A beneficiary of an inherited IRA has been receiving a stream of payments for a couple years. Now the bene is wondering about annuitizing the remaining IRA balance.

Any reason this couldn't be done or other thoughts/considerations?

Have a potential client currently maintaining a PSP and a CB with assets in the same insurance contract. They are clearly separated within the contract under 2 different "sources" (Employer Profit Sharing & Employer Contribution).

Does anyone see a problem with this? I know that 2 DC plans can share the same trust when the sources are clearly defined, I'm just not sure when they are un-like plans.

First of all, I know almost nothing about top hat plans but have been asked to find an answer to a question. I have checked the EBSA web site, downloaded 29 C.F.R. 2520.104-23 and a copy of the DFVC program.

A new client has told us that they established a top hat plan in 2004 and they do not think that they filed the registration statement with the DOL. Is the only consequence that they have to complete Form 5500 and need to go through DFVC to correct the missed filings 2004 - 2008?

Secondly, does the top hat plan file all the same forms with the 5500 that would be filed by a 401(k) plan, e.g. Schedule A (if applicable), Schedule I, etc.? What about the participant count?

Thank you.

Kate Smith

I should have read the DFVC program more carefully before posting this question. I found the answer in there.

Greetings,

I am a 39 year old who has made roth ira contributions from 2001-2004 in the total amount of 11,000. My account balance fell to $8,359. I withdrew the entire amount for the 2009 tax year for an early total distribution . I know I have to pay the early withdrawal 10% penalty. Do I owe any additional taxes? Is the 8,359 counted as taxable income? I dont have any capital gains so I am just confused on how to handle this on my tax return.

Any help would be greatly appreciated

Paul

I know for HCE and Key we look at any day of the year.

But for rate group membership determination, I have been told by an actuary that you look at the 1st day of the plan year.

Example: if a rate group consists of owners, then members of that group would consist of owners on the first day of the plan year, and not include participants who become owners during the year.

And vice versa, if someone is an owner (on the 1st day of the plan year), but sells ownership during the year, he is still in the owner group because he was an owner as of the 1st day of the plan year.

Is this correct?

If a corporation adopts a NQDC plan by documented board of directors action prior to the stated effective date of the plan, and participants complete individual salary deferral agreements prior to that time (or within 30 days), is there any reason why the IRS would not view the plan to have been "adopted" or "in existence" due to the failure a plan sponsor excutive to physically sign and date the plan document before its effective date?

Stated otherwise, would the IRS take a different position re: what constitutes adoption of a plan document (i.e. timely corporate resolution suffices) than it has taken in the qualified plan arena, as outlined in the attached thread.

http://benefitslink.com/boards/index.php?s...amp;hl=unsigned

I don't see anything in this regard in Notice 2010-6.

Any and all comments are appreciated.

I have a company where Mr. A. has put his ownership 75% into a Trust for his 5 children. Nonrelated person owns other 25%.

I know Mr. A's Children are considered HCE by attribution as they are benficiaries of the Trust.

The Children's spouses are not considered HCE.

What about the Grandchildren? They don't have any direct ownership and their parents don't have any direct ownership.

I know that the 318 rules don't pass the direct ownership down to the Grandchildren.

I know that the Trust attributes ownership to the Beneficiaries prorata.

I am not sure that the Trust changes anything as far as the Grandchildren are concerned, unless thay are named in the trust as a direct beneficiary, not a contingent. Do I have to find out who the direct beneficiaries of the trust are and make sure that the Grandchildren are not beneficiaries?

Need for HCE determination. (Have owner, children, children's spouses and Grandchildren all working for the company)

Any thoughts? Am I missing something here?

Thanks for your help.

Pat

If a company has two plans, one for union employees and one for management employees and a participant in the union plan is promoted to management, is this a distributable event where he could roll his balance in to the non-union plan or event rollover to an IRA?

I know i'm confusing myself here but I want to make sure i am submitting the right information for determination letters.

We use corbel pre-approved Volume Submitters

1. with our older documents (which were accudraft) that have GUST determination letters I am pretty sure we have it down ....

the amends we are including with the EGTRRA doc -----(i)EGTTRA good-faith amend, (ii) 401(a)(9) amend (basically any amends that were tacked on to the GUST doc when we submitted for a GUST DL) PLUS (iii) automatic rollover amend (iv) Final 401(k) (v)Final 415 (vi)PPA/HEART) and and discretionary amends in between.

2. Am I correct in assuming that if a plan is new---lets say effective 1/1/2009 or even 1/1/2010, the only amendments i need to include are the final 415 amend and the PPA/HEART amendment when I am submitting for a DL? (maybe this is a corbel questions???)

I couldn't find this question in search, so I'm asking it here...

I have a plan that has been using a different match allocation formula since they signed their reinstated doc in 2005. It is their intention to match the way they had been, so the document is wrong.

Can I just retroactively amend the doc to correct the match allocation the way they have been operating?

This doesn't quite fall under Rev poc 2006-27 appendix B, section 2.07, failures that can be corrected by plan document.

So maybe I don't need to go through SCP????

Thanks in advance for your comments!

Self-employed individual (employer) has maintained and funded a SEP for many years. Hired an employee a few years ago who became eligible for an employer contribution in 2009 if the employer decides to fund the SEP, since it is discretionary.

Question: If the employer decides not to fund the SEP for 2009, can she make a contribution to her traditional IRA and avoid funding anything for the employee?

Second part: If the employer does not fund the SEP for 2009, is the employee still tainted as a participant in an employer sponsored plan and potentially limited in the deductibility of his own traditional IRA contribution?

Thank you.

A company is planning to buy out the contracts of several Teamsters truck drivers. The company is offering the drivers about $100,000 each. The drivers would like the company to negotiate a deal with the Teamsters allowing the buy-out funds to be used to purchase additional years' credit in the Teamsters pension plan (so the drivers can retire sooner). The drivers have been told this is not legal.

Is it possible to purchase extra years in a multiemployer pension plan?

I wasn't sure where to post this, so it's also posted in Multiemployer Plans.

Thanks for any thoughts!

A company is planning to buy out the contracts of several Teamsters truck drivers. The company is offering the drivers about $100,000 each. The drivers would like the company to negotiate a deal with the Teamsters allowing the buy-out funds to be used to purchase additional years' credit in the Teamsters pension plan (so the drivers can retire sooner). The drivers have been told this is not legal.

Is it possible to purchase extra years in a multiemployer pension plan?

Thanks for any thoughts!

My CA employer has an "opt out" policy where they offer compensation if an employee declines or "opts out" of medical coverage. There are several plans available, and one is at no cost to the employee.

In order to opt out, you must provide proof of medical coverage from another source, such as a spouse's policy.

Is it legal to require an employee to have medical coverage? Granted, if coverage is offered (especially if there is a plan at no cost)

one would think that no one would turn down coverage if no other coverage was available. I have coverage through my spouse's plan. I decided to opt out, and I'm asked to provide proof of other coverage in order to opt out. Does my employer have the legal

right to require me to have coverage from another source? What if I just don't want insurance coverage? Do they have the option

to ask for proof of other coverage since they are compensating me for this opt out option? I understand the premise, but

unless there is a law that requires insurance coverage from some source (and this is Calif., not MA) are they not within legal bounds to ask for proof of other coverage?

thanks for any replies.

Partnership sponsors a SIMPLE IRA for two partners and two employees. The partnership is being dissolved...one partner and one employee is leaving effective March 1, 2010....What needs to be done with the SIMPLE IRA that was sponsored by the "former" partnership. The remaining partner becomes a sole proprietor and wants to continue the SIMPLE for himself and the remaining employee.

Can they terminate one SIMPLE and start a new one with a new plan document naming the sole prop as the sponsor?

Plan administrator thought participants were to start deferring first of month after satisfying eligibility conditions. Document states enter the plan the day eligibility conditions were met.

I can find where EPCRS states if the participant was not given the opportunity to defer for the entire plan year you take them out of the ADP test. However, I cannot find any guidance for participants who are briefly excluded where the error is not discovered until after the end of the plan year.

I am assuming you do not take the person out of the test. This assumpiton gives rise to my next question -

Do you use full year compensation, compensation from date they started deferring or something else for the ADP test?

If you use compensation from the time they actually deferred, it might make the participant neutral when you use the average of the group to calculate the required QNEC for the missed opportunity cost. Seems logically but is it the right approach.

Any suggestions would be greatly appreciated.

A Plan must limit distributions to HCEs. An CHE elects lump sum payment and will receive annual until restricts are lifted an annual payment. The plan does not provide for escrow or other arrangements to facilitate lump sum payment.

(1) Does this annual payment constitute an eligible rollover distribution? While it may be based on a lifetime spread, it nonetheless constitutes a temporary series of annual payments of indeterminable length.

(2) If it is not believed this distribution constitutes an eligible rollover distribution, is it still necessary to provide "Your Rollover Options" with the participant's election package?

Note, the participant would be electing lump sum payment, which is not covered under this wonderful piece of paper. It is also of interest that the disclosure provides that "The Plan administrator or payor can tell you what portion of the payment is eligible for rollover." Don't bet on that!!!!

(I resent the requirement to make this statement as it suggests the PA will offer tax advice. If a participant presses, would it be incumbent upon the PA to obtain a tax opinion?)

A company has two plans: 1. A DB plan that covers the two owners and certain groups of employees while excluding other employee groups but passes coverage and nondiscrimination on a standalone basis, amd 2. A safe harbor 401(k) plan that provides the SH match and $0 PS and covers all employees that meet the 21 & 1 requirement. Since the key employees are in both plans this would be a required aggregation group. My understanding is that the 401(k) plan is deemed not top heavy because of it's safe harbor status. What top heavy benefit if any does an employee get if they are excluded from the DB plan and they do a $0 salary deferral?

403(b) plan provides that the required beginning date for a participant other than a more than 5% owner is the later of age 70 1/2 or retirement. Pretty standard. My question is if any participant in a 403(b) of not for profit has to take an RMD prior to retirement? There are no owners. Thank you.

I have a plan that stopped their safe harbor non-elective contribution during 2009 and they now fail their ADP test.

Is it allowable to use the safe harbor contribution that was made during the year as a QNEC towards the ADP Test?