Medusa

I would love to point that out if you can point me to some specific authority.

Not really. I would actually vote for it being a periodic distribution, in which case there really should be a W-4P. However, the Code provides that where no W-4P is provided, the withholding defaults to married with three allowances. Most plans are not set up to handle this, so I think the "pragmatic" response was to treat it as nonperiodic and do the 10%. My point was, "zero" is definitely not the correct answer.

I would have said that this was prohibited by Notice 98-52.

My understanding is that by default, 10% withholding applies pursuant to IRC Section 3405(B)(1), unless the participant opts out.

At least one local attorney writes their 125 plan this way. Their position is that the election form specifies an annual amount, and the employer may take any remaining balance from the final paycheck, to the extent claims have exceeded contributions to date. I'm not saying this is right or wrong, but the attorney is a prominent one in the benefits area.

No way that I can think of. I think the rules were pretty much written because of the potential for abuse in a situation like this.

True to form, the IRS has now changed the date to 1/25.

A couple years ago our local chapter of WPBC had a luncheon topic on HIPAA. My boss talked me into going, on the basis that a much "HIPAA" crowd would be attending than is usually the case. Sorry, grasping at straws.

You can follow the status of new forms here. The 5310 is a continuous use form (see the last dropdown box). You will note that the intended release date is January 18. However, a couple of weeks ago, it was January 10. As January 10 came and went, the intended release date was changed. Therefore, I would not totally rely on these dates.

Kirk: I have read it. It applies to a situation where assets were not distributed as soon as administratively feasible following the termination. In this case, they were. Are you suggesting that the converse of the situation described in the Rev. Rul. is true, i.e., that if assets are distributed as soon as administratively feasible, the plan does not need to comply with changes in the law, in form or in operation? Medusa

pensionadmin: If we took that approach, do you think we can refuse to make a rollover to a 403(B) (for example) because the plan does not provide for such a rollover?

We have a plan that was terminated in the first part of 2001. The termination was submitted to the IRS and an approval letter was received in December. The plan is a calendar year plan. Distributions are being made currently. We did not include any EGTRRA language in the termination amendment. Does anyone know whether we are required to add in language for EGTRRA? Of particular concern to me are the rollover rules (Re rolling out, not rolling in). If you think we need to amend for some EGTRRA provisions... which ones? Rollover and top-heavy are the only ones that come to mind.

Alonzo: I agree that a trust instrument must be established, but not necessarily a trust corpus. At least according to the revenue ruling.

I agree that Gary's client is probably SOL, but I did want to clarify some statements about the existence of the trust. In the olden days, for a valid deduction to exist, the corpus had to be established before the end of the tax year. However I believe that Rev. Rul. 81-114 made it clear that this was not necessary. If there if some evidence to the contrary, please enlighten me!

That PDF SS-4 sans watermark sure would be great. I will send you a "private message" with the e-mail address.

Thank you for your prompt response! I don't suppose you know anything about the new SS-4???

After 2001, we must use the new Form 5310 to submit a terminating plan for a DL. However, that form does not appear to have been released yet. Has anyone received any advice about what we are supposed to do in the meantime, or as to when the new form will be released?

As to the second part of your question, if A and B are unrelated employers, the 415 limits are separate, so a person could conceivably have two $40,000 limits

Spousal consent is not required if the plan is really exempt from the joint and survivor requirements. However, it is not always easy to determine whether the plan is truly exempt. Many plans have the joint and survivor language, and state that it only applies under certain conditions. Sometimes the TPA does not have enough historical information to determine whether those conditions kick in. Consequently, you'll see many TPA's who always require spousal consent, just to be on the safe side. I've always wondered whether the position could be taken by a participant that the plan was not operating in accordance with its terms.

Another thought I had is to check out Pension Edunet. I don't know what they have scheduled currently but if you have a number of employees you are attempting to train, an option might be the on-site training they offer.

Corbel puts on a two day seminar called "Introduction to 401(k)". You might check out their website http://www.corbel.com/events/events.asp

Does your situation differ significantly from Example 3 in Notice 98-52?

I can't say for sure, but it seems to me that the terms of the plan would specifically have to preclude the individuals from getting an allocation, in order to exclude them from the gateway. At least I think that's what the IRS would say.

That was rude, sorry. In retrospect, I think you may have lost sight of my example. My document DOES define the determination period as a calendar quarter, because they are making allocations on a quarterly basis. You have in fact affirmed my point. Once a "determination period" other than annual has been specified in the plan document, it is not optional as to whether I limit 401(a)(17) to 1/4 of the annual amount. That part is governed by law, not by the plan document.

Have fun in jail.