A C corporation that maintains a qualified profit sharing/401(k) plan converts to an S corporation. Loans of the participant/owners are not repaid. Two years go by. What are the corrective measures? Are the loans taxable distributions at the time of the conversion? Is there also a prohibited transaction tax due? Is this an issue for VCR? All comments welcome.

I am looking for a information regarding corporate credit union membership for an approximately 450 person organization. Perferably, I would like to find a credit union that could 'set up shop' onsite. Any recommendations or information is greatly appreciated!

Thank you.

We have a client who presently has a 401(k) with a discretionary profit sharing contribution option. It is a calendar year plan. The client would like to amend the profit sharing allocation from a straight allocation based on comp to a cross tested plan effective for the '99 year. We are using a standarized document. Isn't too late for the '99 year?

Husband-owner, wife primary beneficiary; husband dies and wife takes the check (constructive recpt) out of the dec. husbands IRA (dth distrib). She cashes the check. A week later walks the check over to another investment provider and wants to open a beneficial IRA and would like to now rollover the dollars. (CPA suggested this transaction) Can the spouse rollover beneficial dollars? Yes, it would be a better transfaction to move money from a beneficial IRA to a beneficial IRA as a transfer, but the client has already cashed the check.

Is the following assertion correct?

A taxpayer can recharacterize his Roth IRA (which was the result of a conversion in 1998) to a traditional IRA by October 15, 1999 as long as he filed a timely return, even if he was not over the $100,000 limit or did not mark his return "married filed separately." (i.e. taxpayers can recharacterize by October 15, 1999 for any reason, as long as they filed a timely return)

Is it permissible for a DB plan to allow retired ees, in pay status, to return to work on a part-time basis and continue to draw on their pension? Are there any restrictions on the age of the re-hired ees? What about the general rule (which I've often seen stated but never seen a citation) that DB plans may not allow in-service withdrawals?

How are participant loan repayments applied to recordkeeping sources (e.g., pretax, employer, aftertax)?

Are loan repayments typically made back to the same sources the loan originated from?

I know loan repayments can be directed into different funds than the loan came out of; what methods of repaying by source are open to a plan sponsor?

Where a plan participant has received inadvertant overpayment of retirement benefits, can plan fiduciaries obtain a prejudgment writ of attachment with regard to the overpayment? By virture of holding the writ, can they conduct extraordinary discovery regarding the participant's use of the overpaid benefits??

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72(p)applies to direct and indirect loans to participants. If a participant in a wide open participant directed plan wants to make a loan to a family member, say an adult child, would that be considered an indirect loan to the participant subject to 72(p)? Assume that the loan is made at commercial rates such that it is not a below-market gift loan. I have not been able to find any rulings on this issue, although my feeling is that the IRS would treat such a participant investment as an indirect loan to the participant and a deemed distribution.

any thoughts or comments would be welcome

Kurt

Kurt

hopefully you won't have as much 'fun' as I have had trying to get your reports set up for conversion to 5.0.

anyway, this is the scoop from the National Council Meeting just held:

ALL custom reports must be modified to Oracle. This is true whether you have been running Gupta or Oracle! ALL custom reports have 'remnants' of Gupta, simply because of the way the system works. Surprise, surprise.

At the meeting it was strongly recommended that you modify the reports before converting to 5.0. In fact, the term 'MUST' was used, although by the close of the meeting, it was stated that there might be a way to do this process after converting - a method was being tested.

all that being said, converting has been anything but easy - from my point of view. Lack of adequate documentation.

1. you may have to edit your ODBC and ODBCINST to remark out references to Gupta.

2. there is a 4 page step by step walk through of modifying custom reports available. obtain this from Quantechland.

3. make sure while modifying your reports you either save under a different folder or under a different name. speaking from experience I have modified some reports that can no longer be opened. Thank goodness I renamed the originals.

4. Most of my SQL Tables after conversion end up simply as (example) PLANEE, but a few end up as SYSADMIN.PLANSTAT

The original instructions I was given was to set the location on PLANSTAT a second time to get rid of the SYSADMIN

If I DON'T do that, my report is still useable at 4.1 If I reset the location for PLANSTAT I can no longer use that report.

and all this before converting to 5.0! I have sent a few reports to Quantechland for them to try at 5.0 before I go further, so that is the best I can tell you at this time. Hopefully more information shortly.

At 5.0, a number of tables have been eliminated, and new tables created. This means you will have further adjustments to be made to the reports at 5.0. The original documentation was not the greatest - there should be some better documentation available soon from Quantech.

(Your National Council Members at work for you!)

my apologies if I have left something out!

I was just informed by my CFO that we are being audited by the IRS. Among other things, they are requesting us to provide our COBRA Procedures Manual when they visit. We don't have a "Procedures Manual", but have always followed the same guidelines that our agent uses with his other clients. Where can I get some help on this? Obviously, I need this information quickly.

For employees (non-key, non-highly compensated) who take out hardship withdrawals, should they still receive 3% mandatory Top Heavy employer contributions?

Thanks

I was wondering if anybody has ever heard of an employer assisting it's employees with student loan reimbursement after graduation. My employer pays for tuition costs to attend school - however, I started working for them during my last year of school. I am trying to get them to pay my student loans off in the same manner as they pay for my tuition costs since I am using the education that they would have paid for anyway. If you have ever heard of this kind of program, or know of somewhere I can search for information about this, let me know. Thank you.

What mortality table shoudl be used to take into consideration mortality for nonaccount balance plans when determining the current amount for FICA? The 31.3121(v)(2) reg refers to the 415(e) mortality table, which refers to 807(d)(5)(A), which states "the prevailing commissioners standard tables.

I went to the Society of Actuaries and downloaded thier tables for annuities. None of these consider joint lives, but are all single tables. All the examples in the reg refer to single life tables. (1984-UP, 1983 GAM) Do you count single life only as the survivor benefit is nonemployee compensation???

At first thought, I looked at the QJSA Table VI under IRC 72. My joint lives give me an expectancy of 23 years. The plan provides for a payment period of 15 years with a survivor benefit if the participant dies before the 15 years. If they both die prior to 15 years, payments stop. But, it seems they should get some consideration for mortality assumptions.

Has anyone done this calculation for a joint life benefit? What mortality table should be used? Any help is greatly appriciated?

[This message has been edited by Dawn Hafner (edited 08-16-1999).]

In simple terms, could someone help explain to me the differences between 401(k) transfers and rollovers. When would an individual use one over the other?

"Final Avg Earnings" means avg monthly amt of Compensation during 3 consecutive yrs, within the last 10 calendar yrs prior to termination, which shall produce the highest avg.

Participant works from 1977 till 9/1/97.

What period can be considered in determining avg pay?

A privately held company serves as its own 401(k) Trustee (and Custodian) and wants to offer its stock as an investment option for participants. In order to accomplish this, they have elected to allow participants to self-direct to any investment (stocks, bonds, etc. Theoretically, one of which may be company stock). Their belief is because employees can buy any stock, they can offer their own. But, as a very closely held stock, shares will not generally be available to just anybody (shares would have to be purchased from an existing owner without the involvement of a broker - treasury shares would not be made available). Is there a problem with this? In particular, because employees are technically able to purchase company stock (though in reality will not have the opportunity), is the company covered w/ regard to ERISA? Particularly, if it results in only HCEs having the opportunity to purchase company stock?

Short term disability or sick pay are generally treated as mere payroll practices not subject to ERISA. But if an employer wants ERISA coverage to avoid state mandated benefits, it can set up a trust and Plan Documents. Does anyone have experience with this ? How much hassle to handle the reporting requirements? Must checks be cut seperate from payroll or could the plan reimburse or prefund the employer's payroll check ?

An "underfunded" DB plan is terminated and lump sums are paid and a Single Premium Annuity is purchased to provide the immediate and deferred benefits for those who didn't elect lump sums.

The Sponsor deposits $5 Mil. to cover the additional money needed to cover all the payments (lump sums & contract). This contribution was deducted.

It's now 2 years later and the annuity contract is just getting settled and low and behold the Sponsor actually gets a refund, ($50K).

Is this considered a reversion? Are there any corp. tax implications?

Has anyone converted to 5.0? If so were you able to convert your Crystal Reports? Where there any other major problems with the conversion?