Short answer is that stating that the maximum elective deferrals is the Section 402(g) limit ($10,000 in 1999; $10,500 in 2000) is permitted. One doesn't have to state a maximum contribution percentage

Some reasons why having a maximum contribution percentage might be a good idea:

- Your 401(k) recordkeeper might require that its plans state a maximium contribution percentage.

- To keep contributions (especially from nonhighly compensated employees) rising when employees' compensation rises, you might prefer employees to make elections in terms of percentages of compensation, not dollar amounts. Elections as a percentage of pay may be more consistent with your communications campaign.

- Elective deferrals in excess of the 415 limits may be refunded only for certain reasons. I'm paraphrasing the regulation very loosely, but in general one can only correct 415 amounts if the error wasn't reasonably foreseeable. This is the reason most plans set the maximum contribution percentage at no higher than 25% minus the percentage of pay of all other defined contribution plan contributions and forfeitures.

Can anyone assist me with information concering Multiple Employer 401(k) plans? Do Employee Leasing companies use them? How do they differ from single employer plans?

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An IRA owner must calculate the RMD on each IRA separately but is allowed to withdraw from all or any one. Can an heir who has more than one inherited IRA do the same?

When a nonspouse beneficiary inherits an IRA after the RBD (joint life expectancy, owner's life recalculated and beneficiary's term certain) what is the proper method of determining the RMD? Pub 590 page 25 under "If you die and your designated beneficiary is not your spouse" states that the heir must use his life expectancy as adjusted by the single table. (Start with the joint life expectancy in the year of 70.5, subtract the number of years that have elapsed, find the closest to, but less than figure in Table I). This is quite different than Section 1.401(a)(9)-1 Q & A E-8 Example 2. In the reg, you simply subtract the number of years that have elapsed from the intial joint life expectancy.

Also, has anyone noticed the error in this Example 2 of E-8?

"The calculation of the minimum payment for 1989 is as follows:

1) Life expectany of brother (DOB 7-20-1920) (using age as of birthday in calendar year 1988 from Table V of section 1.79-9) = 18.4"

1987 was the year of 70.5 in the example. 1988 was the year of death. The life expectancy of 7-20-1920 brother would be 17.6 when 68 years old not 18.4 as stated.

Do you agree that the error is in the year? 1988 should read 1987--the year of 70.5. Right?

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I have a client who has a 401(k) plan which is currently matching 50% of each participants deferrals. Matching contributions cannot exceed 6% of salary. Also, the plan is top-heavy. The client would like to adopt a safe harbor plan to avoid the ADP & ACP failures it consistently encounters as well as meet its top heavy contribution requirements. If the plan makes a safe harbor contribution via the 3% nonelective contribution, am I correct that the top heavy minimum contribution requirement as well as ADP safe harbor test would be satisfied? And, I believe the current matching provision would need to be amended to limit matching contributions on no more than 6% of salary to meet the ACP test safe harbor. Comments please...

I am trying to compile information for my understanding on worker's compensation (wc) insurance from an employer's standpoint.

I understand there are classification codes for different industry areas. What are they?

How much wc coverage does an employer have to carry? Is that their call or does some governing body determine that amount?

Am I correct in my understanding that interest on a participant loan to an HCE is never deductible - even if loan is secured by the HCE's home?

Sole-proprietor currently sponsors SEP (via model Form 5305-SEP). Wants to adopt paired MP & PS Plans for 1999. Glitch - has already partially funded SEP for 1999. Rather than transfer SEP to a prototype (to allow a companion QRP) and coordinate the "discretionary" contributionn between the SEP and the PSP for 1999, can client request a refund of his 1999 SEP contribution (plus income) in order to, in effect, "un-do" the SEP contribution?

I have a friend who is having money deducted for a savings plan. She has asked for a prospectus of the plan and has been denied. What are her options?

Are there any restrictions on owners pertaining to obtaining loans against their 401(k) if the plan allows such arrangements?

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[This message has been edited by msearle (edited 11-07-1999).]

Can participants of a 401(k) plan roll over company stock after they have left the company and begin participating in a new company's 401(k)? In other words, the previous employer's stock is down, and the separated employees don't want to cash out or roll over to IRA because they want to be able to take a loan out against it.

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We originally filed a full Form 5500 without the required audit report, but we are eligible to file a 5500 C/R (with no audit requirement). Can we now file a Form 5500 C/R for that prior year to replace the full 5500 that was originally filed?

We originally filed a full Form 5500 without the required audit report, but we are eligible to file a 5500 C/R (with no audit requirement). Can we now file a Form 5500 C/R for that prior year to replace the full 5500 that was originally filed?

We originally filed a full Form 5500 without the required audit report, but we are eligible to file a 5500 C/R (with no audit requirement). Can we now file a Form 5500 C/R for that prior year to replace the full 5500 that was originally filed?

My son is 17 and we are in the midst of applying for colleges. We have filled out the CSS Profile, and find that our Adjusted Gross Income (AGI) is increased by $25,000 because of a Roth IRA rollover. Does anyone know how to get the rollover off the front page of the income tax return. If not, how does one complain to the IRS about this inequity? Any help would really be appreciated!

For information on the financial aid consequences of a Roth, go to www.rothira.com/finaid.htm.

I have a client who is coming up against the 404(a)(3) limits on deductible contributions to his 401(k) Plan. The "problem" is the NHCs really like the Plan, and all want to defer 15% of pay or more.

As I understand it, "compensation" is net of 401(k) deferrals.

In addition, though you are "benefiting" under the Plan for 410(b)if you are eligible to defer, 404(a)(3) requires you to be a beneficiary under the Plan to include your comp in the 15% calculation.

Stop me if I'm wrong anywhere so far.

We have one new employee who's eligible to defer, but doesn't want to.

The Plan is to have her agree to defer $1.00. This would allow us to consider her compensation for 404. It doesn't foul up the ADP test too much.

I guess the question I have is, next year, she'll still be a beneficiary of $1.01, so I would think, even if he/she makes no more deferrals, I can include the compensation in the 404 calculation.

As for the excise tax on non-deductible contributions, assuming 415 limits are OK, if you make the deferrals required by an employee's election and the match required by the terms of the Plan, does anyone think they might the excess over the 404 limits could be deductible under 162? Just a thought...

I knew it had to happen eventually; I'm dealing with my first case where the Employer withheld deferrals and did not deposit them-period. No grey area,he admits he didn't do it, and does not have the money. QUESTION: Who is liable for money? Obviously the Owners,but does liability extend to non-owner Trustees? How about employee responsible for bookkeeping? Anyone else? Any cites would help. Thanks for any info.

PLR 199930015 recently held that LTD coverage provided by a VEBA and obtained either through purchase of new coverage or by modification of existing plans is attributable to employee contributions for purposes of Code Section 104(a)(3), even when the employer acts a conduit for the purchase of coverage or the payment of premiums, such that benefits received under such plans are excluded from employees' gross income. Specifically, employer either purchased coverage and reimbursed itself through after tax payroll deductions, or paid for premiums and include premiums in employees gross income, with additional payment to employees to compensate for cost of coverage & additional income tax burden. Am wondering if the result was directly related to use of a VEBA or if it would also apply to the same practice (employer as conduit), without a VEBA. I have also posted on VEBA board.

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PLR 199930015 recently held that LTD coverage provided by a VEBA and obtained either through purchase of new coverage or by modification of existing plans is attributable to employee contributions for purposes of Code Section 104(a)(3), even when the employer acts a conduit for the purchase of coverage or the payment of premiums, such that benefits received under such plans are excluded from employees' gross income. Specifically, employer either purchased coverage and reimbursed itself through after tax payroll deductions, or paid for premiums and include premiums in employees gross income, with additional payment to employees to compensate for cost of coverage & additional income tax burden. Am wondering if the result was directly related to use of a VEBA or if it would also apply to the same practice (employer as conduit), without a VEBA.

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