I am having trouble understanding the use of the family codes in the sttaus screen of the census secton. Example: Father and Son in a business. If a father owns 100% of the stock ,we enter the 100% ownership, and then use a family code of 0101, his wife is also 0101, and the son who owns no stock is coded as 0% ownership but with a family code of 0102. When running the ADP test, the son does not show up as a HCE but seems to be that he should based on on the Section 318. Since Dad has effective contrl, the age of the son is irrelevant. Second, if DAD owned only 25%, and son owned 0%, would the family code test the age of the son to see if he is a HCE by Section 318 ? Thanks for the help

If a 401(k) participant needs to borrow money from the plan, and may choose whether to borrow either deductible or nondeductible money, which would be the better choice?

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John L. Olsen, CLU, ChFC

Olsen Financial Group

St. Louis, MO

314-909-8818

Sight unseen, I agreed to take over administration of a 401(k) Plan. Prior "Administrator" provided zilch. Reconstructing records, I see a Top-Heavy Plan in 1998, no minimum contribution, and Key Employee deferrals and match of 2.7% (was in effect 3 months of 1998).

Testing for 1999, I'm calculating ADP for NHCs based on 3 months deferrals/3 months pay. Is this Kosher? 401k feature added to long-existing PS.

I want to self-correct Top-Heavy contribution for 1998. Comments?

Company asked if Match in 1998 could be used for Top-Heavy. I know, legally it can. But practically?

Match was 50% of first 6%, which isn't in the document. It's deferral ratio. Self correct?

If I use the Match for Top-Heavy and pass 401(a)4 (doubtful), then I have no LOW ACP % for 1999. I've thought of using HCs Match for TOP-Heavy, but this won't pass 401(a)4.

I know, a doozie.

I understand a Roth IRA can be established for minor child with qualifying income. For some reason, financial institutions that handle Roth IRAs aren't willing to open a Roth IRA for a minor. Can anyone furnish names of brokers/banks that are willing to open a Roth IRA for a minor. I'm aware that I can open a Roth IRA for myself and designate my minor child as beneficiary. I'm not asking about that. I want to open a Roth IRA in the name of the minor child.

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In May 98, I opened an Roth IRA and contributed $2000. In June 98, I transfered my entire traditional IRA account into my Roth IRA account thinking that I had converted or rollovered from traditional to Roth. The error that I made was I did not check the box IRA Direct Rollover on my Account Transfer Form application. My brokerage firm simply transfered the equity from my IRA to my Roth Account. On my 1998 5498 Form for the Roth account, there was no indication for the rollover dollar amount. When I filed my 1998 income tax, I did not file the 8606 form with my 1040 (my error #2).

Question 1. I want to be official Rollover to Roth IRA, not just transfering. What should I do?

Question 2. Do I rollover the origninal transfered amount? If not, how am I going to calculate what is the right amount to rollover? I had sold my transfered equities and bought/sold something elses and bought/sold something elses.

Question 3. Should I rollover in 1998 and do a tax amendment for 1998? or should I rollover now and file as 1999 tax?

Please Advise.

Thanks in advance!

The context is a non profit DB with participants above the comp limit. A non qualified has been discussed but the 457 taxation rules are a problem. Now someone is proposing a "QSERP". Any ideas on how that might help?

If I contribute 2000/year to my Roth IRA, Can I still contribute to a 403(B)? How do I find out the max I can contribute?

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sb

Can "members" of an LLC participate in a 125 Plan? I'm told (in the present case) that although the LLC in question has elected to be taxed as a partnership, the members receive W-2s. In my mind, if the members receive W-2s, then they're employees and should be able to participate. Can someone set me straight? Thanks.

I received an unsolicited Advertisement from this Firm. They used the BenefitsLink White Pages to do this mass mailing, so many of you also received it. Do you think this should be allowed on BenefitsLink?

[This message has been edited by LCARUSI (edited 03-10-2000).]

How is defaulted loan taxed. My understanding has been that upon default of loan, the full value of outstanding principal and unpaid interest on default date is deemed distribution and taxable in year of default. Is this correct? After deemed distribution, what happens to additional accrued interest?

I have seen several places that a suspension of benefits notice is required for a plan that allows participants to continue to accrue benefits after normal retirement age. In my case, the employer continues to credit for years of service but does not actuarially increase the benefit.

The only reference I can find to this type of notice is Labor Reg 2530.203-3(B)(4). However, the regulation concerns suspension of benefits upon re-employment. Does this also apply to the employee who remains employed but does not take a benefit?

If yes, is there a model notice or any further guidance out there from the DOL or the IRS?

Just taken over a defined benefit pension plan that has had benefits frozen by amendment at the end of 1995. Plan was top heavy through end of 1996, and is no longer top heavy. Company is active and is just running this plan for another few years to bring funding up to an acceptable level at which point plan will terminate.

My question is about participants who have entered in 1998 forward. They have no accrued benefit and will not have any further accrued benefit as sponsor has no intention of lifting accruals. I'm assuming I can amend the plan to eliminate future entrants in 2000; any way that I can eliminate the $0 benefit participants? Thought about changing definition of eligible employee to eliminate those with no accrued benefit under the plan. Would a now excluded employee with $0 accrued benefit be able to be dropped as participant (ala a deemed distribution to a terminated non-vested participant) for PBGC premium and IRS count purposes? (Count is getting close to 100 and would like to avoid additional complexity with over 100 count).

Thanks for any input on this issue.

My company provides a 402(f) notice nearly identical to the model in IRS Notice 2000-11 to each participant in advance of distribution. We also provide a brochure summarizing Federal tax consequences and identifying the timing for receipt of form 1099R. Most of this brochure duplicates

information in the 402(f) notice, except some additional detail on capital gains, ten-year averaging and description of specific timing of when our company provides From 1099R. My co-worker calls this a 6057 notice and says we must provide it. I checked Section 6057 and didn't see much resemblance to this brochure. Can anyone point me towards a reference describing the required contents of a 6057 notice? Is my co-worker crazy? Also, we provide an explanation of the QJSA waiver and spousal consent. Are any other notices required at the time of distribution? Thanks for your time.

My company provides a 402(f) notice nearly identical to the model in IRS Notice 2000-11 to each participant in advance of distribution. We also provide a brochure summarizing Federal tax consequences and identifying the timing for receipt of form 1099R. Most of this brochure duplicates

information in the 402(f) notice, except some additional detail on capital gains, ten-year averaging and description of specific timing of when our company provides From 1099R. My co-worker calls this a 6057 notice and says we must provide it. I checked Section 6057 and didn't see much resemblance to this brochure. Can anyone point me towards a reference describing the required contents of a 6057 notice? Is my co-worker crazy? Also, we provide an explanation of the QJSA waiver and spousal consent. Are any other notices required at the time of distribution? Thanks for your time.

hi.. I had a traditional IRA account. there was $5800 in it this amount consisted of a 1997 $2000 deposit and a 1998 $2000 deposit both of these deposits were nondeductible. $1800 is the interest. In 1999 i converted the $5800 to a roth IRA. What amount do I have to pay taxes on ?? the 1099-r states 0 as the taxable amount.

please help... thanks a lot.

What is the proper procedure for making corrective distributions due to ACP test failure when match contribution has not yet been deposited? An employer has decided to make a discretionary matching contribution, and the match formula is defined in the plan document. The employer is planning on depositing the matching contribution after March 15. The ACP test fails and will be corrected through corrective distributions of the excess aggregate contributions. The employer would like to refund the excess aggregate contributions (match) before March 15. A few questions: 1) Can we safely assume that no earnings will be involved since the match has not yet been deposited? 2) Is it possible to make the actual deposit of match net out the excess aggregate contribution amount, so that the excess aggregate contribution amount is never deposited? 3) Can the employer refund the excess aggregate contributions from current match account balances before March 15, even though the match involved in the calculation has not yet been deposited?

What is the proper procedure for handling forfeitures when match contribution has not yet been deposited? An employer has decided to make a discretionary matching contribution, and the match formula is defined in the plan document. The employer is planning on depositing the matching contribution after March 15. The ADP test fails and will be corrected before April 15 through corrective distributions of deferrals. The matching contributions associated with the excess contributions (deferrals returned due to the ADP test failure) will be treated as forfeitures and the plan document provides for reallocating them to other plan participants. The employer will make the corrective distributions of excess contributions before March 15, but the match will not be deposited until later. Questions: 1) Can we safely assume that no earnings will be calculated on the match treated as forfeiture? 2) Can the employer release forfeiture amounts attributable to the discretionary match from current match account balances, even though the match involved in the calculation has not yet been deposited?

Client has 125 plan for medical and dependent care expenses and medical insurance premiums. All contributions are funded by the participant.

What are the limitations on key employees? If the key employees' deferrals exceed 25% of total deferrals, what happens??

Please excuse my ignorance. I have very limited knowledge in this area.

Thanks for any help!

We are contemplating using a wraparound SPD for a welfare program, under which various duplicate provisions are placed in one tabbed section (e.g., COBRA rights, ERISA statement, claims procedures).

However, we are not sure if it is worth the cost and time associated with creating these sections, where the individual plan docs have been amended and are ready to go.

Obviously, wraparounds are a good idea in the long run, but is it worth is for smaller employers (I typically see them with Fortune 500 companies and large multiemployer plans).

Any thoughts?

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A client with a discretionary profit sharing plan failed to make the full contribution for non-HCE's on time. What are the consequences of this other than corporate tax issues? What if anything other than making the contribution must be done?