for match/PS (due to the different entry dates). If I do this, how do I test ADP/ACP? The ADP test will have more participants than the ACP. Would I have to manually calculate the multiple use test if needed? Would there be a more efficient way of testing the plan? Let me know if you need further clarification.

Thanks for all information!

A retired participant in a DB plan is entitled to receive a monthly life annuity in the amount of his 415 limit. He started receiving payments a couple of years ago, but the amount paid was only half of the correct amount. How does the plan sponsor make this right? Pay the shortfall brought forward with interest based on the plan actuarial eq. definition? If so, is there any 415 concern in the current year when distributing the 415 limit plus the "make-up" amount?

Say you have 3 affiliated corporations (A, B, and C) which are considered as being within a control group under the IRS Code. They are located in separate states and maintain separate health plans. Corporations B and C file for bankruptcy and the health plans are canceled. Can the employees of the now defunct companies B and C demand Cobra coverage from company A's health plan (assuming that health plan provides coverage in the employee's state of residence)?

The IRS cobra regulations (Sec. 54.4980B-2) define an employer as a person for whom services are performed or any other person that is a member of a group defined in Section 414 of the IRS Code (i.e., a control group). This would seem to indicate that, for purposes of Cobra, company A could be considered as an employer of employees of companies B and C. Am I reading this section wrong? Does it apply only for purposes of counting the number of employees a particular company has to determine whether it is subject to federal Cobra, or does it mean that a control group company is obligated to offer cobra to employees of its affiliated companies?

An old, bearded shepherd, with a crooked staff, walks up to a stone pulpit and says . . .

And lo it came to pass that the trader by the name of Abraham Com did take unto himself a young wife by the name of Dot. And Dot Com was a comely woman, broad of shoulder and long of leg. Indeed, she had been called Amazon Dot Com. And she said unto Abraham, her husband, "Why doth thou travel far, from town to town, with thy goods when thou can trade without ever leaving thy tent?"

And Abraham did look at her as though she were several saddle bags short of a camel load, but simply said, "How, Dear?"

And Dot replied, "I will place drums in all the towns and drums in between to send messages saying what you have for sale and they will reply telling you which hath the best price. And the sale can be made on the drums and delivery made by Uriah's Pony Stable (UPS)".

Abraham thought long and decided he would let Dot have her way with the drums.

And the drums rang out and were an immediate success. Abraham sold all the goods he had, at the top price, without ever moving from his tent. But his success did arouse envy. A man named Maccabia did secrete himself inside Abraham's drum and was accused of insider trading. And the young man did take to Dot Com's trading as doth the greedy horsefly take to camel dung. They were called Nomadic Ecclesiastical Rich Dominican Siderites, or NERDS for short.

And lo the land was so feverish with joy at the new riches and the deafening sound of drums, that no one noticed that the real riches were going to the drum maker, one Brother William of Gates, who bought up every drum company in the land. And indeed did insist on making drums that would only work if you bought Brother Gates' drumsticks.

And Dot did say, "Oh, Abraham, what we have started is being taken over by others". And as Abraham looked out over the Bay of Ezekiel, or as it came to be known, "eBay", he said, "We need a name of a service that reflects what we are". And Dot replied, "Young Ambitious Hebrew Owner Operators".

"Whoopee!", said Abraham. "No, YAHOO!", said Dot Com.

I have a client who maintains a self-funded insurance plan. The plan year is a June 1 to May 31. The corporations taxable year is the calendar year. The partner that I work for has, for other clients, had the client prepay 30-35% of the next year's premium during the current year, and treat that payment as an expense on the current year corporate tax return. However, he is unsure as to whether or not this practice would work if the corporate year and plan year do not coincide.

I have no idea if this question makes any sense, but if it does to someone, your comments would be appreicated. Thanks.

I just want some opinions on what you would do. I am a TPA and a Broker I carry E&O insurance through my Broker/Dealer for the securities side, but I have no E&O for my TPA side. I am about to ghost (subcontract) my TPA business out (24 plans) but my clients will not be aware of this arrangement. I have never carried E&O for the TPA side. Part of me says to keep the two buisnesses separate and if I ever do have a claim to just kill the TPA company, because there really isn't that much income there, plus I should have some leverage with the fact that I am not doing the work. I know the client would sue me and I would have to sue the ghost. I am already spending maintenance money on Admin and Document software that I am reluctent to give up, just incase this ghost relationship doesnt work out.

In addition, I am a licensed insurance agent and I do not trust insurance companies, I have seen to many of them screw people on health claims and I wonder if the loopholes aren't so vast in these policies that one might be paying for nothing but air.

I am a TPA and I am in search of a retirement plan newsletter that I could forward to my plan sponsors. I had been using Benefits Bulletin that was published by Corbel. However, they are discontinuing this service. I liked the format they used as it avoided heavy use of technical cites and industry jargon. This particular publication covered recent RP developments, law changes, etc. The firm I work for is not large enough to be able to draft and publish such a newsletter economically. But, I would like to be able to continue to provide my clients with useful information.

Does anyone have a suggestion? Thank you in advance.

I thought there would be an exception for DB plans where employer only employs HCE's for 401(a)(26) purposes much like for 410(B) purposes. I cannot find any exception in the statute or reg. If there are only 4 employees and only one wants to participate, it appears that you have to cover two to meet the 40% rule.

Does anyone have a cite for an exception?

I have a participant whose 2000 required minimum distribution is only $7.79. Does anyone know if there is an exception to the minimum distribution rules if the amount falls below a certain level?

We have a client who has a 401k plan which runs 6/1 - 5/31. The plan document calls for a discretionary match. Historically each month the employer puts in a 50% match up to 6% of deferrals. The participants receive quarterly statements showing the match allocation. The employer also prepared a simple participant handout outlining the plan which states the match will be 50% up to 6% of deferrals.

The client now has a cash flow problem and wants to discontinue the match. Since the document says the match is discretionary, can he stop the match retroactive back to 9/1/00? The last participant statements prepared were dated 8/31/00. Or should the client give the participants a notice saying the match will be stopped as of 1/1/01? The client has already deposited match money into the plan for September, October, and November. Could this be used as part of the Top Heavy contribution due for 5/31/01?

Two criteria were just noted to me about opening a Roth IRA that I wasn't aware of..... One was that you may not have a "regular" IRA already.....the other was that you must have below a certain income level. I will read other threads re: maximum income level to see if I understand that correctly (based AGI?), but as to the other existing IRA(s) -- is it correct that you may not have another and still open a Roth? Thank you!

I also posted this on the correction board, but I wanted to hear if any 401(k) experts had an opinion.

Several of our accounts that are going to elect safe harbor status did not provide the required notice within the 30 day period prior to the first day of the plan year as required by the IRS. Can they correct this under APRSC by providing the notice now as long as the employees all get to make the maximum amount of deferrals and receive the maximum employer contributions that they would have had the defect not occurred? If we say that it is an operational defect, APRSC has to be available, doesn't it?

Another employer was safe harbor last year and wants to continue but they didn't send out the annual notice within the 30 day period either. Can this be corrected? If not, is the result that they have to ADP/ACP test or does the fact that their plan document says that they are safe harbor mean that they have bigger problems that have to be corrected under one of the IRS correction systems?

What is the proper terminology to be used in the financial statements of a city government defined benefit pension plan? According to the Government Accounting Standards Board

this should be a "Statement of Net Assets" and "Statement of

Changes in Net Assets". However, I have read in other accounting literature that this should be a "Statement of Financial Status" and a Statement of Changes in Financial Status". This assumes that the City does not include the Plan in its own financial statements. Does anyone have any

views as to what is the correct or preferred manner of presentation?

A plan sponsor leveraged an ESOP with a loan of less than 10 years. The loan amortization schedule was based on variable payments of fixed principal plus interest. The plan released shares based on the principal only method. Therefore, each year the same number of shares were released from suspense as the loan was repaid. No problem so far. However, the plan sponsor then financed an additional purchase of shares with a loan of greater than 10 years. This loan was to be amortized in a normal fashion (i.e., equal payments consisting of varying principal and interest amounts -- like a mortgage). However, the plan and the plan sponsor treated the new loan like the prior loan. The plan sponsor paid the loan using a fixed principal and interest amortization (paying too much each payment) and the plan released the shares using the principal only method. If the plan sponsor had paid the correct loan amount using the normal amortization the release would have been correct since the loan was to provide for equal payments consisting of principal and interest. What issues does this raise? Is there a pt for not following the terms of the exempt loan? If so, can the lender (a related party) remit the overpayment to the plan which would then remit it back to the plan sponsor to cure the pt? Are there potential operational defects? Could the plan be submitted under an IRS correction program? Or, is there a prepayment of the loan (which the loan documents provide for without penalty) and, thus, more shares should be released and allocated (thus resulting in a greater accounting expense to the plan sponsor)? Any thoughts?

This may be a dumb question, but I'm having a brain cramp.

If the profit sharing portion of a 401(k)/ps combination plan is cross tested for (a)(4) purposes, and it excludes "otherwise excludable employees" (minimum age/service) for ADP testing, does this require the same treatment for cross testing (i.e. excludable HCE's in the (a)(4) test but excludable NHCE's out)?

Does anyone have a sample 402h notice?

I'm an employee of a privately held national company that has an ESOP. Since I've been with the company (1987) the stock per share value has remained an even $100.00. On this years statement the value has been cut over 80%. I nearly passed out when I saw this. We are not a Dot-com and have been around over a hundred years. How can an employee such as myself verify that the company isn't playing with the numbers in order to balance their books and/or what recourse do I have. Employees do not have voting rights and to my knowledge there is no employee at large. Am I screwed? Thanks

What are the trustee's responsibilities or duties, if any, when assets of a pension plan are insufficient to pay the benefits upon plan termination? The employer of the pension plan is a professional service company, therefore, the plan is not governed by the PBGC.

Given: A stste retirement system is excluded from Soc. Sec. coverage. In general, the state system defined benefit formula meets the IRS "safe harbor" test for exclusion from Soc.Sec. coverage. However, for some individuals, the state formula falls short of the "safe harbor" test. What is the Soc. Sec. status of such individuals?

I have a PEO who has a participating employer, who is a 50% owner AND is the only employee who actually deferred dollars for the year. (Plan was offered to all and there are other ee's eliglbe but all elected out) Is there anyway possible for employer to pass ADP/ACP putting in the maximum $10,500?? The plan document was not amended for safe harbor.

Help!!!!