WDIK

From the instructions for Line 4c(5) of Schedule T: An employee is treated as benefitting under a plan...that provides for elective contributions under Code section 401(k) if the employee is eligible to make elective contributions...even if he or she does not actually make elective contributions.

Form 5500 Line 8a. Code 2F inidicates an ERISA section 404© Plan.

Tom: Please tell me that you did this while on the job, and not on your free time.

You need the copy of the plan document you have requested to determine if any benefits are payable prior to retirement.

Given the facts that - a) this is a new client of yours; b) your client was confused about the second account; and c) whoever prepared the previous reports was either given bad information by the client or made an egregious oversight - I would suspect that there is a high probability that other issues exist beyond the Form 5500 error that you still have not discovered yet. I would proceed with caution.

mwyatt is correct. Thanks. (I did give fair warning.)

I just finished lunch, so all of the blood has left my brain and gone to my stomach, so someone correct me if my logic here is flawed. 1) The combination of a frozen defined benefit pension plan (where the appropriate EGTRRA amendment was adopted) and a deferral only 401(k) plan should not require any top-heavy minimum contributions. If any employer matching or discretionary contributions are made to the 401(k) plan, this could require top-heavy minimums. 2) Part of the post sounds like the employer is not trying to avoid a contribution but wishes to make it under the defined benefit plan rather than the 401(k). If the EGTRAA amendment was not adopted, the defined benefit plan would still be required to pay top-heavy minimums, just as the employer desires.

I agree that the plan must contain cash-out provisions relating to distributions less than $5,000 if they are to be paid out immediately. (These distributions are optional, not mandatory.) The plan should also develop and consistenly follow a policy as to timing, rollover elections and so forth.

Are there any other issues tied in with this oversight? 1) Erroneous disclosure to participants. (Other than the SAR which is obviously incorrect because it is based on the 5500.) 2) Improper or incorrect allocations of contributions or earnings because of the second account being excluded. 3) Incorrect distributions amounts. etc.

As I read the instructions, being between 80 and 120 participants allows you to elect to complete the same return you completed the prior year. So a large plan that dropped to 80 participants could still elect to file as a large plan, but is allowed to file as a small plan since the count is less than 100.

I am not familiar with the Corbel documents, but am curious as to the wording that they use with respect to the safe-harbor provisions. The prototype document I am looking at uses language such that the plan is deemed to satisfy the ADP/ACP tests once safe-harbor is elected. In my opinion, that makes the election of current year/prior year testing irrelevant for any such year. Then, for some future year in which the current year/prior year election is to be changed, notice 98-52 VIII E would apply and all safe-harbor years would be treated as using current year testing to determine if the change would be allowed. Caveat: I am not a document expert, so I don't know if I'm allowed to address this question or not.

Also, with respect to the qualified plan, plan language should indicate that minimum required distributions for non-owner employees commence the later of age 70-1/2 or retirement. It is possible that plan language could require MRD for both owners and non-owners.

Thanks. There's strength in numbers.

Let's see if I can do this correctly. The filing deadline is the last day of the 7th calendar month after the end of the plan year, or in this case July 31st.

I agree. The point of dispute is whether or not bank stock is held in a regulated financial institution merely because it is bank stock. My opinion is that it is not a qualifying plan asset.

Blinky: Isn't the probability of dying in year x q(x) rather than d(x)?

A Pension plan may have a provision that benefits will not commence prior to Normal or Early Retirement Age, even if the participant separates from service. If such a provision exists a NRA of age 65 (for example) would be later than age 50.

The applicability of the 5-year cliff vesting schedule also assumes that the plan is not top-heavy.

1. Yes. 2. That depends on the language regarding eligibility and participation in the plan document and whether or not there would be any coverage issues. 3. That is one option. Another is to choose an effective date during 2003 that would allow the notice to be given and the plan year to be at least three months long. A third option is to adopt the plan without the safe harbor provisions.

The wording in a prototype document that we use indicates that amendments or changes of the choices of options in the Adoption Agreement must be in writing, but does not seem to indicate a completely new Adoption Agreement is required. Also in several audit situations that included amendments to prototype documents, no issue was made of the fact that a simple amendment changing one page of the adoption agreement was used. I am not familiar with a revenue procedure that backs up this approach.

Doesn''t Title IV pertain to coverage by the Pension Benefit Guaranty Corporation? My recollection is that the Schedule of Active Participants should be attached if the plan is covered by PBGC. A professional service corporation with less than 25 participants is exempt from PBGC.

It's either Collectively Bargained Agreement or Continental Basketball Association.

I have a disagreement with an insurance company issuing an ERISA bond as to whether or not an investment in the stock (which is not publicly traded) of a small community bank is a qualifying plan asset. I would sincerely appreciate the opinions of the other users in this forum. Thanks.

A profit sharing trust holds investments in non-qualified plan assets in excess of $1.3 million. (Approximately 75% of plan assets.) The plan participants consist of the owner of the corporation sponsoring the plan and his three sons. While I doubt it, is there any chance of the plan being entitled to the waiver for the audit without bonding the 1.3 million? Any other ideas?

Your story elicited both a chuckle and a groan.