I work with various Physican groups that have all Highly compensated with both share-holder and non-share holder classifications. Does anyone have experience with an employer reducing compensation to pay for benefits (LTD, LTC, and Profit Sharing contribution in 401k Plan) pursuant to a comp agreement that makes no mention of this arrangement. The physicians verbally agrees to this arrangement. The employer give the physician the one time option to take the "benefit" instead of cash and does not include the benefit costs in taxable compensation.

Additionally, the ER reimburses the employee for unreimbursed medical expenses (with no limit - have seen $100K plus reimbursement.)

My question -

1. If the ER group wants to do this type of "trade-off" can they legally do so within the employment contract? Can we use generic "ER may reduce salary to pay expenses" statement in employment contract.

2. Can the ER reimburse medical expenses without a formal MERP or 105 plan?

3. Is there a maximum that can be paid under a MERP type of arrangement?

4. Is it possible for the business to deduct the expense and not include the premiums paid or reimbursement in the physician's taxable income?

Thx

Anyone have a recommendation for a multiple employer document provider?

Assuming 100 to 200 employers, with the option for employers to have a few provisions that vary from each other.

The software we're looking at now can do this for only up to 20 employers, and it is a lot of manual work if one overall plan provision is changed affecting all employers.

One of our clients (An LLC) has a partner that is involved in a variety of different business ventures. He has W2 income from our client but his overall total income (including all his business ventures) was negative for 2010. His accountant called and stated that all his deferrals for 2010 need to be distributed back to him.

Is this correct?

Thank you

Hypo:

Plan is disqualified. Plan subject to taxation retroactively for all years. Previous distributions from plan were made as direct rollovers to IRA. Due to disqualification, rollovers now treated as excess contributions to IRA. Because previous distributions from disqualified plan no longer constitute eligible rollover distributions, IRS states distributions are subject to 10% early withdrawal penalty under IRC 72(t).

But:

IRC 72(t) specifies the 10% early withdrawal penalty is applicable to premature distributions from qualified plans. Does any other authority provide that this penalty can be imposed on a premature distribution from a disqualified plan?

I have a non-profit organization looking to implement a 401(k) plan. Total of about 60 employee's all of whom are NHCE's. Approximately 20 of them are teachers. The organization would like to do 1 of 2 things and I'd love to get input from the group on if it can be done.

First, they would like to offer the plan to everyone, but only match the teachers. Can they exclude everyone but the teachers from receiving the match but allow everyone else to participate through salary deferrals?

The second and less attractive option for them is to exclude everyone but the teachers from participating in the plan and therefore only offer the benefit to the teachers.

I suppose that because there are no HCE's in the plan they would automatically pass all the testing, but it seems like allowing this could potentially open up a loophole for employers who want to exclude employee's by simply excluding certain types of compensation and/or intentionally keep an ee's comp under 110k.

Any comments would be greatly appreciated!

Say a plan has a 2011 AFTAP of 50% and the 436 contribution to bring it up to 60% is 100,000.

Say the sponsor makes a 436 contribution of 100k (adjusted) and a newly certified 2011 aftap is 60%.

For purposes of the 2011 MRC plan assets for such calculation will not include the 436 contribution. Is that correct?

I located something to this effect in on eof the examples in the 436 regs.

thanks

We are doing some compliance work for a 403(b) plan that contains language that states that for 403(b) contributions, covered employees exclude employees who do not elect to contribute more than $200 for the year. The prior TPA did not include these employees on the 5500 count information, which put the count below the audit threshold. However, they did include them as zeroes in the ACP test. This doesn't seem right. Does anyone know how this should work? Also, what about 410(b)? Will these excluded employees be counted as not benefitting or just disregarded for coverage? Thanks!

Does anyone know how to pay the mandatory withholding on lump sum and periodic payments from plans? Does the withholding go to the IRS or the Hacienda?

Okay - we are now within two 1/2 months of these forms being due. We have no extension form that we can use yet for the 8955, We have clients that will need to sign the forms and may have vacations scheduled. Does anyone think the IRS will extend the due dates of the forms without making us file an extension? Seems to me that they should give us six months from the publish date of the form and extension.

I am ready to send in some draft forms!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Frustrated that this will be cutting into summer plans. What is changing in the 5500-EZ that is making the form delayed in being published?

Am I missing something here???

Pat

401(k) plan failing ADP/ACP test. 401(k) plan provides for a match of 50% of elective deferrals up to 3% of their compensation. Propose excluding HCEs from 401(k) and setting up 403(b) for HCEs only with nonelective contribution in an amount of 1.5% of compensation (equivalent to matching contriubtion made under 401(k)). 403(b) excludes employees participating in 401(k), so NHCEs excluded from 403(b.

401(k) - ADP, ACP, and Coverage testing not required, but 415 and Top Heavy necessary.

403(b) - Coverage not required, but 415 is.

Is the proposed arrangement correct?

A 401k plan terminates 3/31/2011. Question on testing for this short period - it appears that for 415 purposes, you have to pro-rate comp i.e. 3/12 x $49,000 = $12,250. Is this right? And then for ADP purposes, can you use any compensation after the termination date when running the test, or is this also pro-rated? Can you look at comp beyond the 3/31 termination date for ADP?

Thanks!!!

C-Corp with ESOP wants to become 100% ESOP owned, but unsure what options are available to get the remaining shares held outside of the ESOP into the ESOP. All shareholders holding stock outside the ESOP are in agreement to have the corporation 100% ESOP owned. No shareholder wants to do a 1042 transaction.

Can the corporation complete a redemption of the remaining shares and then cancel the shares or transfer to the ESOP? Can the ESOP purchase the remaining shares from the shareholders? What option would minimize the tax consequences to the shareholders and the corporation?

Even though I have been practicing in ERISA for 30 years, I did not get my first Simple IRA question until last month. It is a different set of rules, and maybe someone has the answer.

In addition to a lot of other problems, there does not seem to be a Summary Description as required by 408(l)(2)(B) after the first year of the plan (2001). The statute (as well as the IRS form) indicate that the "trustee"/"financial institution" should supply the Summary to the employer each year. The financial institution is stating that generating the Summary and providing it to the eligible employees is the responsibility of the employer. I agree that distributing it to the employees is an employer responsibility, but is there something that shifts responsibility for preparing it to the employer which is the entity that is supposed to receive it.

The financial institution is also denying that it is the trustee even though the preprinted form from the current FI's predecessor states that it is the trustee. No successor document was generated when the current FI acquired the predecessor's business.

Can someone tell me if employer contributions made to non-HCE executives (99% for EE+Fam) that are greater than the contributions made to other classes (99% for EE only) would cause the plan to be discriminatory? This is a church group, no HCEs as to officers, owners, compensation over 110,000, so all are non-HCEs Thanks.

I came across online where setting up a SEP IRA for your nanny is possible and almost seems a little common. Anyone ever set up a 401K plan for a nanny in order to have a vesting schedule? The nanny would be the only participant. Any info on this is greatly appreciated.

Before PPACA, employer-sponsored coverage of dependent children was tax free only if the dependent was a qualifying relative or qualifying child under 152 of the Code (although certain pieces of 152 didn't need to be satisfied for purposes of tax-free coverage). PPACA amends the federal tax code to say that employer-sponsored coverage of adult "children" is tax-free through the end of the year in which the child has not yet attained age 27. Because not all states will automatically follow the change in the federal law, there may be some instances where a person has imputed income for state tax purposes but none for federal.

I'm wondering if anyone found a resource that outlines the rules (with citations) regarding state tax treatment of employer-sponsored coverage? I've seen numerous articles from law firms and benefits consulting firms with charts, but no two charts are alike. It'd be nice to have a resource that was reliable and regularly updated.

Johnny divroces Susan. Both are participants in the Plan. Johnny owns 100% of the business.

1) Can Susan take a distribution to the extent of her QDRO proceeds? All of the money came from Johnny's 401k balances. Neither one is over age 59 1/2. The document does say that QDRO's can get paid out "as soon as possible" (i.e., you don't have to wait until the participant terminates), but now it is the participant themselves who are not eligible.

2) We've usually treated QDRO's as in-service distributions, to add them back for 5 years for top-heavy. But that doesn't seem to apply to well here.

Any help is appreciated...

A one person DB Plan has about $100k in contributions from 2009 that was not made. Form 5330 was filed, excise tax paid and now the amount is growing because the contributions still has yet to be made. Client is considering plan termination to stop the bleeding. If she were to terminate the plan would the 2009 contribution still be required or would she just be paid out to the extent the plan is funded? There is a small MRC allocable to 2010 as well, even though the plan was frozen in 2010. My inclination is that these liabilities have been incurred and need to be funded, even though it would seem somewhat impractical given it is a one person plan, no employees.

Partiicipant's account balance (net of all loans) = $50,000

Oustanding balance of Loan #1 = $10,000

Participant wants to make a second loan.

Question: In determining the 50% limit for loan #2, does the account balance include existing loan #1 balance?

That is:

Is the limit of loan #2 =

(a) 50% of $50,000 - $10,000

(b) 50% of $60,000 - $10,000

Thanks for all responses.

Good morning, all. A colleague asked that I post the following:

"We have become aware of an odd fact/guidance situation involving the PBGC and terminating defined benefit plans. The situation is as follows:

"A DB plan was amended to terminate in 2008. In 2009 the plan was amended timely for PPA, including for PPA interest rates which were consistently in use from 2008 on. Subsequently the plan received a favorable IRS determination letter and, as the PBGC did not object to the submitted Standard Termination, benefits were distributed. Recently on audit the PBGC has asserted the plan benefits needed to be based on the pre PPA interest rates since the PPA amendment was adopted after the plan termination date. (PBGC cites the 2007 Blue Book (Q-9) as guidance.) Using pre PPA rates would require a sizable additional contribution.

"If you have encountered this situation, we would appreciate hearing how you responded and what the resolution was."

Thanks in advance for any and all responses.