Looking for help with the following exam question ****** ER creates a new product line and hires 20 production EE in early 98. All 20 will become eligible to participate in 99. EEs are paid min wage and ER anticipates that few, if any, will choose to defer into the 401(k) plan. ER is concerned that HCEs will not be able to defer the 402(g) limit because ADP test will fail resulting in refunds to HCEs.

Discuss design features of safe harbor 401(k) and how it could meet the needs of HCEs for PYE 12/31/99.

ER is concerned that safe harbor ER contribution is 100% vested and wants to maintain the curent 2/20 vesting schedule for all ER $. Discuss 3 alternative features available in a 401(k) plan which could help to accomplish ERs objectives w/o using safe harbor.*********

Am looking for case info on any Federal District Court and/or Circuit Court dealing with the $100/day penalty for failure to respond to a Participant request for information.

Does anyone know of any recent cases which actually awarded the penalty to the plaintiff? Also, is anyone aware of the Dept. of Labor's position on this issue?

Any help is appreciated.

I recently remember reading that matching contributions can be used to offset the top heavy minimum benefit requirements. Does anyone use matching contributions to offset top heavy minimum benefits. I have read the regs and they seem to state that you cannot offset the TH minimum benefit with the match.

Thank you for your response.

How are short term capital gains handled

if investing inside a Roth IRA?

Thanks!

Rusty

Can someone specify the IRS reg stating that a Roth IRA prior-year contribution must be made BEFORE filing your tax return. If a person files their return in March and decides to make a prior-year contribution to a Roth IRA before April 15th, they are not affecting the amount of taxable income nor the amount of tax due. Traditional IRA contributions naturally must be made before filing, but I've not seen any citation of the Roth IRA falling under the same rule.

Re; PSP/401(k). Employer wants to terminate 401(k) part in mid year.Questionis; to terminate(& amend the adoption agreement etc.) or to freeze 401(k)&401(m) provisons and let each participant acct. with the investment provider until a distribution event?

Thanks for help.

I have recently become self employed and rolled over my previous employers 401K account into a Self Directed Traditional IRA. As of a few days ago, I have requested and received a distribution check from my IRA with which I intend to pay off all my credit card debt. My question is should I take the money I withdrew from my IRA and open a ROTH IRA with this money, then take the distribution from the ROTH and not have to pay the 10% early withdrawl penalty, since I am only 51, realizing that I still have to pay the 28% income tax next year on the Roth distribution?

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Jim

I thought this was resolved about a decade ago!

I just picked up a prototype DB plan that is funded with insurance. They are using a different mortality table for lump sum equivalence for males and females.

When I discussed it with them, they indicated that the Norris decision only applied to plans with at least 15 participants (this plan has three participants), and that they have a 1995 IRS approval.

Did I miss something? Isn't there something in the Code about this?

Meanwhile, I have to calculate a lump sum based on the terms of the plan document, which for now has a different mortality table for males and females!

What did I miss?

Is our adoption assistance program an ERISA welfare plan? I have not been able

to find any DOL advisory opinions on this topic.

Is our adoption assistance program an ERISA welfare plan? I have not been able to find any DOL advisory opinions on this topic.

I am looking for articles or statistics that can speak about costs over the past 3 0r 4 years.

Any help would be appreciated.

Can anyone give me authority for excluding nonresident aliens with no US earned income from ADP testing. I see that they are excluded from the definition of HCE under 414(q)(8), but I think that just implies that they are not considered employees for purposes of identifying HCEs and, therefore, there is no such thing as a nonresident alien HCE. In turn, that implies that a company’s nonresident aliens are NHCEs because an NHCE is an employee who is not an HCE. The ADR for all the nonresident aliens is zero and brings down the ADP for NHCEs.

I see two possible arguments if there is no cite directly on point. First, I am thinking 401(a)(4) is authority. 401(a)(4) excludes nonresident aliens from consideration when determining whether a plan is nondiscriminatory. Since satisfaction of the ADP test is deemed satisfaction of 401(a)(4), then nonresident aliens are excluded from ADP testing.

Second, under regulation section 1.401(k)-1(g)(4), the definition of eligible employee is an employee who is directly or indirectly eligible to make a CODA. The plan I am reviewing does not exclude nonresident aliens from eligible employees; therefore, nonresident aliens appear to be eligible. However, they don’t have W-2 compensation and therefore have zero compensation under the terms of the plan. It seems that they are not directly or indirectly eligible to make a CODA.

Can anyone help with authority in the regs, an IRS ruling or notice, improve my reasoning (well, that shouldn't be too tough).

Does anybody have a draft ruling request under Rev. Proc. 90-49 that I might be able to look at for style? Thanks. Ed

Recently had a plan brought to my attention that is top heavy and also provides that a certain class of employees is excluded from participation. The question is whether these employees who would otherwise be eligible to enter the Plan (over 21 and completed 1 Year of Service) but for their employment classification have to receive the top heavy minimum contribution. The top heavy regs drafted back in 1984 mention that employees barred from participating due to level of compensation (the old "excess-only" plan) or who are not electing to defer (401(k) plan) must receive the top heavy minimum; they don't mention employees in excluded classes of employment who are not participants. What are peoples' thoughts on this situation (admittedly pretty rare as most TH plans usually are of such small size that exclusions would probably run into ongoing 410(B) problems).

This is becoming more common. Plans with different elgibiity for 401(k) and Profit Sharing. Sceario is this. Top Heavy Plan: 401(k) entry is 3 months of service and Profit Sharing is 12 months. Both have quarterly entry. If an employee is hired in Dec 97 for a 98 plan year, would he need to have the required top heavy contribution?

Is there any reason why a SEP cannot invest in a private placement of stock in a community bank?

Is it permissable for an employer to withhold a final distribution for 3 months from the employee's termination date? If it is why is it so? Does the 60 day notice play into this type of restriction?

Can anyone please offer me guidance if a 457 plan can allow for loans?

Can you tell me if there are any rulings from the IRS on this topic and if so, where I could locate them?

Thank You

I have an IRA through my company's 401(k) plan. Its value is around 35K. I am planning to begin graduate school this fall and want/need to tap into the fund to supplement loans for expenses. My questions are:

Rolling this 401(k) to a standard IRA and then to a Roth IRA will not push me over the 28% tax bracket for income in 1999. So, I roughly estimate about a $9800 tax that will be due for converting this 35K IRA to a Roth. Is this correct?

Once this is converted, can I somehow withdrawl money from the principal amount for educational expenses and not have to pay the 10% early withdrawl penalty?

Who collects this 10% early withdrawl penalty anyway? The IRS, or the company the account is with?

If anyone can help, I would appreciate it.

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Matt

A company makes an annual 401(k) match in the form of publicly traded company stock. Currently, they value the stock based on the average market price on the day preceding the date of transfer to the trust. They are wondering what latitude they have to use other valuation dates--e.g., date that the Board approved the contribution, year end valuation date, etc.--and whether these valuation dates need to be reflected in the Plan document or other materials.

I'd be interested in any thoughts or experience out there!

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