Is there any guidance within top-heavy regulation regarding the correct way to test plan year the amends from fiscal to calendar, thus creating a short plan year?

Plan Year #1: 07/01/98 - 6/30/99

Plan Year #2: 07/01/99 - 12/31/99

Plean Year #3: 01/01/00 - 12/31/00

What is the correct determination dates to test this plan for year 2 & 3?

We have several profit sharing plans with 401(k) & 401(m) provisions. In several of the plans the (k) & (m) benefit all eleigible NHCE's and there is no profit sharing contribution made. In completing Line 3 do I complete separate Schedule T's for the disaggregated parts or do I just check 3(B) & 3(d)?

Line 4 provides space for disaggregated parts, but I don't get to line 4 and Line 3 does not provide space for disaggregated parts.

Any guidance is appreciated.

I am currently testing a new comparability formula under the final Regulations adopted in 1991. Under these regulations, there are two parts required for use of the average benefit test. 1). The plan must pass the ABP test of 410(B)-5 and 2). Each rate group must satisfy a modified coverage test under Reg. 1.401(a)(4)-3©(3). Part 1 is easy enough to test, but Part 2 is a little confusing. Am I correct in that each rate group only has to be at least as great as the lesser of the NHCE midpoint or the plan's ratio %? For example, if Rate group #1 has ratio % of 45% (which clearly fails the ratio % test), and a midpoint of 21.88% (95% NHCE Concentration), does Rate group #1 pass the modified facts and circumstances portion of the Average Benefit Test? (assuming Plan passes plan ABP test of part1).

These testing seems to stretch the interpretation of new comparability testing. I am hesitant to proceed further with any plan designing since this modified testing is not "in the normal testing parameters" as well as the Treasuries current inquiries.

Any insight would be much appreciated.

Can a plan choose to designate the same method of minimum required distribution (for example, single life for all paticipants, even if married) for all participants, or must participants be given a choice? Is the answer different for 457 plans?

In Connecticut, a husband and wife can have what is called a "mediated divorce", wherein the court appoints a mediator and the happy couple agrees who gets what. The mediator prepares documents for the court to sign that, among other things, provides for a distribution to the former spouse from the qualified plan. This document is not a DRO and I'm not convinced the plan should accept it. Obviously, the participant does not wish to incur attorney fees, but I am inclined to insist on a real DRO before processing the distribution. Question is - is there any type of agreement, other than a QDRO that would be acceptable? I have heard that in some instances, there is.

SAR (hyperprep generated) for 1999 plan year the first paragraph indicates that the annual report has been filed with the Internal Revenue Service, as required under ERISA ..... Is this still true especially since the Form 5500 is now filed with DOL?????

Here's a completely theoretical question but thought-provoking.... Let's say a plan year just ended on 6-30-2000, and now the company is changing to a 12-31 year end, so there's a short plan year for the rest of 2000.

We have an HCE who already deferred $10,500 in the first half of 2000. I would like to at least suggest that the participant is not eligible to participate in the 401(k) arrangement in the plan year, or the 401(m) match arrangement (assume no post-tax allowed.) I mean, it could be lousy not having a zero in your ADP test (not eligible to defer), but it may improve your coverage ratio for the 401(m) part of the plan.

I doubt there's any code to back me up, but what do the experts say?

--bri

My company wants to implement a policy where they will match charitable contributions by employees. They do not want to include religious charities. I wonder if this is the norm, surely that would not include religious affiliated colleges. Does anyone have a policy to share or experience with this?

My company is considering leasing employees from a PEO and purchasing their medical benefits through the PEO. What is your experience, pro and con, with securing medical benefits from a PEO?

I have stock in a 401K that I plan to take out as certificates and pay the tax on the cost basis. Here is my question: can these certificates then be rolled into a Roth IRA? I was told that this was possible by a financial advisor, but cannot believe that it is true, and for that reason, I seek independent conformation that this is a valid strategy.

If a 401(k) only allows a lump sum distribution, are lump sums paid to married Participants in excess of $3,500/$5,000 subject to spousal consent? My understanding is that if there is no annuity option then a PSP is not subject to the spousal consent rules PERIOD.

Must a plan be formally amended in order to increase the $3,500 limit to $5,000?

I am having a "difference of opinion" with an associate about the following.

A client with a 10% MP Plan wants to terminate it and start a new 401(k). I am proposing that instead we amend and restate the existing MP Plan as a 401(k) as of a specific date prior to year end. I stated that the ER is obligated to make a 10% contribution based upon compensationup until the effective date of the amendment. I also stated that as we are changing from a pension plan to a profit sharing plan there has to be 100% vesting and any "protected beenfits" must be preserved. My associate says it is not necessary to have 100% vesting.

Also, if the MP funds are placed in "rollover" accounts in the new plan subject to the annuity rules and the new plan only allows a lump sum, does new money in other accounts escape the annuity rules?

Calendar year plan; new plan beginning 9/1/00.

What limits are affected by the short plan year and need to be adjusted?

402(g)? 401(a)(17)? 415? HCE comp limits?

Not that I have done this: If you complete the work on a client where you only have to do compliance testing and you realize you have the wrong plan year don't freakout. Simply run the reports to a file and edit the date on your word processing software. You can not tell the files have been changed and this will save you alot of time. Enjoy!

When the plan year is 7/1/99-6/30/00, would the 402(g) limit be based on 1999 or 2000? (I need to process a refund, but should it be for the amount over $10,500 or $10,000?)

Has anyone seen a cash balance plan that includes a "subsidy" for general early retirement at specified age and service (e.g., 55/15 years) and/or upon a specified contingent event (e.g., termination due to layoff or job elimination with at least 15 YOS)? I see no reason that you couldn't include some automatic pop-up adjustment to the cash balance account, either a percentage increase or a flat dollar add-on... it shouldn't create a backloading issue because it's not part of the normal accrual formula, and it also shouldn't create a nondiscrimination issue if the subsidy is either available to all or, in the contingent event case, meets the current/effective availability test. And yet I have never seen a CBP that included something like this, and of course one of the popular objections to the cash balance approach is the loss of the early retirement subsidies common in traditional DB plans. Is there an issue or prohibition I'm missing here? Is it just that plan sponsors are trying to stay within the cash balance safe harbor provisions of the 401(a)(4) regs (which generally don't permit subsidies)? Your thoughts would be most appreciated.

OK, you have a takeover plan that is, lo and behold, a prototype document with a new comparabiliby formula. The adoption agreement was drafted in 1997. It is my understanding that the IRS is steadfast in its insistance that prototypes cannot be new comparability. So what do you do? I can restate to individually designed, but what effective date should I use? Its only a profit sharing, so I'm not uncomfortable restating now, but I don't want to leave the client exposed to trouble. Is there any guidance on this? Has the service given any indication as to how they would treat situations like this? I know there are other prototypes out there that stuck in new comparability formula options, hoping they would be allowed.

A 401k plan only provides salary deferrals and match. The employer deposits matching contributions quarterly. And, the plan contains a 500 hours of service requirement to be eligible to receive the match. If at the end of the plan year, there are extra matching contributions forfeited due to the hours requirement (but the employer deducted these amounts on his tax return), does this result in a nondeductable contribution subject to the 10% excise tax?

Does anyone know where to find information regarding what the average retiremetn age is in pension plans? I also need to find the percentage of plans that provide early retirement benefits that are subsidized, and at what age/service.

Thanks.

We have a partnership that incorporated mid year 1999. Under the old rules when IRS was handling the 5500s, we would have had to file a 5500C/R for BOTH entities, one closing out the filing for the partnership if the assets were taken over by the successor plan, and one for the new entity showing assets accepted by new corp.

This has always seemed like a tremendous exercise in wasting time, effort and paper, especially in lieu of question 3, "has the sponsorship changed".

In lieu of the fact that DOL not IRS is handling the forms now, don't you think we can just file one form under the name of the new entity showing the name and EIN of the old entity and call it an initial return and cut out all the extra (and now it really is EXTRA) paperwork and BS?