2muchstress

Thanks for the replies. I have been out of this industry for a few years and do not have access to all the resources I used to. My wife is the NP that is affected, so of course I'm trying to get her to 100% vested any way I can

A doctor's office with 4 doctors and about 30 employees. One doctor decides to leave the office to start a separate practice and she is taking a nurse and a nurse practitioner with her. The nurse and NP only worked for the one doctor who is leaving, they did not perform any services for the remaining doctors. All three are not fully vested. The split is not on amicable terms. Would this possibly qualify as a partial termination and allow all three to become vested? TIA

Thanks so much.

Would anybody be so kind as to tell me what ITO Amortization is with regards to PEBOPs and FAS 106?

Thanks to all who replied - this was very helpful to me.

Thanks Pax, I guess I should have been a little more careful to not confuse expense and contribution. My real question is about the differences between how the two are calculated. Specifically (and I may be wrong) - It is my understanding that the ERISA contribution is calculated based on the plan's funding formula which may or may not include using a "smoothed" value of plan assets, i.e. earnings spread out over a 5-year period. The FAS 87 expense does not use this type of smoothing. I don't know if what I just said is factually correct or not so I'm hoping someone can enlighten me. Also, what other differences are factored into the calculations. Thanks again.

Sorry for such a remedial question, but could somebody please take the time to explain the differences between the NPPC as calculated under FAS 87 and the pension expense calculated under ERISA? Thanks in advance for any clarification.

If my spouse is benefitting in a QP, am I also considered to be benefitting for purposes of making a deductible IRA contribution? Our income is over the phase out limits. Also, is she considered benefitting if she is only receiving an accrual in a DB plan? Thanks.

A participant had a 401k loan with a previous employer and wants to roll it over into the new employer's plan. Does the participant need to rollover enough cash to collateralize the loan? Example: Account balance is $30,000 ($15,000 in cash and $15,000 loan) Can the participant rollover the $15,000 loan balance to the new plan and then only rollover $5,000 in cash? Any thoughts, ideas, cites are appreciated.

Not that this will answer your question, but the last few IRS and DOL audits I've gone through, nobody has asked to see a Board Resolution. All of these audits ended up as being "accepted as filed with no changes". I don't know how much weight the IRS or DOL actually put on Board Resolutions.

The amount of the excess deferral (unadjusted for the earnings) must be included as taxable income in the year in which it was contributed (2002). This amount ($1,000.00) should be included in line 7 of Form 1040 for 2002. The attributable earnings (-$250.00) should be reported as “Other Income” in the year in which the funds were distributed (2003). Including a negative number as other income essentially gives you a deduction for the loss. I believe other income is reported on line 23 of the 1040, but it has been a while since I have looked at the 1040 forms.

But you do not purchase an apartment, you rent it. The safe-harbor hardship definitions say you can get a hardship to prevent foreclosure or eviction from your primary residence. If you are getting evicted, this would mean that you are currently renting, and not owning. This has nothing to do with the original post. I'm sure all of us would agree that you can receive a hardship to prevent eviction from your principal residence. However, the original post was about a purchase of a primary residence.

I think the last few posts have misinterpreted the original intention of this thread. You can be evicted from an apartment, and that would constitute a hardship. Nobody would argue with that. In this case, a participant is seeking a hardship to PURCHASE a primary residence. He doesn't own the residence yet, so you cannot equate it with the eviction clause. The issue is that the participant who is supposedly "purchasing" the primary residence, will have no ownership in the residence which he is supposed to be purchasing. You will not find anything in the regs about this scenario, because we all know from experience that regs do not address things on a common sense level.

No. Provided that you do not exceed the 402(g) limit during the year. You cannot contribute more than $12,000 to all plans in a calendar year, unless you are over 50.

Seems to me that this hardship is being used to pay rent to the brother and sister. Without ownership in the residence, the participant would just be a tenant who pre-paid his rent. And I would be willing to bet that the IRS would probably assume the same. I don't see how any rational administrator or sponsor could strectch the language like this. I agree with the last post, if I was a plan sponsor and had my 401(k) administrator telling me this was okay, I would seriously question the credibility of the administrator. (Unless the plan uses the facts and circumstances determination).

The argument I have from the DOL is that if an employer can make the federal tax deposits within 3 days after payroll, then there is no reason they couldn't be able to make 401k deposits. Which would basically mean that all contributions must be made by wire or ACH debit. Gone are the days of floating checks.

I'm working with a takeover plan that has over 200 terminated participants that the client wants to force out. When we submitted our invoice to the client for our charges to coordinate the distributions, withholding and federal filings etc., he was very unhappy - to put it mildly. The prior administrator used to deduct the distribution fees directly from the participant account prior to paying the distribution. It is my understanding that the DOL does not approve of this, but I am not able to find anything that I can use to convince the client of this. Does anybody have any insight on why distribution fees cannot be paid by the participant? Thanks in advance.

Practically speaking, I think that that's the easiest way to correct. However, the participant received the "deduction" in 2002 by not paying taxes on his entire income. Wouldn't it be better to amend the 2002 W-2 to reflect that he didn't contribute?

This would be the perfect time to amend the document to say something like forfeitures may be used to pay administrative expenses of the plan. Any forfeitures not used to pay administrative expenses of the plan will........(reduce future contribution, reallocated, etc. etc.). Atleast this way, you will never have to deal with the issue again. If there are forfs in a future year and the plan consisted solely of safe harbor contributions and deferrals for that year, you don't necessarily have to reallocate the forfs.

However, if an HCE did not exceed the 402g limit or the 415 limit, then the entire deferral IS included in ADP. The catch-up is only recharacterized after the test is performed and it will then reduce the amount of the refund.

Tom, what if the sitution was reversed, and the ADP refund was greater than the 402g refund. For example: Young HCE defers $11,500 for calander and plan year ending 12/31/02. 402g Excess is $500. For ADP, we use the 11,500 and the calculate return of excess contributions is $2000. Does the ADP refund correct the 402g refund - or are both refunds calculated independently? Thanks in advance.

Tom, Whenever I try to apply logic and common sense, there is always some dumb regulation that proves me wrong. How is it that everytime you apply logic, it works?

hpaine- generally speaking, you are correct. However the original post was in reference to top-heavy contributions. The top heavy determination is a test of existing balances as opposed to testing a contribution for discrimination. Safe Harbor balances still need to be considered when calculating a top heavy percentage, and if the plan is top heavy and there are additional contributions other than the safe harbor, then a th min. would need to be made. If the plan consists solely of deferrals and safe harbor contributions, and no additional profit sharing or forfeitures are allocated, the th min is not required, but the top heavy status should still be determined because it could have an impact on the plan sponsors decision making.

Um, I meant presidency - not pregnancy. That would be interesting!

As mentioned earlier, the only thing the Bush administration is doing is trying to score politically. The administration's domestic agenda has been lacking with the Iraq crisis, and approval rates have been slipping. Democratic candidates are starting to line up, and for the first time during his pregnancy, Bush is starting to look vulnerable. What do administrations do when they are becoming vulnerable? They throw out the same stuff the people always want to hear - prescription coverage for the elderly, research for more efficient use of natural resources, toss in some money for AIDS research, throw in some tax cuts, and then top it off with a naive plan about how to shore up worker's retirement. All those issues play well to the general voting public. Issues that the administration has never been concerned with before, but has to be concerned with now or risk losing in two years. Fortunately Congress will have to pass the laws, but I'm still debating whether 535 idiots is better than just one.