My company has a SEP plan and a SARSEP plan.

We have the fund with Putnam funds. Is it allowed for us to sell some Putnam funds to buy into another family of funds or do we have to leave the entirety of the plans with Putnam? Is First American an approved custodian for SEP and SARSEP plans?

Thank you,

DBELL

Is a DRO under a DB plan approvable as a QDRO when, in defining how the present value of participant's accrued benefit is calculated, the DRO incorporates by reference the applicable terms of the Plan? Or must the DRO actually recite the mortality and interest assumptions?

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This question concerns who is responsible and ultimately liable to insure that a 401(k) plan makes the required minimum contributions for plan years when the plan is top-heavy. The relevant facts are described below. A relatively small (less than 200 employees)privately-held company adopted a prototype 401(k) plan sponsored by a local bank. The bank serves as trustee and agreed to perform the discrimination and top-heavy testing each year. The bank performed the required testing each year and provided the testing results to the company in the form of a written report. The plan satisfied the discrimination tests (ADP test), but has been top-heavy since 1992. In 1999, the company realized the plan has been top-heavy since 1992 and that the required minimum contributions were not made for 7 plan years. The company is working with the IRS to correct the problem and make the required contributions. The company believes the bank should pay 100% of the liability because the bank did not make any effort to inform the company that the plan was top-heavy other than disclose that conclusion in the annual testing report results each year. The company believes the bank should have personally informed the company the first year the plan was top-heavy and discussed their options to correct the problem for future years. That did not happen and the plan remained top-heavy for several years. Each year, the bank concluded the plan was top-heavy in its reports, but did not make any effort to correct the problem.

Are you aware of any authority supporting a claim against the bank under these circumstances? As a fiduciary, did the bank have an obligation to correct the problem when it first discovered the plan was top-heavy? In subsequent years?

There seems to be a lot of energy about proposed changes to treatment of 457 assets, most specifically, I am hearing there is a bill which would make distributions from a 457 plan eligible for rollover to IRA.

Can anyone give me more information about this? Even just the bill or it's sponsor would be a start. Thanks.

I received a Form 1099-R which I don't think I should have gotten.

In 1998 I converted an IRA to a Roth IRA. In 1999 I had the account transferred from Company #1 to Company #2. This was transferred as a Roth IRA and is still a Roth IRA.

I just received a 1099-R for 1999 from Company #1. In Box 2a appears the amount which I transferred over to Company #2 as a Roth IRA. In Box 7 appears the Code J.

I get the impression that this form would be sent to me if I took a distribution from a regular IRA. As a Roth IRA I already started paying taxes on it in 1998. In addition, the amount which appears is not the amount converted to the Roth in 1998 but the amount transferred to Company #2 in 1999. I don't think this form should have been sent to me at all.

Do you agree?

On 3-4-99 I converted a Trad IRA (bank CD) to a Roth IRA.

On the same day, I also made a deposit (bank CD)to a Roth IRA. (they said I couldn't combine a Roth conversion with the regular Roth). Both CD's mature on 3-4-2000.

So, on 3-4-2000 can I combine those 2 CD's into one CD ?

SteveS

[This message has been edited by SteveS (edited 02-28-2000).]

[This message has been edited by SteveS (edited 02-28-2000).]

[This message has been edited by SteveS (edited 02-28-2000).]

Until about 1998, employees of tax-exempt trade associations could NOT contribute pre-tax dollars into a 401k. They could, however, contribute on an after-tax basis.

Upon withdrawal, employer matching funds and all earnings are taxable. The employee's after-tax contributions, however, are not.

Is it possible to transfer the after-tax funds into a Roth? If so, what's involved?

A company has a Premium Only Plan (section 125) for their medical insurance plan. It is my understanding that if an employee elects during the year (any time) to drop coverage for himself and/or dependents then he is allowed to do that. However, should this employee elect to enroll in the medical plan (Pre-tax deductions) he could not unless there was a "qualifying event". Otherwise, he would need to wait until the Open Enrollment period.

My question is can an employee who had previously elected medical insurance (pre-tax...Premium only plan) elect to drop coverage any time during the year without a "qualifying event" from occuring? (I would not think a company could require him to pay for deductions until the next open enrollment at which time he could decline coverage. I could imagine that there would be very many upset employees. And if they cannot change this election does anyone have a sample of the Premium Only Plan information that is given to new employees or current employees at Open Enrollment?)

THANKS!

There are severe inconsistencies (my choice would be bugs) in the 4.3 release.

1. ADP / ACP test - includes unconfirmed deferral transactions, EXCLUDES unconfirmed match contributions. (Supposedly fixed in 5.0)

2. Post with 415 limits EXCLUDES all unconfirmed transactions (Supposedly fixed in 5.0) How many of you have now blown 415 limits?

3. ABPT in the General Tests EXCLUDES all unconfirmed transactions. THIS IS NOT CHANGED IN 5.0 NOR IN 6.0!! How many of you now have bad agebased plans? Does everyone else check Q's additions to see if they are different in different reports? I view this as a serious bug and should print a warning at least on the screen, if not on the report.

I have had a Roth IRA for less than 5 years and read that it can be redeemed by a 1st time home-buyer without the 10% penalty (although the earnings would still be taxable). What exactly are the rules concerning the purchase of a house? If you could give me an informational website, it would be greatly appreciated. Thanks.

The plan document excludes commissions in its definition of compensation. This exclusion impacts 6 of 8 HCEs and 4 of almost 100 NHCEs. It seems that this definition would meet 414(s). Is this correct? Also, if it meets 414(s) would comp less commissions have to be used in running ADP test? The test is failed if commissions are excluded and passed if included. Any thoughts?

If a privately held company, whose only business is printing newspapers, wishes to establish an ESOP (most likely through a leveraged transaction with sellers using Section 1042) is there ANY requirement that the ESOP permit pass through voting?

From my research it would appear that the exception in Section 401(a)(22) provides that the newspaper client need not provide pass through voting. This seems very strange to me, and I feel like I am missing some issue. Would anyone happen to know the rationale behind this exemption?

I have searched the 1986 Committee reports and can find no printed explanation for this bizarre exemption.

In addition, is there another requirement somewhere that I am unaware of that would require the vote to be passed through (for example as Section 133 required)?

THANKS.

Hello, Can you explain what a "Hair Cut" provision is in Deferred Compensation Plans?

I'm looking for COB language that permits a plan to exclude dependent spouses who have coverage available through the dependent spouse's employer. Many shades of gray on this language. Or, a citation from ERISA or case law.

It is pretty clear from many other threads that top-heavy compensation is full plan-year compensation. However, should the full plan year include time during the year in which the employee was a union employee? The plan for non-union employees is top-heavy. A union employee becomes a non-union employee during the plan year and immediately participates in the non-union plan. Should this participant's top-heavy contribution be based on time both as a union employee and as a non-union employee, or only time worked while a non-union employee?

We have prototype plan documents that allocate forfeitures to all eligible participants. I have an issue where the forfeiture is extremely small. Some participants receive under 25 cents. Beyond amending the plan, are there any regulations that address de-minimus amounts for forfeitures?

We are trying to research the new regulations regarding statutory exclusions for ADP/ACP testing for plan years beginning after 12/31/98;

1. Am I correct in understanding that the new rule is an alternative, but does not replace the previous method of testing (performing two tests; one on the group of employees who meet statutory eligibility, and another test for the group of 'otherwise excludable employees')? May an employer elect to use either rule for testing, even after the remedial amendment period?

2. Allocation of QNECs for a plan using the new statutory exclusion rule. If a plan uses the new statutory exclusion rule for their 1999 plan year test and chooses to make a QNEC to correct a failed test, would the QNEC only be allocated to those NHCs who meet the statutory eligibility requirements?

I have a client who established a 401k in 1998 and let anyone hired on 5/1/98 defer ASAP but had to wait to share in match after 1 year eligiblity and dual entry date. I now have 3 people with a 7/1/99 entry date for match but have been deferring since 1/1/99.

My question is, for ADP/ACP purposes, do I use full year's compensation for both tests or full year for ADP and half year for ACP?

My software won't do this so before I go to the trouble of creating a spreadsheet in Excel, I would like to know if anyone has ever had this come up and what did they do.

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EAC

An employer would like to change the loan provisions in their plan document to force terminated participants to pay back any outstanding loans within 30 days of termination of employment. Right now, the plan document provides that participants who have terminated employment with outstanding loans may continue to make loan payments. It seems clear that this change can be made on a prospective basis. Can the change apply to 1) current terminated participants who are making payments on their loans, 2) current active participants who have outstanding loans? So if a current active participant with an outstanding loan terminated employment next year, could that participant be forced to repay the loan under the change in the plan document loan provisions?

Plan A merges into Plan B eff. 4/1/2000 (both are calendar years). Do I do an ADP test for Plan A from 1/1 - 4/1?

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Andy Treece