The Treasury Regulations issued in 2007 for Section 1.414©-5 provide special aggregation rules for purposes of determining controlled group status for organizations that are tax-exempt under IRC 501(a). Is there any guidance available with respect to non-profit organizations that are not tax-exempt under IRC 501(a)?

New York State has extended COBRA benefits to 36 months. This extension applys to fully insured plans. I have a client that has elected to go self funded and thereby go back to the federal COBRA of 18 months. The client currently has COBRA participants that are covered under the 36 month extension under thier old fully insured plan.

What are the notification requirments for these members? Can the client grandfather the effected COBRA participants for one more month? Any assitance on this would be great

Can hardship distributions be eliminated from an ERISA 403(b) plan? Does tax code regulation 1.411(d)-4 Q&A-2(b)(2)(x) provides an exception to the ERISA 204(g) cut-back rules for 403(b) plans? Is a 403(b) plan considered to be a CODA or profit-sharing plan under this regulation?

1.411(d)-4 Q&A-2(b)(2)(x) provides: Amendment of hardship distribution standards. A qualified cash or deferred arrangement that permits hardship distributions under §1.401(k)-1(d)(3) may be amended to specify or modify nondiscriminatory and objective standards for determining the existence of an immediate and heavy financial need, the amount necessary to meet the need, or other conditions relating to eligibility to receive a hardship distribution. For example, a plan will not be treated as violating section 411(d)(6) merely because it is amended to specify or modify the resources an employee must exhaust to qualify for a hardship distribution or to require employees to provide additional statements or representations to establish the existence of a hardship. A qualified cash or deferred arrangement may also be amended to eliminate hardship distributions. The provisions of this paragraph also apply to profit-sharing or stock bonus plans that permit hardship distributions, whether or not the hardship distributions are limited to those described in §1.401(k)-1(d)(3).

Employee has enrolled 17-year old step child in cafeteria plan. Step child moves out and in with birth mother and enrolls in birth mother's plan. Employee wants to end contributions for the step child. Change in status?

We got a very strange question today, and not one of us has ever encountered it. And all of us are apparently having heat-induced brain meltdowns.

Two married people are in the same plan. Husband wants to retire or go on disability or get a plan-permitted in-service distribution (we are not sure which, not even sure he is leaving the employer...). He wants to know if he can roll the money into his wife's plan account. Or just transfer his account to her. We all have the same automatic reaction of NO but we don't know why. Any ideas? There is no divorce, no court order, just a strange guy and his strange request. Thanks in advance!

If a plan is distributing an excess deferral or excess contribution that has a related match should earnings/losses be calculated on the forfeited match?

The regs don't seem clear so it appears that the plan document would control.

Thanks!

I just want to be sure where the following plan deductions would be taken on a corporation's tax return. I have a Limited Liability Corporation being taxed as a sole proprietorship. This corporation has a 401(k) plan as well as a Cash balance Defined Benefit plan. Please indicate where the following deductions would be taken; either on line 28 on the front of the 1040 or on line 19 of the Schedule C:

With regard to the 401(k) Plan:

Owners Salary Deferral

Owners Safe Harbor Match

Owners Discretionary Contribution

Non-Owners Salary Deferrals

Non-Owners Safe Harbor Match

Non-Owners Discretionary Contribution

With regard to the Defined Benefit Plan:

Defined Benefit Plan Contribution (and I would assume this answer wouldn't change whether the Plan is a Cash Balance Plan or not).

This case I am working has included and excluded different categories of contributions on the Schedule C each year since 2006. I just want to make sure the the proper deeductions have been taken in the proper places. When I spoke to the CPA, she didn't have a clue (some CPA!).

Thanks

I have a client that has asked to end the current FSA plan year (1/1 to 12/31), and start a new plan year on 7/1. Their Health Plan renewal is 7/1 and they are making significant changes to the Health plan that would cause hardship to those who have an FSA in progress that would not cover the new expenses, and also to those who need to implement an FSA for the new expenses.

I've read a ton of code that says this does not cause a Change of Election qualifying event, but doesn't necessarily cover guidance about ending the plan and starting over.

What are their options, if any?

Thank you in advance for your responses!

CJL

I understand from the 409A regulations that a plan providing the employer and/or employee discretion to make subsequent deferral elections in the time/form of payment are subject to 1/5 year rules, etc. However, what happens if the employer unilaterally (but with the acquiescence of the participant) amends the plan to change the time and form of payment?

For example, a plan currently provides a life annuity at age 62 (with no subsequent election/discretion). The employer--which has reserved the authority to amend the plan unilaterally--amends the plan to state that the participant now is entitled to a 15-year term certain starting at age 67. Assume employee is fully vested and will not sue in the event this equates to a reduction in vested benefits.

From my reading of the 409A regulations, this does not violate the subsequent deferral elections because the plan does not give anyone the discretion or election to change the time/form of payments--it is simply accomplished by plan amendment. Does the employer's reservation of rights to amend the plan count as discretion to make a subsequent deferral election? If so, the plan (and lots of others) would have already violated 409A because it does not include the 1/5 year delay rules, which are required in the plan itself per the subsequent deferral election rules.

Despite this, it doesn't quite sit right with me. I assume the counterpoint is that this method of subsequent elections leaves the decision up to the employer, which could refuse to amend the plan to change the time/form per the employee's wishes.

Any thoughts?

So...are we the only firm disappointed with Relius and Web Client. Does the other providers have the 5500EZ ready yet?

Can a plan be started during the last month of the fiscal year in order for a husband and wife to put away the maximum deferral amount and also a safe harbor match?

Participant filled out his forms indicating he wanted a rollover, and then dies before the rollover is processed. The money is in a pooled account so it takes some time for everything to line up. I say "the participant's election is still valid, and administrative delays should not affect it."

But I suppose if the beneficiary in the plan is different than the beneficiary of the IRA there cou8ld be a dispute.

Has this been addressed anywhere?

For various reasons (increase in retiree contributions, splitting off of some benefits such that not paid through the VEBA), the VEBA has accumulated some money (unbeknownst to anybody except the accountants). Now we are trying to figure out a way to get the money out of the VEBA. It seems that it would be acceptable for the VEBA to "reimburse" the employer for benefits/premiums paid by the Employer for the provision of benefits to participants that could have been paid by the VEBA... is this correct? I assume there would need to be some sort of documented agreement to demonstrate the proof of the reimbursements, etc? Any help/guidance would be appreciated! Thanks!

So we hired someone and between management and headhunters, the phrase "beginning with your first year of employment" was used in the offer letter.

I'm curious to hear what everyone's first take on that phrase is... what is the date or point in time on which that phrase is triggered?

(Note: the phrase actually got used twice and the intent was clearer there so it was then applied consistent w/ that. And I've already given feedback to management so hopefully they modify the phrase in their next offer.)

Has anyone seen any recent discussion on how the DOL is interpreting "the earliest date on which the contribution can reasonably be segregated from the employer's general assets" or what factors they look at? I have heard one factor is how long it takes the employer to remit FICA contributions. Any other relevant considerations that people have seen? Thanks.

Note: This particular plan is not a small plan eligible for the 7-day safe harbor.

I find these particularly amusing

Line 9, column ©. Enter each participant’s name exactly

as it appears on the participant’s social security card.

how many are going to comply with it 'exactly'?

also

The time needed to complete and file this form will vary depending on individual circumstances. The estimated average

time is 49 minutes.

If you have comments concerning the accuracy of the time estimate or suggestions for making this form simpler, we would

be happy to hear from you.

hey, drop 'em a line

Anone have any experiece? Apparently (I am told) that ify ou offer a 403b to your employees who are teachers in public schools in Texas, you MUST offer the funds of ALL approved vendors to your employees, or at least allow them to choose from all of the approved vendors.

DOes anyone know if that is accurate? It just seems so hard to believe that you have not choice but to work with 10 vendors, or something ridiculous like that...

Uncashed benefit payment checks are being redeposited to the forfeiture account in the plan. When the checks are being deposited, i've been including them in income on the 5500. This past year, one of the checks was reissued. Where would I include this on the 5500?

Is including the redeposited checks in the income on the 5500 the proper place for them?

thanks

What is a Qrops pension transfer?

Qualifying Recognised Overseas Pension Schemes - QROPS

It was announced in April 2006 that British ex-patriates would be able to move their pension benefits to a QROPS with the UK revenue’s approval.

QROPS (Qualifying Recognised Overseas Pension Schemes) was launched by the British Government as a way to make ex-patriate retirement easier for Britons. It effectively allows Brits to retire abroad while taking their pensions with them.

In simple terms, this means that anyone who now lives overseas, or is intending to leave the UK long-term, can transfer their existing pension plans into a QROPS. However, the tax-free income and withdrawals allowed within the first 5 years of being a non UK resident will depend on personal circumstances and the jurisdiction of the QROPS. After the 5 years, the pension fund will become subject to the laws of the relevant overseas jurisdiction and the need to purchase an annuity by age 75 no longer applies(age 77 following the Emergency Budget).

Currently, the minimum retirement age of 55 will still normally apply before benefits can be taken. However, the QROPS can offer considerably more flexibility, tax benefits, greater income potential and investment freedom compared to a UK pension.

QROPS may be used to receive transfer values from UK registered pension schemes which can include Protected Rights funds. This may also apply to those already receiving benefits from a UK Self-Invested Personal Pension Scheme (SIPP).

Most of the QROPS schemes are not taxed at source, however the tax applicable to any income will depend upon where you are tax resident at the time.

Comparison Between UK Pensions and QROPS (Qualifying Recognised Overseas Pension Scheme )

CASH LUMP SUM

UK Pension:- This is limited to a maximum of 25% of the value of your pension fund and for occupational pension schemes the tax free amount is based upon a formula involving salary and service.

QROPS:- May offer a much higher tax free cash lump sum which can be upto 100%.

TAXATION

UK Pension:-All income tax derived from a UK pension is taxed at source.

QROPS:- Can significantly reduce the amount of income tax, in some cases to zero.

ANNUITY

UK Pension:- Pension law forces you to purchase an annuity by your 75th birthday (age 77 following the Emergency Budget).

QROPS:- No need to EVER purchase an annuity. This means pension companies do not keep your money when you die.

PENSION INCOME CHOICE

UK Pension:- Income drawdown (until 75th birthday) available but only in Sterling and normally subject to minimum pension pot of £100,000.

QROPS:- May allow flexible ‘income drawdown’ known as ‘unsecured pension income’ to continue after age 75, also allows you to alter amounts and currencies.

BIGGER LEGACY

UK Pension:- If you die with a UK pension scheme your spouse can get up to 2/3rds of the pension you would have received (dependent upon the scheme). If you both die your pension WILL die with you.

QROPS:- All of your pension passes to your nominated beneficiaries in full, TAX FREE, and not a windfall for the pension company or the tax man.

INHERITANCE TAX

UK Pension:- Any asset left upon death to your beneficiaries (except your spouse) will be subject to UK Inheritance Tax currently at 40%.

QROPS:- No UK Inheritance Tax charge upon death.

INVESTMENT FREEDOM

UK Pension:- Can be limited to the insurance companies choice of funds or an outsourcing of fund managers, you have no control of the pension fund.

QROPS:- You have greater investment freedom as you have full control of the investment choices as well as the currencies you wish to invest in. You may invest in onshore / offshore funds, fixed deposit rates, total diversification.

INCOME AND BENEFITS

UK Pension:- You are restricted to the amount of income and the currency received.

QROPS:- You may take an income of your choice, alter your income at any time, take capital amounts at any time and in a currency of your choice (subject to scheme rules).

PROTECTION AGAINST CREDITORS

UK Pension:- You have none!

QROPS:- Protection against possible future creditors. (Dependent on jurisdiction of QROPS).

CONFIDENTIALITY

UK Pension:- You have none!

QROPS:- Protection against ex-spouses, business partners and creditors.

If you are only reporting participants for the 2010 full calendar year, are you able to use the 2009 form? (I know I could put the 2010 dates in Part I)

If yes, do you enter the # of participants reported on line 6a or 6b?