A disqualified individul means any ind'l who is, among other things, a highly compensated individual. An HCE is an indivdiual who is a member of the group consisting of the highest paid 1 percent of the employeees of the corporation or, if less, the highest paid 250 employees of the corporation. any idea as to whether that would include foreign employees to in determining who is top 1%?

What are the controlled group rules for school districts - if some of the employees are covered under a 403b plan or certain schools are but others are not, what is the violation? I am not aware of an 80% board control test or ratio % testing. So what is the violation - universal availability? As governmental plans, there is no coverage testing.

Plan has art as a significant asset. It has been appraised regularly. Owner passed away and spouse wants to buy the art then take the distribution and roll it over. Is there any way this can be done without it being a PT?

I thought I knew the answer to this, but it's different than what I think the regs dictate . . .

Two employer are members of a controlled group. They cannot qualify as SLOBs. Both participate in a 401(k) plan maintained by one of them. The match is discretionary. The Plan's partcipating employer agreement has this box checked: "Contributions made by a Participating Employer will only be allocated to Participants employed by such Participating Employer." One employer wants to provide a different discretionary match than the other.

For 401(a) testing of BRFs (the match percentages), can I disaggregate the employers by using the restructuring rules of Treas. Reg. Section 1.401(a)(4)-9© and then test the BRF & Section 410(b)? If so, how do I test ACP?

I have a case where a 2009 contribution range of $100,000 - $500,000 is generated but the Sole Proprietor only has earned income of $200,000. A contribution of $400,000 would hit his PVAB for a maximum distribution.

The plan will be terminating by year end 2010.

Is it possible to fund $400,000, deducting only $200,000 in 2009 and then deduct the rest in 2011 & 2012 when he has income to deduct it against. (By a quirk, the Sole Prop will have $0 earned income in 2010, but will have income in 2011 & 2012.)

Any sort of direction/code reference where I could look it up would be great. I have been through 404 but do not see anything about it.

Thanks

Is it possible to us a Safe Harbor Match where the match is stated to apply to NCE and HCE Owners? In otherwords, all NCE would get the Match, but if you are HCE you only get the Match if you have ownership in the firm. In effect, HCE who don't have ownership are excluded. Would that formula qualify as a Safe Harbor Match?

In addition to other concerns I have about this, I suspect that Top Heaviness may be an issue.

Any and all comments are appreciated.

I know this is a backwards question, so please skip the correction, but

If a client wanted help figuring out how to reply to his auditor's written inquiry about why their FAS LTROR assumption is 7% (or 6% or 6.5%, etc.) in a 50/50 balanced portfolio, what might be some helpful approaches?

Are there any "model" responses that could be considered.

Assume their ISP does not define a goal for an asset return.

In the old days, I would think that a reply might be that equities are expected to return u%-v% and fixed income might earn w% to y%, so apportion those to the asset allocations and you get Z%, but in the post-2008 world this seems a bit shaky.

Anybody dealt with this? Any auditor "traps" to be weary of?

I am preparing a 1/1/2010 valuation. You accrue a benefit if you work at least 1000 hours in a plan year. If we freeze the benefit accruals as of April 30, 2010 (adopting the amendment some time this month) there would be no benefit accrual in 2010. So when running the 1/1/2010 valuation I would think that there would be no Target Normal Cost for 2010. Does this seem right or would the Target Normal Cost be prorated by 4/12?

Participant takes an ISD and within 60 days they realize they didn't need it. Can they roll the mone back into the Plan? Wouldn't it just be a regular rollover? I get that they need to make up the 20% withholding.

We have a plan that failed the ACP test. However, the ER has not deposited the match yet. Therefore, I may not be able to do the refund from the HCEs account (it's the first year he's eligible for the match) by March 15.

Is the ER on the hook for the 10% excise tax?

We have a govenmental entity, a court system, that wants to spin off from their current 457b with the city, into a new 457b plan sponsored just by the court system. First my question is, does a spin off sound like the right term, or is this a plan to plan transfer? Apparently with a plan to plan transfer, all prior history comes over, but with a spin off only the account balances. I know this is sketchy, but just wanted any input on how others would address this.

Thanks!

Is Field Assistance Bulletin 2009-1 still the most recent guidance on the annual funding notice. I have not seen or heard of any updates but wanted to run it past this board.

Thanks.

I've been informed of a situation and I'm trying to determine its legitimacy. I think (but I’m not certain that) I’ve narrowed it down to the following issue:

Issue: Can an individual continue to accrue benefits in a DB plan if that individual has separated from service?

Background: Employer has instituted a “special leave” program whereby employees volunteer to be placed on “special leave” status and no longer perform any work for the employer. Individuals participating in this program, however, continue to earn/accrue benefits under the DB plan until they reach NRA, up to 7 years (whichever is less). Don’t you have to be actively employed to earn these benefits? Employees are not granted “additional years of service” as is the case in some early retirement programs. Instead, they continue to earn/accrue benefits

These same individuals will be allowed to continue participating in the employer’s 401(k) until they reach NRA or 7 years (whichever is less). They also earn w-2 compensation throughout this same time period.

With respect to the 401(k)s, I think the answer is clear: I.R.S. Regulation 1.415©-2 generally provides that payments received after a severance from employment cannot constitute “compensation” from which an individual may electively defer into a 401(k) (subject to certain limited exceptions, e.g., received within 2 ½ mos, etc.).

Does anyone have any thoughts on this weird situation? Perhaps the issue is whether these individuals are truly separated from service if they continue to earn w-2 compensation?

Thanks!

I directly converted the entirety ($10,000 to keep the numbers simple) of a 403(b) fixed annuity to a Roth IRA and the financial services company withheld 20% ($2,000) because I did not indicate on the form to not withhold. Thus, $8,000 ended up in the Roth IRA.

I wanted to maximize the amount in the Roth (the full $10,000) and not use tax advantaged funds to pay the taxes. If the financial services company does not refund the withheld $2,000 amount, I am looking for an alternative way to get the withheld amount back into tax advantaged status.

I know when an IRA distribution is received and taxes withheld it is possible (within 60 days) to put the entire amount back into an IRA by using outside funds to pay back the amount withheld. Something similar is what I would like to do in this case but am not sure if it is allowable.

Could I pay back the amount withheld right into the conversion Roth IRA without any recharacterization or redesignation?

Is it permissible to redesignate this type of conversion (403b directly to Roth)? I.e., leave the $8,000 in the same account and just have the title changed from Roth IRA to Traditional IRA. If so, could I put the withheld amount back into the redesignated IRA?

Is it permissible to recharacterize this type of conversion (403b directly to Roth)? If so, should the transfer of $8,000 be into a Traditional IRA or back into the original 403(b) account source of the funds? Presumably interest on the $8,000 since the conversion should be added but I am not sure. Using outside funds, could I put the withheld amount back into the account receiving the $8,000 (plus interest)?

If the above is all wrong, can you think of any other way to get the $2,000 withheld back into a tax advantaged account in a way which will pass muster with the IRS?

Thank you very much for any suggestions, theories, etc.

(this was also posted in Roth IRA forum)

I directly converted the entirety ($10,000 to keep the numbers simple) of a 403(b) fixed annuity to a Roth IRA and the financial services company withheld 20% ($2,000) because I did not indicate on the form to not withhold. Thus, $8,000 ended up in the Roth IRA.

I wanted to maximize the amount in the Roth (the full $10,000) and not use tax advantaged funds to pay the taxes. If the financial services company does not refund the withheld $2,000 amount, I am looking for an alternative way to get the withheld amount back into tax advantaged status.

I know when an IRA distribution is received and taxes withheld it is possible (within 60 days) to put the entire amount back into an IRA by using outside funds to pay back the amount withheld. Something similar is what I would like to do in this case but am not sure if it is allowable.

Could I pay back the amount withheld right into the conversion Roth IRA without any recharacterization or redesignation?

Is it permissible to redesignate this type of conversion (403b directly to Roth)? I.e., leave the $8,000 in the same account and just have the title changed from Roth IRA to Traditional IRA. If so, could I put the withheld amount back into the redesignated IRA?

Is it permissible to recharacterize this type of conversion (403b directly to Roth)? If so, should the transfer of $8,000 be into a Traditional IRA or back into the original 403(b) account source of the funds? Presumably interest on the $8,000 since the conversion should be added but I am not sure. Using outside funds, could I put the withheld amount back into the account receiving the $8,000 (plus interest)?

If the above is all wrong, can you think of any other way to get the $2,000 withheld back into a tax advantaged account in a way which will pass muster with the IRS?

Thank you very much for any suggestions, theories, etc.

What is the consequence if a governmental housing authority lets say, adopts a volume submitter document that is clearly an ERISA corporate plan? It has ERISA provisions and IRC provisions that are not applicable to a governmental entity. Is this just superfluous language as the attorney drafter (with huge legal fees) claims, or could this subject the employer to unnecessary provisions, which could be enforceable in an IRS audit?

A DB plan was terminated in summer 2009.

Is it reasonable to apply for dl letter now?

Assets were distributed in 2009 and plan was a one participant plan not covered by PBGC.

Thanks.

I have a client who is a participant in an ERISA plan. A QDRO was issued in favor of her ex spouse as an alternate payee. The ex-xpouse owes child support arrears to my client. As I understand, a QDRO can not issue against the ex-spouse's, alternate payee's, share of the benefits in favor of the children for who he owes support. Is there any advice on ways of collecting or reducing the alternate payee's share of the benefits to satisfy the alternate payees obligation for support?

I have an Employer that has given a Partner a K-1 with both self employement income as item 14 A, and Non-farm optional income as item 14 C.

Are both to be considered as earned income in a Defined Benefit Plan?

Thanks for all your help.

Hi. Company A is currently leasing employees to Company B. Company B is anticipating hiring most or all of the leased employees. Can anyonetell me at what point Company A can share employee data (including HIPAA PHI) with Company B? Company B needs the PHI in order to negotiate a contract with a TPA for what will be its self-funded group health care plan. It needs to have the group health plan ready to go on the date the employees are hired.