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?

Greetings,

I recently decided to take the ERPA exam in a desire to learn more about retirement planning. I am aware of the ERISA Outline but cannot afford the book. I was going to use some QPA materials I can access for free in addition to purchasing the QPA study exams. Would this be sufficient for preparing for the ERPA exam?

Note, I do not have any professional experience practicing in the field. My purpose in pursuing this designation is to learn about retirement planning and ultimately provide consulting services as an accountant and enrolled agent to small and medium businesses.

I appreciate any advice or recommendations in preparation for the ERPA exam.

GeorgiaEA

We have a deferred vested SERP participant who became eligible for payment on 1/1/2009 (due to turning age 55). Several attempts were made to contact him, including using the IRS locator service and the SSA, but he cannot be found. What must be done to comply with 409A at this point? Any suggestions would be appreciated!

Under Section 9003 of ACA (I guess that's what we're calling the health care act), FSAs will generally no longer be permitted to reimburse for any over-the-counter "medicine or drug." Two questions:

1-Currently, I am able to be reimbursed under my FSA for contact lens solution. Will I be able to continue doing so because lens solution is not a "medicine or drug"?

2-Section 9003 applies to "amounts paid with respect to taxable years beginning after December 31, 2010." How is that applied to FSAs with grace periods? For example, can I be reimbursed for Tylenol that I purchase in 2011 during the grace period if I use amounts left over in my account from 2010?

Any thoughts are appreciated.

We are trying to reconcile conflicting instructions and not certain whose direction to follow. (My current employer's procedures often call for the plan trustee to act in situations where I would have expected the employer to act.)

The plan in question was originally established for company A, with the owner of the company as the sole trustee. Last year we received instruction from the trustee to restate the plan with Company B as the new sponsor. As we investigated the relationship between the two companies we learned the as part of a bankruptcy proceeding the ownership of company A was transferred to another individual. The trustee started company B and hired the majority of the employees that had worked for him at company A. The new owner has instructed us to terminate the plan.

Whose direction would you follow in this situation?

OK...here is my question. I have ana Age Weighted plan with two people. The owner is age 66 and the employee is age 39. It's an Age Weighted plan Corbel Prototype. Salaries are $160000 for owner and $33500 for employee. They are only making a $5000 contribution and if you allocate that under an age weighted formula the Key guy gets most of it. Now, the plan is Top Heavy....under the age weighted formula the owner would get a tad over 3% and the employee under 3%. Do switch to standard PS allocation of 2.58% accross the board or do I give the EE 3% and let the owener get the rest?

Thoughts?