I have a plan with two LLC sponsors both filing as partnerships. LLC A has same members as last year with same percentage ownership. LLC B has 3 members. First is LLCA at beginning of year had 75% interest, at end of year 85.71%; Member 2 individual with no interest in LLCA at beginning of year had 12.5% at end of year 14.29%; Member 3 individual with no interest in LLC A at beginning of year 12.5% terminated employment 8/31/09 so no interst at end of year.

Self Employement earnings on K-1 reported as follows Member 1 (LLCA) 0; Member 2 $135,000, Member 3 $66,861. Both Members 2 & 3 received their Guaranteed payments less Ordinary business loss.

Have a top heavy allcoation to make for employees of LLC B, query on how to allocate top heavy allocation cost among members of LLC in a fair and reasonable (ok and legal) way. Do I take 14.29% of EE top heavy allocation and apply to Member 2, or prorate the allocation and count 8/12s of allcoatin at 12.5% level and 4/12s at 14.29%? Do I allocate share to Member 1? DO I allcoate 8/12s of contribution to Member 3? Ultimate goal is to determine plan compensation after deductions for contributions made to plan.

Getting a headache... I would really appreciate some insight on this. Thanks much in advance for your help.

Nancy

I have a plan with two LLC sponsors both filing as partnerships. LLC A has same members as last year with same percentage ownership. LLC B has 3 members. First is LLCA at beginning of year had 75% interest, at end of year 85.71%; Member 2 individual with no interest in LLCA at beginning of year had 12.5% at end of year 14.29%; Member 3 individual with no interest in LLC A at beginning of year 12.5% terminated employment 8/31/09 so no interst at end of year.

Self Employement earnings on K-1 reported as follows Member 1 (LLCA) 0; Member 2 $135,000, Member 3 $66,861. Both Members 2 & 3 received their Guaranteed payments less Ordinary business loss.

Have a top heavy allcoation to make for employees of LLC B, query on how to allocate top heavy allocation cost among members of LLC in a fair and reasonable (ok and legal) way. Do I take 14.29% of EE top heavy allocation and apply to Member 2, or prorate the allocation and count 8/12s of allcoatin at 12.5% level and 4/12s at 14.29%? Do I allocate share to Member 1? DO I allcoate 8/12s of contribution to Member 3? Ultimate goal is to determine plan compensation after deductions for contributions made to plan.

Getting a headache... I would really appreciate some insight on this. Thanks much in advance for your help.

Nancy

Date of loan = 3/30/2005. For whatever reason, the participant was behind on payments but has been doubling up to catch up (he was getting "default danger" notices). Final payments have been withheld from pay (prior to 3/30) but not yet submitted to the recordkeeper. Recordkeeper states the loan has defaulted. I argue the cure period applies and the default is not until 6/30 (quarter-end folllowing). Recordkeeper argues that would be the case if this were simply for missed payments, however, because we're beyond 5 years different rules apply.

I imagine this wouldn't be an issue if he weren't already blacklisted. Surely they're not immediately defaulting anyone whose final payment is not received by exactly 5 years post-issue.

Thanks,

Kelly

an employee received w-2 earnings for 6 months of a plan year then became a member and received a K-1 for the remainder of the plan year. My concern is only how to determine K-1 earnings for plan purposes. If she had $151,541 of SE earnings (line14(a) of K-1) and you deduct $3,554 as Section 179 deductions(Line 12 of k-1), would that amount ($147,987) be what you use towards 415 limit of $245,000?

The plan defines comp as w-2 wages with the only adjustment being the exclusion of comp while not a participant.

Here are a couple of questions.

a) can an LLC currently be taxed as a sole proprietorship make a tax election now to henceforth be taxed as a C corporation?

b) if so, can the owners be added to payroll for the personal services they render and receive MERP benefits?

If an ESOP loan is refinanced and the term of the loan is extended, under 409(o)(1)(B), can distributions to participants be delayed until the refinanced loan is repaid in full? Any guidance would be greatly appreciated.

A tribe's health plan covers employees of the tribal government and its commercial enterprises. I assume that it is subject to COBRA and that the tribe must comply with ARRA subsidy rules for all its employees. What about a plan that covers only employees who perform gov't. functions? Although the plan would be treated as a state gov't plan for ERISA purposes, I don't believe it would be covered under the Public Health Act, and so it wouldn't be subject to COBRA at all? Any thoughts?

A tribe's health plan covers employees of the tribal government and its commercial enterprises. I assume that it is subject to COBRA and that the tribe must comply with ARRA subsidy rules for all its employees. What about a plan that covers only employees who perform gov't. functions? Although the plan would be treated as a state gov't plan for ERISA purposes, I don't believe it would be covered under the Public Health Act, and so it wouldn't be subject to COBRA at all? Any thoughts?

This might be a stupid question... If the AOCI increases from the prior year is that good or bad?

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!