Lori H

If a participant terminates at age say 63 with 60% vested in their account, leaves their account in the plan and does not take a distribution post age 65, are they 100% vested? Thanks

A profit sharing plan has a is 4/1/2011 through 3/31/2012 plan year. Does the 2011 limits or apply or the 2012 limits? Thanks.

402©(4)© does not mention mandatory on 59 1/2

A participant wants to take a withdrawal from her account. She is over 59 1/2. The plan does not have in service distribution. Only loans and hardships. Since a hardship is not an eligible rollover distribution, she is only electing 10% FIT with held. However, the custodian of the account is stating that funds must have the 20% mandatory with holding since she is over 59 1/2. Is this accurate?

Thanks for the link. in short, yes the participant would be 100% vested, is how I interpret the language.

A participant terminated in 2001 with 100% vesting and was paid out of the plan. He returned to work for the company in 2011. Are all of his YOS included for vesting? Thanks.

Generally, who would be considered plan fid in a small (less than 20 participant) plan? Board of directors? investment adviser? non-producing TPA? corporate? What is most common?

Would someone give me an example of how a participant goes from an eligible to non eligible class? I have a participant in a Safe Harbor 401(k) who went part-time (approx. 400 hrs a year) and need to know if she is still eligible to particpate in the plan. Thanks,

Thanks for your comment. If the plan defines comp as W-2, would that cover the sole pro too?

married couple has an 1120 company. He w2's 50K, wife is 20K. Net profit is appx 170K after they pay themselves. He also has sole pro income of appx 100K net, 140K gross. He also receives w-2 from outside sources. They are interested in reducing their taxable income. Neither participate in any other qualified plan nor do they plan on having employees. He is a software engineer and the major reason a corp was established was to avoid the Sched. C, however, not every company the husband contracts with are willing to pay him through the corp. I'm thinking a PSP would allow them to put 25% of 70K away for the corp and then he could possibly set something up for the sole pro. Is there anything that would not permit that?

Not the loan, but the proceeds from the loan. At that point it's just cash and an asset just like any other asset. Let me ask this, how would the loan be handled in a terminating plan or would that not even come into play? Also, it's not certain the participants who are covered in this plan have the cash to buy the policies and have them assigned, if this plan were to stay frozen would there be pros/cons to that. Technically, the corporation is planning to be in existence for 5 more years, but the employees/participants are employed by another entity at this time.

Bill, forgive my ignorance in this area - I am not real familiar with life insurance, so would appreciate your insight. Do you have cites that would back up this option? How would this transaction be taxed - what value is used? It seems like the DOL uses one amount for fair market value, and the IRS uses something very different (like that has never happened before!). Hard to summarize the bizarre insurance part, but here is a very good article. http://documents.jdsupra.com/29f2aeae-4b95...36082865956.pdf Excellent article - thanks so much! I agree. That article is a keeper. Thanks for the link.

True, but might be the lesser of evils. I wonder about the circumstances surrounding the plan termination. This appears to be a very large policy, perhaps for an owner; is there a change of ownership? If the idea is to get rid of the MPP might it better be simply restated as a PSP? Otherwise Bill Presson's suggestion of borrowing out some or most of the cash value before distributing or buying the policy is good, just be careful because a stripped-out policy can be expensive to maintain. (When I was new to the business, I asked my boss, a life insurance salesman/TPA "why should life insurance be in a qualified plan?" His answer: "To make a commission." That is really the only reason; it pretty much stinks at the end of the road for the participant.) Yes, the company is being shut down and merged with a hospital group, so there will be no restatement. The few doctors that have policies and need to keep the coverage are just considering to keep the plan frozen and pay the annual admin fees. Technically the practice will be in existence for the next 5 years. The face amount is appx $800,000 and the csv $311,239 I agree life insurance has no business being in a qualified plan. You can earn more using other products. My dad always said that and he was a life agent.

This is a M.D. He has the cash to buyout the policy. However, he is leaning towards keeping the plan frozen and just paying the annual admin fees. He is of the opinion that if he purchases the policy he will owe long term capital gains. The policy is with MassMutual

Putting permanent insurance within a qualified plan is almost always a bad idea. Very True!!!

Thanks for the replies. This is an PLLC. They get K-1's if that makes a difference.

Thanks for the replies but the participant wants to keep the coverage. He is paying about $2000 in premiums and its CSV increased by about $14000 last year. He is 64 with heart condition as well. So he just reimburses the plan with the current CSV or PERC of the policy? Could the policy not be rolled over into a successor plan?

a small law firm (3 partners) has a 401(k) plan with appx 20 participants. one of their partners will retire in a few years and they are looking to set aside about $250K over the next 3 years for this partner only. Would a non-qualified plan be a good option? The firm was wanting to write off/deduct any contributions it made to benefit this partner.

A pension plan has several participants with cash value life policies in it. What are the participants options with regards to the plan termination? Can the policies be assigned to the participants? How would the participant be taxed on it? Current cash value? Could the participant roll the policy over to another plan assuming it allows for ins.? Thanks

a high school has a 403(b), in order to receive the match the SPD states"you will have met the service requirement when you have completed 24 months of service" and that was what was elected in the AA. the SPD further states that "you will have completed the required number of months if you are employed by us at any time after you have completed that number of months measured from your initial employement commencement date" which I am interpreting that if you quit after 12 months and come back, you can be eligible for the match after an additional 12 months of service. This means that any employee, regardless of hours worked, can be eligible for the plan match, after 24 months of service, correct? Full time and part time. However, the plan excludes employees who normally work less than 20 hours per week and are aliens, so basically they would have to work just over 1000 hours a year to be eligible for the match.

thank you for your responses.

thanks for the input. the note would be on a piece of property the pension plan owns.

the plan sponsor would be a party in interest a transfer or use of plan assets is considered a PT, but this 4 participant plan is trying to pay the one employee who is not related to the other family participants.

A small plan sponsor wants to sell a $40K note in a pension plan to its psp in order to have enough cash in the pension plan to pay a non-common law participant. I think this would be a prohibited transaction as the plan would be considered a party in interest. Ultimately both plans will be terminated. The pension plan is not liquid. Do you think approaching the IRS for approval would be an option?

Are you saying that EPCRS let the participant re-start payments on a defaulted loan?