Where can you get a 1099R for 2006? i need to do a corrected form for a loan default (or do you need to do a 2006 form?). All the legalalities have already been done and interest and penaltys are being paid. I just need to do the form so the accountant can do a correctede tax return.

Thanks

Archimedes, so it is said, contended "Give me a fulcrum and a long enough lever and I will lift the world." This begs the question of where Mr. A had in mind to place the fulcrum?

Is it ok to use dual entry dates if a plan has a 2 year wait and provides for 100% immediate vesting?

Corporation has had a 401(k) safe harbor plan for several years. Each year, each owner has always been paid the maximum annual compensation limit (ie: $230K for 2008) and each owner has always benefited from the maximum annual contribution (ie: $51K for 2008 including $5K catch up).

The corp does not match, but is does contribute a 3% safe harbor.

The 2009 max annual compensation limit is $245K .... but the owners' want to know if they can each get the 2009 $54K max annual contribution ($49K + $5K catch up) if each of their 2009 annual compensation is only $200K.

Am I correct in thinking that they can, as long as the corp is willing to make a 5% PS contribution to each qualifying NHCE ?

I figured the 5%, as follows.

Owner deferral = $16,500 + $5000 = 22,000

Owner 3% safe harbor = $200,000 @ 3%= 6,000

Plug owner PS cont = $200,000 @ 13% = 26,000

Total addition = $54,000

PS cont to NHCE = lesser of 5% ... or... 1/3 of (3% + 13%).

Since 5% is less than 5.5%, then the required PS cont to NHCE must be 5%.

Am I correct, in left field, or in the parking lot ??

Thanks

DC plan with termination date 11/23/09. Most distributions have been made and accounts of unresponsive participants will be transferred to IRA tomorrow. This will leave $0 assets as of 12/30. The goal is to avoid a 2010 Form 5500. Problem is we know that there are dividends that will be credited later than today. These are likely to be very small amounts and will be distributed as soon as possible to participants, but since they will go in and out of the trust, will they create more plan assets that will require a 2010 Form 5500?

I am not very familiar with cafeteria plans or HSA plans. Client asks:

"We are converting our employee health plan to an HSA plan effective 1-1-10. Please let me know the impact of this on our FSA account for medical expenses. Can we have both an HSA and a Section 125 Plan? Does it make sense to have both?"

Can they amend existing FSA to allow employees to have their health insurance premiums withheld on a pre-tax basis (POP)? Or can they amend to a limited-purpose or post-deductible health FSA?

My understanding is that a person cannot participate in both a general purpose FSA and an HSA, correct?

Thanks!

Employer has standard safe harbor 401(k) plan with safe harbor match formula (100% of first 3% deferral, 50% of next 2%). Employer has instituted auto-enrollment at 3% and auto-escalation up to 5% deferral rate, but now wants to increase auto-escalation for NHCEs to 7% with additional 50% match. Under Reg. 1.401(m)-3(d) this will blow up the matching safe harbor, so the plan will have to pass the ACP test. But what about the elective deferrals? Are they still treated as safe harbor? All deferrals or just those matched to the matching safe harbor limit of 6%? Regs appear to be silent on this. Any opinions or similar experiences?

I have a client with a frozen 401(k) plan that was never restated for GUST or EGTRRA. I am attempting to put this client on our EGTRRA VS document and am unsure about the appropriate effective date of certain provisions.

History: Plan became effective 7/1/1995 using a prototype document of the vendor, but based on certain language it appears the prototype document was never submitted for an opinion letter (and never intended to submit). The plan only has CODA contributions and QNECs to satsify non-discrim testing. The only amendment to this plan after it became effective was to cease all contributions to the plan effective 12/31/1997. (This division was determined to be non-profit and was moved into the company's 403(b)). The plan itself has never submitted for a d-letter.

The plan never had more than maybe 2 dozen participants and has about 8 now. I can only assume the plan has been operated in accordance with the existing plan document and am unsure about how any legislative changes have been treated (e.g. 180-day QJSA election period). It does not appear that much of the language, if any, would cause 411(d)(6) issues and I expect it is unlikely that there have been any operatioanl failures (other than lack of amendments - but do not know enough about actual administration to make a detemermination) mainly because it has been frozen. However, I am wondering about the effective date of the restated document and the various legislatively required provisions. Is it better/appropriate to amend the plan with retroactive effective dates for GUST and EGTRRA provisions (based on either the required dates or actual plan adminstration) or would it be more appropriate to have an effective date of 1/1/2010 (or some other more recent date) and focus on keeping the plan in compliance going foward?

The source for the extension is here:

6707A Website

I have an employer who is SH for 2009, but not for 2010. They have one employee is slightly over the HCE limit of $110,000. Can they (with the employee's consent) postpone enough $ from his last payroll to keep him under the limit since the 2009 data will be used for testing in the 2010 plan year? I can't find anything that supports doing this.

We're leaning towards giving everyone BOTH the Roth AND the regular tax notice together. They'll be stapled in one packet together, but referred to as the two separate notices that are included. We're going to tweak the introductory paragraphs from the template which says "you're getting this because some or all of your account can be rolled over to a Roth IRA..." accordingly.

What are other people doing?

ER is making a retroactive wage adjustment to an EE's salary in that the EE's position was deemed to be of a higher salary grade. The retroactive wage adjustment is going back several years. Does the ER have an obligation to make an increased ER contribution to the EE's 401(k) plan based on the EE's adjusted salary for those years. The Plan document does not require the same?

An employer had what they thought was a non-ERISA 403(b) arrangement where they made employer contributions to individual 403(b) annuities on behalf of each employee. There is no plan document and no contract or agreement between the employer and the various 403(b) providers. This was really operated like a non-ERISA salary deferral 403(b) (other than the fact that they made employer contributions).

So an employee passed away and the annuity was paid out to the beneficiary. The employer attempted to make its contribution, but was too late as the annuity contract was paid out. The insurer will not provide the employer with the beneficiary information so now the employer has this money ear marked for the employee, but has its hands tied. Since there is no plan document there are no plan provisions that require the employer to make the contribution. I don't see anything wrong with simply paying the amount ear marked for the contribution out to to the employee's spouse. Any thoughts?

A client terminated and paid out all participants from their 401(k) plan in mid-December 2008.

They now want to start up a PS only plan (no deferrals) with a January 1, 2009 effective date.

For vesting purposes in the PS plan, they want to exclude years before this new plan is established.

I think there are some problems with this, but haven't found the guidance. I don’t think a new PS plan with a January 1, 2009 effective date can exclude years before the plan starts if just a few days earlier in December 2008 the company had terminated another qualified plan. I also have this feeling that there's something else causing a problem here, but it eludes me (other than December 28 being an eleventh-hour time to finally decide to set up a plan for the year).

Thoughts?

This question is an attempt to coordinate limits for an individual who wants to make 401k roth and roth ira contributions for 2009.

Say a 1 employee/participant/owner corporation provides compensation of $24,000 for its one employee/owner.

The employee is over age 50.

Say individual makes a designated Roth 401k contribution of $22,000 for 2009. $16,500 plus $5,500 catch up.

Issue #1

Regarding employer deduction limits and annual addition limits the catch up contribution of $5,500 is not counted. Do we agree?

Therefore, a 25% employer contribution of $6,000 is acceptable since the annual addition would be $22,500 ($16,500 plus $6,000) which is less than the 100% compensation limit of $24,000.

Now say the employee is below the AGI limits for a Roth IRA contribution.

Regarding the 100% of compensation IRA contribution limit; is it equal to $24,000 since the 401k contributions were all Roth contributions?

If the 401k contributions were made on a pre-tax basis would the 100% limit be $2,000 ($24,000 less $22,000)?

Thank you.

Plan sponsor decides today that they want to elimiate the safe harbor match in their clandar year plan. Safe Harbor Notices were provided for 2010 already. I know that generally plan sponsor must give a 30 day notice to eliminate. Is that true even if they want to eliminate prior to the beginning of the plan year? If we can amendment signed by 12/31 can plan sponsor eliminate match effective 01/01 or does it need to 01/31 at this point?

Thanks for any guidance.

I have conflicting information, so I just wanted to get things straight.

Are the PPA, HEART and WRERA Amendments required to be signed by December 31, 2009?

Thanks in advance for your help.

Comments?

http://blog.nj.com/njv_johnbury/2009/12/actuaries_suck.html

Taxpayer on 12/31/09 has a Traditional IRA of $30,000. Basis in this IRA with nondeductible contributions is $30,000. So the IRA has no appreciation.

Taxpayer also has a 401k with $200,000 in which he plans to roll over into Traditional IRA from former employer in 2010 or 2011.

Question - Taxpayer wants to convert Traditional IRA to Roth in 2010. Doing so would result in no additional tax liability since the FMV = tax basis. Lets say they convert in January, 2010. What effect, if any would the transfer of the 401k plan to IRA have on the ROTH conversion if it is done AFTER the conversion but in the same 2010 tax year. I assume you look at the value of all IRAs at the time of conversion and that any amounts added to traditional IRA's after the conversion have no effect?

Edited later - answered I believe lies in the form and instructions to form 8606.

In computing the basis used in the conversion, you divide the accumlated cost basis by the IRA distribution during the year PLUS the balance in the IRA as of the END of the year. therefore, if you happen to empty out the IRA earlier in the year, then transfer from a 401k to the traditional IRA later in that same year, the 401k would effect the out come of the conversion. So it would make sense to hold off rollovers from qualified plans until a later year.

We have a 401K plan with a 3% non-elective Safe Harbor contribution. I know that this 3% will count towards determing the contribution amounts for cross testing. So, in a simple case, if a 5% total allocation rate for NHCEs is required to meet the gateway, the 3% match will count because the plan has a 3% non-elective Safe Harbor as opposed to a matching Safe Harbor. So we would have to provide, in this case, a 2% profit sharing allocation.

But 3% is the minimum contribution. What if our plan contributes 4%? In the simple case above would this mean that we would only need to provide a 1% profit sharing allocation to NHCEs. The software we currently use to cross test, uses a fixed 3% Safe Harbor contribution, so I can't test the effects of increasing it to 4%. Perhaps, 3% is all that can be used for cross testing. I don't know, hence this question. Thanks.