Is is possible to use the 2010 compensation to determine the 2010 maximum contribution for sole proprietor and partnership?

Most likely, we cannot use the compensation to calculate the 1/1/2010 FT; but can we use the compensation to determine the TNC?

The argument FOR using the compensation is that the 2010 deductible amount must reflect the 2010 compensation; the larger the compensation, the larger the deductible acmount.

Of course, using the compensation will delay the valuation for one year (2011) and create AFTAP problem.

The regs include an IPO as an example of a condition related to a purpose of the compensation, i.e., as relating to the employer's business activities or organizational goals. An IPO is a type of CIC, so can a CIC also constitute a SROF? Ignore fact that CIC is a valid payment event.

We administer a calendar year 401(k) plan that previously had two participants (the owner and one employee), and each year we filed a 5500. In 2008, the non-owner participant was fully paid out. The only remaining employee is the owner, and the plan is being terminated in 2010. Is there a reason we can't switch to a 5500-EZ for the 2009 & future filings?

Any input would be greatly appreciated. Thanks!

If a participant exceeded the 402g limit for 2009 and the plan failed to distribute the excess by April 15, 2010, what are the consequences? Can the plan self correct under EPCRS to distribute the excess and thus the participant is subject to double tax? Is this a plan disqualification issue or just a contract issue since it is a 403b contract rather than 401k plan.

Thanks

Question - If an employer is moving from one H.S.A.(insurance side of the H.S.A.) carrier to another carrier...can those deductible limits that been accrued carried over to the new carrier?

I.E. Moving from Anthem Blue Cross H.S.A. plan and have paid $1500 of my $2250 deductible, moving to a United Healthcare H.S.A. $2000. Is there any rulingregs that would not allow my $1500 dollars of the deductible to be carried over?

Question - If an employer is moving from one H.S.A.(insurance side of the H.S.A.) carrier to another carrier...can those deductible limits that been accrued carried over to the new carrier?

I.E. Moving from Anthem Blue Cross H.S.A. plan and have paid $1500 of my $2250 deductible, moving to a United Healthcare H.S.A. $2000. Is there any rulingregs that would not allow my $1500 dollars of the deductible to be carried over?

A newly hired executive and the employing closely held coroporation enter into an undated "proposed" term sheet in late 2003.

Term sheet proposes "equity participation" equal to a 5% grant of shares outstanding at 1/1/2004, and stock options equal to 15% of the company based on fiscal year end values (April 30 of 2004, 2005 and 2006).

The "equity participation" shares vest in 1% increments at 6 months, 12 months, 18, 30 and 42 months, such that shares equal to 2% are vested and nonforfeitable as of December 31, 2004. No shares actually change hands nor is any additional compensation provided to the executive at any time.

The options vest in 5% increments at June 30, 2004, June 30, 2005 and June 30, 2006; each increment expires after 10 years. Thus options equal to 5% are vested as of December 31, 2004. No further documentation of the options is made.

Fast forward to 2010; parties to "proposed" term sheet want to give it effect to the extent possible and primarily desire to continue deferral of the options and "equity participation"/appreciation rights to extend until change in control of closely held company.

To the extent the term sheet constitutes an "issue" or "grant" of stock rights before January 1, 2005, all stock rights would appear to be entitled to "grandfathered" valuation rules under Notice 2006-4 which states in relevant part:

"Until further guidance is issued, with respect to a stock right issued before January 1, 2005, for purposes of determining whether the stock option results in a deferral of compensation pursuant to Notice 2005-1, Q&A-4(d)(ii), or the stock appreciation rights results in a deferral of compensation pursuant to 1.409A-1(b)(5)(i)(B) of the proposed regulation, prinviples similar to those set forth in Sec. 1.422-2(e)(2) will be applied. Accordingly where there was a good faith attempt to set the exercise price of a stock right granted before January 1, 2005, at a price not less than the fair market value of the stock subject to the stock right at the time the stock right was granted, that such exercise price will be treated as being not less than the fair market value of the stock at the time of grant for purposes of determining whether the stock right is excluded from the requirements applicable to deferred compensation under section 409A."

As grandfathering of valuation method = all stock rights, whenever "vested" are deemed to be non-discounted and hence not subject to 409A, is the whole arrangement exempt from 409A and thus capable of being revised and restated at any time in any way the parties see fit?

Last year I filed a 5500 for a plan. In 2009 , the owner was the only Participant. Assets are only about $40,000. So I am not required to file this year, I think.

If I don't file, will the employer get a letter asking for the 5500?

Will anything else bad happen?

Am I wrong about not needing to file a 5500, or 5500EZ?

My specific situation is with respect to a Keogh plan but I understand these issues are the same as for a traditional IRA.

Situation:

I am over 60.

Last year I had high income from my consulting business.

I deferred filing my 2009 return with a 6-month extension.

I can deposit to the Keogh account, deferring 2009 taxes on the deposited amount, any time before I file the 2009 return.

This year to date I have had no income.

The question:

Can I

1) withdraw an amount from the Keogh plan,

2) pay (low) 2010 taxes on the withdrawn amount,

3) then redeposit some or all of it in the same Keogh plan, and

4) thereby avoid paying the (high) 2009 taxes on the deposited amount?

I understand that I could use the rollover provisions of the law to avoid paying tax on the withdrawn amount if I redeposit cash, but must I do so?

I don’t like EFAST2

How about you?

Maybe it’s the software or just my clients.

I will have to think this through.

The DOL said this would be easy

My software vendor said this would be no caper.

My clients just don’t understand.

I wish we could still use paper.

Loan balance of $20,000. Original date of loan is 2 years ago. Loan is repaid on Monday, so the loan balance is zero. A new loan is taken 1 week later for $20,000 and a new 5 year term is granted,

Discuss

Hello,

I've transitioned from a TPA to a financial custodian, and need to make sure that I'm reporting a return of excess Employer Contributions properly.

ISSUE:

A Profit Sharing Plan has been over funded. The Employer and his plan advisor are requesting the custodian to return the excess employer contribution to the Employer. The Employer is a Sole Proprietor and the owner is the sole employee and participant. (Also, the ER & TPA are aware of the issue of Form 5330 & 10% penalty tax).

QUESTION:

Does the custodian report the return of excess Employer Contribution as a taxable withdrawal to the Employer or to the participant using 1099-R code 8/P? Or is the return of excess PSP Contribuiton to the Employer a non-taxable, non-reportable withdrawal?

Thank You for all of your inputs

We have run into a number of cases where our in-payment status participant elected J&S. Participant subsequently divorces spouse (up to 30 years ago in one case) and does not have a QDRO. Are we required to payout to ex-spouse since the ex-spouse is no longer a qualified spouse and there is no QDRO? What happens when we can't find the ex-spouse (numerous searches, IRS letters, etc)?

We have had problems locating spouses of term vested participants who are deceased as well (they would be eligible for a 50%J&S upon reaching 65). What are our legal obligations to find these lost spouses?

Can the US win tomorrow afternoon? If so, how far can they go?

Interested in any thoughts or experience with the following situation.

Bank has a SERP subject to 409A that provides for accelerated vesting and lump sum payout of benefits upon a single-trigger change in control. Bank is considering a transaction which will result in a change in control. The Bank is a TARP recipient. The transaction would actually result in repayment of TARP simultaneous with or shortly following the CIC transaction. Under the Interim Final Rule (IFR), it appears the single-trigger CIC benefits would be regarded as prohibited parachute payments and thus may not be paid. This appears to be the interpretation even if the TARP amounts were repaid simultaneous with the CIC.

Under Section 30.14 of the IFR, the SERP benefits apparently would be ok if they they were double-trigger benefits (i.e., payout upon a 409A separation from service following a CIC). (CIC deal involves acquisition by non-TARP entity so the 30.14 exception would seem to allow double-trigger benefits.) All parties involved here would like to amend the existing SERP provisions at this time to provide for double-trigger benefits as all of the SERP participants are to continue employment.

The catch (22) here though appears to be that there is no way to amend the single trigger payout to a double trigger at this time under Code Section 409A. (The deal will happen within the next few months so there is no way to make a subsequent deferral election 12 months in advance of the CIC date--assuming that would work if timing permitted.)

As a result, seems the TARP rules prohibit receipt of the accelerated vesting and payout of the CIC benefit in accordance with the existing 409A-compliant single-trigger distribution provision while the 409A rules prohibit amending the payment date to track the TARP rule exception.

Has anyone dealt with this before or see some way around we are missing? Thanks.

I realize line 18 is not new for 2009. (It was a required attachment for the 2008 filings). However, now that it is a question on Schedule R-I'm puzzled by how this impacts a single employer DB plan. Has anyone had to respond to this for a single employer or multiple employer filing?

Thanks.

a flooring contractor is considering establishing a plan. He employees several Hispanics who will work on a job, then they may not work again for another few months. My thinking is that they probably would not meet standard eligibility requirements, but is there a procedure when terminating employees and then rehiring them that he could implement?

My client has dissolved his corporation as of 12/31/2009.

He still has a balance in his SOLO 401K (about $90k - he is the only employee) and is planning to rollover it over to his IRA on 06/30/2010.

The termination date will be 06/30/2010. Which form does he need to file 5500 EZ or SF?

He has 7 month to file it... which will give him until 01/2011. What will happen if the form for 2010 is not available by then?

Hi all. I have a Profit Sharing only plan where the client is now requesting that I amend the plan to provide for in-service/early distributions. The whole concept here is to get the money out and immediately roll it to an IRA which has an insurance product (possibly?) in it which provides for some sort of protective rider to protect against downside loss. Obviously the Insurance Agent is really the one who brought up this idea and is pushing it.

The HCEs in this plan are not 59 yet. However when I raised the issue of having problems just allowing distributions for apparently no reason, the Ins. Agent consulted another advisor whose position is that distributable events only apply to 401(k)s.

So the question here is - can you have distribution prior to age 59 1/2 for no reason from a profit sharing plan which are eligible rollover distributions?

I am just kind of lost on this because it seems odd to just be able to effect a distribution whenever you want one.

Help!

Thanks in advance for shedding any and all light.

What is the regulation with regards to the timing of a distribution to a deceased participant? Participant died in 2004 and there are still assets in the plan.

Thanks for your help.