Spencer

Thanks, Dawn. You were right ... compensation is limited to $2,000 for purposes of non-elective contribution.

A client has requested that their document require that an employee be employed on the last day of the plan year in order to receive a year of service for vesting. Currently, they are on a prototype that only requires 1,000 for vesting credit. Could we accomodate their request on an individually designed document?

Thanks, billy bong ... that's what I thought. Thanks, Dave. I will post question in Prototype Q&A. However, I would still love input from others who regulary post to this board; Corbel doesn't appear to post new Q&A very often. [This message has been edited by Spencer (edited 11-05-1999).]

I have a colleague who just begain working for a small TPA firm. He has discovered that the agents selling the plans have been modifying the prototype adoption agreements. The prototype they use does not offer much flexibility so they simply type changes on the adoption agreement. Can you do this? If you modify a standardized prototype adoption agreement, does the determination letter for the prototype still apply? Or should employer now file for individual determination letter? Any comments? Thanks.

The deadline for distributing deferrals in excess of the 402(g) dollar limit is April 15th. The penalty is double-taxation. The $800 is taxable income to the participant in BOTH 98 and 99 and two 1099r's should be filed. The earnings on the excess amount are taxable in 99.

It has always been my practice to mail direct rollovers to the financial institution or trustees of the qualified plan accepting the rollover. My new employer has instructed me to mail rollover checks made payable to the financial institution to the participant. My understanding was that a rollover had to be a "trustee to trustee" transfer and that the participant literally could not touch the check. Is it okay to mail the rollover check to the participant?

We have not converted to 5.0 yet, but I attended a QT seminar on the 13th and the facilitator mentioned that all custom reports must be opened and a conversion program run. This is necessary because 5.0 stores information in different places. For example, vesting is tied to Sources in 5.0, but in 4.x is tied to the Account (fully vested or subject to vesting).

When calculating the deductible contribution, you only use "eligible" compensation per IRC 404(a)(3)(A). So you don't include compensation for anyone who is not eligible to share in the contribution; it's doesn't matter whether it's due to a 1,000 hours requirement, a last day requirement or a 2 yos requirement.

The good news is the plan was covered by ERISA. ERISA was amended by the Retirement Equity Act of 1984. REA added mandatory spousal rights to ERISA. Your husband was right; unless you signed a waiver and consented to his children being his beneficiaries,you get his benefits. You might want to contact an attorney who specializes in ERISA law to help get things moving. Hang in there.

I have a plan with a 1,000 hour and last day requirement for the profit sharing contribution. Previously, the contribution was allocated on an integrated basis. On December 31, 1998, an amendment to change to an age-weighted formula was adopted effective January 1, 1998. This change significantly decreases the contribution to all non-highly ee's. Isn't this a violation of the anti-cutback rule? Would this amendment be okay if it was executed on 12/30/98 prior to participants satisfying the last day requirement?

When completing the Form 5500C/R, on the question that asks "Did the plan at any time hold 20% or more of its assets in any single security, debt, mortgage, etc.?", do you consider mutual funds a single security? We have not, but a book we purchased this year re: completion of 5500's says that mutual funds should be considered a single security for the purposes of this question. We would appreciate input from other TPA's as to how you answer this question.

We print the Contribution Analysis and Census Data Verification by division without using Custom Reports. For the Contribution Analysis, click on Report Style, change the Font Size to 8, then click on "Contribution Analysis, sorted by division" under Report Contents. Click Assign and Close, then Print. For the Census Data Verification, click on Report Style, change the Report Type to Totals Only, then change the Font Size to 8, then click on "Totals Only, sorted by division" under Report Contents. Click Assign and Close, then Print. Hope this helps. p.s. We also print our Summary of Participant Accounts report by division, but we do use a Custom Report for that. If you would like a copy of it, just email me. I will be happy to email the report to you. ------------------

Thanks, Tom. We will give this work around a try.

Regarding eligibility problems, the plan document our office used most often has eligibility requirement of 1year and entry date nearest. For plan with only one entry date, Quantech calculates correctly. However, we have a handfull of plans with 1 year and entry date nearest with two entry dates. We cannot get Quantech to calculate eligibility correctly on those cases. We have called Quantech and they have confirmed that the program will not calculate eligibility correctly. Do you have any experience with this scenario? Any suggestions on a work around? Thanks!

See Question 21 in the Q&A section for Plan Defects: Correction/VCR/CAP at BenefitsLink.com. It provides two methods of correction.

Check your plan document; many allow you to forfeit a "lost participant's" account balance if the plan admin. can demonstrate that they have tried to contact the participant (returned envelopes, no response from locating service). The participant's benefit would have to be reinstated (with interest) should they make a claim at a later date.