If a 401(k) plan has immediate eligibility for deferrals but one year for profit sharing and the plan is top heavy for the plan year, who gets the top heavy contribution?

all participants or only participants eligible for profit sharing portion of plan?

Employer failed to remit deferral contributions for 9/99 - 12/99. The employer has now remitted the contributions, but still must make up lost earnings. What is the best way to calculate those earnings?

We have a terminated calendar year plan that distributed all assets February 28, 2000. The final 5500 for the short plan year January 1, 2000 - February 28, 2000 is due September 30, 2000 or with an extension until December 15, 2000. Previously we would have used the prior year 5500 and "X'ed-out" the year on the form changing it to the current year, as indicated in the 5500 instructions. Does anyone know how to handle this situation using the new forms? The current instructions do not address this and if we wait until the DOL issues the 2000 forms, we will probably miss the extended due date.

I would like your thoughts on this--

Have any of you had an employee request a loan under a 401(k) or other retirement plan specifically (and exclusively) to pay qualified higher education expenses? If so, have you been requesting a Form W-9S and then maintaining and filing the loan information normally required for those types of loans? Do you provide a special rate for the loan since often student loans are offered at a lesser rate? Should it make any difference if the loan is an allocated investment of the borrower (so the lower interest rate is fiduciarily more appropriate)? What about any other special requirements relating to student loans--what else should we be concerned about?

Thanks

Theresa Lynn

Can a money purchase plan be amended after the end of the plan year to reduce the contribution to be made to the plan?

My Company is preparing to implement a salary reduction qualified transportation fringe benefit program effective 1/1/2001. In designing the program, the following issues arise:

1)If an employee ceases to make salary reduction amounts but remains employed, may s/he seek reimbursement for qualified transportation provided in the future until his/her account is used up?

2) If an employee prepays a parking expense before the program is implemented, may s/he seek reimbursement for each month as the parking is provided?

3) Can contributions be generic and applied to parking and/or transit passes or are there two separate categories?

4) If an employee is paid biweekly, then s/he will be paid three times during two months of every year. Q&A-13 of the Proposed Regulations limits salary reduction to the combined limit of $240. During months when the employee has three payroll dates, it is possible that her/his salary reduction amount will exceed the combined limit. Any suggestions for dealing with this situation?

We have a situation where the balance in a non-qualified plan is being paid to the beneficiary of a deceased participant. Question is whether the payment is subject to federal tax withholding. Has anyone encountered this?

Thanks for any replies.

What are the SS bend points for 2000?

Is it true that when doing a 2000 PIA calc, the most recent NAtional Average Earnings available are for 1998 (that is two years behind)?

Does anyone know when the NAE are published and where all this info can be found?

After reading through IRS publication 590, it appears that there is nothing illegal about deliberately over-contributing to an IRA or Roth IRA account. This raises the following question: what is there to stop me from opening a Roth IRA account with an initial deposit of, say, $10,000, if I am willing to pay a $480 penalty each year for the rest of my life on the $8,000 excess contribution? The way I see it, $40 per month is a small price to pay for a ~3 year jump start on untaxed growth using Mechanical monthly investing, as I use (or practically anything that at the very least matches the market).

(btw, the example on p31 of

http://ftp.fedworld.gov/pub/irs-pdf/p590.pdf

makes it clear that it's the excess contribution itself, excluding any capital gains or interest that it might generate, that gets the 6% tax each year, even though it requires the withdrawal of the excess plus the earnings in order to stop the annual tax)

On a related note, does anyone know about excess contribution taxes that individual states might impose in addition to the 6% federal tax?

Thanks,

Robbie Geary

Can an employer that sponsors a Sec. 125 plan (including medical expense and dependent care expense reimbursement features) increase the maximum deferral amount mid-year, and permit participants to increase deferrals, without running afoul of the prohibition on mid-year election changes? I would think the answer is "no" but since the mid year election change prohibition is generally geared to employee changes am wondering if there's an exception for this kind of case.

My company is too small to get good rates from reputable dental plans. Instead, we want to reimburse our employees up to $1500/yr for dental expenses, as a taxable bonus. Are there any regulations that I should consider in regards to this potential benefit?

Thanks!

--Liss

Has anyone had any experience with amending a 401(k) plan so that all administrative expenses are paid out of plan assets? Would expenses be apportioned to participants on a per capita basis or according to percentage of total plan assets? What potential problems must a plan sponsor consider (i.e. notice to participants, decreased employee morale, decreased employee participation) in making a decision to pass administrative expenses on to plan participants? Any insights are appreciated.

Can a son who is an employee of a mor ethan 2% Sub-S onwer participate in a 125 plan?

I have a safe harbor plan which would like to make a 3% nonelective contribution to satisfy their top-heavy contribution requirement. However, the plan sponsor would like to exclude all HCE's from the contribution. I have read Notice 98-52 but, I am still unsure if HCE's can be excluded from the contribution. Does the contribution have to be made to all eligible employees (HCE's and NHCE's alike)? If not, what kind of documentation is necessary to communicate this to the employees? Citations would be appreciated.

Copy 1 of Form 1099-R is supposed to be sent to the state tax department. Is this the state that the company is located in, or the state that the participant resides in, or both? Is there anywhere to get a comprehensive list of mailing addresses of state tax departments that these forms should be sent to? Some states apparently don't require filing Form 1099-R (for example, Pennsylvania supposedly gets information directly from the IRS). Is there any easy way of finding out which states have what requirements?

What, if any, adverse federal income tax consequences do you think would result if the fomer employer (i.e., the acquired) continued providing health coverage to non-M&A Qualified Beneficiaries (i.e., those employees that continue on with the new employer) until the acquirer can get a health plan up and running?

A teacher is contributing to a teacher's state retirement fund. The state plan is in lieu of Social Security. While working the teacher is receiving her deceased husband's Social Security benefits. When this teacher retires, can she continue to collect her husband's SS benefits and collect her retirement benefit through the teacher's state retirement plan? The state is Texas. Cites would be helpful.

The exemption for Schedule H for welfare plans applies if the plan meets the requirements of 29 cfr 2520-104-44. That reg says that the exemption applies to "unfunded" and "certain insured" plans. The "certain insured" plans means those which forward employee contributions (if any)within three months. There is no mention of how to handle an unfunded (i.e., self-funded) plan that has employee contributions. If there are employee contributions for a self-funded plan is the plan considered "unfunded" for the purposes of the exemption? The reg says that benefits must e paid "solely from the general assets of the employer". Are employee contributions that are withheld from pay considered to be general assets of the employer?

I have a New Comp. Plan effective 1/1/99. The 1999 Profit Sharing was accrued and therefore as of 12/31/99 there was no actual balance in Mr. X's Account. Is Mr. X required to take a 70 1/2 distribution based on accrual.

Also Mr. X turned 70 1/2 in 1995 when the plan was not in existence. Does he have the right to make an election or does he HAVE to take the required distribution?

I would appreciate if anybody has dealt with such a situation in the past or knows the answer.

Thank you.

I resigned last March from a company with a defined benefit plan. The plan includes provision for a single sum distribution. I looked into rolling it into an IRA but have been advised by the company I need to sign a Repayment Agreement under the provisions of Treasury Regulation 1.401(a)(4)-5(B) which places restrictions and limitations on the amount that can be distributed as a single sum distribution. I am told that the present value of the benefit, payable as a single sum distribution, exceeds the maximum amount (the "Nonrestricted Limit") that can be paid to me by the "Restricted Amount."

Getting information from the administrator is a little difficult and so I am turning to this message board with the following questions:

1. Can somebody tell me where to find a copy of Treasury Regulation 1.401(a)(4)-5(B)?

2. Can I still roll the "nonrestricted limit" to an IRA and leave the "restricted amount" with the Plan?

3. If I leave the "restricted amount," can I still draw a retirement benefit based on that amount? (I will be 55 next February and eligible to draw a benefit if I leave ALL the money in the Plan.)

4. This last question is rhetorical: How in the world did this all get so incredibly complicated and convoluted?

My thanks in advance to anybody who can help.