k man

I thought the statement would be a good idea due to possible time lag in between land purchase and trialer purchase. i guess just extra due dilligence

No loans in plan. I am going to tell the Employer to get a signed statement that says they intend on purchasing trailer. I think is sufficient due dilligence on behalf of plan sponsor.

my client has sold all of its assets to another company. the company that aquired the assets maintains its own 401(k) plan. the client would like to terminate the plan, vest all the participants and make a distribution to everyone. the plan is currently frozen. I believe they can do this based on the exception to the same desk rule. Is this the correct logic? How does the successor plan rules impact this issue?

they get better all the time. A client of mine has an employee who wants a hardship distribution in order to purchase raw land and then purchase a double wide trailer to put on the land. this will be his principal residence. the plan provides for hardship distributions based on the deemed immediate and heavy finacial need safe harbors. Of course one of which is purchase of a principal residece. should I allow the distribution for this land purchase?

I have a client who has a safe harbor 401(k) plan giving the 3% non-elective contribution to all eligible participants. currently, employees must wait 12 months to enter the plan. they would like to allow employees in immediately for deferrals but restrict the 3% non elective to those with 1 year of service. can they have this dual eligibility with a safe harbor 401(k) plan?

You also have to consider the size of the employer. if the employer has multiple locations and payroll is done from more then one location, it might take the employer longer to gather the data needed to calculate how much to remit. also, the rule states that the money only needs to be separated from the employers general assets and becomes part of the plan no later than 15 days after the last day of the month in which it is collected. you will not lose that much if it is only invested in a money market account. also, as i stated earlier in another post, it is reasonable for a company to charge plan sponsors extra fees to allocate money more frequently then twice a month. this expense will invariably be passed on to the participants. thus, in end you might not be benefiting at all.

we are going to take the position that it will cost the client and participants more money if the adminstrators have to allocate and invest the contributions more than two times a month as opposed to doing it once a month. Our firm charges plan sponsors an additional fee to allocate contributions more than two times a month. if the investment return is in the range of 10 percent and factoring in the amount of contributions vs. our fee, then the participants lose.

Client has a 403(B) Plan. I need to know whather this issue can be corrected via TVC program. Plan document provides that the employer shall make non-elective contributions for each participant of 11% of compensation. In reality, the employees were given a choice of taking 11% in cash or receving contribution. most employees took cash. What, if any, is the problem with this? what is correction method?

along the lines of the previous post, they can obtain favorable tax advantages (with the exception of tax deductable premiums) by purchasing the life insurance outside of the plan. by keeping the insurance outside of the plan, they can have unfettered access to the increasing cash values prior to age 59 1/2.

i think R.Butler was referring to the brother or sister of the party in interest, not the participant. p.s. thank you r.butler and k.johnson. those code sections were right on point for what i was looking for.

Does family attribution come into play for party in interest transactions?

what is the rule for family attribution pertaining to son in law or daughter in laws over 20. is it that if the parent owns more than 50% of the voting stock, then they own the son in law or daughter in laws stock by attribution?

A client of ours was audited by the DOL. The result was the DOL cited them for not deposting employee contributions timely (most occurences were prior to the new 15 day reg). The DOL position was based on the fact that the employer does payroll weekly and that segregation of the assets could have been done in seven days. frankly, we are confused with this interpretation. does anyone have any insight?

What (if any) penalty is there for failure to maintain an ERISA bond for the correct amount as provided for in ERISA REG. 2580.412-11?

How does a Plan Sponsor enter into "John Doe" discussions about resolving Plan defects (self correction) in the southeast region? I have read that each region handles this differently.

I have a 401(k) Profit Sharing Plan for a law firm that is cross-tested and provides for several different profit sharing contribution percentages (discretionary) for different classifications of attorneys and partners. is it necessary to list the allocation percentages in the SPD or omit that information? the reason I dont want to include the percentages is for confidentiality (the partners dont want each other to know how much each other is getting).

does anyone know where I can get a sample investment policy for a 401(k) Profit Sharing Plan?

A client took an early distribution from his IRA but failed to pay the excise tax. He already filed his return for 1999 . he would like to pay the tax. what is the procedure for this? should he file an amended return and just pay the 10% . how does he calculate the late interest and penalties, if any? [Edited by k man on 07-10-2000 at 08:49 AM]

No. The contribution was made an error and is not deductable. As such, the employer wants to take it out. Rev. Proc. 90-49 provides a procedure for doing this mut it must be done the later of 2 1/2 months after the close of the Plan Year or 6 months after the valuation date. well in this case the val date is the first day of the Plan year so both deadlines have passed. So what should my client do?

It is a long story but in order to comply with Rev. Proc. 90-49 which enables employer to take out non-deductable contributions from the plan, i need to change the valuation date from the 1st day of the plan year to the last day of the plan year. is there a procedure for doing this?

How much time does the code give the plan administrator to made the determination that a (DRO) order is a QDRO? I thought it was 18 months from the date the first payment would be required under the order.

if an employer goes bankrupt and a successor employer hires the employees to do the identical job, has there been a separation from service? Do we need to pay out the participants as a result of this situation? the new company would like to assume sponsorship of the plan and not make distributions.

the plan basically says that distributions must be in accordance with 401(a)(9) and applicable regulations. It also defined required beginning date as the April 1st following the plan year the participant attains age 70 1/2

we have a client who after attaining age 70 1/2 started to receive distributions based on his life expectancy. three years later he married and recalculated the amount of his distributions using joint life payout. Was the 1st election irrevocable thus making the recalculation improper? If improper what do we do?

Kirk, i think the problem is that this area,in particular daily valuation and directed brokerage, is very new and dynamic. In recent months, we have seen an explosive increase in participant trading activity, which can be directly attributed to the growing popularity of daily valuation and self directed brokerage options. True, some of the activity has to do with "irrational exuberance" (greenspan term). But if such activity is here to stay than as with everything else, I am sure the litigation will follow. [This message has been edited by k man (edited 06-01-2000).]