Just back from ASPPA and geared up to get our 8955-SSA's filed for our clients. The question regarding having supplied the required individual statement was mentioned. Does anyone have any particular wording they are using? The instructions generically say to provide a statement setting forth the information contained in the SSA form. Isn't all this on the quarterly plan statement that most 401k participants receive regardless of active or terminated status? Any thoughts on the wording you're using out there would be appreciated, Thanks

If a company begins 10/1/11 and their 401(k) plan also begins on the same date, but has a 12/31 year-end date, is that still considered a Short Plan Year?

Does anyone have a good outline that would address this topic that you'd share with me?

Please send me a private message if you do.

A client would like a year of service graded match formula with 3 tiers, the 3rd tier being after 10 years the match increases to 100% up to 4% of deferrals. However to be eligible for any match during the plan year, the participant has to be deferring on January 1st of each year and then the match is funded each payroll period. If they are not deferring on January 1 but start deferring later in the year, they will not receive the match. Is this formula valid? I could see January 1 being kind of like a reverse last day rule, but in this case they have to be employed and deferring on January 1.

Does anyone see any problems? Is this just a matter of coverage testing under 410(b)?

Thanks!

Participant age 49 has both 403(b) and after-tax (non-Roth) ee money in a 403(b) plan. She has left employment and now wants to roll the money from old employer to new employer. New employer will accept the 403(b) and employer money, but not the after-tax. What can she do with the after-tax money? She doesn't need the money right now and does not really want to take a cash distribution.

A roth IRA might be a good fit. But she would be taxed on her after-tax plan earnings, correct? I'm not sure how much we are talking about, but lets say the earnigns amount to $2,000 and that her overall after-tax account has $10,000. So if she rolls to a Roth IRA, She rolls the entire $10,000, but is taxed on $2,000? In other words, she has to pay tax on money that she really will not get her hands on? That's a little tough. Is the alternative to roll $8,000, take $2,000 in cash and pay tax on the $2,000, but you now have money for the tax (because you are taking $2,000 in cash)?

Finally, due to her age, is there a 10% early distribution tax and if so, how does putting money in the Roth affect that? If she put the entire $10,000 into the Roth, would she avoid the 10% tax? If she took $2,000 in cash, is only that portion subject to 10%? Is nothing subject to the 10% because it is after-tax regardless of what she does with the after-tax monies?

Thanks for any comments.

We are in the process of acquiring the assets of a company which sponsors a health flexible spending account. We plan to transfer the accounts of the participants to our plan. Unfortunately, the selling company's plan is not a calendar-year plan year while ours is... how exactly does that work? The way I read the Ruling, the transferred participants utilize the remaining balance for the remainder of our plan year, so if they come in 1-1, they have until 12-31 (not 4-30 which would be the end of the prior company's calendar year). The sale itself is not a change in status, so unless the participants otherwise have a status change, they will be unable to adjust the amounts in their flexible spending account. The fact that the selling company's plan year is not a calendar year plan is throwing us for a loop on how logistically we get this accomplished. Any insight would be appreciated!

Facts:

Plan has immediate entry for 401k

Plan excludes HCE's

2010 NHCE ADP - 2%

2011 NHCE ADP - ?

EE hired April 2011 and will make $133k in 2011...becoming an HCE in 2012

Issue: When the EE was hired, the company did not give him an election form. They knew upon hire he would be come an HCE overlooking that he is a NHCE in 2011. They were going to give the EE an election form so he can contribute in November/December.

Question: I believe he is owed a QNEC (1/2 the rate of the ___) but what is the QNEC calculated on? Does he get 1/2 of the 2010 NHCE adp or do we wait for 2011 to be finished? My guess is that he still gets a QNEC even if he elects 0% on the election form for Nov and Dec.

Lot's of questions and hopefully someone can help with the answers. Does the irs allow a poa to change beneficiary designations on an ira or is this just up to the bank's own policies? Can a poa choose to elect ownership or choose to decline ownership for the deceased's spouse? Would a spouse have to elect to treat the ira as her own in order to change beneficiary status (this was supposedly done by poa)The ira owner is deceased, can the surviving spouse, or her poa, change only her beneficial interest to a trust in which she has no control, or can a change be made to include the remainder beneficiay of the ira as well? What it boils down to is this - if a trust seems to prevent ownership due to limitations on the ability to access funds and since RMD's have routinely been taken out by the trustee, can owenership occur and if not, can a beneficiay change be made by someone not the owner, but only beneficiary? Trying to figure out what has gone on is very confusing, if anyone can offer some help, please do!

Client has SH 401k Plan. Current eligibility is 1 YOS with semi-annual entry dates. Client wants to change entry date for deferrals only to 90 days effective immediately. Document being used will allow this, but are there any problems with doing this mid stream?

First, I fully admit that I'm a "DC" person. You know - know just enough about DB Plans to be dangerous!

With that in mind, I need to know whether it is within the realm of possibility for a 64-year old self-employed doctor (of course!) with annual earned income of ~$250,000 to adopt a DB Plan? Yes, no, maybe so? Pros and cons?

Thanks for any and all replies!

1.Can I have HRA for shareholders in an S corp. that own greater thatn 2 percent of the stock?

2. Can I Have an HRA for employees that are enrolled in medicare?

I have an administrator who is holding pension payments via direct deposit if the participant does not inform the benefit office of a change of address. Upon providing the office with the new information, the office does proceed with the payment, not including any interest or other monies with the payment.

My problem is I'm not sure an administrator can hold a payment to a vested retiree who is in pay status, but I cannot find anything specific. Any ideas on this with any type of authority? I would appreciate any insight!

Plan owns a building that sustained damages related to snow, and much of the expense was not covered by insurance.

I assume this would not go on the schedule C, becaus they were not providing a service to the plan, but wondered if anyone had some authority they could provide. I can't see how replacing a roof could be a service, but if there was something I could point to...

Also, I don't see a service code for construction, I suppose I could pouint to that!

We just aquired a plan that has not filed a Form 5500 since 2003. They tell me they have never received a letter from the IRS regarding a delinquent filing. Is there anyway I can find out if the IRS did mail these notices or not? Also, if a notice was received, does that mean we can no longer file under the Delinquent Filer program?

I am not even sure that testing has been done on the plan since 2005.

Any advice as to where to even start? Or perhaps should we just resign before we begin?

Hi all - I'm back after a long break. And no, I wasn't hiding because of the Red Sox dismal September choke job, although I should be...

I know these disclosures are everyone's favorite subject. Just one question - wanted to see what folks think.

What I get out of the regs is that for the 408(b)(2) service provider disclosures, "one-participant" plans ARE subject to these rules. But for the participant fee disclosure regs under 2550-404a, the "one participant" plans are NOT subject to the rules.

Agree/disagree?

Trying to determine if an HCE is eligible for a distribution as of 11/1/2011. We have the FT. TNC and FT of the individual participant as of the most recent valuation date, 1/1/2011. Is the correct methodology to take the 1/1 numbers and increase them for 10 months at the plans effective interest rate to come up with an estimated 11/1/2011 liability? And is the total liability you compare to the assets the FT + TNC, or just the FT?

Once I increase the plan's FT, TNC, and participant's FT with the EIR, then:

Contribution Required to Pass Test = 110%(FT + TNC - Participant's FT) - Assets + (PVAB of Participant)

A client with a Profit-Sharing Plan has consistently kept a portion of the trust invested in real estate (usually raw land) and has done well buying and selling over the years. A few years back, the Plan purchased a 60% interest in a property as a Plan asset, and an individual (also a participant) purchased 40% personally, not as a plan asset. The land is roughly 1/3 of plan assets. The Trust is commingled.

The client is now at retirement age (though not ready to retire). His account is 95%+ of Plan assets. The plan allows in-service distributions. The Adoption Agreement doesn't now, but can provide for in-service distributions.

Is there any prohibition from him taking an in-kind distribution and making direct transfer to a self-directed IRA? Assume an independent third party appraisal or three are obtained.

The IRS sample 402(f) notice for accounts that are not designated Roth accounts says:

If you have an outstanding loan from the Plan, your Plan benefit may be offset by the

amount of the loan, typically when your employment ends. The loan offset amount is

treated as a distribution to you at the time of the offset and will be taxed (including the

10% additional income tax on early distributions, unless an exception applies) unless

you do a 60-day rollover in the amount of the loan offset to an IRA or employer plan.

Does the reference to an "IRA" include both a traditional IRA and a Roth IRA?

Here's the setup...

Company A = Owner #1 50% and Owner #2 50%

Company B = same Owner #1 20% ; same Owner #2 20%, Owner #3 20%, Owner #4 20% and Owner #5 20%

All of these owners receive payroll under only Company A and the owners plan balances are all under Company A.

Do you concur that for top heavy determination purposes on Company A I use only the balances for Owner #1 and Owner #2?

457(f) plan allows for a contribution to an employee's account equal to a certain dollar amount less the maximum amount that may be contributed to the 457(b) plan that is also in place. It appears as though the organization inadvertently credited the employee with the dollar amount and failed to reduce it by the 457(b) amount that was also contributed. Is this excess contribution a problem since the amount exceeds the amount outlined in the plan document. What is the proper correction procedure for a 457(f) plan? Also, due to short term deferral exception, plan is not subject to 409A.