pmacduff

My feeling is that no, she can't. For one thing, it would be after tax dollars she would be putting into the plan, the plan would have to allow for that. If she has the money equal to the cash value outside the plan, why not strip the cash value in the form of a loan, deposit that into the plan; Trustee can then transfer ownership, and the participant can pay back the policy loan once the policy is outside the plan? It accomplishes the same thing, and creates no taxable event for the participant. Plus, the original stripped cash value is safely tax deferred in the Plan for later distribution. If anyone has a different opinion, I'd like to hear their thoughts, too.

Kate - IF the plan allows for in-service distributions at 59 1/2+, then she can take distribution of the policy, otherwise, she would have to wait for a distributable event. Now, if eligible for distribution, there are actually two ways that I know of that the policy can be addressed: 1) Participant takes over ownership of the policy and continues paying premiums personally. In this instance, she would receive a 1099-R form for the cash value upon transfer of ownership, (even though she did not actually receive those funds, they are available to her once she assumes ownership); and 2) Some policies allow for the total cash value to be taken from the policy in the form of a loan. The proceeds are then deposited into the plan and remain tax deferred until the participant takes that cash in distribution. The policy ownership is then transferred to the participant who can continue paying premiums personally. The loan amount (once the policy is signed over to her personally) can be repaid into the policy by the participant with other monies or if it remains unpaid, will usually reduce any death benefit. In this scenario, the participant would not receive a 1099-R form as the policy has no cash value on transfer. Hope this helps.

Richard - When reading the reams of information in our field, I'm not sure exactly where I read this. I thought it was the 5500 filing instructions but have not been able to find it there. I even checked back through old '99 & '98 instructions; could've sworn there was a section on late filings...In any event, I am attaching a .PDF Federal Register file in reference to the DFVCP and, if you look on page #3, 1st column, last paragraph, it references what to do if you cannot obtain copies of the form years you need (use current form and replace the year). I realize that this is not saying you MUST file current forms with the correction year written in...and that you should try to obtain the year you need... I still believe I read somewhere that you should use the most recent form, cross out the current year and write in the prior year that you are filing for. I will continue to look for the reference materials that I remember having read that do state this is the appropriate method for late filings. I will try to find that and forward it to you. UT OH...I can't figure out how to attach the .PDF file to this post, please e-mail me and I will send you a copy....Patti

Others can add to or dispute this, but I believe if you read the instructions for late filings you are to use the current form, cross out the year (2000) and write in the year you are filing. This is applicable for the 5500 forms so I see no reason it wouldn't apply to the 5500EZ. Hope that's helpful.

CyndyB - I am relatively new to Quantech also, but we did do forfeitures in our training course. The forfeitures are reallocated based upon the information you have coded in the Plan Specifications. Look for the form with forfeitures. You will tell the system when to allocate. One choice (I think) is upon distribution or after 5 breaks-in-service. Once you have this coded properly, the system should know that your two terminees have received distribution and should be forfeiting. You will also need to run a transaction for forfeitures to allocate (it's on the contribution transaction and I think there also may be a forfeiture transaction for those held in Quantech's forfeiture suspense). I am also a former FDP user and find it very confusing sometimes to do things in Quantech that seemed so easy in FDP! Hope this helps. Patti

After January 1st the rules for those monies eligible to be rolled in to a Qualifed Plan will relax and allow for rollovers of IRAs, 403(B), etc., but what about the client who terminates a 401(k) Plan and sets up a Simple IRA Plan. Can the Simple IRA plan receive the 401(k) rollovers?

I think you also need to look at the total client work the administrators are doing. I've worked for small companies where the administrator is doing everything for the client, from census request through the 5500, data entry, loans, distributions, phone contact, etc. Obviously if an administrator is handling the complete cycle for the client, they would have a much lower caseload than if there is more clerical and administrative support in the office and the administrator handles only actual administration & compliance work.

Wanted to put in my 2 cents...Depending on the business...if an office is that small (2 or 3 employees/participants) I think that everyone in the office pretty much already "knows the score". It's hard to keep things hidden in that type of environment. Also, if an employer is that suspicious of his 2 or 3 employees that they would make an issue of knowing his plan balance(s), perhaps he doesn't trust them and they should not be working for him! I think some credit has to be given the employees, they will probably be like the vast majority of the rest of us and file away their SAR when received not to be seen again for awhile, if ever.

agriffith- is there is already a report that is giving you MORE information than you want but including the modeling totals??...couldn't you just then modify the existing report by using "suppress" or hiding the underlying investment data thereby only reflecting the modeling totals? I may be wrong but wanted to give you a possible idea (I'm no Crystal expert!)

While both replys are good, I think we need to "back up" here. I think that there are other questions to be asked first. What position do you hold in the Company? Why are they asking you to serve as a Trustee? What is the Company's history, especially financially? There are responsibilities and liabilities for any Trustee of a Qualified Plan and I think you need to be well aware of all before you make a committment like that.

You'll find a thread started by TRA-C-C on 07/27/2001 (last post was 08/11/2001) that deals with this very subject. It's under "Retirement Plans in General".

Tom - After much trial and error, I was actually able to develop a crude report on Crystal that prints out all of the user defined fields! I entered through line 50 on one case and on another, skipped to 100 to see if it would print and it did. One issue is that the consecutive fields within an employee cannot be identical because I had to use the "suppress if duplicated" option on the ud fields in the report. Otherwise, it is working for what I needed. If you would like a copy, please let me know via e-mail and I'll be happy to send it to you. Patti

I had to add one final note...I can see where the "kinder/gentler" IRS agent had the response he did, but I think the worry in recent times is the DOL not the IRS. My opinion is that the DOL would advise what you are suggesting, file the 5330, restore the plan and move on. Isn't it ironic in a field such as ours that there are so many things that are open to different interpretations, including by the governing bodies!!?? In any event, good luck with your situation.

R. Butler - I'm not sure if I agree with your #2. response. Although I agree the sponsor could have an issue with the custodian, the DOL in an audit situation will not care about a "he said, she said" situation. They will look at the actual date of the deposit of the funds (this is from experience, not guesswork). If a sponsor is not at fault and the investment firm or custodian did, in fact, make an error on their end and not timely deposit, perhaps a request should be made to correct the deposit dating in the records to reflect the actual date.

It is the date deposited, not the date of the check or the date the check is received by the investment firm.

Tom - Thank you for the thoughts. As it happens, I do have quite a number of other census fields available in this particular plan that will serve my purpose (as in your example, this plan is not using the beneficiary fields). I am somewhat embarrassed that I didn't think of that solution myself...I guess sometimes it just takes an objective person to advise us of the obvious. Thanks again.

Does anyone out there have experience with the Relius "user-defined" fields? I have a plan where I have data in the user defined fields 1-10 and am trying to create a report with that data. I spoke with Relius tech support and was advised that the ud fields in database PLANEE2 for rows 1-5 are the only ones available at this time. She advised me that I could use the PARTUDF database and create a sub-report with reference to the lines after line 5 (ie., 6 - 10) but it was rather a complex operation and she wasn't even sure I could get it to work. There is a variable in the PARTUDF database that references the row number of the user-defined field. I've been trying to incorporate that and get Crystal to look, for example, at row #6 and print the data in row 6 and beyond but to no avail. I'm not super proficient in Crystal, but any advice would sure be appreciated. Thanks in advance.

I agree with Alan, especially since one payment has already been processed. The participant should cash the loan check and then pay off the loan in full [provided the plan loan policy allows for prepayments without penalty;I assume most, if not all, do].

FJR - That is the nature of balance forward/pooled account dc plans. As far as I know, there is no IRS ruling as the plan document dictates distribution dates. Terminated participants are traditionally paid out the last valuation balance per the document. This can occur quite often ie., when a calendar year employer goes on extension and does not make the ps or contribution until later in the year. Many documents have "60 days following the valuation following termination" for example, but also provide for an "administratively feasible" timeframe. Unless you have individual accounts or daily valuation, this is the "nature of the beast" with pooled accounts and/or balance forward plans. A side note, in my experience, most balance forward/pooled account employers would not be willing to pay for interim valuations of the plan every time a partcipant was due distribution and, if they were interested in immediate payouts, usually go the participant accounting or daily valuation route.

Jim's anecdote reminded me of a story...because I'm in pensions my best friend KNEW I would find humorous. She was working for a car dealership as a title clerk and worked closely with the girl who processed the credit applications. One day the girl was reviewing a form and said "Oh, this customer will have NO problems getting credit from the bank!" "Why do you say that?" questioned my friend. "He has $401,000 in his retirement plan at his job and he's only 30!" she replied. My friend glanced over the girl's shoulder and, as we all might have guessed, the applicant had written in the "Employer Retirement Plans" box...401k.

Actually, the Cigna summary is more recent than my file. Thanks pax.

I have a ".PDF" file with a listing of all states and the withholding rules in relation to Qualified Plan Distributions. I think it might help, it looks like Pennsylvania is the only state to require withholding regardless of the Federal withholding. If you would like me to e-mail this to you, please let me know.

Can you change the employees coding in the Census info (Status/Service form) to "former key" or perhaps remove the "key" coding for that individual alltogether? I'm fairly new to Relius so I'm not sure that this will work, but if it doesn't effect anything else in the plan, I would try changing the coding.

The 2000 form 5500 instructions state that you MUST file the form 5558 with the IRS. It does not, however, mention if this will also be true going forward. The newest 5558 form (rev. 06/2001) also states file with IRS ONLY so, for the time being, I would file with the IRS.

Pension & Welfare Benefits Administration