R. Butler

I don't really make recommendations, I present options. I have no problems with presenting different "options" to my employer and then letting the employer decide. I don't have any problems presenting "options" to clients and then letting the client decide.

I've got a handful of SIMPLE-IRA documents to update. It is my understanding this has to be done by the end of the year. My only real question is the effective date in Article VII; do I back date that to 01/01/02?

This is news to me. When did the poisition set forth in Announcement 2001-77 change? Is there written guidance on this somewhere?

The results you are providing indicate that you pass the gateway. The first part tests to see if the lowest allocation rate for any NHCE is at 1/3 of the highest alllocation rate for any HCE. There cannot be any benefitting NHCE with an allocation rate lower than 2.167 to pass the 1/3 test. It appears that you the Plan passes the gateway. The second part tests to see if all NHCE's receive an allocation of at least 5% of 415 comp. Since you meet the 1/3 test you are not concerned about this test.

We've got a takeover Plan that uses one vesting schedule for employees hired before 01/01/00 (6 year grade) and another vesting schedule for employees hired after 01/01/00 (4 year grade). Is this permissable? I've never seen something like that before.

Is this it? http://benefitslink.com/boards/index.php?showtopic=4748

The first-time homebuyer exemption applies to IRA's only, not to qualified plans. I was only fairly certain in a prior post, but now I am more than fairly certain.

1.416-1, M-10 provides the rule that partcipants still employed on the last day of the year receive the top heavy minimum. An employee becomes a participant when he/she is eligible to defer, regardless of more restrictive requirements for other employer allocations. I am sure there is a cite for that, but I don't know it off the top my head. You may want to try to Search the board for a cite. I am sure this topic has been discussed before.

It applies to employer matching contributions.

1. Death 2. Disability 3. Substanially equal periodic payments after termination 4. Participant at least 55 and termianted 6. Amount not in excess of deductible medical expenses under 213 7. Distribution due to IRS levy 8. QDRO payment to alternate payee 9. Corrective distributions 10. Certain ESOP dividends. I am fairly sure that first time honebuyer exemption only applies to IRA's (could be wrong). These are found in 72(t)(2)(A)-(F). http://benefitsattorney.com/cgibin/framed/...?ID=304&id==304

Reg. 1.72(p)-1 Q&A 15 states that deemed distributions are generally not subject to withholding. http://benefitsattorney.com/cgibin/framed/...gi?ID=64&id==64

Minimum contributions must be provided to all participants. The employee became a participant when he/she became eligible to make deferrals.

I'm not sure I completely understand the question, but there is generally not withholding on a deemed distribution. See 1.72(p)-1.

There is no attribution between owner and the ex-spouse, but that doesn't mean. She could be key for another reason.

I tend to agree w/ mbozek that the antialienation rules would not apply after the money is distributed, however, the ERISA Outline Book does indicate the issue is not clear. Sal cites Guidry v. Sheet Metal Workers Local No. 9, 10 F.3d 700 (10th Circuit 1993) in support of the proposition that the antialientation would not apply after distribution. He US v Smith, 47 F.3d 681 (4th Cir. 1995) in support of the proposition that antialienation does apply, even after distribution.

The client is correct. If the document doesn't put a limit on the number of loans, a participant can take more than 2 in a year. I was at a seminar "live via satelite", sponsored by ALI-ABA. Dick Wickersham was one of the speakers. He indicated that regs would be finalized by the end of this month. He also indicated that the 2 loan limit would not be in the finalized regs.

Thank you. I knew theoretically it was possible, but I've read commentaries suggesting that the IRS may frown on it, so I wanted to double check.

Corporation with 3 owners and nine other employees. Husband, Wife and Son each own 1/3. I want to put Husband, Wife & Son each in their own class. I would have 4 classifications of employees, a separate discretionary provided to each class. Classes as follows: Class A -- President (covers the Husband) Class B -- V. President (covers the Son) Class C -- Treasurer (covers the Wife) Class D -- Others Is this permissable? I am concerned about each owner being a seperate allocation group.

Now an age-weighted plan avoids the gateway. Can I add the 401(k) to an age weighted profit sharing plan and still avoid the gateway?

Getting ready to do my first "real world" experience with a Cross Tested Plan w/ 401(k) & Matching Provisions. Just want to verify a few things: 1. Profit Sharing Contribs and forfeitures are the only contribs used in rate group testing. 2. 401(k) and matching only used in the Average Benefit Portion. 3. If my coverage ratios in the rate group testing ratios exceed 70%, I don't worry about the Average Benefit Portion. Does this sound right?

I've never really actually seen a frozen 401(k), but would there be any further deferrals? The intent is totally freeze all contributions; if participants are eligible to defer, then they couldn't do a SIMPLE-IRA because they would be benefitting under a qualified plan. Am I missing something? Again I never have seen a frozen 401(k) and don't really see how it is a good option.

100% vesting alone doesn't make the match a QMAC, certain distribution restrictions also apply to QMACs.

I am fairly certain the matching contributions have to be QMACs to be used in the ADP test. Probably should review 1.401(k)-1(B), specifically 1.401(k)-1(B)(5) for rules on QMACs in the ADP test.

Plan Sponsor wants to freeze the 401(k) and start a SIMPLE-IRA in 2003. (Can't figure out why they just don't terminate the 401(k)) Is this permissable? I don't see why not since no one would benefit under the 401(k), but just wanted to check.

Its debatable. Those that argue it is not acceptable generally base their arguement on PWBA Opinion Letter 94-32A, which dealt with QDRO expenses being charged directly to the participant. The opinion essentially stated that a Plan can't charge the participant for a benefit he/she is entitled to under ERISA. Those that argue that it is acceptable reason that such expenses can be charged to the Plan and it is more equitable to charge the fee directly to the participant. If you agree that the fees can be charged directly to the participant, I don't see why the fee would have to waived for participants with nominal balances. The issue is whether it should be charged at all.