I have a controlled group of three companies each with its own plan. They will file seperate 5500s and pass one 410(B) test. When completing Schedule T, do I disaggregate the plans?

What's your opinion on how to answer the defined contribution pension features and whether or not a plan is intending to comply with 404c (code 2F)?

I think a lot of plans try to comply, but I've always heard that 404c is impossible to comply with.

We have a lot of clients using insurance group annuity contracts with brokers telling them they are complying with 404c. I have some trouble not marking that they saying that they are not when clients think that they are. Someone said that the IRS is gathering this data so that they can start auditing plans for 404c compliance.

Employer A and Employer B merge mid-year. At the same time Employer A's top heavy plan is merged into Employer B's non-top heavy plan with Employer B's Plan being the "survivor". As of the date of the merger, the resulting merged plan would be top heavy.

What is the top heavy obligation for the year of the plan merger? 1) All non-keys? 2) All of A's non-keys, but base the contriubiton of B's non-keys on comp from the date of the merger? 3) A's non-keys only? or 4) no top heavy contribution is required.

Under Q&A T-31 it is clear that all of the assets of the two plans will count toward a top heavy determination. However under 416(g)(4)©and Q&A T-22 the "determination date" is the end of the prior year (before the merger). At that point the "survivor" was not top-heavy.

Of course the Plans could have been kept separate under the 410(B) grace period and would not have had to be aggregated for top-heavy in which case the only top-heavy contribution would have been for A's employees. However, the employer decided it wanted an immdediate merger.

Any thoughts?[Edited by KJohnson on 08-25-2000 at 10:01 AM]

If you have a traditonal IRA worth $1,500,000 and you have set up a special IRA living trust. Does this allow your heirs to spread the income recieved over a 5 year period instead of taking it all in that year?

In an (non-leveraged) ESOP that contributes a certain dollar amount at mid-year to the ESOP trust, but does not allocate the contribution across participant accounts until year end, what is reported as Sec. 415 Annual Additions for participants? The value at time of contribution, or the value at time of allocation.

This can have many potential plan reverberations, since the assets in the trust could potentially be invested in a supplemental fund within the ESOP trust - i.e. money market. Then, would income from that investment be required to be allocated to participant accounts?

lets say you have a client that started a 401(k) plan in 1997 and you became the TPA in late 1999. you come to find out that the client failed to provide complete census data to the prior TPA, so ADP testing was never done for 1997 or 1998. The client, which is a conglomerate of dental practices, then goes belly-up and claims it cannot provide complete census data for 1997, 1998, 1999 or 2000, but will "do its best". Now, it turns out that "its best" is not very good at all and you are certain that the data provided is at least incomplete and almost certainly innacurate. my inclination is to refuse to do the ADP test. i don't want to be blamed when this plan is audited and the agent finds the test to be based on bogus information. now suppose that the client says he wants to terminate the plan without having done the testing and wants us to send out distribution forms to the participants. if the plan would fail The ADP test for any of the years involved, it would be disqualified, so offering the employees the option of rolling their distributions to an IRA might get my firm in trouble, i think. what do you do? is it even possible for me to place the responsibility for bad rollovers onto the trustee by sending him a letter informing him that he has no assurance that the plan is qualified? i'd like to resign from the plan, but i empathize with all of the parties involved and don't want to leave them stranded, but i also don't want to get my firm in hot water.

The Schedule SSA instructions indicate that if you need more space, you can either use additional copies of the Schedule SSA, or additional sheets containing all the information on the schedule can be attached. Schedule SSA only allows for reporting 4 participants. As an example, if you are required to report 9 participants, should you attach 3 SSAs including both pages 1 and 2, or only page 1 of SSA and 3 separate page 2s?

Has anyone had any experience with automatic enrollment with your 401(k) plan? I'm reading a lot about it, but haven't actually "met" anyone doing this? I'd be interested in your experiences...

Also...we are contemplating changing our waiting period from 12 months to 6 months. Any pointers or cautionary tales???

Thanks in advance!

Sheila K

602 683-1013

An employee quits his job and has the choice of rolling his vested Profit Sharing distriution into his personal IRA or rolling it over into his new employer's profit sharing plan. If he chooses to roll it into his IRA, then he can later roll that IRA over again into another IRA (after a one-year period has lapsed, according to the tax code)

HERE'S MY QUESTION:

If he had choosen to roll the Profit Sharing distribution into his "new employer's" profit sharing plan, then does the tax code allow him (withhot penalty) to re-roll it from his "new employer's" plan to an IRA (several years later) while still employed with the new employer ? (Assume the participant is UNDER age 59 1/2).

An employee who previously elected health coverage for his spouse contacted me recently regarding the company's decision not to extend benefits to his domestic partner. I explained to him that according to our policy (and hopefully the policies of most other companies), he could not cover both a spouse and a domestic partner under our health insurance plan. The employee then informed me that his spouse is in fact an ex-spouse, whom he divorced three years prior to beginning employment with us, and that he was ordered as part of his divorce decree to cover her under his employer's health insurance. When he elected benefits at his hire date, he simply wrote her information in the "spouse" section of the enrollment form.

Our health plan is self-insured and does not provide for coverage of ex-spouses - my understanding is that we are not obligated to comply with court ordered coverage if it provides benefits for someone who doesn't fit the plan's definition of a dependent.

This being the case, what the heck should I do? The employee has asked me to write a letter to his attorney explaining the situation and informing him that coverage on the ex would be dropped. I'm not inclined to cancel her coverage retroactively (she's been covered by us for 2 years), however I'm wondering if failing to do so would violate ERISA. I don't see how this could possibly be construed as a qualifying event under COBRA, and I feel terrible about abruptly terminating coverage for this woman who thought all along that she had secure health benefits (and apparently has some significant health concerns). Any suggestions on how to handle this would be greatly appreciated.

Pursuant to a sale of assets (no assumption of liabilities, etc.), buyer hires seller's employees and assumes sponsorship of seller's 401(k) plan, effective as of the first day of the last quarter of the calendar/plan year. Buyer maintains no other qualified plans and has no employees of its own, pre-sale. If the IRS audits that particular plan year, can both entities ultimately be responsible for responding to the audit?

In a 401(k) Profit Sharing Plan, is the plan sponsor required to have a Fidelity Bond? Or is it just strongly suggested?

For plan/fiscal 7/1/99 - 6/30/2000, our client sponsored a 20% money purchase and a profit sharing plan. By 12/31/99, they had already funded almost the whole 15% allowable profit sharing contribution. Now, in order to avoid 415 and possibly 404 problems, they want to fund the money purchase plan at only 10% instead of 20%. Does anyone know if, in the case of two DC plans, 412 takes precedence over 415? I am somewhat uncomfortable about funding less than the "required" amount for the money purchase plan, yet agree that they shouldn't fund over 415 limits. Of course, the plan documents are silent on this subject.

How can an employer whose employees are being enticed to join a union "discretely" determine the funding status of the union's DB pension plan?

Thanks!

Company A and Company B are owned by husband and wife (H&W). H&W are the only employees of Company A. Company B has only NHCE's. H&W establish a 25% MPPP for Company A, but have no separate plan Company B and exclude Company B in the plan for Company A. We've been retained to fix the problem. Is VCR required here, or may contributions for employees of Company B plus earnings be calculated and contributed? What about SVP? Seems like .05 of Appendix A to RevProc 98-22 might apply. Are there other options? Correction by making makeup contributions could be quite expensive.

In a tiered profit sharing plan can the contribtion allocation have the following three steps?

1. A flat dollar amount allocated to each eligible participant in the group that is descretionary (might be $300 one year, zero next year, $1,000 following year, ect.)

2. Any eligible participant in the group whose allocation in step one is less than 3% of compensation will receive an additional allocation such that the allocation for each eligible participant will be the greater of the amount from step one or 3% of compensation.

3. If any amount remains after step two, that amount will be allocated to each eligible participant in the group in the same proportion that each eligible participant's compensation for the year bears to the total compensation of all participants within the group for such year.

The main question I have relates to whether the flat dollar amount in step one can be discretionary, or must it be a fixed dollar amount specified in the document?

Does anyone have any experience with the IRS as to what is acceptable under the "significantly discriminatory" statement under 1.401(a)(4)-5. I have a client that fits Example 1 exactly. I realize that in order to increase benefits, I need to give something to the previous participants, but the question is how much. I would suspect that as long as the NHCEs get 70% of what I give the HCE, I would be fine, but since it says "significantly discriminate" and since 70% passes the standard discrimination test, could I use 50%? Any thoughts?

Do I recommend what I think is reasonble then defend it if the IRS asks, or should I ask for an opinion letter ahead of time?

Has anyone else dealt with this?

Assuming a "reasonable error", is there a deadline (similar to March 15 for excess contributions and April 15 for excess deferrals) for distributing deferrals to correct excess annual additions? If there is a deadline, what are the consequences of distributing after the deadline?

We just received census information on a 1999 calendar year plan in which one participant deferred 31%.

An internet venture (in the form of an L.L.C.) is interested in establishing a plan that would provide employees with an equity ownership interest in the entity. I am guessing that this plan would resemble a non-qualified stock option plan and might provide employees with "profits interest". Does anyone have a document that I might be able to review. Thanks. Ed

I recently gave a car dealer my 2 wek notice, but left 4 days early. They are now holding 2 paychecks from the previous month pay, one a commission check. The manager says he has to wait until all paperwork is cleared. I will owe them nothing because I have no outstanding debts with them. He said if he can't coolect customers bills, I will have to pay those bills, because it is my responsibilty as a service consultant to make sure bills are paid. I am still due a paycheck of commission for 9 days of work from them. Is this legal? Can he withhold a paycheck? He has had it about 8 days now. I am not sure what my rights are. All help is much appreciated. I don't even know where to look this information up at.