Determine the amount of profit sharing contribuiton to be allocated to Emplyee A for the PY ending 09/30/97:

-Total ER Contribution - 30,000

-Plan's integration level is the taxable wage base.

- 1996 TWB = 62,700

- 1997 TWB = 65,400

-Maximum possible integration

-only plan - no employees related

Part. Comp.

A = 160,000

B = 80,000

C = 40,000

D - 20,000

Answer is $17,409. I can't get to it??

A client has a question regarding whether or not a Church Plan is required to pay PBGC premiums on their defined benefit plan. They have been paying the premiums all along but have recently heard that if they are a church, they do not have to pay. Is this correct?

A Company will pay a former employee a lump sum settlement. Amounts will not be paid in accordance with Company's STD's policy, although the amount would equal aggregate amount of payments individual would have received under policy. Amounts are from employer's general assets. While general rule would treat these amounts as wages subject to withholding, does result change because amounts are received as part of settlement.

We have a client using a standarized 401(k) plan document, with the provision that forfeitures will reduce match contributions.

There are no highly compensated participants in the plan. The match is $1 for $1 up to $1,000. The company has high turnover and wants to net the match contribution. For example, assume during the '98 plan year 3 participants deferred $1,000 each. All three particpants quit before becoming 20% vested. Can the employer contribute a $0 match on their behalf? Or must the employer contribute the $3000 for '98 and then have it forfeited out?

Thanks for your help.

Is it possible to set up a 401(k) plan with a vesting schedule tied to the participation in the plan versus the length of service?

Thanks for any input.

When an Employer terminates his business in essence the Qualified Plan is also terminated as there is no sponsoring employer. Often times the Employer abandons the plan and the participants are unable to receive a distribution as no Plan Administrator is available to authorize the distribution. What steps should the Trustee (directed) take to terminate the plan and distribute the plan assets? Should these participants become fully vested? How should the final 5500 be filed? If the trustee signs is he taking in the Plan Administrators liability? Any comments and suggestions are appreciated.

Does anyone have an effective definition of disability for a Defined Benefit retirement plan? Would appreciate e-mail at jedens@surfsouth.com, or reference to aan available source.

Thanks

JE

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Are there any insurance companies that offer health benefits to retirees under age 65 at 100% of the cost to the retiree until they reach age 65? Then they would go on Medicare.

In other words, give them the opportunity to get health coverage at a group rate.

Can you forfeit a lost participant's balance after a number of years? Plan document says you can forfeit, but not until age 62 or Normal Retirement. Plan sponsors agree to repay into plan participant's balance if he is located. Balance is less than $10 and the cost to maintain his account is greater than this per year. Does anyone think it would be acceptable to forfeit in a case such as this? Any other suggestions?

We have a client who established a 401k plan 1/1/98. He had an existing ps plan at the time. January 31, 1998 he terminated the ps plan. The distributions still have not been made from the ps plan but will be soon. Are there any problems here tied to successor plan rules?

Any help would be appreciated.

We have taken over an account where the client has made loans out of his IRA to non-family members. The IRA holds the notes as an asset of the IRA and the repayment of the loans are considered earnings on the investments that are contributed to the IRA. The owner of the IRA is under 59 1/2 (if this matters). Is this a prohibitive transaction?

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I work for a small insurance company who is considering converting our defined benefit plan to a 401(k). Has anyone completed this task? How does it affect employees who are fully vested and those who are not fully vested? If someone could let me know all of the "implication" of switching, please let me know. Thanks in advance!

I am aware that the combined deductibility limit for a combined money purchase plan and profit sharing plan arrangement is generally 25%. Here's my question.

The Code also says that the deduction by a company of its money purchase contribution is the "full funding limit." Say for example we have a 5% of pay money purchase plan formula, and also have a profit sharing plan. The profit sharing plan has a 401(k) feature.

Is the maximum deduction allowed 20% (5% MPPP + standard 15% deduction for PS plan) or is it 25%. The idea would be to fund a 5% of pay MPPP contribution, and make up the add'l 20% by virtue of deferral and profit sharing and match? Can this be done?

Thank you for your help!

Official cite: IRS Announcement 99-57

I have a company that has filed their taxes for 1998, but now wants to make a Profit Sharing Contribution to their 401(k) plan. May they still make this contribution, and if so, can they ammend their tax return to reflect the contribution?

A new business is established on January 1, 1998. The firm wants to implement a SEP for 1998. Must this SEP have immediate eligibility (i.e. age 21 and 0 out of the last 5 yrs employment) or can eligibility still be conditioned on age 21 and working 3 out of the last 5 years for the employer with the understanding that everyone is eligible for 1998 since the company did not exist prior to 1998? Also, in any case, wouldn't everyone age 21 with $400 in comp for 1998 need to be included in the 1998 allocation, even those hired during 1998 but after January 1, 1998?

Thanks,

Mike

Can you borrow against either a ROTH or Standard IRA? If not, can you make withdrawals prior to age 59 1/2 without penalties?

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We are a private company whose stock is valued by the Board of Directors at quarterly intervals. We added a company match to our 401k plan in 1998. The match is in the form of company stock only. (Employees can invest their own contributions in 14 different funds managed by Fidelity.)

When we were setting up this plan we were trying to determine whether or not we would need an independent valuation of the stock. Our attorneys told us this:

"An employer contributing non-publicly traded stock in the form of a match to the employer sponsored 401(k) is not subject to the ERISA section 406 prohibited transaction rules. Specifically, section 406 refers only to "acquisitions" of employer securities. A contribution of employer securities is not an acquisition of securities for purposes of section 406.

Due to the fact that a contribution of employer stock in the form of a match to the 401(k) plan is not subject to the prohibited transaction rules, ERISA does not require an independent valuation of the stock. Valuation by an independent appraiser or independent valuator as required under the ERISA adequate consideration rules is not required in this situation."

We concluded that we did not need an independent valuation of the stock and implemented the plan. All seemed fine and dandy until our annual 401(k) audit. Our auditors are telling us that we do need to get an independent valuation.

Our company does NOT want to have to get an independent valuation of the stock.

Any of you wise and wonderful 401(k) experts have an opinion on whether or not we really need one? Any ideas will be appreciated.

Thanks,

Marie

I have a client who has announced that there will be a layoff in the near future. Many participants are looking to go to school to learn new skills before they are laid off. Several have expressed that they want to go to Truck Driver Training. Does this seem to reasonably fit the definition of post-secondary education?

Here's the scenario: You have an error in a participants' investments. In order to correct it you (the TPA, plan sponsor, trustee, advisor, whoever was responsible) make up the money difference to make the participant whole. On the other hand, let's say that making the participant whole results in a "profit" for you. How do you reclaim that from the trust? Doesn't seem right that you can't. Any ideas and cites?

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Richard