What's the rule of law regarding pre-tax premiums that are in arrears due to Leave of Absence? How long do we have to collect them pre-tax? I would suppose you have until the end of the calendar year only? Or can they span plan years? Latter doesn't seem likely but that doesn't take into account end of year leaves. Does the law dictate how many months of premiums can be put into arrearage to be repaid pre-tax? I would think it would be only the one month and then it must be after-tax. Any help would be much appreciated.

I have a participant who has passed away and the beneficiary is not a us citizen and does not have a ssn. I have never come across this. How does the payout work?

Does anyone know the actual percentage of plans that are using an indendent advisor on their DC plan? I saw the number somewhere a couple of weeks ago in an article and can't find it anywhere

A client of mine had his CPA tell him he could use the level amortization method for his RMD calculation.

I thought that was only for avoiding the extra 10% tax if you are under 59 1/2. (And it specifies no additions other than g/l, but my client will not be making more contributions.)

I can't find any reference to it satisfying the RMD requirements.

Am I missing something or is the CPA missing something?

Thanks!

We have a client with a FSA and POP cafeteria plan, the sponsor writes and asked me this question "We have an employee who is covered by Medicare and has a Medicare Supplement Policy thru the Kentucky Teachers Retirement. His deceased wife was a teacher. The only payment method for the premiums is bank draft from his checking account. The question is can we payroll deduct the premiums in the cafeteria plan and then write him a check for the premiums since we cannot pay Ky Teachers Retirement directly." Can anyone tell where to find the answer for him?

I do not have much experience in cross testing and have been reading these forums which have made me more confused about what I'm doing. Of course I want to make sure I'm doing things correctly but I have a plan that is not a great candidate but I'm trying to do the most I can with it. The plan is a safe harbor 401(k) and the dentist (owner) is only 35 but would like to contribute the maximum. He has a couple employees who really have no interest in contributing and are all in their 20's.

I thought he could do a safe harbor match so that he could pass the ADP/ACP test and then contribute a profit sharing contribution in order to maximize. I use datair and allocated a percentage of 11% of compensation as a profit sharing to the NHCE in order for the gateway and the 401a4 to pass but the average benefit % shows failed. I'm assuming since the 401a4 passed as a plan it doesn't matter if the average benefit percentage part failed but I'm not completly sure and I don't feel comfortable relying on the software.

Also, regarding the safe harbor match, if none of the NHCE defer then no safe harbor match is contributed so does that mean the profit sharing contribution of 11% makes up for it!

Please help as I have a tax planning meeting tomorrow with my client.

Thanks, MM

Could anyone point me to guidance on the procedure for requesting an opinion letter from the PBGC? This seems like it should be a very simple piece of information to obtain, but I can't find anything on it. Thanks!

Could anyone point me to guidance on the procedure for requesting an opinion letter from the PBGC? This seems like it should be a very simple piece of information to obtain, but I can't find anything on it. Thanks!

If in 2010 we find out that the EIN used in 2009 has changed (during 2010), what I've been told by 3 separate people at the IRS is that you need to:

1) Use the new EIN for the 2010 5500;

2) Indicate the prior EIN on line 4 of the 2010 5500 (i.e., last year this plan was repoted under the following EIN)

3) Here's the kicker: amend the 2009 filing to mark it as a final 5500.

Without this 3^rd item, they keep telling me that there is no way for their system to NOT look for a filing under a particular EIN if that form was not marked as final. If 3 people didn't tell me the same thing I wouldn't believe it…

Has anyone else had a similar experience?

Have a multi-member LLC client with 4 members and 1 employee. Members W-2 wages range from $80,000 to $150,000. LLC has $700,000-$800,000 in profits to be divided among 4 members. They wish to do a 401k/PS Cross-Tested Plan. Can the K-1 income be combined with the W-2 income to reach the annual compensation limit of $245,000, allowing them to max out at $49,000 each? Otherwise they couldn't all max out if 25% was based only on W-2 compensation.

Joe Smith Sr. previously owns 100% of company A which sponsors a 401(k) plan. Joe Smith Sr. starts a new company (company B) and simultaneously sells all of his stock ownership of company A to his son, Joe Smith, Jr. 8 employees of company A move over to company B with Joe Smith Sr. The employees that moved from company A to company B continued to contribute to company A's 401(k) plan (i.e., no new plan was established for company B). All of this occurred back starting January 1, 2009.

We have determined that company's A and B do not form a controlled group nor affiliated service group, which would make it a multiple employer arrangment. My concerns are:

1. If company B did not adopt company A's plan (even though company B owner was previously company A owner), are the employees that are now with company B but still contributing to the 401(k) plan sponsored by company A ineligible to do so? If so, how is that or can that be corrected from a documenst standpoint (i.e., retroactive amendment)?

2. Does the 410(b)(6)© transition period come into play at all here?

3. If it's possible to correct and keep this arrangement in place going forward, how is ADP/ACP testing handled for the first year?

Any insight is appreciated!

A plan we administer for a governmental entity has a definition of compensation that is W-2 wages, including deferrals and "excluding reimbursements or other expense allowances, fringe benefits (cash or non cash), moving expenses, deferred compensation and welfare benefits".

They allow their employees to opt out of the health insurance they offer if the employee is already covered by a spouse's insurance and instead receive $5,000 in lieu of the medical coverage. They run the $5,000 through payroll and it is taxed. They do not want to include it as compensation for the 401(k) plan. According to their definition of plan compensation, can it be excluded? Does it make any difference that it's a governmental entity?

Thanks.

I'm in the process of getting a divorce (we're being fairly amicable because we have two young children and are handling things in mediation) and, in order to buy my wife out of our house, I'm taking out a home equity loan. I'm a vet, so can take out 90% of the equity in the house as a cash out loan, so I'll be able to pay her off and have a few thousand on top of that. In order to afford to live in the house, I need to pay off my outstanding debt (around $10k). I have about $9k in a SARSEP and $3k in a 401k, and am trying to figure out the best way to cash one or both of those out with the least penalties.

I've heard that I can get a QDRO as part of the divorce which will offset some of the penalties as long as the cash goes to her? That will show up as part of her taxable income, so I'm guessing that I could pay the taxes on that if she's willing to let me do the cash out and then give me the $ to pay off the debt? Or, I'll "use" that $ as the house buyout and use the home equity loan to pay off my debt (as a matter of semantics).

Does anyone have any input/ideas on this? Does this seem like the best way to handle this?

Thanks!

Under the maximum deduction rules of section 404(o) the deduction can be no less than the funding target plus target normal cost over plan assets under the at-risk rules.

Regarding the calculation of FT and TNC for this purpose:

1) If the assumed form is a lump sum and it is subject to 417(e) do you use the 417(e) rates or the 430(h)(2) in determining the FT and TNC.

and

2) For this purpose does the loading factor apply and if so how is it applied? Assume each year PPA applies has been subject to at-rsik/

Thanks

Do people think it is important to be an ERPA? Am I correct that I will probably not be allowed to assist in an audit, or even talk to the IRS abouta client's account without being an ERPA (i.e., will my Power of Attorney not be accepted without it?)?

Anyone have recommendations on how to get ERPA CPE done on the cheap?

Current safe harbor match plan. Employer has already provided notice to the employees that it will continue to be a safe harbor plan for 2011. The employer now changes its mind and does not want to be safe harbor for 2011. Please confirm that they can make this change and no matching contributions will be required for 2011 as long as they amend the plan by 12/31/2010.

Thank you.

I want to be an ERPA, but I'm concerned that the bill is HUGE for the CPE. Does anyone have a strategy to do it on the cheap?

Our document software provider supplied a copy of the HEART/WRERA Amendment for Employer signature. While the WRERA portion does not have to be adopted until 12/31/2011 (calendar year plan) the HEART portion (all one amendment) must be adopted by 12/31/2010.

Is the final adoption date 12/31/2010 or can they adopt by the due date of the 2010 Corporate Return - assuming both plan and corporation are 12/31?

A client of ours just received a letter from the IRS that their 5500-SF is late. We bulk mailed our 5558s in July but have discovered that this one was erroneously not included. Should I have the client send a reasonable cause letter? Is our excuse of "we thought we did but actually didn't" going to be considered "reasonable"?

Any input is appreciated.