John A

So what amount should go on line 9d of the Schedule B for the money purchase plan? Is this amount zero of non-zero? If non-zero, is it based on an interest rate assumption or on earnings actually lost by participants? If it is based on interest rate assumption, who decides what the interest rate should be?

Are automobile expenses included in the various 415©(3) and 414(s) "safe harbor" defintions of compensation? Does this depend on whether the "automobile expenses are 1) use of a company car, 2) a car allowance payable in advance, or 3) remimbursement of car maintenance and fuel expenses?

What would the procedures be (assuming they exist) for requesting from both the DOL and the IRS a waiver of all late filing fees due to facts and circumstances, rather than using the DVFC?

What if the decision is made based on whether or not a participants is scheduled to work 1,000 hours for a plan year? All participants scheduled to work 1,000 hours are allowed to defer from the beginning of the plan year - all those scheduled to work less than 1,000 hours are not allowed to defer at all for the year. Thoughts? I personally would prefer not to do this at all, but I have not been able to find arguments that are strong enough to prevent a determined plan sponsor from going ahead with this idea. Help?

The 410(a)(1) requirement also applies for purposes of participating in the profit sharing and matching contribution components of a plan, but it is clearly acceptable to have a 1,000 hours and last day requirement for a participant to actually receive a matching or profit sharing contribution. So I do not think 410(a)(1) prevents a plan from having a 1,000 hours or last day requirement to actually be able to receive the benefit of being able to defer. Is there something else that does? There are restrictions that are allowed on deferrals - for example, clearly a plan can provide that a participant may only change a deferral election on a quarterly basis. Why couldn't a plan provide that participants in the 401(k) component could not start making deferrals to the plan until they had reached 1,000 hours for the plan year, at which point they would be allowed to defer for the rest of the plan year? How is this different than requiring 1,000 hours for match?

What if the requirement applies to the following year? In other words, what if the requirement is that a participant has a last day, 1,000 hour requirement to determine if the participant can or cannot defer for the following plan year?

Participant was paid a distribution of: $10,000 from 401(k) account. $600 from match account (forfeited other $400). $700 from profit sharing account (forfeited other $300). When the participant is rehired and meets other requirements for buy-back, does the participant have the option of: 1) Repaying $600 to match account to have match account restored, but not repaying profit sharing account? 2) Repaying $1,300 to have both match and profit sharing restored? Or is the only allowable option to repay $11,300 to 401(k), match and profit sharing to get the forfeited amounts restored?

Could an employer with a discretionary match declare that a certain match will continue until a new BOD resolution changes it? For example, could a plan sponsor declare that the discretionary match will be 50% up to 4% based on each payroll period starting January 1, 2004, and then continue to make this discretionary match without doing any new resolution until July 1, 2007, when a new resolution is done declaring that the match will be 25% up to 5% from July 1, 2007 forward? Or must the sponsor declare what the discretionary match will be each year?

Can the plan sponsor of a 401(k) plan grant service credit to new employees for their service with their previous employer, on a new hire by new hire basis, even if the previous employers were not related to the employer sponsoring the plan, provided it is done in a manner that does not discriminate in favor of HCEs? If this cannot be done, please provide a cite showing that this cannot be done. Thank you!

For what state should the taxes be paid upon distribution to a participant in a qualified plan: a) to the state the participant lived in when the money was deferred b) the state the participant lives in now when the funds are distributed c) the state the sponsor is headquartered in, d) other?

Has anyone ever used the ability to delay an audit due to a short plan year (of 7 months or less) to delay the audit for a full year preceding the short plan year (and then of course issued an audit covering both the full plan year and the following short plan year)?

How does "effectively connected income" affect 401(k) plans? When is “effectively connected income counted for 415 limit purposes? Is “effectively connected income” taxable in the U.S.? Can a participant contribute pre-tax salary deferrals from “effectively connected income?” Is "effectively connected income" the same as U.S.-source income?

Thanks, Harry O! Can you give me an example of income that would constitute "foreign source income that would be reportable on a W-2 but for the fact that it is not included in a NRA's gross income?" Also, would a nonresident alien with no U.S. source income but a nonzero 415 limit be able to contribute pre-tax deferrals to a 401(k) plan? Or would they be limited to after-tax contributions and profit sharing contributions?

If a defined contribution participant has no U.S. source income, is the 415 limit for that participant zero? If that is the case, is there any way for a participant with no U.S. source income to ever have money in a U.S. qualified D.C. plan? If not, why is it even possible to include "nonresident aliens with no U.S. source income" in a plan - what would be the purpose of including this category?

Tom, Okay, I'm getting closer to understanding. If the match based on service is not an optional form of benefit, what is it - a right or feature? Okay, I did a little more research - my understanding is that the rate of match would be a feature, correct? What would an example of an optional form of benefit be? And an optional form of benefit would be lump sum, 10 C&L, etc., correct? How do I tell whether something is a benefit, a right or a feature? And a benefit is a form of payment to a participant, a right is a particpant's ability to do something - like a right to make salary deferrals, and a feature is what's provided to a participant, like an allocation formula. Thank you for your help!

http://benefitslink.com/boards/index.php?showtopic=9253 Okay, I'm confused about how current availability is determined related to different match levels for different years of service. Since age and service conditions may be disregarded for determining current availability for a benefit (such as a match), wouldn't the different matches almost automatically meet current availability? For example, if you have: 25% for 1-4 years 50% for 5-9 years 100% for 10 or more years, wouldn't you count anyone eligible for any match as benefiting for current availability purposes, rather than only those with 10 or more years? Of course, you would still need to meet the effective availability requirement, but my concern here is understanding how to determine current availability in this case, and if I have a misunderstanding about what it means to disregard age and service conditions. So how is the coverage-type nondiscrimination test for current availability applied to the match situation above?

The Canadian employees have made "401(k) contributions" but they are not tax deferred contributions, so I have no idea why the Canadian employees are contributing. The plan document does NOT exclude nonresident aliens with no U.S. source income, so the employees are included in the plan. So does that mean these employees do have to be included in coverage and ADP testing (since they are not excluded under the plan document terms)?

My understanding is that U.S. source income is "Compensation for labor or personal services performed in the United States." So it appears to me that Janet M. is correct about there being no U.S. source income. But is Janet M. correct about not being able to have salary deferrals from money that is not U.S. source income? Is it possible that the money that is not U.S. source income is still taxable in the U.S. and that therefore the employees may make salary deferral contributions? Also, can anyone answer the ADP/ACP and coverage testing questions?

I have read through the 3 threads copied below and I am still not clear on the answers to the questions below: http://www.benefitslink.com/boards/index.php?showtopic=3901 http://www.benefitslink.com/boards/index.php?showtopic=4026 http://www.benefitslink.com/boards/index.php?showtopic=10349 If a U.S. company has a location in Canada, can the Canadian citizens living in Canada, working in Canada, and being paid in Canadian currency for service at this Canadian location, make 401(k) salary deferrals? [is their pay taxable in the U.S.?] Do these Canadian employees have to be included in coverage testing? Do these Canadian employees have to be included in ADP/ACP testing?

Has the Arkansas legislature convened, or when will it convene in 2003? How soon might they take action regarding EGTRRA conformity?

Kirk, It does not seem directly on point to me, but is this the thread you mean? http://benefitslink.com/boards/index.php?showtopic=17892 Thank you.

Are P.S. 58 Costs taxable each year in a nonqualified deferred compensation plan as they are in a qualified plan? If so, how are taxable P.S. 58 Costs reported each year? If not, how do P.S. 58 costs affect a nonqualified deferred compensation plan (or do they not have any effect)?

I konw there have been several threads on missing participants, and I've read most of them. However, in this case, the participant is dead, not missing. The beneficiary per the plan document is the estate, but there evidently is no estate, or no one to handle the estate. And there seems to be no living family - even distant family. Based on this set of facts, should the plan do anything different than what has been suggested in the missing participant threads?

My understanding is that both the safe harbor contribution and ADP/ACP testing will be required for the short plan year unless the plan was amended timely to say that the plan would not be a safe harbor 401(k) plan for the short plan year (and then presumably would say that the plan would again become a safe harbor 401(k) plan for the first full plan year following the short plan year).

Did this rule change under the finalized RMD regs?