At the DB panel discussion at the ASPA conference, one of the speakers mentioned that a DC plan cannot be amended to have a short plan year (e.g. 11/1/99-12/31/99) so that a DB plan can be established with a calendar plan year beginning 1/1/00 with no 415(e) limitations?

The reason given was that a plan cannot be amended to accelerate the effective date of legislation. In this case, the amendment would be the amendment of the limitation year to the calendar year since the effective date of the 415(e) repeal is for the limitation year beginning after 12/31/99.

Does anyone have a cite for this?

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The plan year is 9/30/99. The plan document specifies that employees can defer between 2 and 5%. Everyone is within this range except for one employee who earned 165,000.00. He deferred 5% of 165,000.00, and should have been limited to 5% of 160,000. His contribution should have been limited to $8,000, but he contribed $8,250.00. The excess contribution is $250.00.

1. Should the money be a)shown on the allocation report and b) included in testing, or should the money be taken out like it was never there?

2. Does the client have an option to do a 1099-R or W-2, since the 1999 calendar year is not yet over?

3. Should the money stay in the plan and be advanced to the next plan year, or be refunded?

4. Should this be handled through APRSC?

Our thoughts at this point have been:

1). Take the money out of the plan like it was never there 2). Tell the plan sponsor to refund the money to the participant. 3). Give the plan sponsor a choice between issuing a 1099-R, or adjusting the W-2 form.

Thanks.

Check your Plan for the defintion of "Limitation Year" That is the period used to judge your 415 limitations. Hopefully they are the same even if your Plan Years are different.

If they are not the same, I believe that the employer generally makes a written resolution of which Limiation Year is controlling.

I am in the process of amending the vesting scheudle to a 403(B), at the sponsor's request. The new vesting schedule will be less favorable (from immediate vesting to a three year cliff, with a one year service requirement). What type of notice do I need to give to the employees about this change?

I have taught over 100 HIPAA classes the last few years and it is amazing to me that so many employers think that their insurance company can send all of their HIPAA certificates for them. There are so many times that only the employer has the information neccesary to complete a proper certificate. What are you all hearing from employers...are they paying attention to the certificates or do they think their insurance company is taking care of it?

I am currently dealing with an organization looking at establishing a 401(k)plan. The organization is a ski resort. They have approximately 35 employees who are considered full-time permanent, approximately 25 employees who are full-time seasonal and aprroximately 200-300 who are considered part-time seasonal. My questions is, if all employees other than full-time permament employees normally and customarily work a 6 month year, can they be excluded from participation if they do not complete a 1,000 hour requirement over a twelve consecutive month period? This questions is different for "seasonal" employees than for part-time employees. I have read 410(a)3 and this seems inconclusive. Anyone have an idea or who can point me in the direction where to look? I have asked many "experts" and they either can not provide a clear answer or disagree with other "experts".

The owners of a LLC were wondering how the comp will be calculated when they were a C corp until July 1, 1999. THey are looking to establish a crosstested plan and maximize their contribution. Would they add their

W-2 wages to schedule K income?

We have taken over a one person money purchase plan. The plan started 1/1/96. Both in 1997 and 1998 no money purchase contribution was made. Is there any way this plan could be exempt from making the maditory contribution or will they have to be made up. Also, for 1997 a 5500EZ was filed stating no contribution was made.

Does anyone have experience with concierge services for employees? If so, what have you put in place and how have your employees responded?

Does any one know how to get some basic information on retirement plans in Panama? Specifically a defined contribution plan, like our 401k. Or does anyone know anything about one?

Would a partner who is a self-employed individual with "earned income" exceeding $160,000 (for 1999)who is a participant in a qualified 401(k) profit-sharing plan which is integrated with social security be subject to the IRC Sec. 404(a)(3) deduction limit of 15% at both the partnership entity AND individual levels since the partner claims a deduction for the contribution on his individual return? Stated differently, if the plan allocation formula resulted in an allocation to a partner while the total contributions at the entity level were not in excess of 15% of total covered compensation, would each individual partner be limited to 15% of the applicable compensation limit? For purposes of this inquiry, please ignor the special rules requiring a reduction in the partners earned income for the self-employment tax deduction and for the plan contribution deduction.

In determining whether an individual owns 50% of the profits interest of a partnership for purposes of determining whether a purchase by such individual in the partnership constitutes a prohibited transaction, would any interest held by the individual's IRA in the partnership be attributed to the individual? For example, assume that X, an individual, holds a 20% interest in a partnership and X's IRA holds 30%. In determining whether X's IRA can purchase an additional 10% interest without violating the prohibited transaction rules, would X be considered to own 50% (X's interest and the IRA's interest) or would X only be considered to own X's 20% interest? (This example makes the assumption that the IRA's initial purchase of the 30% interest in the partnership was not a prohibited transaction itself). More generally, is there attribution from an IRA to its owner in the world of prohibited transactions? Seems like this may be considered "indirect" ownership. I just can't find much out there about what constitutes an indirect holding in determining who is a party in interest. I did find one case where a trustee's holding of a company through a qualified plan was aggregated with his direct holding of the company in determining that the company was a party in interest. My scenario seems fairly analogous. Thanks in advance for any help.

If a participant in a 401(k) plan terminates at age 60 with an account balance of 300,000.00 and elects to take an installment payment of 1,000.00 per month or 12,000.00 annually until his account balance is depleted, would this be considered a substantially equal periodic payment that would exclude the distributions from the definition of eligible rollover distribution? Would the answer change if the installment election was revocable?

Is a self-directed brokerage investment option that requires a minimum account balance for participation (imposed by the broker) considered discriminatory under 401(a)(4), both "current" and "effective" availability?

Have a not profit organization A that sponsors a 401(k) plan. Org A has a for profit subsidiary B that markets products, including investments for TSAs and qualified plans. Sub B has a subsidiary, C which is its broker dealer for securities for the retirement plan. The trustees for the 401(k) plan is the Vice President of HR & the CFO Org A and the Director of Consulting Services for Sub B. The Director is a registered representative for securities. The 401(k) plan investment options are asset managed accounts through a broker dealer. The trustees are considering replacing the current options with mutual funds from PUTNAM, through Sub C. The returns historically in these funds exceed the current offerings and the expenses are much less. The recordkeeping has been brought in-house and reviewed by an outside consultant. What issues should we be concerned with from a fiduciary and prohibited transaction stand point? The registered representative on the board would not be the account manager for the 401(k) plan. Any information would be appreciated.

This book, 401(k)Provider Directory Averages Book, is referenced in the DOL "Study of 401(k) Plan Fees and Expenses" as a tool to use in the investigation of fees. Has anyone ever heard of it? Who is the author and publisher?

Several questions regarding safe harbor 401(k) plans.

1. The employees must be notified at least one month in advance of the plan's effective date. Where can I find what the notice must contain?

2. Can the first plan year for a Safe Harbor 401(k) Plan be less than 12 months?

3. Can a Safe Harbor 401(k) Plan have a non-calendar plan year that is

(a) the same as the corporation's fiscal year, or

(B) different from the corporation's fiscal year.

4. What IRS notices, rulings, regulations etc. contain information on these plans?

Thanks

I am having difficulty with a payroll company. We believe we must gross up matching contributions at year end for employees who front loaded contributions in 1999. Definition of comp is w-2. The payroll company wants a cite because their system is not allowing it. Help.

Well, I've been reading in the Message Boards about excluding certaining classes of employees, and the terms "opting out" and "electing out" seem to come up quite frequently.

Legally, what is required of the employer and of the "electing" employee in order to take advantage of this election?

Also, what is the difference between "electing out" and "alienation of benefits"?

I'm investigating how to exclude an 85 year old HCE(still taking a salary) from a

401(k)Profit Sharing Plan. Excluding her by name is not an option (obviously). If the employer could use this "electing out" option in favour of excluding her in the text of the legal plan document, this would be ideal.

thanks for any ideas or suggestions.

I am pretty sure of this, but just to confirm, an individual participant may not, under 403(B)(8), rollover 403(B) assets into a 401(k)if their 501©(3)company now starts up a 401(k), correct? I think the assets must be maintained separately. Thanks for any comments.