John A

Thanks, Jim. I do see reasons why it's a bad idea on your list, but not necessarily a reason it can't be done. 1. Both employer contributions and deferrals are 100% vested. 2. It is a participant in a self-directed account that is asking for the accounts to be commingled - does not want them tracked separately. 3. Good point. Rollovers need to be accounted for. 4. Good thought - don't believe there is any hierarchy. 5. True, but still only applies to the year, not to the account balance. 6. Affected by the year, but how is the 5500 affected by the account balance? 7. Self-correction might be able to be done despite not tracking the sources separately, but I agree that there could be situations where the separate accounting would make it easier. 8. Records for each year would be available from the testing documentation, but I don't see where a division of the account balance would be necessary. I believe it is much better to keep track of the sources separately, but I'm still struggling with why the sources would have to be kept separate in all situations. I'd like to tell the participant that the sources must be accounted for separately, but I still don't have a definite reason why this is required.

Now that delinquent 5500 forms (even for pre-99 years) are filed with the DOL rather than the IRS, what will your procedures be when filing a delinquent 5500 form? Will you always use the DOL's Delinquent Filers Voluntary Compliance Program (DFVC)? Why or why not? Will you send a letter of explanation with the delinquent filing? Will you send a request for waiving fees or penalties with the delinquent filing? Will your procedures change from whatever delinquent filing procedures you used when filing with the IRS? Do the answers depend on the reason the filing is delinquent?

AJR, No, you are not correct. Since a Schedule H was filed in 1999, choosing to file the same as the prior year would mean a Schedule H for 2000. You would only have the Schedule I choice for 2000 if a Schedule I had been filed for 1999 and the other requirements for the 80-120 rule were met.

As long as a plan does not provide for hardship withdrawals, does not provide for different distribution options depending on source, and the plan accounts for deferrals long enough to do annual testing each year: Is there any reason a plan has to keep track of how much of a participant's account balance is from deferrals versus how much is from employer contributions? Why?

MWeddell: THANK YOU! I enjoyed the turn in the discussion, but I appreciate getting back to the original question. However, what if the participant has terminated employment and received a lump sum prior to receiving (or being notified) of the DRO? Could the Plan Administrator then ignore the DRO, or automatically determine that it is not a QDRO but still go through the QDRO procedures, or could the DRO possibly still be a QDRO?

Can a seasonal worker who works 4 months a year be considered to be on a "leave of absence" for the other 8 months for purposes of the participant loan rules?

Several participants (but not all) participants for 1 company received 1099-Rs with an incorrect code, indicating nontaxable distributions rather than the correct taxable distribution codes. The 1096 appears that it would not change. How should the incorrect 1099-R filings be corrected?

If a 457 plan does not adopt the amendment to use 2001 Required Minimum Distribution regs, is the participant essentially stuck with the old regs? Participants in 401(k) plans would still have the opportunity to roll over the difference between the amount under the old regs and the amount under the new regs. Since distributions from 457 plans cannot be rolled over until after 12/31/01, it appears that participants in 457 plans have no comparable opportunity to use the new regs (unless it's a first time RMD that can be paid after 12/31/01). Is there any reason a 457 plan would not just adopt the amendment?

EGTRRA changed the rules to allow rollovers from 457 plans. Is this effective for all distributions after 12/31/01, or for distributions during the first plan year beginning in 2002, or when is the provision effective? (I am not very familiar with 457 plans - are there 457 plans with non-calendar year plan years?) If the distribution occurs 12/1/01, could the participant wait until after 12/31/01 and then roll over the amount received on 12/1/01?

Belgarath, thanks for the response. When I looked at this again, I started wondering if it really mattered whether the old or new rules applied. Is it true that under both old and new, the spouse's RMD would be calculated based on the spouse's life only with recalculation (unless plan document specified something different)? Even under the new rules, when a death occurs prior to the participant's RBD, the new simplified table (old MDIB table) is not used, is it?

If a qualified plan participant died several years ago, and the beneficiary this year has a RMD for the first time (participant would have had RMD now if he had lived), does the beneficiary determine the Required Minimum Distribution under the old rules or under the 2001 proposed regs?

A judge issued a DRO in the mid-90's. The spouse is just notifying the plan sponsor now, in 2001. The participant is still active in the plan. What action should the plan sponsor take when the DRO is received from the spouse?

An accountant for a plan sponsor is suggesting that the sponsor can return deferrals to HCEs to avoid top-heavy status. Is this allowable? What are the consequences if the plan sponsor returns HCE deferrals to avoid being top-heavy (and the deferrals would not have been returned due to ADP testing or any other reason)?

Can anyone tell me what a "401(a) plan with a g rider" is in connection with the plan of a government agency?

1. Did Notice 2001-42 effectively extend the GUST remedial amendment period for prototype filers to 12/31/02? If a prototype is approved after 12/31/01, is the deadline still 12 months after the day approval is received? 2. Can a plan sponsor that uses a prototype still freely choose current or prior year testing for 2001 and/or 2002?

If there are 100 or more participants on the 1st day of a brand new plan, is an audit required, or is there any exception for the 1st year of a plan?

Does treating a plan benefiting otherwise excludable employees, i.e., employees who could have been excluded under the age 21/1 year of service rule, as two separate plans affect how testing must be done in the following year?

Since I believe the actual language in EGTRRA is: "any distribution made for a reason other than separation from service, death, or disability, subparagraph (A) shall be applied by substituting '5-year period' for '1-year period.; I would say that corrective distributions for ADP, ACP and 402(g) are still included in top-heavy determinations on a 5-year period basis. It is interesting that the language is "separation from service" rather than "termination of employment" given the changes to the "same desk rule."

Did EGTRRA (or anything else) change the requirements for eliminating optional forms that were spelled out in the final 411(d)(6) regs released about a year ago? That is, is it still necessary that: 1) after the amendment takes effect for a participant, the alternative payment forms that are still available to the participant must include payment in a single-sum distribution form that is “otherwise identical” to the eliminated or restricted optional form of benefit, and 2) an amendment eliminating or restricting a participant's right to receive payment of accrued benefits under a particular optional form of benefit cannot apply to a participant for any distribution with an annuity starting date that's effective before the earlier of (1) the 90th day after the participant receives a summary that reflects the plan amendment and that satisfies DOL's requirements for an SMM, or (2) the first day of the second plan year following the plan year in which the amendment is adopted?

Is there any guidance that specifically notes whether a new owner can or cannot continue a 401(k) plan of a bankrupt company? A company goes bankrupt and so no further salary deferrals are made. A few months later, a new potential owner wants to buy the company and reactivate the 401(k) plan. Is there any reason the plan must be terminated? Is there any reason the new owner cannot simply reactivate the plan immediately after purchasing the company? The new potential owner does not own any other companies. What steps are necessary to reactivate the plan? Any cites would be appreciated.

I'm interested in how others handle daily accrual of interest in money market and bond funds. Is there a standard industry practice? For example, if a money market fund pays interest quarterly, do you account for daily accrual of interest during the quarter, or do you only add the interest when actually paid? Do you handle bond funds differently than money market funds? If a company has not been taking interest accrual into account, does the company need to take any actions?

From the instructions: "File Form 5558 with the Internal Revenue Service Center, Ogden, UT 84201-0027." There is no indication that the 5558 would be sent to a different address for any reason.

If a 5558 was mailed to the "old" address, should another 5558 be mailed to the Ogden address?

It sounds from the posts above as if it is generally okay to eliminate the provision as long as it would not take away vesting rights or the right to receive a lump sum at a particular time (which is generally not a problem in DC plans as most plans provide availability of lump sums on termination of employment). The early retirement provision may affect in-service withdrawal rights, but my understanding is that in-service withdrawal provisions can be eliminated from a plan document without violating the anti-cutback rules. Am I missing anything?

May a defined contribution plan eliminate its early retirement provision? Is it possible under some circumstances and not in others?