Can I calculate a RMD for a participant in a DC plan, using the single life method if I have not received the election form back from the participant specifying which calculation method to use. This plan does not allow for a joint and survivor annuity form of payment. My concern is to get a number to the plan sponsor today or tomorrow so the distribution can by made by 12/31. Any cites?

Thanks

Season's Greetings!

I have two questions regarding the so-called "ESOP Notes."

1. I understand that the ESOP Notes carry a floating interest rate; this should protect the note holder against interest rate risk. Is my understanding correct? [if the rate were fixed, given that the notes have a 60 year maturity, the interest rate risk would be huge.]

2. It seems that Ford Motor Credit, GE Capital, ITT Financial and others offer ESOP notes. However, at least these three companies make no mention whatsoever of ESOP notes on their web sites. Where can I find more information on the practical aspects of buying ESOP notes with the proceeds of an ESOP stock sale?

Thank you in advance for your help.

Vladimir M

A 401(k) Plan document requires that Plan loans be issued at an interest rate Prime plus two percent. The new Plan Trustee issued Plan loans at an interest rate equal to prime. Upon discovering the error, the Plan loans were reamortized using the correct interest rate and the Plan's participants were asked to pay the back interest based on the Plan's required rate. One Participant refuses to pay the back interest ($24.00) claiming that it was the Trustees error and they should pay the back interest.

What would be the result if:

The Trustee did pay the back interest?

Nothing was done to collect the back interest but all future payments used the correct rate?

Is there any way to force the Participant to pay the back interest ?

A plan began as an ESOP with most of its assets in employer stock. Over time, however, the plan has come to hold about 50% of its assets in employer stock, and 50% of its assets in unrelated investments.

Is this plan still an ESOP? If it's not an ESOP, do ERISA's diversification rules apply to all the assets in the plan's trust, such that with respect to the 50% of the assets that remain in employer stock, the plan may now fail to satisfy ERISA's diversification requirements?

Can parents gift their Roth IRA to a child? For instance, can both parents and the child open a Roth for $2,000 each, then after 5 years remove the $6,000 basis to pay tuition costs and gift the interest remainder to the child for his retirement? If so, what are the tax implications of doing so?

Would a forfeiture reallocation to participants result in different amounts when allocated on 1/10/01 or 6/10/01?

Thank you for your insights.

Charles

Can prior year ADP testing be used for SARSEP plans?

Since retirement services providers are now taking "paperless" distribution requests directly from married participants, how are providers ensuring that QJSA waiting period rules are being adhered to?

I have not ever done this before, so I am a little apprehensive about it. In a small cross tested plan one of the young NHCEs that is needed to pass a4 has terminated before becoming eligible. If the employer allocates 3% to all eligibles in the NHCE class, the plan will fail a4. Can the employer make a corrective amendment to give a 3% contribution to a named ineligible employee? The plan will pass if this person also gets a 3% contribution.

If this works, can the same approach be used to pass ADP/ACP test? That is, pick one or two terminated employees, and amend the plan to give them a QNEC in an amount necessary to pass ADP testing.

Can 403b deferrals be made from income received in the final year of service that was derived from annual leave earned throughout all years of service? Is this income included in total compensation amounts used to determine catch-up limits?"

Can anyone point me to a site or source that shows what States have opted out of Social Security other than Illinois and Texas?

Is a qualified plan direct rollover distribution check dated over 60 days payable to the new IRA trustee (not the particpant), still qualify for a tax free rollover?

Anyone know where I can obtain 2000 cov comp table?

Thank you, gary

A plan provides that NRD is 65 and 5 yrs participation.

It also provides that if you retire at age 65 you get your full pension.

However, if you terminate prior to age 65, then you can get your full pension at your SSRA. That is you would receive a reduced pension at age 65.

Has anyone seen anything like this and does anyone know where in IRC that such a provision is allowed?

thank you, gary

A plan allows hardship distributions of employee money only. A new TPA inadvertantly lets a few employees receive hardship distributions from both employer and employee money.

(1) To correct this I understand that the plan can either (a) use walk-in cap and retroactively amend the plan to allow the withdrawals (the er doesn't like this option) or (B) collect the distribution from the employee. Are there other options that have been blessed by the IRS?

(2) If the employee won't or can't pay, must the employer recontribute the distribution to the employee's account --giving the employee a windfall?

(3) Finally, if the plan actually allowed hardship withdrawals from both er and ee money, wouldn't the employer be obligated to withhold 20% on the er money (unless it was rolled over) and 10% of the ee $ since 401(k) deferrals are not rollover eligible (unless the employee returned a form W-4P).

Thank you for your help!

Client is considering adopting a new 401(k) Plan for 2001 (no existing or prior plan) and may need to go "safe-harbor" (i.e., 10 ees - at least half of whom will be HCEs). Ideally, the decision would have been made 60 days ago and the safe-harbor notice distributed by 12/01/00. However....

Am I correct in my understanding that, if the 401(k) Plan is to operate under the "safe-harbor" provisions, it cannot be made effective until at least 30 days following distribution of the safe-harbor notice, resulting in a short plan year?

Could the Plan be made effective 01/01/01 (so the Plan could use full calendar year compensation), with salary deferrals not starting until 30 days from the date of the safe-harbor notice - or is this too logical to be legal?!

I heard a rumor that for year 2000 .... an employee's $10,500 elective deferral does not have to be included in the "Section 415 annual addition limit of $30,000"... Thus, an employer can contribute $30,000 (not including the employee's $10,500 deferral). This would mean an annual addition of $45,000.

Has anyone heard of such a thing .... or is it simply nonsense ??

THANKS

Under the DOL’s new claims regs, I understand that a provider can force a group health plan to treat a “pre-service health claim” as “urgent.” But what about a plan that does not have pre-certification requirements (or other requirements for advance approval)? Can a provider force a plan to adjudicate a claim within the 72 hours, where the plan does not have penalized the participant for failure to get advance approval?

Any insight as to how the claims regs might fare under the Bush adminsitration? Should we still expect to have to comply in 2002?

Employer A has a money purchase plan and employer B has a profit sharing plan. Both employer A and employer B are part of a controlled group, but did not realize it. As a result, employer A's plan fails coverage for many years but employer B's plan does not. The IRS has discovered this mistake. The obvious solution is to include employees of employer B in employer's A plan. But employer's A plan is a money purchase plan, and the IRS wants to assess severe penalties for the failure of the plans to meet the minimum funding rules, which it says it will not waive. Is there any way to get the IRS to waive the minimum funding penalties or to get around such penalties?

Is there any latitude under IRC regs for employees of a state governmental plan to change the election amount for their IRC 125 MRA election after the open enrollment period and/or after the first fo the year - eg., reason being an increase in HMO premiums for the new year?"