Richard Anderson

Thanks Michael and pax. I'm fairly sure that she will want to distribute the 2002 minimum in 2002. But, I do so few minmum distributions, that I couldn't remember if the first distribution had to occur after age 70 1/2, or if it could be taken anytime in the calendar year, even if before age 70 1/2.

Owner will turn 70 1/2 on Decembr 27, 2002. May she take the first required minimum distribution in 2002 before December 27?

If there is any possibility that this is not an ASG, then I think that you need to know for sure. It's possible that the ASG, when treated as a single employer, passes coverage and non-discrimination. But if the group is not really an ASG, then the plan would be a mutiple employer plan; and each employer would have to pass coverage and non-discrimination seperately. May pass combined, but not seperately.

Our census request also asks only for plan year data. We have mostly small plans so we can look carefully at census data. If for the first year of hire an employee worked less than 1,000 hours, then the next year we ask the client for hours for the 12 month period from date of hire and for hours on plan year basis also.

Here's another possibility. Were these "excess contributions" created because the matching contribution of 4 participants was calculated incorrectly, and they received matching contributions greater than they should have?

If I understand the question, Cbanarer doesn't have a problem with the document or how to determine eleigibility or vesting service. The problem is the pension software is not able to calculate correctly based on the document. We have to check all new hires to make sure that the pension system has correctly determined YOS for the first eligibility period.

Code section 72(t)(2) lists exceptions to the 10% early withdrawal penalties. Plan termination is not one of the exceptions. 72(t) (2) Subsection not to apply to certain distributions Except as provided in paragraphs (3) and (4), paragraph (1) shall not apply to any of the following distributions: (A) In general Distributions which are-- (i) made on or after the date on which the employee attains age 591/2, (ii) made to a beneficiary (or to the estate of the employee) on or after the death of the employee, (iii) attributable to the employee's being disabled within the meaning of subsection (m)(7), (iv) part of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the employee or the joint lives (or joint life expectancies) of such employee and his designated beneficiary, (v) made to an employee after separation from service after attainment of age 55, (vi) dividends paid with respect to stock of a corporation which are described in section 404(k), or (vii) made on account of a levy under section 6331 on the qualified retirement plan.

Since this was posted to the cross tested board; I have a question. Is this a new comparability type plan, with separate allocation classes? If so, is the owner in a separate class?

Must they also be 100% vested in any new contributions made to them?

My interpretation of these facts is that a former participant that is rehired on say 5/1/01 would enter the plan on 5/1/01, not 1/1/01. I believe the immediate participation language overrides the plan entry dates.

Bleow is Section 4975(d)(1)(A)-(E). In order to not be a prohibited transaction all 5 conditions must be met. In the context of allowing loans on deferrals only, does anyone have a problem with either (A) or (B)? (d) Exemptions Except as provided in subsection (f)(6), the prohibitions provided in subsection © shall not apply to-- (1) any loan made by the plan to a disqualified person who is a participant or beneficiary of the plan if such loan-- (A) is available to all such participants or beneficiaries on a reasonably equivalent basis, (B) is not made available to highly compensated employees (within the meaning of section 414(q)) in an amount greater than the amount made available to other employees, © is made in accordance with specific provisions regarding such loans set forth in the plan, (D) bears a reasonable rate of interest, and (E) is adequately secured; Question 1. As for (A); is it a reasonably equivalent basis if most or all HCEs are deferring, but many of the NHCEs are not? Question 2. Would loans be available in an "amount greater" because HCEs deferral accounts are greater than NHCEs deferral accounts? Assume that for all accounts (deferral and profit sharing) added together, the amount disparity between HCEs and NHCEs is less than when considering deferral accounts alone. I am personally OK with limiting loans to the deferral account only, but I'm having trouble convincing another person in the office. Does anyone see any problems with limiting loans to deferrals only?

OK, here's my situation. Client previosly adopted ABC company's volume submitter and received a determination letter 6/96. Client "certifies" by 2/28/02 that he will adopt plan of XYZ Co. Client intends to adopt XYZ's volume submitter, with minor changes, without submitting for determination letter. We realize that there will be no automatic reliance. Assume ABC's deadline is 2/17/03 and XYZ's deadline is 6/20/03. 1. Under this situation, what is the latest that the GUST restatement will be considered to be timely? 2/17/03, 6/20/03, or 2/28/02? 2. Also, assume same data, but Client adopts ABC's VS document on 01/01/00 and has not previously submitted for a letter. Does that change your answer?

Thanks.

Client wants to limit loans to deferral source only. I think that this is a fairly common practice. Some NHCEs are not deferring, and would therfore not be able to get a loan. Does the availablity of loans need to be tested for non-discrimination under these circumstances? If availability of loans must be tested, can the plan be disaggregated for testing? Test deferral, match, nonelective sepearately?

Is compensation for a self employed person in a Simple 401(k) calculated in the same maner as a Simple-IRA? Or in the same manner as non-Simple 401(k)? Thanks.

Very high deferral rates for low paid HCEs frequently will cause the Average Benefits test to fail. Are you sure that it passes AB test?

I have the same question as Janet. What does the document say happens to forfeitures? Reduce contribution? If reallocated, to whom?

It just seems strange to me that unless you submit, you have not timely adopted a GUST restatement.

I'm unsure about a sentence in Rev Proc 2000-20. Section 19.04, last sentence says; "Within this period, the employer must amend or restate its plan by adopting the GUST-approved M&P or volume submitter specimen plan (or another GUST-approved M&P or volume submitter specimen plan, or individually designed GUST amendments) and, if required for reliance, request a determination letter." This seems to be saying that if the document adopted must submit for reliance, then you must submit in order to get the period of extension. If you don't submit a modified VS plan, then not only do you not have reliance, but also don't get the period of extension that you thought you had. I'm I reading this correctly? I hope not.

Yes. 1.416-1, T-6

My understanding is that only one rollover distribution is allowed per year. Is that limitation a limitation per account or per individual? For example, if a person has two seperate IRA accounts, may he have two rollover distributions per year, one for each account? Or is the person limited to one rollover distribution per year, without regard to the number of IRA accounts?

In your example, for determining HCEs for calendar year 2002, you would look at compensation from 1/1/01 through 12/31/01. No pro-rating of compensation is used for determination of HCEs, just look at prior 12 months compensation.

Yes, but I think you should have a corp resolution that states what part of the contribution after PYE applied to what plan year.

Assuming this is a calendar year plan; was any of the 2001 match actually deposited in 2002?

Why not take the money out of the 401(k) that should have been distributed from the 401(k) and put it in the ESOP.