Can someone explain this to me a little more in detail? If an employee irrevocably elects not to participate in the plan by signing some sort of waiver, how are they treated for nondiscrimination purposes, etc? Would they be included in an ADP Test, 410(b)? Why would someone irrevocably elect not to participate? Employer wants to give participant the option of participating in the plan or giving more money. Not sure why an employer would want to do that considering tax ramifications unless compensation increase is less than the benefit? Any insight would be greatly appreciated!

Thank you!

Can someone explain this to me a little more in detail? If an employee irrevocably elects not to participate in the plan by signing some sort of waiver, how are they treated for nondiscrimination purposes, etc? Would they be included in an ADP Test, 410(b)? Why would someone irrevocably elect not to participate? Employer wants to give participant the option of participating in the plan or giving more money. Not sure why an employer would want to do that considering tax ramifications unless compensation increase is less than the benefit? Any insight would be greatly appreciated!

Thank you!

I have a client that has a new comparability plan. The plan year previously ran from 7/1 -- 6/30. They changed the plan year in 2009 so that they had the following two plan years: 7/1/2008 -- 6/30/2009 & 7/1/2009 -- 12/31/2009.

When I run the testing for the 12/31/2009 PYE, my understanding is that I will need to include the informaiton (EBARS) for both plan years when calculating the ABPT. This is due to the fact that all plan years ending in the same calendar year must be included for the ABPT. Please confirm.

Any comments are greatly appreciated

Participating employer ceased making contributions last month even though CBA providing for contributions does not expire until next year. Can employer and union jointly agree to amend the CBA so as to discontinue contributions effective last month? I am almost certain that's NOT possible (and disregard any withdrawal liability concerns), but any other thoughts would be welcome.

a 403(b) that is terminating and shutting down the company later this year, suspended its match mid plan year 2009. they are now wanting to go back and match those accounts as well as match for 2010 plan year. when the plan was amended the match became discretionary. they have not filed their 2009 tax return or 5500. how much trouble could they get in for giving money to their participants?

HERE'S THE SITUATION: HAD A PLAN THAT TERMINATED, ACTUALLY BOUGHT OUT AND ASSETS WERE ROLLING INTO THE NEW FIRM'S PLAN. PRIOR TO THE TERMINATION, SEVERAL TERMINATED PARTICIPANTS WERE PARTIALLY DISTRIBUTED FOR ONE REASON OR THE OTHER. BEFORE FINAL PAYOUT COULD OCCUR TO THOSE PARTICIPANTS, PLAN TERMINATES AND MINUTES SAY ALL PARTICIPANTS 100% VEST (STANDARD LANGUAGE).

QUESTION IS, THOSE TERMINEES WHO BEGAN PAYOUT, DO THEY RECEIVE NOW 100% OF EVERYTHING OR THEIR REMAINING VESTED BALANCES PRE-TERMINATION, FORFEITURES THEN ALLOCATED, AND THEN ALL PARTICIPANTS 100% VESTED.

SEE 1.411(A)-7(D)(5)

IT SEEMS TO SUGGEST, YOU CAN FINISH PAYING THEM ON THE ORIGINAL VESTING SCHEDULE, I THINK. NEED AN EXPERT ANSWER. SORRY FOR THE CAPS BY THE WAY.

CLIENT DOESN'T WANT TO 100% VEST THOSE PARTICIPANTS, MY FEELING IS WHETHER YOU 100% VEST THEM OR NOT, SOMEONE IS GOING TO BE ALLOCATED THE MONEY AND THEN DISTRIBUTED SO WHAT'S THE DIFFERENCE, REALLY.

ATTORNEY SEEMS TO THINK YOU CAN PAY THEM ON THE PRIOR SCHEDULE, I'M NOT SURE WHAT I THINK.

HELP:)

A plan sponsor signed a plan in late december for 1/1/09 effective date. Just a few employees in plan who only get 0.5% accrual and an owner.

The plan was submitted to IRS for dl.

Sponsor now says he wants plan effective 1/1/10 and just redo dates and he will sign now.

What do we tell IRS agent? Anyone experience this?

This is on basis that employees won't have a problem and the plan will provide benefit service at least as far back as 1/1/09 so no impact on their pension.

Thanks.

---One person Keogh

----with Money Purchase Plan and Profit Sharing Plan

---Do the assets of the Money Purchase Plan and Profit Sharing Plan have to be added together for the $100,000 or $250,000 limit requirement for filing 5500-EZ or are they treated as separate plans?

---I would be OK for the $250,000 limit for the last three years if added together.

---Is there a statue of limitations for Keogh plan audits for one person or sole proprietor? Does this follow the 3 year IRS audit time period?

---If I am above the $100,000 limit for some years, what procedure can be used to correct the filing of the 5500-EZ.

For 2010 my wife and I setup our first family HSA account. Instead of having withdrawals from our paycheck, we decided to make a couple of lump sum deposits for a total of $3,000. We planned to add more money as we needed it. We charged a few qualified medical expenses to our credit card that came to around $1,500 and have not reimbursed ourselves for this yet. Since we just had our first child, we are expecting more medical bills to arrive – probably another $2,500 or so. To pay for this we are going to have to add more money to our HSA acct.

So my question is, do we reimburse ourselves the $1500 and then use that money to make another deposit to our HSA account to pay the future bills? It seems odd that we are going to withdrawal the money and then deposit it back again. Then again maybe that is what the IRS needs to see for tax purposes.

Thanks. DanG

Plan specifies that participants with 20 years of service may receive benefits in the form of a lump sum. Plan terminates this year in a standard termination at a time when participant X has 15 years of service.

Instead of giving all participants the option to receive a termination lump sum, the plan purchases deferred annuity contracts (with the same options available under the plan) for participants not otherwise eligible to receive a distribution.

Participant X continues to work for an additional 5 years. Must the lump sum feature be preserved in the deferred annuity contract, or can the plan avoid a cutback problem based on the fact that the participant had not satisfied the condition for receiving a lump sum when the plan terminated?

Ok, from the regs. and treatises I have read, if a 401(k) plan sponsor is using the W-2 safe harbor definition of plan compensation, then non-qualified stock option (NQSO) exercise income is included in plan compenation (and would also be included under the 3401(a) wages for withholding safe harbor definition).

The adoption agreement I have has a check-the-box to exclude NQSO grant income, but not exercise income.

So should plan sponsors using the W-2 definition indeed include the NQSO exercise income in plan comp? How do they take elective deferrals from this non-cash income? This does not make intuitive sense.

And...correction methods if they are improperly excluding the income? Thanks!

I am reviewing our 5500s for last year and I noticed that our commissions on the various coverages range from 3% to 15%. I would really like to get that number down, but I don't know if this is something that is generally negotiable on my end as a plan sponsor, or if the carriers determine them without regard.

Thank you.

A husband and wife own two small companies.

Both companies sponsor the same pension plan.

Regarding allocation under 404.

My understanding from 414(b) is that each employer is treated as a separate employer re: allocation of deduction.

Any other views or does that cover it?

Thanks.

Participant has reached NRA (65). Participant is still an active employee and wishes to take an in-service withdrawal. Is this participant entitled to take a distribution even if the plan document does not have an in-service withdrawal provision?

So, I have a plan that has two locations in it. One location receives a match and the other does not. The plan also allows for after-tax contributions. Since the plan passes coverage due to the after-tax component, do they need BRF since the "levels" of match are different?

Any thought would be appreicated!

Safe Harbor plan, match calculated over the entire plan year. Plan sponsor wants to change to each payroll epriod mid-year. Can that be done? My inclination is no, but I'm not positive.

Thank you in advance for any guidance.

HAS ANYONE HAD A CLIENT RECEIVE AN ERROR AND NOT LET THEM EFILE BECAUSE OF INTEGER PROBLEM? CAN'T SEEM TO FIND WHAT THE PROBLEM IS. I'M THINKING IT HAS SOMETHING TO DO WITH THE & SIGN IN THE PLAN NAME?

I am with a school district that offers a section 125 plan for health premiums.

A teacher was participating in this plan, when she went on a sabbatical leave for 1 semester, with a partial paycheck. She was required to make full premium payments (no employer contribution) for the time she was out. These deductions came out of her partial check. The premium was changed to post tax (I don't know why). After her return they remained post tax. She just now in 2010 figured out that they should have been pretax.

My questions:

Should there have been documentation of her 'un'enrollment, change to post tax?

Once back, should we have put her back into pretax automatically or should there have been a new enrollment?

She now wants it changed in April, our plan year is Jan-Dec. Can I change it to pretax now, do I need a new enrollment form?

She is also asking for her W2 to be changed and to show the premiums as pretax for the 2009 tax year. Can I retro it?

Where can I find IRS documentations on this in detail?

Thanks in advance for any help!!!!

We are a CT employer and have had to cover dependent children to age 26 on our health insurance since 1/1/09. There are a dozen or so states that have this mandate. The PPACA (Health Insurance Reform Act) that was signed into law 3/23/10 will extend this coverage to all states effective 6 months from 3/23/10.

In the Reconciliation Act, there is a provision that makes this coverage non-taxable. One bulletin I rec'd says this is effective immediately. A blurb on the website of The Journal of Accountancy confirms that the Reconciliation Act changed the definition of dependent for purposes of IRC Sec 105(b) but does not mention an effective date.

This would mean that we no longer have to impute income for the value of the coverage. It also appears that medical expenses for these "adult dependents" could be reimbursed from an FSA/HRA/HSA.

Has anyone else looked into this? What have you concluded ?

Consider the following:

1) Sole plan participant has accrued a benefit equal to the 415 limit

2) Plan offers lump sums solely based on the 417(e) rates

3) Participant is at retirement age and has elected to retire during the year.

The Funding Target Segment Rates produce a liability of $1.6 million.

The lump sum based on 417(e) Rates is $1.9 million

The max 415 lump sum (5.5%) is $1.75 million

What is my Funding Target?

I know 417(e) is not relevant, but what about the 415 limit? The 430 Regs say I "must take in account" an alternative lump sum basis to the extent the value is different from the present value determine using the segment rates, but it also states that if the basis of my lump sum strictly 417(e), than I should ignore the current 417(e) rates and just use the segment rates (other than differences caused during the transition period).

So in my case I "know" the plan will be paying the 5.5% lump sum during the year, so should I consider that an "alternate basis" so that my funding target is $1.75 million and not $1.6 million?