kocak

Attached is the file (I think!) Please comment and send any modification ideas to me. My email is kocak@msn.com. Thanks for the input. Michele Kocak

I put together a chart we used in a training session earlier this year, because we were getting so many off-calendar year catch-up questions. I would be happy to email it to you for your review and comment. In order to answer your question, I think we need to know their deferrals from 1/1/02-8/31/02, their compensation for each period ( for the 15% limit). Why is the plan catch-up available 10/1 but the plan year is 8/31? mck

I'm confused on this topic as well. I thought that in order to be exempt from the audit requirement, a small plan filer had to meet the investment/bonding requirements AND the disclosure requirements. For example, a plan that has at least 95% of qualifying plan assets doesn't need an additional bond, but still had to meet the disclosure requirements on the SAR. Now if all the assets are in self-directed brokerage accounts, there is no disclosure, but if they are in a pooled trust, I thought I still had to disclose. Any thoughts? mck

My understanding is the amendment must be adopted by the later of 1) end of GUST remedial amendment period (12/31/02) or 2) last day of plan year in which catch-up provision is effective (06/30/02). So technically, you could adopt the amendment by 12/31 and still have it apply to the plan year ending 6/30. However, the EGTRRA amendment we use (pre-approved volume submitter) indicates that the effective date of the amendment is the first day of the first plan year beginning after 12/31/01. In our case the catch-up is not available until 7/1/02 so be careful. mck

If I want my top heavy allocation to be deductible in the year allocated, I know I need to deposit it by the 404 deadline. But if I don't want to deduct it in the year allocated, I couldn't find the deadline. That was why I said deductibility wasn't an issue. I think we'll recommend they deposit it before the 415 grace period ends (30 days after 404 period ends). Thanks for all your help.

What is the date I need to make a top heavy contribution by when deductibility is not an issue? Do I have 12 months after the allocation date (like a QNEC made to correct an ADP failure) or 30 days after the 404 period ends, like an annual addition? Thanks

Do I know you? I am concerned about allowing a participant to take their entire 401(k) balance. It seems an odd result to me and I wanted to make sure I wasn't missing something. Thanks for you input!

Participant has a 401(k) balance of $2,500. This is $2,000 contributions and $500 earnings. Participant takes a loan for $1,250. Particpant's balance has experienced a loss and the account is now worth $800. Participant wants to take a hardship distribution. Any ideas on how to calculate the eligible hardship amount? Thanks.

Any ideas on how to determine the cost of a limited partnership for the attachment to Schedule H? I know the initial investment and the number of units held. I don't know how the distributions each year affect my original investment cost. Thanks. mck

Thanks. I appreciate your time and assistance. michele

The new rules say "The term top-heavy plan shall not include a plan which consists solely of - (i) a cash or deferred arrangement meeting 401(k)(12), and (ii) matching contributions of 401(m)(11). Query: Does a plan that has a profit sharing feature, but no profit sharing contributions, satisfy these requirements? I'm trying to determine if my existing safe harbor plans were designed in error because we checked the profit sharing feature on the adoption agreement. Since the statute says 'consists solely of a 401(k)(12) arrangement', I'm thinking that if a plan has a profit sharing feature, even if never used, it will not meet these requirements, and then may be considered a top-heavy plan. Sal Tripodi's newsletter indicates that "a safe harbor 401(k) plan is deemed to be a non-top-heavy plan if the only contributions to the plan fall into ... 401(k)(12) and 401(m)(11)." This seems to me that a plan with the profit sharing feature could still be considered non-top-heavy. I haven't seen anything else written about this topic. Any input is greatly appreciated. mck

The plan document says that participant loans are treated as general investments (the interest is shared among all plan participants). Aministratively, all participant loans have been treated as individual investments (the interest is credited to the account of the participant who took the loan). The outstanding loan balance has been reflected as a portion of the participants account balance. I'm looking for suggestions on the best way to fix this discrepancy. Thanks for your consideration. mck

A top hat plan that did not file the DOL statement within the required 120 day period becomes subject to Title I or ERISA. What questions need to be completed on the Form 5500 and is there anyway to avoid this filing?

If "A" is a related employer who wants to withdraw from a defined benefit plan maintained by "A" and other related employers, would "A"'s withdrawal be considered a plan termination with respect to "A"'s employees? We know that it is not considered a plan termination for the group, and we know we need to look at possible partial termination issues for the plan, but our question is, if "A" withdraws from the plan do "A"'s employees have to be 100% vested? Thanks

When amending a Form 5500 do you 1. Refile the Form, all attachments (Schedule A, C, SSA, etc.) and Schedule P; or 2. File the Form, all attachments (Schedule A, C, SSA, etc.) without Schedule P; or 3. File the Form and only those attachments (Schedule A, C, SSA, etc.) that have changes? Assume there are no changes to the Schedule P that was filed with the original return. Thanks

Are there any good reasons to have an early retirement option in a defined contribution plan?

Larry Deutsch has a seminar every year. I've heard it is very good but have been unable to attend to date. I think it is in February in New Orleans. He is listed in the ASPA yearbook. Email me if you want his phone #.

Four doctors each own 25% of a medical practice. They have a Profit Sharing Plan. They terminate the plan and sell their practice to Company A in 1996. All assets are distributed from the plan in 1998. In 1999 four doctors buy the medical practice from Company A, each with 25% ownership. Three of these doctors are the original owners. The new owners want to start a 401(k) plan. I'm having trouble deciding whether I need to include the prior PSP in my top heavy calculations. Any ideas? thanks mck

Thank you very much. That is exactly what I needed to know. mck

A spouse (<59 1/2) is the beneficiary of a death benefit from a qualified plan. My understanding is that spouse can (1) roll the proceeds into an IRA, or (2) receive a distribution from the plan. In scenario (2) the distribution is taxable income to the spouse but the 10% penalty on early withdrawal (<59 1/2)is waived. If the spouse elects (1) a rollover, then it must be to an IRA. They can not roll to a qualified plan. My question: If the spouse elects rollover and then takes a distribution from the IRA are they subject to the 10% early withdrawal penalty or is the penalty waived because the IRA is proceeds from a death? Any cites are welcome. Thank you. mck

Also note the 3% safe harbor contribution would have to be 100% vested.

There was an article in the Wall Street Journal in the last week addressing the tax withholding/penalty issue specifically because of Roth IRA conversions. Sorry I can't remember the day but maybe someone else out there still has it?

Thanks for all responses. They were a big help. mck

Thank you so much for your response. I guess my question is what are the pros of a 401(k) for a non profit? It seems like a 403(B) is the way to go but I want to make sure I am not missing something. Thanks for your help. mck

I don't know much about 403(B) plans. Why would a 501©3 organization want a 401(k) vs. a 403(B)? Advantages and/or disadvantages? Thanks for all responses. mck