chris

Profit sharing plan and trust has year ending June 30. Want to change plan year and year of trust to calendar year-end. Per Rev Proc 87-27 no IRS approval necessary for the plan year change b/c the plan not subject to 412. Automatic approval provided for change of trust year assuming conditions in Rev Proc 87-27 are met. My question has to do with operating the plan during/after/in light of the short plan year. For most amounts/limits, eg. compensation limit 401(a)(17), simple pro-ration made as follows: full mos. in short year/ 12 mos. With respect to year of service determination in short year, plan says such determination will be made for all purposes in accordance with DOL Reg 2530.203-2©. DOL Reg. 2530.203-2© deals specifically with vesting computation period. Would same apply to determining year of service for purposes of eligibility requirement in the plan?? It appears that reference to the DOL Reg cited above in the plan's definition of year of service mandates applying the Reg's rationale for all plan purposes where determination of year of service required. Any comments or suggestions??

In early 1998 I submitted an SVP request with respect to a plan sponsor who had adopted a standardized prototype document. The plan sponsor did not have its own determination letter and it relied on the Opinion Letter of the prototype sponsor. The compliance statement was issued with no problems.

HCE has personal account and directed investment account at same brokerage firm. HCE directed broker to sell investment x in directed investment account. Broker executed sale of investment x in directed investment account. Meanwhile, at some point, HCE had instructed broker to purchase investment y in personal account. Broker transferred sales proceeds from HCE's directed investment account into HCE's personal account inadvertently and the funds were used to purchase investment y in HCE's personal account. Although HCE signed authorization to transfer funds, HCE was not aware that funds were being moved from directed investment account to personal account. Any advice as to how to correct this error under APRSC or otherwise?

Political subdivision of state wants to adopt 401(k)plan which was created pursuant to state statute in 1984. 401(k)(4)(B)(ii) prohibits political subdivisions of state from adopting 401(k) plans. Reg. 1.401(k)-1(e)(4)provides a grandfather exemption for governmental units which adopted a 401(k) prior to May 7, 1986. My position is that political subdivision cannot now adopt 401(k) because of prohibition in 401(k)(4)(B)(ii)and because it does not meet any of the requirements of the grandfather exemption. Official of state 401(k) plan maintains that political subdivision can sign up for state 401(k) because the state 401(k) was established prior to the May 1986 deadline. Apparently, that the 401(k) plan was in place at the relevant date seems to be good enough. However, it seems to me that the actual governmental unit, here, the political subdivision, would have had to have "adopted" the 401(k) prior to the May 1986 cutoff and the fact that the state 401(k) was in place prior to the cutoff date would not carry the day with respect to the political subdivision's 401(k)being qualified under 401(k). Any comments or opinions?????