I have a couple of questions regarding a 401k plan for a sole proprietor. First, if a sole proprietor defers more than the allowed $10,000, how long do they have to have the money returned to them without 10% penalty (March 15 or April 15 of the following year?) Second, if the tax return for the past three years is amended for lesser Schedule C, and the ER has been putting in the max 15% profit sharing contribution had been allocated, how do we correct for a lesser allowed 15% based on lesser Self-employed income? Is there a 10% penalty for those years for contributing too much or can the excess be returned to the employer? Any assistance in this matter would be appreciated!

I'm looking for several companies to include in a vendor search that specialize exclusively in ESOP's.

Any ideas?

I have a client that converted his Standard IRA to a ROTH IRA in 1998. He set it up to pay the taxes over the allowable five year period. He died this year (1999). Is the full amount now taxable in 1999, or is there some way to defer some of the taxation to future years? (If it is important, the spouse is also deceased but there are surviving children.)

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[This message has been edited by SPollock (edited 07-29-99).]

I am looking for a list of plan limits that will be altered by having a Short Plan Year in a new 401(k)PLan. Input would be appreciated.

Thanks

Is there any feasible recourse against an employer which refuses to give summary plan documents, statements, balances, the name of the plan administrator, or any information concerning its 401k plan? Ex-employees are unable to rollover their money. All we have are our pay stubs showing the withdrawals for the 401k plan.

Can someone confirm that the following meets the safe harbor guidelines: Employer's plan allows EEs to defer immediately, but EEs are not eligible to receive match until they have one year of service, at which time they will start getting the match on the next plan entrance date (Jan 1 or July 1). As long as the contribution safe harbors are met (ADP & ADP), there's no problem with keeping these eligibility requirements, are there? Thanks.

Assume an employee takes an unpaid break for a pay period then returns to work. There was zero pay, and a zero deduction. On the next paycheck should I deduct 100% of the money owed or can I spread it out? If I spread it out over payperiods, how far can I do that? Is there a difference if it is an employee plan being run through the POP? Thanks.

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Client is acquiring Company A in a stock deal. Company A has recently disclosed a serious operational error and Form 5500 filling mistakes for their Retirement Plan. Assume for our purposes that Client has no option other than assuming liability for the shoddy Plan. In order to negotiate a hold-back amount for the transaction, Client has asked us to quantify the Worse Case Scenario if the Service were to disqualify the Plan. (The Service is currently auditing Client and therefore, Audit CAP is the only available correction program if this matters.) Retirement Plan as about 160 participants and $5.5M in assets.

Any idea how I would begin to quantify?

Thanks in advance.

Aside from the RPA '94 rules. Say in the history of a plan the company amends from time to time the definition of actuarial equivalence. Is it necessarily true that the lump sum a participant could have gotten at the date of change grandfathered in some way. It doesn't appear to always be stated in plan documents.

Say a company discovers that they made a mistake and they gave al retiree an extra $100 per month. Say the company discovers this several years after the person began receiving a pension. Can they correct the mistake and then pay the smaller benefit? Has it been done?

Assuming a plan allows loans to be repaid over 5 years, what is the required maturity date of a loan that was taken out to refinance a previous loan. There appears to be two possible answers here: reamortize the loan with a maturity date five years from the date the original loan was taken out, or reamortize with a maturity date five years from the date the new loan is taken out.

I guess what it boils down to is whether the second loan is considered a new loan. Any guidance or information would be greatly appreciated.

In a Community Property state (California), a husband contracts with his wife to give his son 40% of the husband's government plan retirement benefits should the husband die first. The husband dies. Is the wife required to give the son 40% of the benefits? or may she keep all the benefits since the husband did not otherwise will it away?

A client of ours sold his stock in a small company to a newly created ESOP. 30% of the sale proceeds were in the form of a note. The terms of the note do not require any payments during the first 12 months. The balance of the proceeds (70% cash) were investing in qualifying 1042 securities. If he purchases additional qualifying securities with the note proceeds, will it qualify for the 1042 deferral? (Even though the proceeds won't be collected within the 12 period following the sale?)

And, can the 30% which was sold for a note qualify as an installment sale? (Assuming we don't get the 1042 deferral.)

Any comments are welcome. Thank you.

I would like to have suggestions regarding the creation and implementation of financial education materials to a diverse and decentralized work staff. Our DC provider offers 27 funds which has created a lot of confusion with our participants. Some participants need the very basics such as the difference between a stock and a bond and then we have others at the other end of the spectrum that are very financial savy. Any ideas on how to go about creating the materials and how to present them? Your suggestions would be greatly appreciated.

Can anyone tell me if there are any regs against an employer paying 100% of the premium for salaried employees, but a reduced percentage for hourly? This is a small, non-union business with a fully-insured HMO. Thanks.

If a plan requires that a participant's deferral contributions get suspended for a twleve month period after they take a hardship distribution and allows for multiple distributions in a twelve month period, how is the suspension of deferrals handled? For example: Jane Doe takes a hardship withdrawal in 8/98 to pay for her daughter's tuition for college and takes a second hardship in 2/99 to pay for unexpected medical fees. She suspended her contribuitons to the 401(k) plan effective 8/98. Does her hardship suspension end 8/99 or is it extended to 2/2000? Thanks.

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AOlson

We are looking for COBRA forms (initial notice and election forms) in Spanish? Would anyone be willing to share or are they published on the web anywhere?

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CGleaton

My aunt works for a nation-wide company which planned to down-size 3000 employees. Her company offered its employees an early retirement package with two years pay in wages. My aunt was planning to retire in two years anyway (She's 55 and has been working for the company since she was 18 yrs. old.), so she opted for the offer. She and several of her coworkers of equal seniority were not selected for the retirement offer, and numerous individuals with less time with the company were chosen. In the early 1990's, her company offered the same exact retirement package, and employees were primarily chosen by seniority. Unfortunately, I am not cognizant of her union's current contract with the company. In case the union agreement doesn't waive any seniority rights, my question is: Does this case have grounds for a class action suit under the protection of ADEA or its Older Workers Benefit Protection Act amendment? I appreciate any feedback on this matter.

I don't know how the DRO you have is worded, however, most I've seen related to a 401(k) plan simply state a dollar amount to be assigned to the AP. In this case, in my opinion, it would be irrelevant how the AP and attornies arrived at the dollar amount as long as there is enough money in the participant's account to cover the AP's portion assigned by the QDRO.

I feel our attornies would reject a DRO that mentioned moneys from a terminated plan and let the AP's attorney re-write the DRO.

Do all states allow for an employee participating in a SIMPLE IRA to exclude the employee deferral contributions from his income for income tax purposes? I have heard that there may be some states which don't recognize SIMPLE IRA's and require taxpayers to add their deferrals to their income for State tax reporting?