A custodian is charging a Plan an Asset Based Fee, but it's NOT a transactional fee deducted from participant accounts

Instead, the fees are assessed against the unit values of each fund that a participant holds assets in.

Is this considered Direct or Indirect Compensation for Schedule C reporting?

We are a US based company with a handful of employees based in the UK.

One of our UK employees (UK citizen) has requested maternity leave. I have found much information on line, but one thing that I am still uncertain about is vacation/holiday accrual.

The employee is going out in Nov. 2010 and wants to use her remaining holiday/vacation days immediately before her official maternity leave begins. This aspect is fine. However, the employee is also requesting to use the 25 days of holiday/vacation pay that we give annually on the back end of her official maternity leave, thus giving her 1 year + 25 days of time off.

I dont think we have issue with her taking the 25 days, but must this be paid leave? What if at the end of the 1 year and 25 days she decides not to come back to work....we have no way of recouping this money.

Thanks for any input.

My understanding is that if you have multiple IRAs - some with pre tax, some with after-tax, and some with both, you cannot pick and choose which ones to convert to a roth, but have to aggregate them all to determine the taxable/non-taxable portion of the amount that is being converted. In other words, if I have 3 IRAs - one with 10,000 after tax contributions and 2,000 earnings and one with 8000 pre tax and I want to convert the 10,000 after tax to a roth, then I would pay tax on 5000 on the conversion. Is that correct? If so, where is the authority for this in the code and regs. Again, if correct, when is the total value of the IRAs determined? At the end of the year, time of conversin, etc. Thanks.

Is an accurate participant count on the 5500 really THAT important?

I mean, if we had put 34 actives and it was really just 32 or 36?

Would a govn't auditor really get upset in that case?

I'm not talking about a case in which the difference would mean filing as a large plan or not. And I'm not talking a significant delta of like 20% or anything like that.

It is my understanding that mandatory employee contributions (increased by a certain amount of interest) to a defined benefit plan are nonforfeitable ("Accumulated Employee Contributions"). Code Sec. 411(a)(1).

It is also my understanding that the simplified recovery rules (the "Simplified Method") is used to calculate the taxable and tax free portions of annuity payments made from a defined benefit plan.

Question: How do these two separate concepts fit together?

Hypothetical: Employee participates in a DB plan requiring employee contributions. At retirement, the participant has contributed a total of $10,000 to the plan (and will recover $30 of that amount tax-free per month under the Simplified Method). The participant's Accumulated Employee Contributions equal $15,000 (i.e., the $10,000 she contributed + a certain amount of interest). She will recieve a monthly single life annuity of $500. The plan provides that a beneficiary will receive any unrecovered Accumulated Employee Contributions that exist at the participant's death.

Assume the participant dies after receiving 10 monthly payments. At that point she has recovered $300 of her tax basis ($30*10) and $5000 (500*10) of her nonforfeitable Accumulated Employee Contributions. Who gets to recover the still unrecovered tax basis? Is it taken into account on the participant's final tax return, or does it go to the beneficiary who will receieve the unrecovered Accumulated Employee Contributions? Do you think Code Section 72(b)(3)© answers the question?

Thanks

My understanding is that in order to termnate a 401k PS plan it requires a resolution and a plan amendment and maybe even additional statutory compliance amendments to be based on current laws.

Are there situations where just a resolution is sufficient?

Don't have the specific plan doc I am referring to, but a standard doc I use suggests that a plan term canbe facilitated upon delivery of written notice to the plan administrator or trustee. I don't necessarily assume that to mean that a resolution (and no amedment is sufficient).

Thanks

Plan uses an ACA. What they want to do is each year require an eligible employee to decline to make deferrals or they will withold deferrals. So an eligible employee who declines when first eligible will have to decline again the following year and the following year (etc. etc.) or the employer will withhold.

Is this acceptable? Any laws (Fed or State) being violated? Once a participant declines under AE isn't it up to them to decide to participate?

I've been so concerned about getting stuff out the door that I entered the monkey-see-monkey-do mode. As such, having gotten caught up, I've paid a little more attention to reading the crud I'm now required to proudly disseminate. Here is the boiler-plate acknowledgment for receipt of the client's authorization to file his 5500 in his behalf:

PART II - Acknowledgement of Receipt of Authorization

On behalf of Potrezebie Consulting, I hereby certify that the firm will use the authority granted only for the express purposes described above; that the firm will not disclose confidential information to any parties other than the DOL, as required for EFAST filing; and that the firm will take reasonable steps to assure that confidential information provided by the Plan Administrator or Plan Sponsor is protected from unauthorized disclosure.

It finally occurred to me that the information being provided and to which I am swearing on my grandmother's grave that I will not disclose, will be posted on the DOL website and become public record. In such case, what constitutes "unauthorized disclosure" and what are the reasonable steps I must take? I'm unsure but in good faith, I've decided not to divulge my middle name to Mike Preston and David Rigby.

I have a plan that disbursed the last of their assets in March of this year. This means that the Final 5500 should be filed at the end of this month. The client did obtain signer credentials for EFAST2 for their 2009 filing. Datair had said that they were going to have their 2010 forms ready for their software update by october, but now they have changed their minds on me (shocker, I know). I wasn't sure if we could file a 5558 to extend the deadline of the 5500 for a final or not. My boss says no, but Datair says yes. Forgive me if i don't trust the software provider....

So can I file a 5558 for this client? I also have one due 11/30, but I hope that Datair will have their promise fulfilled by then. I leave for a two week trip to Europe on the 22nd of this month, so I was trying to get the 10/31 filing done before then. We aren't going the IFILE route BTW.

Thansk for your opinions...

Employer sends out notice telling employees: effective DATE the employer contribution is reduced to X%.

The timing and delivery of the notice comply with Code section 4980F.

The notice fails to state what the employer contribution was before the change. See 54.4980F-1 Q&A 11(a)(3)(i).

So the notice is technically deficient. Assuming a technically deficient notice is no notice at all...

54.4980B-1 Q&A 14 & 15 address the failure to provide a 204(h) notice

Q&A - 14 states that for egregious failures all applicable individuals are entitled to the greater of the benefit to which they would have been entitled without regard to the amendment. Egregious failures are either intentional (which this was not) or result in a failure to provide most of the individuals with most of the info they are entitled to receive. I believe we are safe here because everyone got most of the info and the info they didn't get in the notice (info regarding the employer contribution prior to the change) they already had in their SPD.

Q&A - 15(b) says the excise tax doesn't apply in two situations:

1. no excise tax is imposed on a failure for any period during which it is established to the satisfaction of the Commissioner that the employer exercised reasonable diligence, but did not know the failure existed. (This is also in 4980F©(1)) - I have no idea how you do this. Do you?

2. no excise tax applies to a failure to provide a Section 204(h) notice if the employer exercised reasonable diligence and corrects the failure within 30 days after the employer first knew or exercising reasonable diligence would have known that such failure existed. (See also 2980F©(2)) - This has potential. Has anyone ever "cured" a defective 204(h) notice in this way?

There is an example in the regs but it assumes the 204(h) notice contains the proper information, it was just misdelieverd to a group of participants.

I am wondering how this works in my case because the notice relates to a change that took place over a year ago. It seems like participants would be confused if the employer handed out a new notice saying essentially - effective last year we changed the employer contribution from Y% to X%.

Company X is terminating their DC (401(k)) Plan and there are outstanding loans. Can employees continue to pay back their loans after the plan termination date, up until assets are distributed? The company will still exist after the plan temrination and will still be issuing payroll checks from which the loan payments would be made (plan also allows for check payments, so payments may also come directly from participant). I cannot find anything in the plan document that governs this and am still looking for the separate loan policy. The bigger question is whether I'll even find anything in the loan policy - i.e. is this even up to the plan sponsor, or do the IRS regs specify whether or not this is allowed?

Need answer asap - thanks!!!

In the past a statement could be attached to the 5500 stating that the audit would be sent in later. Now with efile I don't believe they allow this. Any suggestions? This is for an ESOP

The client is under Cycle E, so I'm getting ready to submit the ESOP. I'm thinking I probably need to get his individually designed DB plan submitted again, too. Is that right, or do I have more time for that one?

For a client, we are trying to confirm the post-PPA timing rules for employer contributions under a money purchase pension plan since IRC 412©(10)(B) has been eliminated. We looked up the chapter on defined benefit funding rules in "RIA's Complete Analysis of the Pension Protection Act of 2006" and found some interesting observations. Basically, the "minimum funding standard account" under IRC 412(b) was eliminated under the PPA. Because the minimum funding standard account was eliminated, it appears as if the timing rules that applied to the minimum funding standard account were also eliminated. Accordingly, the only timing rules that remain with regard to employer contributions under money purchase pension plans are those under IRC 404 (i.e., not later than the time prescribed by law for filing the return for such taxable year) [iRC 404(a)(6)].

We weren't able to find any other commentary or discussions on this out there, so I was hoping someone else out there had some insight or could confirm. Thanks in advance!

403(b) Plan's at TIAA tend to have about half of their account balances allocated to terminated participants, none of whom have been reported to SSA before. So now we need to report the new people who terminate on the SSA, I assume? Here's the tricky part, as people take distributions, how do we know which of the sea of people were previously reported on the SSA??

I know we haven't even made it to the 15th but was wondering what I should be telling my 403b clients for whom we're delivering a form 5500? Will there be a follow up for the SSA?

New client wants to offer a Brokerage Account (managed) to the participants in the plan. The minimum account balance is $25,000 for this type of account.

Is this discriminatory? Do I need to test this 'feature of the plan'?

Thanks

PS Plan with a 7/31/10 PYE. The plan has a 1000 hours requirement but no last day requirement. SS integration used for PS allocations.

Q1: Can the 7/31/10 plan year be amended after 7/31/10 to allow for new comp? There would be 2 rate groups, one for owners (all HCE) and one group for everyone else. If permissible after PYE, what is the deadline to make the amendment (is it 2-1/2 months after PYE?)

Q2: If it is too late to amend the 7/31/10 PYE. could we amend the 7/31/2011 PYE now (10/2010) before anyone has 1000 hours worked in the current plan year?

Q3: Performing a 180, could we amend the 7/31/10 to pro-rata now (after 7/31/10)? doing so would only "hurt" the HCEs since it would take a greater overall PS contribution for them to achieve what they would have received if SS int was used?

Thanks for any comments.

Relevant Background Information

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One owner plan - DB Plan with insurance (Incentive Life. He is 67 yrs old and terminated the plan. He wants to buy the policy outside of the plan and change the ownership from the plan to himself. I received the Policy values (PERC values). There seems to be a discrepency between the IRS and DOL on what to pay to the plan to buy the policy outside of the plan.

Specific Question

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The DOL says to use the cash surrender amount to pay to the plan and get a 1099 for the difference between the cash surrender amount and the perc amount. The IRS says the PERC amount is the amount owed to the plan.

Which one is correct?

Cash Surrender amount is $25,864.74 and the PERC amount is $68,313.00

Hello,

We have a client with fewer than 10 employees that currently has a health plan 100% paid by the employer. The employer would either like to make the plan 100% employee paid or terminate it outright.

Does anyone one which one would be easier adminsitratively? Also, what employee notices/disclosures would the employer need to provide?

Thanks

IOn Rleius, there is an attachment for Accountants Opinion, which is where we are putting the audited statements. When we do this, we get no validation errors.

But there is also this:

"financial statements used in formulating accountant's opinion"

What the heck is that??