Plan sponsor started a cross-tested plan in August of 1996 and the document was drafted by maximizing the owners and minimizing the nhce's at 5.75%. Upon receiving the year-end census, it was determined that the hce's could hit their maximums and pass at 3% to NHCE's. This formula was utilized for 1996 & 1997. In 1998, the plan was transfered to a different tpa and when the 1998 calculation was being completed, it was determined that there was never an amendment done to the plan to change to the 3% level. What are the issues, options for resolution and potential results(penalties, fines or other) at this point?

Company A and Company B are going to form a joint venture into which both will contribute assets and employees. Rightly or wrongly, it has been determined that the same desk rule will apply. Company A has a profit sharing plan that includes a 401(k) element. Company A is considering a spin-off with respect to the employees that are being terminated and offered positions with the joint venture. What assets can be spun-off? The entire balance of participants accounts? Only the 401(k) portion that is covered by the same desk rule? Wouldn't you be violating the terms of the plan if you don't distribute the profit sharing portion because the employees have terminated employment?

Company A and Company B are going to form a joint venture into which both will contribute assets and employees. Rightly or wrongly, it has been determined that the same desk rule will apply. Company A has a profit sharing plan that includes a 401(k) element. Company A is considering a spin-off with respect to the employees that are being terminated and offered positions with the joint venture. What assets can be spun-off? The entire balance of participants accounts? Only the 401(k) portion that is covered by the same desk rule? Wouldn't you be violating the terms of the plan if you don't distribute the profit sharing portion because the employees have terminated employment?

Does anyone know what insurance companies are currently wrirting Group Executive Medical policies (Section 105(h)) plans?

Company intended to start a 401(k) plan on 1/1/00. It got around to signing the plan document on 2/15/00. Election forms were distributed to eligible employees on 1/17 and all employees enrolled by 1/31. The first deposit into the 401(k) plan was on 2/15 and it supposedly consisted of deductions from 1/1 to 1/31.

The deferrals for January seem wrong because the plan document was not executed at the time that that compensation was earned. Some of the January deferrals seem wrong too because they were retroactive to the beginning of the month on compensation that was earned before an election form was signed. Isn’t that wrong?! What Code or regulation sections were violated?

Have learned that a participant has rolled money from a 401(k) plan to a Roth IRA.

What are the consequences or items that need attention for the trustee, plan administrator, and former participant?

20% withholding was not done.

Thanks.

What are the consequences (deemed distribution and/or plan disqualification and/or ?) of a more than 10% partner receiving a loan from the partnership's Profit Sharing Plan?

Is there any corrective remedy available under EPCRS?

Thanks for any and all responses.

Is there any instance where where a reversion of plan assets to the employer would not constitute a violation of Sec. 4980 (or prohibited transaction)? Client claims overfunding on a money purchase/profit-sharing -

I actually have a plan in which the following might occur for the year 2001. well, some of us actually do look ahead in the planning stage to see what might happen.

Plan is a SARSEP.

ee makes 15%, plan is integrated.

so I figure 415 limit is

for the owner

lesser of

15% * 170,000 = 25,500

or 30,000 - (80,400 * 5.7%) = 25417.20

correct?

if ee defers 10,500 then if contribution was 6% + 5,7% in excess, ee gets capped at the lower figure?

I need information/laws dealing with controlled groups and their coverage in a group health insurance plan.

For corporations, the 25% rule is the maximum overall plan participation for key employees.

My question is, on the C-corp are the family members of the key employees also part of the 25% for the company pretax?

We do our coding here at ADP as owner/key as follows: XN11P

Would we code the children and spouse the same?

A company has a self-funded insurance plan with annual premiums of $108,000 and annual administrative expenses of $60,000. The plan has received reimbursement of claims from secondary insurance and doesn't know how to treat these funds. Can the plan keep these reimbursements to cover future medical claims? Or does the plan have to refund the money to the company?

Profit Sharing Plan participant begins taking substantially equal periodic payments at age 54. Participant becomes disabled at age 57.

Due to disability, can participant modify the substantially equal period payments without invoking 10% early withdrawal penalty?

Note: This is prior to the later of 5 years from date of first equal payments or age 59 1/2.

I need help on distribution codes on Form 1099R's. What date is used to determine the distribution code, the distribution date or the date the participant separated from service. This is regarding to the additional 10% tax that is imposed by IRC 72(t). IRC Section 402(a) stated that distributions are taxed in the distributing year while 72(t) talked about when distribution is excluded from additional 10% tax.

We have taken over a case where an ESOP has been used as part of a floor offset with a DB. I know that this can cause a prohibited transaction because the ESOP is no longer considered an individual account plan and therefore is subject to the 10% limit on Employer Securities. If we rescind the floor offset amendment in 2000 to correct the prohibited transaction, do you think the prior DB valuations would be effected? Or could they stand as is, since the offset was not really a problem?

Employer adopted a profit sharing plan in 1986. The plan is a standard prototype. Employer failed to include one of its employees (that we know of) since the inception of the plan. We intend to file under SVP. 2 questions arise immediately:

1. Employer's CPA is convinced that since payroll records must only be kept for 7 years that the correction can be made just for 7 years. The employer actually does have records back to 1986. I find no basis for the CPA's position. Notice 2000-16 is clear that correction must be made for all taxable years. Am I missing something?

2. The employer omitted the employee because the employer felt that it could exclude all employees that did not average 32 hours/week. My concern is that there are others that were excluded and the employer is not telling us. I have never filed under SVP, VCR, etc. The submission requirements require that we explain how the faile arose, procedures in effect at the time etc. Is the IRS likely to see this as a red flag and audit the entire plan once the SVP is over?

May a foreign government, or an agency of that government, establish a 401(k) plan for its USC employees in the US as well as its resident alien employees in the US (resident aliens are subject to US taxation)?

I see nothing in the Code or regs to prohibit this.

I have a defined contribution plan. The plan document set vesting for both a top-heavy plan year and a non-top-heavy plan year at a 6-year graded schedule (2-20%). Prior to taking over this plan, the document was amended to change the non-top-heavy vesting schedule to 1 year of service = 50%, 2 years of service = 100%. The Plan was not amended to change the top-heavy vesting schedule. The plan has been top-heavy for the past few years. Since the participant's vesting percentage would decrease under the top-heavy schedule, can I rely on "protection rules" to apply the greater vesting percentages under the amended non-top-heavy vesting schedule? In other words, is it necessary to amend the plan to allow for a vesting schedule which is at least as fast as the non-top-heavy schedule?

A plan passes both the ADP and ACP test using the alternative, +2 x2, method. It then fails multiple use. If 1.0% was borrowed from the ADP of the HCEs and NHCEs and used in the ACP test the ADP test would still pass and the ACP test would pass using the basic, 1.25%, method. Multiple Use would not be necessary. What wording or code references must be in the Plan Document to allow borrowing?

It was just discovered that a 403(B) participant over contributed $500 for 1999 (deferred $10,500 vs. $10,000) and the plan is refunding the $500 in December of 2000 (under APRSC). My understanding is that the participant will be taxed twice on this over contribution--once in 1999 (year of deferral) and again in 2000 (year of distribution).

My questions are these: 1)Is this excess deferral subject to an excise tax? Would a Form 5330 need to be filed? If so, would it be filed by the participant or by the employer? 2)Are related earning also required to be refunded? If yes, only taxable in the year of distribution?

Any comments would be appreciated.

Thanks,

Diane