Casey

On what line and schedule would the cash value of the life insurance contract be listed? Thanks, Casey

They are life insurance contracts on individuals, with premiums paid from the retirement plan account of the participant that is covered. The life insurance contracts have a cash value. The cash value may be a plan asset? If so, where does the plan record it on Schedule H? Casey

DC plan has life insurance policies. In addition to reporting on Part III of Schedule A, I believe the cash value also needs to be reported on Schedule H. My question: what line is normally used to report this? The only insurance policies that seem to be specifically mentioned are insurance company general accounts/unallocated contracts. [Line 1.c.14] Would you put this in the "other" line -- line 1.c.15? Thanks for your help, Casey

Hi, I don't seemed to have framed my question well... I most want to know if folks think: - there is a requirement that plans consider the participant's ability to pay/limit the loan based on the ratio of the periodic loan payment amount to the participant's periodic pay check amount; and - Has anyone run into this? is it common? I did find the responses interesting for analysis, but if anyone can answer the above I would be most grateful! thx, Casey

Hi, A client's TPA is advising them to limit/deny plan loans where the repayment amount would exceed a stated percentage of the participant's paycheck. I believe they were recommending 25-30%. TPA says lot of plan's doing this. Concern - Is this now the norm, and if so, what is the motivation, legally - Is there a new piece of guidance indicating this is a requirement? I can see it as a factor the plan MAY consider, as it is a factor which "would be considered in a normal commercial setting by an entity in the business of making similar types of loans" (DOL reg.) But is it a MUST do? Thanks in advance for your thoughts! Casey

Is it permissable to forfeit rather than distribute very small account balances, (e.g. $15 or $20)? In this situation, cost to employer of processing the check is $15, though this is not charged against the participant's account. So, the employer could be paying more to the TPA than the employee will receive. I know that under the IRS correction programs, an employer need not make small corrections, but I am not aware of anything that allows the employer to forfeit very small accounts rather than distribute Would your answer be different if the balance in the account, however tiny, represented 401(k) or other participant contributions? Thanks!

Remedial Amendment Period. Q: The regulations under Code section 401(B) state that the remedial amendment period applies to a plan provision, designated by the Commissioner, as a disqualifying provision, that is "integral to a qualification requirement" of the Code which has changed. How much latitude does that give the employer? For example, would the law change that requires 401(k) deferrals to be included in the definition of 415 compensation allow other retroactive amendments to the definition of compensation? {e.g. to change from a definition of compesnation permitted under section 415 to another) Thanks, Casey

Thanks for you response, LCarusi. I still feel a bit uncertain about when a "deemed distribution" occurs. Is there anything in the regs or elsewhere that makes it clear that "deemed distribution" means the date that the loan is past due (and grace period is over) rather than the date the plan sponsor takes action to treat the loan balance as taxable distribution? Thanks,

I am dealing with the same issue. I had concluded I would need to default those loans that were over the grace period late, but what amount gets defaulted for those really late loans, like the first writer mentions [one year late...]? Can someone clarify the date on which to stop counting interest in the example below. Thanks. Example: A takes a loan from a 401(k) plan on 1/1/96 and begins making weekly payments, but then stops on 8/1/96. A's grace period is over on 12/31/96 at which time his outstanding balance is $5000, but the administrator takes no action. On 8/1/98, administrator decides to issue a Form 1099 for the "deemed distribution". Should administrator issue a Form 1099 for the $5000 [amount which was in default on 12/31/97]OR should administrator accrue and add the amount interest from 12/31/97 to the date administrator issues the Form 1099? If you think the answer is $5000, would your From 1099what year would it be [1998 or 1996]. All thoughts appreciated

Can someone clarify the date on which to stop counting interest in the example below. Thanks. Example: A takes a loan from a 401(k) plan on 1/1/96 and begins making weekly payments, but then stops on 8/1/96. A's grace period is over on 12/31/96 at which time his outstanding balance is $5000, but the administrator takes no action. On 8/1/98, administrator decides to issue a Form 1099 for the "deemed distribution". Should administrator issue a Form 1099 for the $5000 [amount which was in default on 12/31/97]OR should administrator accrue and add the amount interest from 12/31/97 to the date administrator issues the Form 1099? If you think the answer is $5000, would your From 1099what year would it be [1998 or 1996]. All thoughts appreciated!