Medusa

I disagree with the above response. Public schools are governmental units and as such are precluded from sponsoring a 401(k) plan.

I saw a plan where this was accomplished as follows: plan provided discretionary match for deferrals from certain bonus pay, and a different discretionary match on deferrals from all other pay. When they wanted to make a discretionary match, they simply paid the employee a bonus of this particular type (can't remember what they called it), let them defer it and then matched it at a very high rate (like 1000 to 1). In that plan, this type of bonus was paid only to NHCE's so ACP and BRF not an issue. I think I saw an article in Journal of Pension Benefits along the same lines a while back.

Sorry, make that 6(B)(1)(i)

Reg. 1.415-6(B)(2)(i)

I'm not sure there is a "norm"; it is more a matter of firm policy and funding arrangement. For example, if I am a bundled provider taking over from another bundled provider or an independent TPA, I am not going to prepare forms for distributions they processed. Why? Because I can only issue 1099R's and 945's for my paying agent. If there are no bundled providers involved, policy varies as to who should report. Often, getting information from the old TPA is problematic. As a general rule, I tell the employer that I will do the 1099's based on the employer providing a complete schedule to me. I simply don't want to assume reporting liability when I must depend on other parties for the information. Also, in the letter where the old TPA is being notified of their termination, we always have the employer include a statement that the old TPA is being held responsible for such reporting, unless a complete schedule (and here we detail what is needed) is provided to the new TPA.

Recently I had a situation with an affiliated service group consisting of 9 individually incorporated physicians and another corporation employing all the staff. Each physician was supposed to establish their own money purchase plan with provisions identical to those of the staff plan. I had told them not to use a standardized prototype, but some of them came back with standardized prototypes anyway. I was expecting to see that these prototypes would automatically cover all members of the affiliated service group. A couple did, but a couple were worded such that they only covered the adopting employer. I assume that in such a case, the end result is simply that it is kicked out of standardized prototype status and into individually designed status?

I have a safe harbor (match) 401(k) with this problem. Unfortunately, we can't use the solution proposed by Richard Anderson, since there are federal regulations stating that tax withholdings must be taken before any other deductions. Any other ideas? We expect that most of the individuals compensated by tips will not want deferrals taken from them. One thing we are thinking about is having separate elections for tip income and other income, in the same way that some plans have different elections for regular pay vs. bonuses. There may still be a few individuals who do want to defer from tips that we would have to make accommodation for. Does anyone see a problem with this approach?

Company A has an unfunded severance pay plan which takes effect January 1, 2000. In order to be covered by the severance pay plan, an individual must a) be terminated on or after the effective date as the result of a just-completed corporate merger, b) sign certain agreements including a nondisclosure/limited noncompete, and c) not have a separate employment agreement. The severance pay plan offers a choice between two types of severance pay, installment and lump sum. The first individuals who could have been eligible for the plan were those terminated on January 1, 2000. Technically they worked on January 1. First question: are the members of this group eligible participants at the beginning of the plan year? Over the course of the year, hundreds of people were terminated and became covered by the plan. However, all but a handful elected the lump sum option, so their participation ceased as of the date they received their lump sum payment. Only about 15 people took the installment method. Consequently, at the end of the year, only these 15 people were participants. My boss is having trouble with the fact that, because we potentially have a beginning count of 0 and an ending count of 15, but processed hundreds (if not thousands) of people inbetween, we might be exempt from filing a 5500. That just does not seem right to him, even though it's fine by me (since I'm the one who has to prepare it!). Does anyone have experience with the finer points of participant counting and welfare plan exemptions?

Late last year, we terminated one of the sponsor's two defined benefit plans. The plan had excess assets that were allocated to participants. All the distributions occurred before 12/31 and everyone was pretty much thinking that 2000 would be the last 5500. Now the insurance company who provided the annuities has come forward and stated that they made an $11,000 error on the annuity purchase. They charged $11,000 too much and want to send a check back to the plan. Can anyone think of any way to deal with this without having to do another 5500? Unfortunately there are no plan expenses to deal with, these were all paid by the plan before terminating it. There is probably not a good answer here but I feel obliged to ask. Thanks in advance for any responses.

Late last year, we terminated one of the sponsor's two defined benefit plans. The plan had excess assets that were allocated to participants. All the distributions occurred before 12/31 and everyone was pretty much thinking that 2000 would be the last 5500. Now the insurance company who provided the annuities has come forward and stated that they made an $11,000 error on the annuity purchase. They charged $11,000 too much and want to send a check back to the plan. Can anyone think of any way to deal with this without having to do another 5500? Unfortunately there are no plan expenses to deal with, these were all paid by the plan before terminating it. There is probably not a good answer here but I feel obliged to ask. Thanks in advance for any responses.