Lynn Campbell

Assume that these are well paid employees (including dental hygienists) who have already funded IRAs on their own. My question is - is the top heavy minimum needed or not? Thanks for all input...

To clarify, there are no plans in existence now. Client would like to set up PS for 1999, only eligible EE is the key EE, using a 1 yr service/age 21 requirement. Then next year, he wants to set up separate 401(k) for all the employees who work less than 1000 hours and he will NOT participate in the 401(k) Plan. The top heavy regs seem to say that these 2 Plans do NOT have to be aggregated and therefore no top heavy contrib is needed in the 401(k)?

What would be the result if the Key EE = DDS sets up a separate PS Plan just for himself? He is the only employee who works > 1000 hours/year, and this Plan would have a 1 year of service requirement. His hygienists want a separate 401(k) Plan, with no service or age requirement. The Owner/DDS would not participate in the 401(k) Plan. My reading of the aggregation rules on top heavy indicates that a top heavy contribution would not be needed in the 401(k), since the PS Plan passes 401(a)(4) and 410(B) by itself. Does anyone agree?

Dean Witter had such a non Model SEP a few years ago. They may be able to help you. Now they are Morgan Stanley...

Was the distribution paid to a person who had reached Normal Retirement? If so, does the Plan permit distributions after Normal Retirement even if the employee is still working? This may leave you off the hook?

client wants to set up a Profit Sharing or Money Purchase Plan for business owner only, no other employees work or will ever work 1000 hours, therefore, would never join Plan. Is there any way to permit these "non-eligible" Employees to make 401(k) deferrals without running into the top heavy requirement? These Employees would never be vested in the top heavy contribution...and it seems there should be a way to avoid it?

I worry about Standardized prototypes because they generally do not include an end of the year requirement and doesn't that create a problem if you want to terminate the plan now and not fund for 1999?

What is the procedure to retrieve the funds from the IRS, assuming this is the only time that funds were withheld for this Plan this year?

I am a TPA of very small plans and have done manual data entry to date. However, I want to switch to electronic data entry for employee data on one 401(k) client - specifically hours worked, salary earned, deferral amount, etc. Does anyone have experience in this transition who is willing to give advice/horror stories, etc? Thanks for all input.

If you want to start a safe harbor Plan now for 1999, you must use a short Plan Year and the Plan cannot be effective before the short Plan Year began. See Notice 98-52 Section X, which also states that the Short Plan Year must be at least 3 months long except in the case of a newly established employer. So it appears to be too late for 1999...

Participant is 100% vested in $5,500 account balance. Wants to borrow $1,000. She is married and Plan is subject to J&S requirements. Must spousal consent be obtained? or is it unneccesary because loan is less than $5,000?

If all Plan investments are directed by participants, is there any change in the requirement to distribute the Summary Annual Report? In very small Plans, the SAR effectively discloses the key EE's account balance, and I am getting increased resistance from the key EE on doing this. Any similar reaction, any solution?

Is it ever permissible to roll funds from an inactive SEP to a qualified Profit Sharing Plan?

In my experience, the only thing that works is a check drawn on the Bank where deposited, made payable to the Bank and deposited along with the Tax Deposit Coupon with the Plan's Trust ID# used on the coupon.

Assuming that a small "tiered" Profit Sharing plan- with an "end of the year" allocation requirement - meets 410(B) coverage ratio percentage tests because more than 70% of all NHCES benefit under the Plan - then when contributions are allocated to the groups in the tiered plan, how are the participants who terminated with greater than 500 hours - and therefore do not "benefit" under the Plan - treated for 401(a)(4) testing? Are they ignored completely or counted as having a zero accrual rate? Thanks for input...

A colleague has a small Church that is looking to set up a low-cost 403(B) Plan and needs assistance. Any recommendations for TPAs in the Bay Area? Prefer a small firm with considerable experience in the 403(B) area. Thanks very much.

I would be very interested in feedback from TPA's re recent DOL investigations. Thanks for any input about your experiences.

In a situation with a Pension Plan - sole participant, QDRO for ex-spouse, who is entitled to withdraw funds at her discretion, but has not yet withdrawn her entire amount - if the participant himself reaches Normal Retirement Date and wants to draw a small distribution of a few thousand from the Plan every few months or so (Plan permits post-retirement withdrawals by active participants) - would he waive a Life Annuity, and state that he is unmarried, or must he waive the Joint and Survivor Annuity with consent of his ex-spouse? Client is adamant that spousal consent is not needed but I wonder...

YES. When computing the 15% limit you must subtract the Employee Deferrals from compensation.

If you are the participant and concerned about your account balance, you should request a statement in writing. Under ERISA you are entitled to receive this once a year if you ask for it. Also the DOL does require a yearly SAR.

I am wondering what vendor provides documents for a Money Purchase Pension Plan that uses the "tiered" or "classification group" allocation method. Thanks for all input.

It seems to me that the reason to fire all the technical people is to maximize the profit for the firm without regard to the quality of the work to the client.

Owners want to make higher contributions than permitted by 25% Money Purchase Plan. A suggestion has been made to use a DB Plan for the owners only and to keep the existing Money Purchase Plan for all others. All non-owners earn at least $80,000 a year and the idea is to consider them all HCES. What about 401(a)(26) for the DB Plan? and what about 404 deductible limit of 25% for the combination? Do these apply even though no EE will participate in both Plans? I am looking for the potential problems in this arrangement and appreciate all input.

Client has SARSEP and SEP - assume NOT TOP heavy - and one EE has deferred legal limit (15% of comp after deferrals). Now client wants to make ER contrib to all eligibles. Is the EE with the maximum deferrals locked out of the ER contrib and is this OK?

Owner and sole participant in a defined benefit plan is 70 1/2 in 1999. Wants to roll his entire account to IRA now and take Minimum required distribution from IRA by 4/1/2000 for both 1999 and 2000. Is this OK or must he take the 1999 distribution prior to rolling to IRA?