We are taking over a plan that has a 401(k) plan and a New Comparability Profit Sharing Plan with 4 HCEs and 45 NHCEs. The plan is designed to allow for a contribution of $30,000 to each HCE, none of the HCEs make a 401(k) contribution, and normally this is not a problem to pass testing. This year for some reason, one of the HCEs made contributions of nearly $10,000 to the 401(k) plan. THE PROBLEM: The plan will not pass testing if we make a $30,000 P/S contribution to 3 of the 4 HCEs and a $20,000 contribution to the one HCE who made the 401(k) contribution. MY QUESTION: Is there some way we can "return" the 401(k) contribution made during this year to the HCE who made the mistaken deferrals? Can we hold it in a suspense account or treat it as an employer contribution? I hope someone can respond to this soon because I am meeting the client tomorrow. THANK YOU!!

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The Plan bases discretionary contribution on gross compensation excluding bonuses and overtime. The differential between the included compensation for the HCEs and nonHCEs is only 3%. Any advise on whether this differential would be considered di minimus for testing purposes will be appreciated. Thanks.

Participant in 401(k) plan is married and names spouse as death beneficiary. They divorce. Divorce decree does not mention retirement plans or employee benefit plans of any kind. Participant neglects to change beneficiary designation. Participant dies. Is there any argument that plan can pay death benefit to participant's brother instead of to ex-spouse?

Our VP just got back from ASPA and said that the general consesus was that cross-tested plans may be on the way out (given the increased scrutiny of aggressive plans in general owing to the cash-balance episodes of this summer). Anyone care to comment on this opinion (not mine, my boss's - however, a Democratic house in 2001 should surely bury these plans - my view).

I've seen several references to published IRS audit guidelines for flex plans, but have not been able to locate a copy. Want to do a self-audit for compliance.

Does anyone have an internet source? or other source?

Assume an employer maintaining a DC plan (which is not being terminated) has exercised its fiduciary duty to locate a number of participants in the plan whose account balances are payable, but has been unable to locate them (ie, assume diligent effort has been made - locator firm hired, IRS locator service utilized, etc.). In a DC context, what can the employer safely do other than to continue to maintain these account balances? Can the money be transferred to an interest bearing account for the account of the missing participants? Can the money be trasnferred to an interest bearing account for the account of the employer (probably not)? Can the plan be amended to provide that, in the event a participant cannot be located after diligent effort has been made, his/her account will be treated as a forfeiture under the plan (either reducing future employer contributions or reallocating to other participants)? I am aware of the missing participant program for DB plans, but would like to know what others are doing with this situation in a DC context (and when there is no plan termination).

Does anyone know of any company, law firm, etc. that provides the service of licensing TPAs in all 50 states?

Does anyone know of a company, law firm, etc. that provides the service of licensing TPAs in all 50 states?

Does anyone know of a financial institution that has a vehicle that will accept UK Group Personal Profit Sharing rollovers?

As I understand the rules the UK will allow a rollover should the withdrawl requirements of the UK be maintained.

Qualified Preretirement Survivor Annuities (QPSA) and Qualified Joint Survivor Annuities (QJSA) apply to a DB plan. Active participant (P) is married and gets spousal waiver to name daughter as beneficiary. P lives to retirement. Plan offers lump sum or annuity forms of payment. Need new spousal consents upon entering retirement status? (Same spouse).

For a DB plan, active participant (P) is married and gets spousal waiver to name daughter as beneficiary. Spouse of P dies and P's daughter still named as beneficiary. P remarries. Do we need a new waiver from new spouse if P does not terminate or does not become eligible for retirement?

An employee takes a loan and is about to start the repayments(to be withheld from his paycheck) and says he can't afford the repayments and that he took the money out for medical expenses and wants it to be deemed a hardship withdrawal? He signed all the necessary paperwork for the loan prior to the loan being issued. Can he change his mind after the fact? If the payroll department doesn't withhold the necessary amount, can it be deemed a distribution? I don't think so, but wanted to hear other opinions.

Does anyone know the Letter Ruling Number of the situation sited in the Oct 27th Wall Street Journal "Tax Matters" where a grandmother paid $163,000 in prepaid tuition for her grandchildren? The amount was non-refundable and was not considered a gift since it was classified as tuition.

I have an interesting situation: a client in her 80's converted her IRA to a Roth in 1998. The amount converted was in excess of $600,000. She died this year with a taxable estate of approximately $1.5 million (45% marginal rate), and her beneficiaries are interested in recharacterizing the entire amount back to a "regular" IRA before 12/31/99. Two questions: 1) Is it permissable for the executor to "step into the decedent's shoes" and recharacterize the Roth? 2) Is it advisable to do so, if this is possible? I suspect that the answer to the second question is negative, in view of the fact that the income tax on the remaining 75% of the conversion amount will be on the final 1040, resulting in an estate tax deduction for the extra income tax due, but I welcome any comments.

ER has historically matched 100% on the first 3% deferred & 50% on the next 2% deferred. Had a really profitable year, so they want to contribute additional matching contributions up to the 15% deduction limit. ER does not want to contribute this amount as a Profit Sharing contribution, only wants to reward those who have deferred 401(k). ER wants to contribute the additional match based on compensation. Is this a possible option? I think not. My thought is to allocate the total match dollar amount pro-rata based on deferrals. (total match dollar amount to get to deductible limit is more than two times salary deferrals) Please provide citations if possible.

My recollection is that such a change cannot operate to extend the TEFRA payout period -- in other words, you can't use a new, younger, designated beneficiary's life expectancy to extend the payout period.

Does anyone know the deadline to amend a prototype IRA document? In particular, we intend to amend a previously IRS approved prototype Traditional IRA with the current version of the IRS Model Form 5305 or 5305-A. If anyone knows the answer, would you please include the IRS reference.

An employer maintianing a DC Plan indicates that they had a DB Plan which terminated in June 1994. I have calculations of the annual accrued benefit at NRA for each participant at the time of plan termination and the lump sum benefit using PBGC rates (each participant elected this lump sum option). I also have years of service under the Plan, "high three" compensation data, as well as birth and normal retirement dates.

Could someone walk me through how I get to the 415(e) DB fraction--particularly with regard to the lump sum distributions, pre-social security age distributions and distributions to participants will less than 10 years of service?

When terminating a prototype plan, either standardized or nonstandardized, and the employer elects not to file Form 5310 (certainly against our advice), what sort of notice is given to interested parties? Is it ok to use the standard format and indicate that the plan is not being submitted? What date is used in place of the application date, which all the comment dates run from? Thanks.

A person is the agent of record or a broker of record for a particular plan. He provides guidance and assistance to the trustees in selecting the menu of funds that will be available for participants to invest in. He also assists with periodic review of fund performance, etc. He will not likely render any direct investment advice to participants (I don't know if this is a material fact or not).

The president of the company is a fiduciary by virtue of being involved in the review and hiring of the investment and administrative service providers. If the broker of record marries the president's sister, as is planned, would this in any way be a prohibited transaction?

The broker would be a party in interest as defined in ERISA 3(14) although I doubt that he will fit the definition of relative in ERISA 3(15).

Any thoughts on this??????

I know this sounds weird, but hey, I'm not making it up......

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