maverick

Philb: When I worked in this area we required the forms to be submitted to HR by a certain date -- and kept track of when they were received. The due date was something like 11/30, so we had time to follow-up with anyone who had not submitted a form. I don't know how many employees you have, this may be unworkable for a large organiztion. Also, I've found that no matter how many times you ask for something, and regardless of what steps you take to make it easy for employees to comply (e.g., give them a stamped return envelope), someone always finds a way to not do what you ask. Good luck. Maverick

Firm est. in 2000. So, the more liberal eligibility rule would have to be "service in 1 of the 5 years immediately preceding the year a contrib is made." Right? Then Joe X would be eligible for a contrib in 2002. Thanks Gary.

Related question, sort of: - Firm established in 2000, owner only employee - Joe X (NHCE) hired 2001. Can the employer establish a SEP in 2002 using more liberal eligibility reqr of "performed service in at least 2 of the 5 years immediately preceding the year a contrib is made?" Why? He wants to get a 2002 contrib, but exclude his employee. I know you can let people in sooner, just not sure if the company has to have been in business in each of the 5 years immediately preceding. Thanks. Maverick

I've never heard of giving one person a large p.s. contrib, so I'll let the veterans respond to that. If you waive the year of service for one ee, you have to waive it for everyone. Vesting must follow the plan document, you cannot selectively pick and choose people for 100% immediate vesting. Personally, I think some kind of compensation/ bonus arrangement would be a better way to take care of this soon-to-be HCE, rather than tinkering with plan specs. Maverick

While I recognize that there has to be some time spent on non-billable stuff, I try to bill most work. Like someone said in another thread today, put a hours goal out there and people will magically meet that goal. Professional staff must get 40 hours CPE per year, and we have all kinds of non-chargeable categories (misc. admin/housekeeping, client development, meeting w/referral source, meeting w/prospect, etc.). If I'm working on a valuation and spend an hour or two "fighting" the software, the time is non-chargeable. Learning new software/releases also goes to non-charge. For example, if it takes me 4 hours to complete a val, 2 hours of which is getting familiar with new version, only 2 hours is billed. Sometimes I say the heck with it and spend a morning reviewing my reference files or looking at old threads on benefitslink.com. Most work gets completed on schedule, you know how that goes.

Billable hours divided up by month, more during busy season, less during slow periods. The annual goal was determined based on data from prior years. I do everything -- prepare plan docs, set-up plans on r.k. system, do record-keeping, compliance testing, and prepare form 5500. Also consult on plan design and ERISA "issues." "Pro-active" time is usually posted as client development (non-chargeable), but sometimes gets charged. We have work-in-process codes for EB admin (routine day-to-day stuff) and EB plan design (non-routine) to break out hours. We also have wip codes for 5500 prep, and audit (work we spend gathering/providing data to other cpa firms auditing our plans w/100 or more parts). Maverick

I work for a CPA firm and have a billable hours goal ranging from 1400 to 1500 -- out of a 2080 hour work year (yeah, right). Some our clients are set up on a fixed fee schedule, some are billed from the fee schedule plus hourly charges for non-routine work, and others are billed on an hourly basis only. None of our plans has fixed hour allocation per year/reporting period. After doing a couple vals, we pretty much know what kind of fee/hourly billing arrangement the client belongs on. Our time reporting system allows me to add a text comment to each "time card," so it's easy to analyze the work done. Maverick

After reviewing previous threads on this issue, I believe that it's okay to term the 401k plan 12/31/02, then establish a SIMPLE IRA 1/1/03. I even found a thread that said there would be no problem if the final 401(k) deferrals of 2002 don't get deposited until 2003. The assets being out of the 401k plan is not an issue either, as long as there aren't any 2003 contributions made to the qualified plan. Can someone confirm my findings? Thanks. Maverick

Client has a "traditional" 401(k) that they want to terminate as of 12/31/02. Do 100% of the assets have to be out of the plan by 12/31/02 in order for them to set up a SIMPLE plan 1/1/03? All employees will probably roll their plan balances into the SIMPLE, but that can't happen until early January 2003. Thanks. Maverick

That actually makes sense. Thanks ndt123. Maverick

For Mike Preston: I've heard of the Pension Information Exchange BBS, but don't know how to go there. Is it a Q&A site like available to the general public (me) like benefitslink.com? Thanks. Maverick

Archimage: We have a plan that let an employee under 21 make deferrals. They do not want to retroactively amend the minimum age/make a QNEC. Would the same procedures apply to returning the deferrals to the ineligible employee? Also, I've never been able to get an answer to this question: What code would be used on the 1099-R? I'm thinking 7 so the person would not have to pay the early dist penalty. Thanks. Maverick

Situation: - son owns 100% of construction company - parents used to own company, actual ownership now is 0%, but they still work there In researching whether the parents own >5% via ownership attribution rules I found 2 different answers. There are some posts on this board indicating that attribution goes from kids to parents and vice versa, but I also found one that says ownership only attributes from kids to parents if the kids are under 21. I have a page from an old Journal of Pension Benefits article which reads as follows: - Description: children - Actual owner: 1) child under age 21 - Constructive owner: each parent - Description: children - Actual owner: 1) child over age 21 - Constructive owner: a parent who owns (before application of thia paragraph) more than 50% (in value or voting power) of the corporate stock It would be great to get the parents out of the HCE category on the ADP test (both made 11k and deferred 15%). Sorry for the long post, I wanted to get all the facts out there. Can someone enlighten me please? Thanks. Maverick

wmyer: I have heard of your method, but wonder what code you'd use to report the distrib. Since you don't want the non-participant to pay the 10% early dist penalty, would you report it as a code 7? Thanks. Maverick

Restating a Principal Financial Group non-std prototype plan this morning and could not find a named trustee, but did find this text: "The plan is not trusteed. Plan assets shall be invested only in an annuity contract." I guess the trustee section of the adoption agreement is left blank, but what about the Schedule P? You learn something every day in this business. Thanks. Maverick

To Greg Judd, I say "amen." And yes, I know the DOL doesn't care about the amount. It takes me back to my time in the Marines -- you could ruin your career or "go to jail" just as easy for making a $1.00 mistake on your travel voucher (aka expense report), as you could for driving a multi-million dollar tank off a cliff. Jarhead, aka Maverick

A couple years ago I submitted a det. ltr request with both the amount of match, and the percent of deferrals that would be matched as "discretionary." The IRS bounced the request and told me that one or the other needed to be specified. Go figure. Maverick

I also believe Business Insurance publishes a list of EB consultants once each year. Maverick

Fifty year old client rolled large 401k dist to IRA and is now taking a series of payments (about 45k per year). So far, she has taken 2 annual payments. She now needs 50k to buy a business. I think there was a discussion thread on the consequences of changing the amount of payments, but I can't find it, so I'd appreciate comments on the following: - Already took 45k in 2002, draws another 50k: Is the 10% exception gone for 2002 and/or prior years? - Future years: Assuming she takes the extra 50k in 2002, can she revert back to 45k in 2003 and forward? - What about setting up a 401k plan, rolling 100% of the IRA into it, then taking a participant loan for 50k? Would this "cancel" the 10% exception on 2002 and prior dists? Thanks all. Maverick

I'm surprised they don't require spouse approval. When I retired in 1989, my wife had to sign-off on my election to NOT enroll in the survivor benefit program. That's my .02 cents. Maverick

MPP merged into 401k 12/31/01. As stated in the initial post, notice provided timely, so no MPP contrib for plan year ending 12/31/01. Now it's 2002 and some MPP forfeitures are available. I'll probably allocate the forfeitures to former MPP participants, and put the $$ in their MPP "merged" source in the 401k plan. Comments/recommendations appreciated. Thanks. Maverick

Last week I posted a question re: how to verify a TIN. I was referred to freerisa.com, where I registered and was able to use their EIN finder. So far I'm 3 for 3; each number I entered came up zilch. Researching some old threads on TIN's I discovered that the IRS purges trust ID numbers after several years of inactivity. Is there a way to reactivate a TIN? If not, I can just see it now -- I file a SS-4 to get a new TIN and the IRS comes back and says one was already issued. But if you use it on 1099-R and 945 forms they reject the filings. Thanks all. Maverick

What. Thanks Fredman, just what the doctor ordered. Too bad the EIN I entered didn't get a hit. Tried another one and it worked fine. Thanks again.

Last week an efiling company called regarding the federal employer ID number (FEIN) we used on a 2001 Form 1099-R. They were efiling a former participant's 2001 1040 and the FEIN was rejected because it did not match the employer name. We took this plan over from a bank several years ago and I think we just continued to use the trust ID the bank entered on Schedule P. I suspect that this trust ID number is the bank's, not one applied for in the employer's name. Is anyone aware of a resource I can use to verify the name associated with a particular FEIN/trust number? Thanks. Maverick

Kirk is right regarding a minimum employer contribution. One of the first terms I learned as an employee benefits consultant for a midwest insurance company was "adverse selection," i.e., when there was no employer contrib toward the group insurance premium the only enrollees will be people who have to have insurance. Usually happens with very small plans where the ER can't afford to help with insurance prems, but still wants to offer the benefit. I believe our underwriting standard was minimum ER contribution 50% for single coverage. Maverick