maverick

Why not just change the plan to allow in-service withdrawals after age 40? The problem with setting low retirement age is it triggers 100% vesting. My 2 cents.

I'd just prepare the 1099-R and 1096 forms and throw them in the mail. I've not had any experience with late submissions, so I can't tell you what the IRS will do.

I agree w/Blinky, why do something you don't have to? If you take federal w/h on dists under $200, you have to include the w/h on the 945. In my situation, some plans have no other distributions, so I'd be stuck with preparing a 945.

Jeanine makes a good point. There are a lot of providers who don't participate in TRICARE (used to be called CHAMPUS). So, someone may not be able to use their family doctor if TRICARE is the only coverage. Having used both TRICARE (retired USMC) and civilian health insurance for the past 13 years, I can assure you that, in most cases, civilian health insurance coverage is superior. When families remain in the reservist's home town, and a military medical facility is not located nearby, obtaining health care can be difficult. Also, although they try hard to do a good job, private contractors who pay the claims don't always process claims timely. I've seen collection agencies go after military dependents because TRICARE was slow making payments.

Try Mike's suggestion -- the top heavy min. % is on screen 21.

If the plan accepts rollovers, and allows loans to be rolled in, you shouldn't have any problems. A 1099-R would be issued to the deceased spouse under code H (rollover into a qualified plan).

Janice Wegesin's website (author of 5500 Preparers Manual) has has some infotmation on this issue. She also includes a format for setting up a spreadsheet to import the data. Here's the link: http://www.form5500help.com/index.html Maverick

What is the "date of the loan" for starting the 5 year limit? - date loan app is signed - date amort is prepared - date note is signed - date check is delivered - or??? Thanks.

RC: Not that it has anything to do with this thread, but do you charge a fee to process a loan refinancing? Running off a new amort, preparing a new note, changing the recordkeeping system, etc. must be worth something. Thanks.

Plan says $$ must be deposited by due date (incl. extension) of the firms's tax return. I guess this situation is no different than funding a discretionary match throughout the year. One other thing, if the pre-fund ends the year worth 10k (there are some years when funds have a positive return, right???), I don't think a participant would complain that his profit sharing allocation was $1,000, not 1k plus investment gain.

Here's a good one: During 2002, client pre-funds 2002 profit sharing to the tune of 50k. Instead of just parking the pre-fund $$ in the money market, it was invested in mutual funds offered by the plan. On 12/31/02 the pre-fund money is down to 40k. I'd appreciate comments about how other people have handled this. My first reaction is that the participants don't have a right to the money until 12/31/02, so their p.s. allocations should add up to the 50k total. Okay, so the employer makes up the 10k of losses, how do you account for the 10k? There are threads about other situations where the ER puts $$ in the plan to make participants whole (e.g., a deposit equal to surrender charges assessed when the employer changes fund companies), but I didn't see anything similar to this scenario. Thanks.

Also, if someone else is paying the distributions, you use their tax number on the Schedule R. For example, we use a daily platform and Schwab is the custodian. For dists, Schwab cuts a check and sends it to a bank (think they're called a "paying agent"). The bank deposits the $$ and cuts the dist. check for the participant. We put the bank's number on the plan's Schedule R.

Disregarding the "out" via statute of limitations, I think R Butler just wants to get the document restated without having prior/current options elected on the adoption agreemnt come back to haunt him/her. I've had a couple restatements with the same problem. The cover letter included with the new plan documents indicated that, since it could not be determined what testing method was used, we checked "current year".

For just this situation a lot of employers have written policies stating that vacation is paid as a lump sum on termination date, say 12/20/02. They do not allow employees to work through 12/20, then go on two weeks vacation, then terminate 1/3/03. Also impacts 2003 ADP/ACP tests, and eligibility for group health/dental insurance (some plans cover ee for entire month if ee works at least 1 day). Tom

Here's a different wrinkle to taking back match funded during the year: Employer has a discretionary match that is funded with each payroll. It's now December, and oops, ER realizes he can't "afford" the match. Now he wants to recover the pre-funded match and use the money for non-plan related things. Other than a morale issue (employee sees match deposits, then the money is taken away), is this legal? I found plenty of discussion on removing the match if an employee does not meet a "1,000 hours worked " or "employed on last day" requirement, but have not had much luck in the "employer changes his mind" scenario. Thanks.

After learning recordkeeping on Quantech, I now use Datair. As indicated previously, it still runs on DOS and does have limitations. One that comes to mind is only allowing one match source. So, if you have a s.h. match and a discretionary vested match, you're out of luck. The support people at Datair are very good (especially Gary), and always seem to have a work-around to solve most problems. We also prepare 5500's using Datair's system (Pension Reporter). I've used it over two tax years and have had few problems. They are quick to post fixes on their website, so little glitches get corrected right away.

Although this relates to a lesson I learned the hard way about military retirement, the same "rules" apply here. As soon as you relocate, make sure that you do everything required to become a legal resident (register to vote, driver's license, vehicle registration, etc.). Some of the more aggressive states will make you prove that you are no longer a resident. Just because you moved to Florida doesn't mean that Minnesota won't try to get you to pay MN state income tax.

Thanks for the responses. I got the idea to start the plan year 1/1/02 from a Q&A in a 1999 issue of one of PPD's periodicals. "Q: If a calendar year corporation is established mid-year and it establishes a plan on the date of incorporation (e.g., 7/9/99), must the corporation create a short limitation year and prorate the 415 dollar limitation? A: No. The corporation may designate a full 12 month limitation year ending with the last day of the initial short plan year and avoid proration of the 415 dollar limitation. IRS Q&A session, Q-11, ASPA Conference, October, 1997, IRS Q&A session, Q-84, October 1996." The way I read that, the plan year will run 12/1/02 to 12/31/02, but the limitation year will run 1/1/02 to 12/31/02. Mike: The doc is a member of an existing medical practice (S.C.). He's starting his own practice (no connection to old employer)

I have not heard of U.S. Pension Services. You may be thinking of UPI (Universal Pensions, Inc.); I believe they were bought out by BISYS. Each year Business Insurance has an issue featuring a list of tpa firms. You may be able to go back a few years and find something. Good luck. Tom

There was an extended discussion of this back in March, but I want to make sure I understand the how pro-rating works. Situation: - medical practice established 12/01/02 - owner wants to set up 401(k) plan for 2002 - plan effective date: 1/1/02 - limitation year: calendar year - deferrals begin 12/1/02 Here's my take on the various limits: 40k 415 limit is not pro-rated 200k comp limit is not pro-rated 402(g) limit is not pro-rated SSWB is pro-rated (integrated profit sharing formula) I found something going to the IRS Q&A session (Q 11) at the 1996 APSA conference re: using a full limitation year for a corporation established mid-year, but I'm having trouble accepting that most of the limits are NOT pro-rated for a firm & plan that have only been existence for 1 month. Comments appreciated. Thanks.

Austin, I believe that all weekdays, except Federal holidays, are business days. This link lists Federal holidays: http://www.opm.gov/fedhol/index.asp Tom

Katherine's suggestion to have the ER put $$ into a FSA is a good idea. Back when I was underwriting, we did not factor that in to the rates.

I want to make a comment as a former group health insurance underwriter. Rates set for various deductible levels, "assume" that there is no under-the-table reimbursement for part/all of the deductible. In this case, if the insurer knew that you were going to reimburse 750 of the 1k deductible, your monthly premiums would increase. The reasoning is consumers will have no reason to "ration" health care if anything above 250 is reimbursed internally. For example, a person would not go to the doctor for a cold if he or she knew that the cost of the visit would not be paid because the charges were going toward meeting the deductible. Things may have changed in the past few years, but that's the way it was in the mid nineties. Also, the insurance company may ask if the employer will reimburse part/all of the deductible.

Tom's right. Our adoption agreement has an option to make the plan a safe harbor 401k in those years when notice is timely provided. If your a.a. has someting similar, just check that block, and provide the notice now for 2003. If your HCE's make 200k, they can defer 10k w/o ADP problems.

At the annual conference back in '96 or '97, ASPA posed the following question: "Is there anything on point which says the plan can't have a participant pay for the cost of the termination paperwork charged by an administrative firm? So, for example, if the charge to the plan/sponsor for handling the termination processing is $100, can the participant's account be debited for this charge or is this a violation of the participant's ERISA rights? For example, a bank is charging a $15 fee for cutting a check for a terminated participant, which is being paid by reducing the account balance of the participant. Apparently, the DOL audited the plan a year ago and never raised this as in issue." The IRS response: "This is a DOL issue. We would think that this is a problem. It might also be an IRS concern as an impermissible forfeiture." I don't know if there is anything more current on this issue.