Directed 401k plan is under audit and is missing a signed and dated copy of the Final 401k / 401m amendment. The plan was using a prototype and the prototype sponsor supplied a copy of the amendment but did not have any signed copies.

The client could not find where the prototype sponsor sent them the amendment, it appears to have been never rec'd.

The IRS auditor has indicated that if no signed correspondence / cover letter regarding the amendment or the signed and dated amendment itself can be found, the plan will go to audit CAP. The auditor indicated that plans of this size (5 participants, under $500k investments) see $3000 - $4000 fines for having a missing restatement. That said, does anyone out there have experience with the fine for a missing amendment for this size plan?

Thanks!

Under certain corrections under 2008-113, an employee is required to repay amounts erroneously paid to the employee, including interest.

The correction procedure specifically says the employee should have a legally binding right to the amount that had been erroneously paid, but doesn't say what happens to the interest. Does the employer just get to keep this amount? I realize that the penalties under 409A fall on the employee, but I fail to see why the employer should benefit from the failure.

We have a client with a 401(k) plan that is a law firm. They have several individuals they call "of counsel" employees who were former partners of the law firm.

Most years these "of counsel" employees receive a K-1 reflecting self-employment income on line 14, code A when they receive payment for prior services or when they perform current services for the law firm.

The client says that their former TPA told them they didn't have to report these individuals, because they are not employees. But I question this.

I know that "of counsel" relationships can be structured to be an employment relationship or an independent contractor relationship. But my thought is that since they are reporting the income on the K-1 (all as guaranteed payment), and the payment is for personal services rendered to the employer, that the individuals are indeed self-employed individuals, which makes them employees of the law firm.

If it was an independent contractor relationship they should issue them a 1099 instead of a K-1, right?

Any thoughts? Am I missing anything?

We have a client with a 401(k) plan that is a law firm. They have several individuals they call "of counsel" employees who were former partners of the law firm.

Most years these "of counsel" employees receive a K-1 reflecting self-employment income on line 14, code A when they receive payment for prior services or when they perform current services for the law firm.

The client says that their former TPA told them they didn't have to report these individuals, because they are not employees. But I question this.

I know that "of counsel" relationships can be structured to be an employment relationship or an independent contractor relationship. But my thought is that since they are reporting the income on the K-1 (all as guaranteed payment), and the payment is for personal services rendered to the employer, that the individuals are indeed self-employed individuals, which makes them employees of the law firm.

If it was an independent contractor relationship they should issue them a 1099 instead of a K-1, right?

Any thoughts? Am I missing anything?

Does anyone know why 409A requries participants to make an election in their first year of eligiblity, as opposed to waiting until there is a distributable event?

Facts:

- Plan is a small law firm with 6 key ee (five are actual owners)

- The sixth key is the wife of one of the owners (family attribution)

- Plan is top heavy

- Wife contributes 401k as a key

- The husband of the spouse became a judge and terminated employement with the law firm in 2011

Question - What is status of husband and spouse ownership in 2012?

Both will be key's in 2011. Husband will be counted as key in 2012 due to look back year. What about the spouse? If she is still working in 2012, will she be a key in 2012? Does look back apply towards family attribution?

A participant died in 1999, his son is his sole designated beneficiary. I am doing an EPCRS calculation back to 2000. When I do the 2001 RMD what life expectancy factor do I use since this was during the re-proposed RMD regulation transition rule period. The beneficairy was born in 1960.

For 2001:

Do I use the new Single Life Table looking at his age in 2000 minus 1 (i.e., 43.6 - 1 = 42.6 for 2001 LE)

Do I use the new Single Life Table looking at his age in 2001? (i.e., 42.7)

This has downstream impacts as I reduce 1 for subsequent life expectancy factors.

Thank You!!

Husband and wife corporations.

Wife owns 100% of dental practice 1

Wife owns 79% of dental practice 2

Husband owns 100% of consulting firm 1

Husband owns 79% of consulting firm 2

Wife and Husband satisfy 1563(e) with no child under 21.

Question: does each of the 4 plans have separate 415 limit?

Thanks for all responses.

Hello.

I have an employee who took a 403b loan last year and now is considering defaulting on the loan.

He is having trouble making payments .

I do know that his wife is in Grad school- could he change the loan

Into a hardship distribution for her tuition?

Thank you for any answers I can give him.

Law firm has two classes: Lawyers and secretaries. Eligibility for both is currently 1 year. Company wanted to change eligibility for lawyers to immediate and keep secretaries 1 year. There were four people hired in 2011: two of each class. Of the lawyers, one is the son of the owner (what a coincidence) while the other is not. The son would enter as an HCE right away and the other lawyer would be a NHCE the first year.

Anyone see any issues with this? We are not bringing in the son by name. We are making a change for a class. It looks like coverage would still pass, so no issue there.

I have a client. Client works for his father's company (a merchandising company). This particular client needs to accumulate retirement assets, so I advised him to begin contributing to the company's 401(k) plan (he told me they have one).

Upon our next meeting, the client tells me he is excluded from contributing to the plan. I can only find one particular reason he would be excluded: he is working there under some form of contract that prohibits him from contributing because he is the son of the owner of the company.

Has anyone had any experience with a situation like this? Am I missing an obvious rule/regulation?

Edit: I should add, he satisfies all other service requirements.

Has anyone used 401kExchange for appointment setting? I was considering trying out their program then I found that they have been kicked out of their Better Business Bureau BBB here: http://www.bbb.org/south-east-florida/busi...ach-fl-30004469

Does anyone here have any experience with these guys because they talk a good game.

Was an employer required to implement the 2009 RMD relief or was it optional? The sample amendments imply that an employer could have disregarded the relief and administered as usual. I suppose a participant could still take advantage of the relief by making an indirect rollover.

What was the most common way employers handled this?

If the db formula is based upon certain # of highest years of compensation, is it ok to count the years in which a participant had the highest base compensation, even though his actual take home pay was less because he was working part-time? Any potential issues in doing this?

If a db plan is amended to increase the accrual rates after a participant reaches normal retirement age, are we still limited by the 133 1/3% rule?

Does the 133 1/3% rule only apply with respect to accrual rates prior to normal retirement age?

I am looking for some input regarding a policy as it relates to the dropping of spousal and/or dependent medical coverage by an employee.

If an employee wishes to drop his/her spouse during open enrollment or any another qualifying event (other than divorce) - as an employer can I legally have a policy that requires proof that the dropped spouse/dependent(s) have coverage elsewhere or that the person being dropped authorizes the drop?

Additionally, if there is a request to drop someone from coverage based a qualifying event - can I have a policy that requires proof of the qualifying event....

My separated spouse just started a new job, so I wish to drop them from coverage.

What is a best practice policy to impose for these circumstances?

Thanks for the input.

Hello,

I'm hoping for some clarification on the following:

We have a medical fully insured plan.

ER pays 100% of EE premiums.

EE can elect family coverage, but must contribute towards the premiums; ER will also contribute a set amount per month.

The EE has to sign up for the coverage and list dependent info; e.g., name, dob, gender, etc.

The "election" to cover the dependents is valid until revoked by the EE.

The payroll system is configured with one deduction function that withholds the employee portion for each periodic payroll, as a pre-tax deduction.

The questions I have are:

Must we have a cafeteria plan for this?

If we do, must we demand from the employees an election each year to "defer" their co-pay, in view of the fact that the dependent insurance is in place forever until the employee decides to change it?

(Note: the fact is we do have a caf plan, but it seems a wasted expense for the above purpose).

Thank you in advance for your time and thoughts.

A tax client of our firm has an IRA that is all one piece of raw land. He is 75 years old and the RMD is about $9,800. How does he get cash in there to pay RMD and $3,200 pr property taxes?

Hi--I have a group of plans that are part of a controlled group. The formula is as follows:

The global profit sharing is the same program across all participating plans. The amount is determined each year by the board. The 2010 Plan Year amount of $1026.53 award was for a person who was employed the full year. If an employee is hired during the year or they die or retire during the year they get a pro-rated amount based on the number of months that they worked at least one day. For example, someone hired in December would get 1/12 of the full award.

Since not all employees received the full $1,026.53 would general testing be required?

HSA is established in Nov of 2011. Employee is single and has $15,000 in HSA eligible medical expenses in 2011.

Can the employee use receipts from 2011 to substantiate HSA withdrawals for 2012 and 2013?

Thanks.