How are employee options considered when making a controlled group determination?

Does it matter if the option has been exercised?

The following is a link to an article on point by S. Derrin Watson.

http://benefitslink.com/modperl/qa.cgi?db=...loyer&id=55

Curious if there are any other opinions or thoughts on the issue.

This error was just discovered (in 2011). A participant terminated in 2010 and was distributed his account balance (less loan amount) and he did receive a 1099-R for that amount. He walked away from the loan, so there was a default, but the default didn't get reported on the 1099-R. Rev. Proc. 2008-50 doesn't seem applicable where the participant has terminated - the correcting options don't make sense. So, is VCP really the answer? Or, is this just a matter of correcting the 1099R?

If the 1099R is "corrected," I guess the employer could pay the withholding or leave the withholding alone (even thought the latter doesn't seem correct).

Part of my confusion is that, from what I'm reading, the default should be an actual distribution as opposed to a deemed distribution.

Calendar year safe harbor 401(k) plan has a profit sharing provision. No hours or last day requirement. Plan sponsor wants to exlcude a handful of HCE's from a profit sharing alloction. I don't see that they can do that in the current plan for 2011. Is there anything that prevents them from adopting a separate profit plan for 2011 with the proviisons that thye want and then merging the two plans at together a later date?

I don't see anythat anything prevents this, but want to cover all bases since essentially the new plan plan is only being adopted because the current one can't safely be amended.

Thanks for any guidance.

During a recent audit, it was discovered that the ER failed to make a match for some participants over the past two years, totaling approximately $900 in each year. What is the SCP for this? Do tests have to be re-run? Do the 5500s have to be amended? Thanks for your help.

Trying to get benchmark information about companies who allow Paid Time Off accrual while employees are on STD. Thanks.

Service provider received direct comp of $500 and indirect comp > $5000. All indirect comp = eligible indirect comp. Would this service provider then be required to fill out line 2, and in so doing fill in $500 of direct comp and $0 of total indirect excluding eligible indirect? It just looks funny to be listing them with only $500. As an alternative can this service provider be listed only in line 1?

Hello

Day 1 - I exercise my NQSOs. I now own 50% of the company.

Day 2 - We sell the company for $20m, $2 M being held back.

My W-2 income reflects the $9m SP as the FMV of my NQSO (less exercise price).

Year 2 - escrow is released. I think this is W-2 income. But the company's been acquired.

Is this W-2 income? If so, can you provide authority?

Who issues the W-2? The accquiring company doesn't want to.

I was hoping someone might have some insight on this. Under ERISA, trustees of a plan have the right to audit an employer that they suspect of shaving contributions owed to the Fund. Unfortunately, the company (employer) has gone into receivership (bankruptcy proceedings). Does the plan (fund) still have the right to demand an audit of their books while the receivership is pending? Also, if the employer has been cheating on hours, is there any way to contest the receivership or seek personal liability? Any information would be appreciated!

For the calendar year 2010, an Employer elected to contribute a 3% profit sharing contribution to all eligible participants. The contribution has not been deposited. However, the Corporation's tax return (not sure if extension applied for) and Form 5500 have been filed - both reporting the 3% allocation to all. Now, the Employer states he cannot afford the 3% allocation and only wants to contribute the 3% top heavy.

Can both returns be amended for the lesser contribution? I am not certain that Rev. Rul. 76-28 applies here.

Anyone have the factors out there? I have it for male and female, but not unisex.

Good morning,

I am currently working with a Dr plan that is a 401a PSP with a New Comp feature. I get that, in general, a 401(k) is a feature of a 401(a) plan. The "k" feature is merely the particular provision that permits employee contributions on a pre-tax basis, but it is already included in an "a" plan.

Question is: Any reason they would or wouldn't want to add the K feature to the plan? Would it effect the amount they could put away? Thanks

We have a frozen DB plan and we are trying to shift excess contributions from one year to a later year. Does any know of any guidance out there that would indicate whether an amended Schedule B/SB to Form 5500 can be filed to shift contributions from an earlier year to a later year?

We're looking for a service where we can punch in the SS# and find out their last known address. We want to be able to do unlimited searches for a fixed annual fee. I've seen versions that are out there, but I am curious what others are doing to find these lost participants.

At the present, there is a big hurdle for us in terms of doing these searches - who will pay the $10 fee. I want our staff to be able to do it whenever needed without a care in the world. Any thoights? I know there are some programs out there that are hundreds of dollars a month (background checkers, etc) which is way out of our price range for this!

The rules for imputing disparity for employees with more than 35 years of service are a little confusing to me. It appears that an adjustment is required to the PDF if a participant's service is more than 35 years, but only if such participant benefitted under a DB plan in the measurement period. However I believe it's also true that DC participants (with no DB benefit) are limited by the 35 year rule when tested on a benefits basis.

Below is a quick summary of how I think the service adjustments are applied to the PDF under various testing methods. Can someone please confirm if my understanding is correct for each one? For simplicity I am assuming that the "base" PDF for Benefits testing is .0075 (i.e. for purposes of my question on the 35 year stuff, I am temporarily ignoring other adjustments for SSRA, etc.). Also, I am assuming that participants only have a DC plan benefit (no DB benefit).

-Benefits Basis, Annual Method: PDF is .0075 if Total Service as of testing date is <= 35; PDF is zero if Total Service as of testing date is > 35

-Benefits Basis, Accrued To Date Method: PDF is .0075 if Total Service as of testing date is <=35; PDF is .0075 x (35/Total Service) if Total Service as of testing date is > 35

-Benefits Basis, Projected Method: PDF is .0075 if Total Service as of NRD is <=35; PDF is .0075 x (35/Total Service at NRD) if Total Service at NRD is > 35

-Contributions Basis, all methods: PDF is .057, regardless of Total Service today or at NRD

Are my above interpretations correct?

Does anyone know of a website that publishes the daily rates of the PPA monthly LS segment rates? Thanks.

A potential client has an existing S-Corp that they claim they set up about 2 years ago, but have never run any business through and have never taken wages through. This year the S-Corp has commenced business operations and they Owner and wife are taking wages.

Let's assume the S-Corp commenced 1-1-10 and the wages for 2011 will be $100,000. For 415 % of pay limit, should the 415 % of pay limit be:

a) 2*10%*($0+$0+$100,000) = $6;667 or

b) 1*10%*($100,000) = $10,000

The plan won't be recognizing any past service. I would think that the previous years of the S-Corp in which there were no wages would not be included in the determination of the high 3 average pay because there was no service.

A small church would like a self-employed minister to participate in its 403(b)(7) plan. The self-employed minister would be able to make salary reduction contributions to the plan as well as receive employer contributions. Everything that I have read seems to say that a self-employed minister is only eligible to participate in a section 403(b) plan of his or her denomination, and that the 403(b) plan has to be a retirement income account. Is that correct? Or can a self-employed minister participate in a 403(b)(9) or a 403(b)(7) plan established by his church and not by his denomination? I am mostly relying on 414(e)(5), so any other citations would be greatly appreciated.

For purposes of making contributions, does compensation for SIMPLE IRAs, SEPs and SARSEPs include differential pay under the HEART Act? If so, is it elective or mandatory? Is differential pay included in Compensation for purposes of determining the limits such as 25% of Compensation?

A client is adopting a new defined benefit plan, owner and spouse are the only employees. We don't necessarilly want to provide benefits for past service, but do want to create a funding target in the first year in order to provide a range of contributions rather than just having the target normal cost.

What is the best way to draft the benefit formula to provide for this, but avoid potential issues? Specifically, we want to avoid having a benefit at the end of year 1 that is greater than it would be if we weren't trying to create a BOY FT, but also would like to avoid having a minimum benefit for future entrants if possible.

Is there any issue with something like: "4.5% of High 3 AMC x Years of Participation. . . Notwithstanding the above, each Participant who was a Participant as of the Plan's Effective Date shall be provide with a monthly benefit not less than the following: Owner - $X, Spouse $Y"? In this case, X and Y represent what would be the end of year monthly benefits based on the benefit formula and comp history as of the end of the year. X and Y are less than the BOY 415 limits.

Any other suggestions/better ways to accomplish this?

We have a client that established a sole 401(k) plan but do to controlled group rules was ineligible to establish. The plan was thus terminated. What is the correct method for correction regarding the return of employee, and employer contributions (i.e. 1099-R preparation) and the deductibility of the employer contribution on the tax return.

Thank you.