Alan Simpson

I too have established a ER receivable account under Quantech to hold the ER contribution receivable. The reason for this is that I can post it as a receivable, but not have Quantech actually determine the appropriate buys since the receivable is tracked as a cash account. Therefore, during the next year when the receivable is contributed I then use the transfer receivables as mentioned above and the system will inform me of the appropriate mutual funds to buy. Doing it this way, instead of posting the receivable but not confirming the transactions, ensures that any participants who make a change in their investments will have the correct investments purchased, instead of the investment allocations they had at the end of the year.

Stacey, I currently am tracking over 40 mutual funds that I download the prices on a daily basis from the internet into a file and then import the values into Quantech. A disavantage is that this is not an automated process, but a manual one. However, it only takes me a few minutes to bring in the prices. The advantage is that there is no cost involved from the internet or Quantech. [This message has been edited by Alan Simpson (edited 04-17-2000).]

Assuming that you are using an TPA for the plan why not make the funds from companies ABC and DEF available to all participants. That way they can individually choose which fund the wish. Of course, the TPA may not allow this, but this is an easy solution to the problem if it will work.

More detail-- Check are made payable to the bank but the bank doesn't want to take them as tax deposits since funds are "not collected" at that time and the bank would be fronting money for the tax deposit until the funds are "collected".

Working with a plan which has its assets invested through a brokerage firm. In the past when making distributions, checks were prepared from the plan account and then despoited with the fed tax deposit coupon at the employers bank. However, bank is no longer willing to take check drawn on another bank (brokerage account bank)for tax deposit. How are other people handling this. Also, have a plan which uses the employer TIN for the plan TIN. This requires that tax withholding be remitted electronically. How would this be handled using the same situation above.

I am not sure if this is what you are looking for, but here goes. Regarding seminars you could contact the following companies. They put on retirement plan seminars all around the country and are very good. Corbel - www.corbel.com PPD (owned by Corbel) - 303-759-1004 McKay Hochman - www.mhco.com Universal Pensions - 800-346-3860 AS far as creating your own accounting system for use with your plan I would like to suggest that you strongly consider purchase a software package specifically designed for this. Yes, I know that they are expensive but they also have some benefits. These benefits include 1) complaince with changes in regualtions regarding testing, 2) access to Users group (a valuable source of ongoing information), 3)saving of time, etc. The drawbacks include 1) continuing outlay of cash, and 2) possible learning curve. I believe that if you want to ensure that you are operating the plan correctly you should attend as many seminars as possible and look into purchasing a software package for the processing of the plan.

I have had a similar problem with a plan. However, when I informed the participants that their individual accounts would be charged for the plan administrative fees and governmental reporting fees for continuing the plan they sure returned the distribution forms in a hurry.

While I am not an attorney why not have the participant create a will in which a trust is created to take care of any minor children until such time as they become adults. This trust could then be named as primary beneficiary of the retirement plan/life insuarnce/etc. All parents should have a will if they have children, if nothing else, just to designate the guardian of their child(ren). The addition of a "trust" within the will should not be that much more expensive.

Why not put the limit the same for all employees (NHCE and HCE)? Assuming your HCE earns $80,000, or more, the most they can defer is $10,500 for the 2000 plan year which is only 13.125% (10,500 / 80,000 = 13.125%). Using the matching listed in your posting it would not increase the matching since it stops at 6%. Therefore, you would be giving all participants the same maximum percentage level and can point to the regulations for the HCEs not being able to defer more. [This message has been edited by Alan Simpson (edited 03-10-2000).] [This message has been edited by Alan Simpson (edited 03-10-2000).]

Plan has failed to remit some deferrals within the 15 business day timeframe. This info needs to be reported on the 5500 C/R and on IRS form 5330. How is it communicated on the 5500 C/R -- would it be considered as an extension of credit by the plan to the employer? When calculating the tax to be reported on the 5330 for the late contributions (which I believe is 15% of the deferrals), is this amount calculated on each late deferral contribution. My opinion is yes but I would like to have backup if possible. To make the individual participants whole for the late deferrals how should the calculations be performed? ------------------

If the recordkeeper can handle the accounting of the funds from more than one source why not just stop contributions from going into the "old" funds and just put them in the "new" funds. You could also give each EE the option of transferring their portion of the "old" funds into the "new" funds with the knowledge of any penatlies. Sometimes it is worth it to take the penalty. Therefore you still only have one plan and one administration fee but have investments at more than one place. Currently we are doing this for a 401(k) plan and almost all the employees moved their money into the new funds. However we still track the few employees that did not want to move their investments.

The plan document/adoption agreement should indicate when a participant can change the amount/percentage they elected to defer into the plan. However, they should be able to drop to a $0/0% deferral at any time during the plan year regardless of the plan limitation on when deferrals may change.

How about the fact that if the distribution isn't made at the appropriate time an excise tax of 50% of the shortfall is imposed on the participant for the tax year that begins with or within the calendar year for which the distribution is required. (Prop Treas Reg 54.4974-2, Q&A-1). While this tax can be waived there aren't any guarantees that it would be. When the participants who should have received a distribution know this information they may be willing to refile their taxes instead of losing half of the distribution as a penalty. Just because the checks were cut in December does not necessitate that the participant has received a prior minimum distribution -- perhaps they just didn't wait until April 1 of the next year to take it (it does happen). If this is the case, and the attorney will put his recommendation in writting, then it might be a possibility to just reissue the 1099-Rs for 1999. However, how do you explain everything to the IRS if they come knocking?

Have a 401(k) plan with a plan year of 8/1/1999 through 7/31/2000. One participant (the owner) is able to defer 6.25% out of first paycheck of the plan year (August 1999) and reach the $10,000 maximum deferral. When is the next time that this participant can defer into the plan. Is it after January 1, 2000 since this begins a new tax year for the participant or is it the next plan year? If it is as of January 1st, and the maximum amount that can be deferred is increased, then what limit should be used (1999 or 2000) for the "second" deferral into the plan? Also, is there anything I should be aware of when doing plan testing? Your assistance is appreciated and any cite(s) would be helpful.

Do contirbutions made to a SEP count towards the maximum contribution (15%) for a Profit Sharing plan or are they separate from the PS plan

Basically a transfer is when benefits are distributed directly from one plan trustee to another and where participants do not have the right to elect immediate distribution (ie. plan merger, spin-off). A rollover is a transfer from a qualified plan into either an IRA or another qualified plan.

I am currently reviewing the addition of the Voice Response Unit and web site software sponsored by Corbel. If you have had any experience with either of these please e-mail me or post a message to this board regarding your satisfaction with these systems and any pitfalls that you may know of. Thanks. [This message has been edited by Alan Simpson (edited 08-06-99).]

We currently have plans that have participants using the recommended investments and some who self-direct. While we do offer self-direction to our clients, the only participants who tend to use it are those with large account balances. Please be aware, that while this is a valid way to operate a plan, if one participant is able to self-direct then all participants are able to self-direct. If a participant decides to use the funds recommended for the plan then their investment election form includes a statement indicating that they know they are able to self-direct but have chosen not to do so at that time. As with all plans, the Trustee/fiduciary is responsible. Therefore, it is important for the Trustees to verify the capabilities of the individuals who would be handling the transactions. They may wish to provide a policy to review the investment firm/broker before allowing them to handle the transactions for a self-directed account. One disadvantage of self-directing it that you do not have control over the transactions until such time as they have already occurred. This could put the plan in jeopardy if prohibited transactions occur, or are made in investment that are not allowed within the plan (whether by regulations or plan investment policy). Hence the review of the firm/broker and their capabilities to follow the plan investment guidelines. Another disadvantage is that this could increase the recordkeeping costs to the plan since their will be more time spent on reconciling transactions occurring in the self-directed accounts.

I believe the computer scanable formats are available at PWBA's internet site which is http://www.dol.gov/dol/pwba

Situation: Employee has money in a retirement plan with previous employer and wants to roll it into plan with new employer. Employee is due required minimum distributions from prior plan due to the attainment of age 70 ½. However, when the money is rolled into the new plan will the employee still have to take RMD's applicable to the rollover money even if the new plan allows for the postponement of the RMD's until termination of employment. (Note, until the money is transfered the RMD's will be taken) Any cites would be appreciated.

I am not sure if you can just cut the participant a check. However, how about sending him a letter indicating that the fees for recordkeeping and governmental reporting will be paid from the plan and since he is the only participant these fees will be coming from his retirement account (include an estimate of these fees for him to review). Once he is aware that there will be fees he may change his mind and start communicating with you.

Am strongly considering using the Internet for education about a retirement plan, investment alternatives, and other plan information for a company with multiple locations throughout the state. Am curious what your experiences ahve been with using the Internet as well as the type of software necessary to perform the functions listed above. Your response is appreciated.

We have a client with multiple locations and are considering using the Quantech Internet access software to assist in education, enrollments, and communication participant balances. I am curious how well the system works and what the good and bad points are for using this type of communication tool. Thanks in advance for your response.

In the 1999 edition of the 401(k) Answer Book the depositing of deferrals is mentioned in question 5:33 under Common Prohibited Transactions. Hope this helps.

Active employees may still defer into a 401(k) plan whether they are over 70 1/2 or not. As far as the RMD rule, recent legislation had allowed those that reach the age of 70 1/2 and who are not considered a 5% owner to defer taking RMD's until such time as they terminate their employment. However, this should be incorporated into the plan document.