k man

we have a client with an overfunded DB Plan that is terminating. he is the only participant and has reached the 415 limit. he is no longer in business. does anyone have any ideas as to how to reduce the 50% excise tax on the reversion? someone suggested the amount of the reversion is based upon the assets as of the date of the plan termination and does not include earnings since that date. can anyone comment on this point or offer suggestions?

What do you need to disclose regarding brokerage commissions/investment fees in Part I of Schedule C? Specifically what are they referring to when they say: "include brokerage fees and commissions only if the broker is granted some discretion"? The cite they give on the form seems to refer to brokers executing securities transactions. in our case we are a TPA and we are concerned about subsidies received from mutual fund companies. The 5500 seems to be only concerned with fees paid by the plan. money received from other sources dont seem to be the issue to me. sometimes we are a fiduciary and we disclose and offset under frost but this does not seemt to be relevant in this question.

Does anyone have a sample letter they use when they issue two checks to the same participant?

can you email or post the name of the mutual fund companies.

I know this is an old thread but what happens if we use the IRS locator program, they send the participant a letter but the participant still does not attempt to get the money. the balance is over 5,000.

has anyone heard anything about that Nationwide case recently?

i feel comfortable that there is no service as defined by the DOL regs. clearly you cannot defer money when you are not an employee. although there is no definitive authority on this i believe the safer way is to exclude the severance accross the board.

based on that article and another source i am going to suggest the same thing as the accountant - that the deferrals be returned.

thanks. it seems to me the article suggests that the employee would not receive credit for time not actually worked for vesting and accrual of contributions

There seems to be alot of confusion on this issue. does anyone know how to deal with severance pay and its affect on vesting and hours of service? our plan document seems to be silent on the issue except for a statement that severance pay after separation from service is not included in compensation. basically, our client terminated several employees and paid them six months of severance pay (payable each payroll period). They allowed the employees to defer a portion of this into the 401(k) and they would like to know if they should receive credit for these hours of service for the severance period. It is my feeling that they should not have been permitted to defer of this money. in addition, i believe they should not receive credit for hours of service. does anyone know the answer to this?

Michael, that is accurate that they needed to sign the certification. i am researching the issue for some of my clients. if the cases in question were on another sponsor's prototype, the employer would automatically qualify for that sponsor's extension. You might not be in trouble on all of those IDP's. If the plan was an off calendar year plan, the deadline to amend may not have passed. Thus, you can still get a certification. However, all calendar year IDP's had to be done by 2/28/02.

we really dont deal much with these plans but we have a client who has one and wants to terminate it and begin a standard 401(k). what is the procedure. I am aware of the tax consequences of this event but it seems that there is no procedure. the fund company is not aware of a procedure either.

it would be too late for that since you did not make the application in time. a few months will help. i have another 150-200 to do.

John, my company fits into that group- both DB and DC. Thus, our deadline is actually 4/31/03. i can't tell you how happy i am about this.

i was focussing on the rule that in the event of a default, the plan sponsor would have to get adequate security for any subsequent loans to the same participant. are you following the proposed regs?

that is pretty bizzarre. so what is effect of the proposed regulations.

Are there new proposed regulations and final regulations that were issued on the same day?

question - if an employer is using an individually designed plan with a 9/30/02 year end (end of its remedial amendment period) and it decides it is going to adopt a prototype instead, what is the deadline for adopting the certification? i think it can be done by 9/30/02.

any word on the possible extention. i spoke to one of the managers of the prototype program in cincy and he said they really are considering extending the deadline.

so on a corporate level it does not matter how the transaction is structured, so long as the trustees consent to the "spin off"? what makes this different than an ordinary separation from service situation?

A few shareholders and associates in Law firm A decide to leave the firm and form Law Firm B. They would like their new entity to sponsor a plan with the identical provisions. is this a spin-off as defined by the 414 regs and are the account balances just transferred to the new plan?

i agree with your interpretation. i also agree that in the vast majority of situations it would make sense to actually peform the test. however, if you are dealing with a big company with a plan that has been in existence for along time and never top heavy, then you might not feel that it is necessary.

Is there a requirement in the code, regs or any other authority that requires a plan sponsor to actually perform a top heavy test when they know from prior years the plan is far from top heavy?

Does it cause a problem if a TPA receives, reviews and makes the decision to grant participant loans in accordance with the provisions in the Loan Policy? In this case the loan policy is not part of the Plan document. I see the discretionary decsion as to whether or not to make a loan as a discretionary (fiduciary) function. What if there are no restrictions for loans (loans can be made for any reason) and the terms (interest rates etc.) are given to the TPA? If it is a fiduciary function, what is the potential liability for a bad loan? I see it as an excise tax DOL Compliance issue.

does anyone know whether there is a chance that the service will extend the deadline for prototype plans to beyond 12/31/02.