Earl

"chage the rules" is redundant

§107 Retention of records. Every person subject to a requirement to file any report or to certify any information therefor under this title or who would be subject to such a requirement but for an exemption or simplified reporting requirement under section 104(a)(2) or (3) of this title [29 USC §1024(a)(2)or (3) ] shall maintain records on the matters of which disclosure is required which will provide in sufficient detail the necessary basic information and data from which the documents thus required may be verified, explained, or clarified, and checked for accuracy and completeness, and shall include vouchers, worksheets, receipts, and applicable resolutions, and shall keep such records available for examination for a period of not less than six years after the filing date of the documents based on the information which they contain, or six years after the date on which such documents would have been filed but for an exemption or simplified reporting requirement under section 104(a)(2) or (3) [29 USC §1024(a)(2)or (3) ]. (Sept. 2, 1974, P.L. 93-406, Title I, Subtitle B, Part 1, §107, 88 Stat. 850; Aug. 5, 1997, P.L. 105-34, Title XV, Subtitle A, §1503(d)(5).)

thanks - very helpful. So a 5500-EZ filer has no option for relief?

client walked into my office this morning with his 5500 filings for the year ending 12/31/00 (due 10/15/01). [First MP, final DB (no Sch b)] what do i look at to find how to mitigate his damage? thanks for any guidance. Earl

Under teh new bonding rules, if non-qualifying assets exceed 5% of the Trust and are in excess of $500,000 (actually over $1,000,000) does the maximum bonding requirement of $500,000 cap the bond or is a $1,000,000 bond required? Is there a problem getting this issued by a carrier since there was/is this statutory maximum. Thanks -

THIS IS FROM RIA: In general, all distributions under an IRA, SEP, or SIMPLE IRA must be reported to IRS. A Form 1099-R filing is not required, however, if the gross designated distribution paid to an individual for the year is less than one dollar. 3 A $10 minimum applies to distributions under a qualified pension plan.

.... and sell him a DB Plan.

Seems to me that when you legally merge the plans, the assets, where ever they are held, become assets of the surviving plan and you have an empty trust/plan that has a final filing due date in 7 months. Just because you "forget" to change the Trustee/Plan Name or don't move the money to a new set of investment options, I don't think the plan continues to live.

I think it only makes sense because the combined plan limits went away and the SEP had no mechanism for doing that test.

What if this is a fiscal year plan (06/30/03)? My client will make $300,000 for the 02/03 year, but only $60,000 for the 03/04 year (he is 50+). I want him to fund $40,000 PS and $2,000 catch-up pre-6/30/03 (since he hit 415, the first deferral turns into a catch-up on 6/30/03). Then from 07/01/03 - 12/31/03 he contributes $12,000 as the regular deferral, so he does $14,000 in 2003 but the catch-up is the first money in (pre 6/30). Then 1/1/04 - 6/30/04 he does another $16,000 ($13,000 + $3,000). Plus the PS of $15,000. Is it possible that the catch-up could be the first deferral of the calendar year in a fiscal year plan?

and tell the guy that it has to be W-2 not K-1 so you don't have to tell him next February.

thanks.... the plan definately is required to offer annuity. So Trustee has to select and purchase it? This is a very small biz. the guy that died was the founder of the biz and the Trustee until a yr ago. guy that is taking over the biz will be clueless when I tell him to go get an annuity. So I guess it means referring him to an ins. agent...

A Participant, past his required beginning date, dies. Beneficiary is his sister. She wants to annuitize to make distribution go past 5 years. Mechanically, how is this done. Does the plan have to annuitize her? Can an annuity be purchased? If so, is the account distributed to the annuity by the Trustee so the Trustee is responsible for selection of the annuity provider? Since the money cannot be rolled, can 100% be distributed and an annuity then purchased by the beneficiary? (So she is the one selecting it?) If so, the plan issues a 1099 code 7, then how would the participant get that money excluded from current income? If the plan annuitzes her can she be charged every year for the calculations (I think maybe)? for the 1099 (I think no)? (15 years and no one ever wanted an annuity before!)

you can set up individual accounts at Schwab but restrict what can be purchased, only mutual funds for example. is that something other than an Particpant directed brokerage account?

! Thanks

The practical reasons are clear. No doubt about it. My question is more of a compliance/non-discrimination issue. Seems to me, yeah, beneficiaries and ex-spouses would have a right to take a loan under the terms of a loan program that is available on a nondiscriminatory basis. I understand that inconvenience would lessen loan programs (not a bad thing in my book) but convenient does not make it nondiscriminatory. I plan to look at the ERISA cite and see if nondiscrimination is "nondiscriminatory availability to Parties in Interest" or is it "nondiscriminatory availability to Plan Participants" or is it something else. This same issue extends to Hardship distribs. My prototype document allows terminated participants to be excluded from taking Hardship distributions. I know they can get the money, but I am just talking about nondiscriminatory availability. Thanks -

yeah, i know... i still don't get it. guess I am just dense...

I do this, but don't like it.... I don't know where to draw the line. Under $100? I guess it is ok. The real solution is getting the PBGC program open to DC plans. Why they haven't done this already is beyond me and I see it is included in that bill that just passed the house. We will see. The other real solution is getting the default rollover provisions going. If mutual fund companies could be compelled to accept rollovers of as little as $1000 without Participant sig. that would help. The ones i know want $5000 min. and there is the diversification issue... So then what to do between $100 and $1000? Seems like too much money to just forward to the Treasury. Maybe some enterprising chap will put it in a document and get a DL? Now that would be interesting.

I have seen the default on termination language and the available only to current employees language in loan policies. I have never understood how it can be ok to deny participants (who happen to be terminated from the sponsor) a feature of the plan (loans). Especially since the majority of the terminees are NHCEs. I sure understand that it is convenient for everyone concerned, but don't get how it is not a discrimatory practice in operation. Any rational you have heard? Thank you.

I entered "0"s for the funding area (Plan amended to 0% for a variety of reasons) and got rejected. funny thing.... It seems to want blanks, not "0"s, on the Schedule but on the reject letter i guess i have to put "0"s, not blanks. Directions say "if not subject to 412" skip section. Seems to me a 0% formula is not technically exempt from 412, just has a $0 required contribution. whatever... guess we just have to learn how to play the game.

unfortunately, not a 401k issue but don't know where i would otherwise post this: March 19th, 2002 the client calls and says he sold all assets of the biz to another unrelated company (12/21/01). Now he wants to make a pension contribution. All employees either terminated or went to work for new co. on that date. (Begs the question as to where the money would come from now that company has no assets.) MP & PS both contained a last day rule. Can last day rule be amended out now? Was 3/15/02 the deadline for the MP Plan with effect on min funding standards? Could PS be amended now (till 9/15) or is that only for disqualifying defects, which this is not.... any thoughts would be appreciated. thanks

I am worried about 2003/2004 when NHCEs might be hired/become elgible again. Safe Habor is a good idea and might be the only way to go. In fact, they were safe harbor in 2000 before the cash ran out, so the idea would be sellable. Would plan be forced to use current year when NHCEs are eligible/tested again, since prior yr NHCE% would be = 0? (Forced meaning under pain of HCEs not being able to defer.)

401(k) Plan... 2001 passes ADP with NHCEs, but by 12/31/01 they are all terminated (small tech co.). 2002 only the HCEs (2). As I understand it, 401(k) with no HCEs is deemed to pass ADP. But is there an implicit current year election in this case. Or is there just no test, current or prior.

an email would be greatly appreciated. and very useful. thanks in advance.

415(h) 50 Percent Control. For purposes of applying subsections (B) and © of section 414 to this section, the phrase ``more than 50 percent'' shall be substituted for the phrase ``at least 80 percent'' each place it appears in section 1563(a)(1). highlighting "more" than 50%