Bird

Ditto on the thanks. After my post, I was told elsewhere that the IRS has been issuing these kind of rulings for 10 years. Oh well. The proposed legislation I mentioned may have been for non-spouse rollovers.

Sorry to jump in late... I agree with Belgarath and MBozek that this is odd, and a new interpretation. (At least, I think that they still think that way, and are waiting for a cite to show that it's always been permitted.) The PLR cites some Code sections but IMHO the letter makes a leap that a beneficiary (spousal, anyway) can "do" an IRA rollover for a decedent. I remember that this was part of recent proposed legislation but it was cut out or shot down somewhere along the line.

That's what I get. In this case, you carry the calcs all the way to the refund per employee and then apply the catchup.

That's how I read it. Clearly, at least IMHO, someone who terminates at age 37 has to wait for a 1 year BIS. Likewise, I think someone who reaches NRA and then retires is entitled to a distribution at that point. That is, the paragraph is NOT about death, disability or retirement. It's about "regular" Terminated Employees. THEY get paid at the earlier of death, disability or (attainment of) retirement (age), or a 1 year BIS.

I read the question literally, and J2D2 understood what I meant. To clarify: If the document says the match is "calculated" on a pay period basis, there should be no true up. The match is whatever was deposited, assuming those calcs were done correctly. I think most people read the question NOT as it was written... "The document says the match is calculated on a pay period basis with the true-up being made quarterly." ...but interpreted it is... "The match is deposited on a pay period basis with the true-up being made quarterly." I find a quarterly true-up kind of curious. Does this make more sense? Am I being obtuse?

I don't understand the question. Maybe it's just me, but if "the match is calculated on a pay period basis" then what's to true up? I remember that there's a quarterly *deposit* requirement for pay period match calcs, but that's a different issue.

I agree with the descriptions posted earlier. If it helps, think of "per stirpes" as "per branch" (of the family tree). (Although I don't know if that is a literal translation.) So if one child predeceases the participant, and the child has children, benefits still flow to that branch.

Oh yeah...what WAS I thinking anyway? Thanks to both.

Companies A and B are part of an Affiliated Service Group. A sponsors a plan and B is an adopting employer. Effective 2005, the ASG status will end by virtue of change of ownership and business relationship. B will start its own plan, and assets for the employees of B will be spun off from A's plan to B's plan. If B has non-owner employees who earned more than $90,000 in 2004, will they be HCEs in 2005? (I think not but that's more of a guess than anything.)

Kathye- Thanks for the feeback, and good luck!

I think they have to be 100% vested because they effectively had a greater than 1 year (plus 6 months) period before they entered.

I wouldn't be obsessed with diversifying $1,000. Keep in mind that a mutual fund is diversified to start with by its nature. I'd pick a good fund family, and then one fund in the family, maybe an equity-income or balanced fund, accumulate the $3,000 and then split it up. When you look at the actual $$$s to be gained or lost through diversification among funds it's not going to make much difference. If you're comfortable doing your own thing, go with a no-load family. If you need hand-holding, you could do a lot worse than the American Funds. I'm a little confused because you mention sub-accounts which implies a variable annuity contract, and you also mention a front-end load which is not generally how VAs are sold...but now I think I do remember seeing that as an offering. But in any event I wouldn't recommend using a VA because it typically adds a layer of expense and nothing else. You could simply set up a Roth IRA account through American Funds without the ins co middleman.

I think we all agree. I'm not sure if I read too much or too little into what was asked.

Yes, and you can apply it to an emloyee who has satisfied the old requirements as long as they have not actually entered the plan...at least according to one court case...it'll come to me any minute...check out...still thinking...OK, I think it's a case with "North Shore Auto" in there somewhere. I seem to remember that they not only changed eligiblility from one to two years, but then changed the entry date as well. There were probably discrimination issues but they weren't part of the suit.

No problem. I should have mentioned that this started because they were, indeed, systematically deactivating EINs that hadn't been "used" for a certain number of years (e.g. in 1099-R reporting).

It's a known problem. Are you in ASPPA? ASAP 04-42 had an update. In brief- IRS stopped de-activating EINs for "non-use" in Jan 04. Using the EIN on Sch P does nothing to keep it active, although it's been suggested as part of a fix. In the meantime, to reactivate, you need to communicate with Ogden, UT. Reference the plan name, EIN in question, sponsor mailing address, name and phone # for questions. Fax it to EP Entity Control Unit at 801 620-6900, using sponsor letterhead, or e-mail to Jalynne Archibald at JaLynne.K.Archibald@irs.gov In a situation where money has already been deposited and you get a reject or correction letter (as in your first case where the IRS changed to the business number - sheesh! - they did that to one of my clients earlier) I think it's too late for reactivating using the procedures above; I'd write back to the address given on the notice with a full explanation. It worked for me. In fact, I don't know how you're supposed to know a number is inactive until it's too late so I don't know that the paragraph above is all that helpful.

Check this thread; the last message has a link to Cigna's summary of state tax WH. http://benefitslink.com/boards/index.php?showtopic=13240 It matters whether there is 20% mandatory fed WH and it matters which state the recipient resides in.

They can continue to vest based on the graded schedule.

Sorry to beat it to death. I understand the difference between ERISA and non-ERISA plans, and that said difference results in different standards for depositing contributions. But, I don't think the average participant understands that there is such a difference, or why there should be a difference. (And I don't understand the "why" part, from a public policy standpoint.)

Thanks again. I understand, but don't "get it"; most or all of what you said could be applied to 401(k) plans, I think, at least to some extent. FYI, I just got an RIA update that pointed me to an IRS publication - found here: http://www.irs.gov/retirement/article/0,,id=111442,00.html that talks about the differences between 403(b) and 457 plans and 401(k) plans. It doesn't say "the Department of Labor may harass your employer to no end about "late" deposits of deferrals to a 401(k) plan, to the point of asking your employer to allocate a few pennies for a couple of days, but your employer can hold your money for 30 days or more in a 401(k) plan and we don't really give a crap."

Thanks, and that's a good question. I still don't think the average Joe or Jane looking at the forest of deferral plans would see why there is such a drastic difference in deposit requirements, and I guess I don't either, except that the plans are, by definition, "different."

Here's a different question/angle on the new regs: Why did the IRS specificially say that a "plan" could use language that called for deferral contributions to be deposited no later than 15 business days after the end of the month? They cited that as an example of acceptable language, at least that's how I read it. I understand that ERISA plans are still subject to the DOL as soon as practicable standard. And I understand that there's a world of difference between ERISA and non-ERISA plans from an employer's or fiduciary's standpoint. But from an employee's standpoint, I doubt that a nurse who worked for a separate department in a hospital, which had a 401(k) plan, and then goes to work for the hospital itself and is offered a 403(b) plan, sees much difference. I don't do much with 403(b)s so maybe that's "just the way it is." But I found it curious.

pax, thanks for the feedback. The claims section might be of some use but in general I don't think this particular problem will find a good solution in the SPD. I was wondering if people were avoiding the obvious, but could be maybe not has come right out and said it: if you want to put your employer through living he** call the DOL. frogman, I would do this as a very last resort. Those of us who administer plans could give you horror stories that might be better used as a threat. pax gave you some sites; you might check this one too: http://www.dol.gov/ebsa/faqs/faq_vfcp2.html This gives details on how to calc earnings on late deposits and other correction guidelines. To my knowledge, the 6621 rate has not been under 4% in the time period over which this happened.

Just curious, pax, but what would this person be looking for in the SPD? As someone in the business, I found your comment, mmm, shall we say, interesting in its unhelpfulness. I can't imagine what frogman would make of it. Are you saying "get lost"? I'm relatively new here and may need a translator. Frogman, were your contributions supposed to be deposited into a self-directed account? It doesn't necessarily matter but it might provide some helpful background info.

Oops, started a lengthy reply about SIMPLE IRAs but then see it is a SIMPLE 401k. No, you can't merge a qualified plan into an IRA, so you'd have to terminate and let employees roll if desired.