rlb64

I hear these regulations will eliminate the < 20 hour exclusion currently available for 403b plans. Is this true?

I think the primary question is since there is last day of plan year condition, has this person lost his right to the allocation since he is no longer an eligible participant at the end of the plan year?

Plan excludes union employees. A participant has recently changed to union. The Plan provides matching contributions on a per payroll basis and a year-end profit sharing allocation with an employed on last day of Plan Year, 1000 hours condition. Plan year ends 6/30. With respect to the non-union plan, I realize the person immediately becomes ineligible upon change to union and the plan must stop deferrals and discontinue matching contributions. However, I'm not sure whether the participant will be eligible for the 6/30/05 year-end profit sharing allocation and if so, what the compensation figure is. The document (Corbel doc) says compensation is counted as of date person becomes ineligible. Hours of service definition counts all service. And, this person would be considered employed on the last day regardless of whether a member of the eligible class.

http://www.corbel.com/Resources/Amendments.aspx

The plan terms are as I described. Matching contributions are calculated on a monthly basis using compensation during the month. Sal describes a special rule for match referring to Treas. Reg. §1.401(a)(17)-1(b)(3)(iii)(B) which basically says the 401(a)(17) compensation limit does not need to be prorated. If so, then why does the compensation limit need to be recognized for the entire year?

I'm not sure I follow your example: Pay is $22,222 per month and elects 6% of pay (catch-up eligible). Monthly match is $440. Yearly match is $5,280.

Plan provides 33% match up to 6% deferrals. Match is contributed monthly and there is no year-end true-up. If the matching contribs exceed the match based on 6% of the comp limit, is the excess forfeited?

403(b)(7) says hardships are permitted from contributions pursuant to a salary reduction agreement. 403(b)(11) which only applies to annuity contracts specifically excludes the earnings. We're new to the 403(b) world, but does this say hardships from earnings attributed to post-88 contribs under a 403(b)(7) are ok? Our client's document reads like 403(b)(7). We read the IRS audit guidelines and it basically reiterates these code sections. Is there anything more specific than the language in 403(b)(7)?

Are you saying post-88 earnings may be withdrawn for hardship from a 403(b)(7)?

I'm looking for something that proves hardships from post-88 earnings are not permitted from custodial account plans. Can someone help?

Alf, can this plan document be restated again retro to 1/1/04 to continue the 401(k) provision without running into an operational error problem subject to VCP? Also, can the restated EGTRRA amendment be adopted now as well? We're trying our best to avoid VCP. Thanks

I'm looking at a tax-exempt 457(b) plan document using a TIAA-CREF prototype. The base document provides for lump and annuity options. It's my understanding annuities shouldn't be offered by a tax exempt 457(b) plan if a lump sum option is also permitted. The amounts become available and taxable. Am I wrong?

Assuming there isn't a 411d6 issue, are these amendments operational failures?

Company A wants to provide a 10% of pay unfunded defered comp plan to those who provide services to the employer even though they are employees of unaffiliated Company B. Is this acceptable? Would this be exempt from ERISA?

Prior recordkeeper incorrectly restated a 401(k) plan as a profit sharing only plan and did not provide for predecessor service. The effective date of the restatement is 1/1/04. The plan year is calendar year. Can we restate and fix retroactive to 1/1/04? Does this fall under the general remedial amendment period rules which allows us correct by tax return due date?

Would a person's normal W-4 withholding information apply to a 457 plan distribution from a tax exempt org, or does the person have to complete a separate form?

Well, the employer agrees that the employee has some blame as well. They suggested they would probably cover any taxes if the IRS comes in and says the loan was administered wrong and should have been deemed. The concern I have as TPA is whether this is the worst that could happen.

What is the timing of contributions for 457 plans? Can employer contributions be made after the end of the plan year similar to qualified plans?

Participant took out a 5 year loan back in March of last year. The employer forgot to set up withholding. Since it's the employer's fault, the employer is instructing us to not deem the loan. They are just going to start up loan repayments now. The question I have is if we follow the client's instructions, is this just a taxation issue for the participant, or is there a plan disqualification issue as well? Thanks

Lori, I can't find a sample 403(b) SAR. Can you help me find one on the internet? These plans have only mutual funds and it looks like the only information left is a notice to employees that they have a right to view a meaningless 5500.

Prior plan document (non-standard prototype) preserved the old matching vesting schedule of 5 year cliff for pre-2002 money. This provision was never added in the new document restatement (volume submitter). I'd like to do an amendment retroactive to 1/1/02 and submit to the IRS since such change will remove reliance on the volume submitter opinion letter. Any thoughts?

The ERISA outline book refers Q&A 8 example under the 72p regs where a plan loan is used to repay a third party loan. This would qualify due to the tracing rules under IRC 163(h). It also says refinancing would not be permitted, so I'm not sure.

Participant took out a 15 yr. loan for a primary residance from a former company retirement plan. When he left that company, he paid off his loan balance by taking out a short term loan (at 18% interest). His plan was to then take out another loan from his current employer plan to pay off the short term loan and resume his "mortgage" payments. Any suggestions? Any thoughts on whether the tracing rules would help?

Partnership has dissolved, but employees stay with one of the two partners. The partner keeping the employees continues the plan. Is that a severance from employment for the other partner?

Fundek, the difference is the $5 fee perhaps should be charged to anyone who has an account balance, as the plan provides for trust assets to pay for fees. I'm fairly certain the reduction is due to fees, but I haven't been able to confirm yet. I understand the $ amount is small, so I'm sure it doesn't matter a whole lot.