pmacduff

I would make sure that the Trustee authorizes forfeiture and that the Trustees/sponsor is aware that the money would need to be replenished and paid out if the participant ever comes looking for it. Is this excessive backup and will that diminimus amount ever be an issue to the IRS or DOL? One would think not, however in this business, we have seen MANY crazy things happen that don't appear to make sense when it comes to the government entities and Qualified Plans.

RCK - Sorry about that...I didn't read your original post carefully! And, as well all know, strict and conservative is usually your only "saving grace" when an issue arises with IRS or DOL, etc.

I was always told that the key to that box on the W-2 was for the Individual & tax preparer & IRS to determine that individual's eligibility for a deductible IRA contribution as the law has limited the deductible IRA amounts for individuals based upon their participation in a Qualified Plan as well as AGI and other factors. If these individuals are NOT receiving ANY allocation in the plan, it is my understanding that the box not be checked. You may want to check with an accountant or tax specialist for the definitive answer.

Jim - Due to the fact that those two items are actually a result of the answers to the questions on Schedule H - Part IV - Question 4 "Transactions During Plan Year", I believe you would still need to provide a listing as an appropriate response to those questions.

The non-keys from 98/99 would receive the top heavy allocation.

Tom - There are others in the plan (one NHC and the other is HC, owner's wife). W-2 is approx 21K and Sch C is Approx 76k, so he is not over the limit. It also appears with the Mrs. in the mix that he's going to have to take a refund anyway, so won't be able to defer from the Sch C income. I think under those circumstances, I am going to code him as one person in Relius. Thanks for the thoughts.

I am working on a plan in which the owner has both W-2 and Schedule C income. He deferred from his W-2 wages and now wants me to compute the maximum he can defer from the Schedule C income. I was going to enter the owner as two people but I wasn't sure if that was the best way. There is also a match in the plan with a dollar cap so, thankfully, he doesn't get any more match. Any ideas on the best/easiest way to code this participant in Relius? Thanks in advance for any comments.

I agree with rcline that "vesting is irrelevent" in the loan account. That being said, then I think that NO vested % or vested balance should show on the Relius reports for the loan accounts. Most of the participants in my plans would question the fact that their statement shows them 0% vested or partially vested in loan principal balance monies that they already borrowed! The great majority of our plans treat the loans as part of the individual's account, not a plan investment. I would like to thank everyone for their comments and I agree with JohnB10 that I will have to lobby Corbel to get it changed if I want (especially the fact that the census forms reflect 0% vesting).

I am sorry, you totally lost me!!! What I am saying is that the principal balance in the loan account is 100% vested, regardless of where the monies came from and the participant's vested percentage. My simple examples...100% vested in $2000 and borrow $1000 which "transfers" from my investment funds to the Loan Account. I am 100% vested in that $1000. Now, let's say I'm 40% vested in $2000, or $800. I can borrow $400 of that $800 which "transfers" from my investment funds to the Loan Account. I am then 100% vested in that $400. I am not vested in 40% of $400 ($160) in the loan account or I could not have borrowed it (in most situations with the standard 50% of vested balance loan available)! Follow me?

Anybody else notice that the vested percentage on the loans in the employee census shows 0%? When I run the summary of account detail that I use, it also shows 0% in the percentage column, but applies the current vested percentage to the loan principal balance. In other words, if the participant is 100% vested, the vested balance is correct; but if the participant is say 40% vested, the software applies the 40% to the loan principal balance and shows that as the vested balance (while still NOT showing vested percentage). I believe this is WRONG! I talked extensively with Tech Support on this issue, but they do not seem concerned. I believe that all loan account balances should show as 100% vested and the vested loan balance should be 100% of the dollar amount. The vesting on the account was already determined when the loan originated. I expressed my dissatisfaction with the response and the software, but was left feeling that they were not concerned! Is anyone with me on this?

I don't think Kelly's question was when to forfeit, but what to do with forfeitures throughout the year, created when participants terminate and get paid out. We always put the forfeitures in the Money Market and then reallocate or reduce at plan year end. This avoids the "loss" factor that you mention, Kelly. It seems to me that the partial termination of your example would be the exception and not the rule. Even so, the Money Market fund would afford those forfeitures gains which could be paid to the participants affected by the partial termination.

W. Myer - I have the Qualified Retirement Plan Distribution Request file if you would like me to e-mail it to you also. It is seven pages and page #7 shows a chart with the State Withholding policies. Again, it came from the 2000 ASPA conference in Washington D.C. & I think ASPA is pretty good about being sure that the info we receive is in good order and accurate (although I know everyone is human and can make mistakes!)

Wow! This is eerie! I just printed a sheet off from the 2000 ASPA conference that details the State Income Tax withholding for all states! PA states that there is a mandatory State withholding of 2.8% from the gross distribution amount. I can try to e-mail you a copy of this page...it's in my Acrobat Reader software with which I'm not really proficient! Let me know if you want a copy with all States shown

Tom - This is a takeover case. I was entering the 2000 data to "recreate" the 12/31/2000 valuation report, basically to double check the val run. I will be doing admin effective 01/01/2001 and beyond. I have 15 employees in 2000 who did not become participants because they failed the hours and/or service requirement. The prior administrator's 12/31/2000 report shows them as "terminated" and caveats them as never becoming eligible. This is why I was trying to use the category codes to achieve my desired results. Thanks for your comments and thanks to Sue H. also.

I am working on a plan for an employer who, due to the nature of the business, has many employees who terminate before becoming eligible. The prior plan category was "ineligible" and reason not eligible was "fails hours requirement". When I enter the termination date and status of terminated; the system does not change the plan category and reason not eligible to terminated. Why? I liked the software that we used before because it actually had a status for "terminated before becoming eligible to participate". I also manually changed the plan category and reason not eligible for a terminee and after running eligibility, the software changed both of these back to "ineligible" and "fails hours requirement". I would like these employees to show on the Census Verification as terminated. Any ideas? Should I perhaps run eligibility once, reenter my overrides to category and reason, and then run eligibility again? Thanks for any input.

I don't know the answer to your question, but did find one web site for Lafayette Life Insurance Company; llic.com that could get you contact with the Company (if it is the right one)!

I think with this diminimus amount, I would forward 100% of the distribution to the IRS as Federal Withholding and report 100% as distributed and Federal Tax on the form 1099-R. I know that there are those who disagree with this method, however in this instance when there is a plan termination to be completed, it seems to be the cleanest way. We have sent 100% of diminimus (under $100) to the IRS in this manner and have never had a problem.

I'm sorry dmb, I misunderstood, do you mean the FAS 87 worksheets? I know that at my old employer (where I did the DB work), we actually used an old Lotus program to insert the Pension software generated numbers and prepare all of the worksheets that we provided to the client's accountant. We were using FDP Pension software at the time, (which is now Corbel/Relius) and FDP didn't have a worksheet program either. If you do find a program, can you let me know? Thank you.

We are on 6.0, DC only but if you look on the "Standard Reports" menu under "Defined Benefit" there is a "FASB 87" report. We don't subscribe to the DB services, so that's the furthest I can direct you!

There is a good article by Nixon Peabody LLP in the "Benefits Buzz" section of this website...it's dated 03/15/2001.

I found the following cites regarding transfer of an outstanding loan from one plan to another on page 13-25 of the 2001 Edition Pension Answer Book: Ltr Ruls 9617046 & 9043018; Rev Rul 67-213, 1967-2 CB 149. Hope this helps.

I'm not sure if the Virginia Department of Taxation has a website, but I'm from New York and the New York State Department of Taxation does. Our website offers this type of information, so you may want to try searching the web by "Virginia Department of Taxation". Hope this helps!

In Sal Tripodi's ERISA Outline Book, I found the following on page 3.113 of Volume I: "1.a.2) If a non-key employee becomes a participant during the Plan Year, the 3% minimum allocation must be based on his compensation for the entire plan year, even though allocations in excess of the minimum might be based only on compensation from the plan entry date to the end of the plan year. Treas.1.416-1,M-7" So - in answer to your question, top heavy requires that you use total plan year comp, not just comp as a participant

Karen - I don't know if you are an ASPA (American Society of Pension Actuaries) member or not, but the November/December issue of the Pension Actuary publication (page 16) states that in a discussion between ASPA's Government Affairs Committee and the Treasury; "ASPA's representatives raised a number of issues with respect to the proposed new comparibility plan regulations including confirmation that only participants who "benefited" under a plan's allocation formula were entitled to a gateway allocation. Therefore, it would be acceptable for a new comparibility plan to contain a "last day" requirement for an allocation." This was written by Jeffery C. Chang, APM from the law firm of Chang, Ruthenberg & Long Law Corporation. He specializes in Employee Benefits. I guess it is not clear whether or not the Treasury confirmed the notion, only that ASPA requested that they do so.

I agree with everyone above, however a reason that I would offer that you may want to consider a new plan would be the benefits to you personally. You will be able to put more away in a Qualified Plan than you would in an individual IRA and, depending on your AGI, you may not even be eligible for a deductible IRA. Much would depend on the nature of your new business and what your anticipated salary or income might be expected to be in your first few years. I think a good starting place is with one of your local Third Party Administrative firms but I would go to someone highly recommended that DOES NOT sell investments but is purely administration. They can help you examine the options and what might be best for you. More than likely they will not be as expensive as an attorney and not as "product driven" as your Investment person or a TPA firm who sells investments.