So....after much controversy within my office, what is the opinion of the rest of the community with regards to Schedule SF rather than Schedule EZ, in regards to confidentaility issues and such.

I guess, when is an appropriate time to use an SF?

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One of my plans has a participant who should have entered the plan in 2007. She only works part-time, and the ER thought she wasn't eligible, and never sent me information on her.

So, they have to give her a Safe Harbor contribution for 2007 & 2008. I figured those out with earnings, and the ER will deposit the amounts.

My question is: do the amounts have to go on 5330 as a prohibited transaction?

If I rollover funds from a Traditional IRA to a Roth IRA before April 15, 2010, can I apply it to the 2009 tax year (1040A, Line 11a)? I know contributions can be applied, but not so sure on rollovers.

Thanks.

Anyone had experience with a firm of "environmental engineers"? Trying to figure out if they would be considered professional service employers, so as not to be subject to premiums. I called the PBGC but got transferred 6-7 times (literally) and no one could get me an answer. Thanks!

I work for a company which acquired another company. Below is the scenario:

The acquiring (parent) company - has a medical plan which is a combination of self-funded (or unfunded -- that terminology always confuses me; the company pays claims out of general assets, of which the employee pays a portion) and fully insured (some states and clients require insurance contracts so there are a few of those; those premiums are paid directly to the insurance company).

The acquired company (which was acquired in the middle of the fiscal/calendar year) - has a VEBA. The VEBA is about 10 years old, and although they may have used it to advantage in the past, currently they are just moving cash to the bank account to cover claims, much like an unfunded plan -- no advanced funding or investment being done.

During the year of acquisition, the acquired company was held as a separate subsidiary and the plan audit and Form 5500 were filed with just the financial information for that subsidiary.

NOW the acquired company has been fully integrated into the parent company (it's no longer a subsidiary). All claims are now paid through the parent company's TPA, using the general assets of the parent company. There were some residual run-off claims from the old plan of the acquired company that happened in the first part of the year (which were paid by the parent company through general assets), but any current year claims are being paid through the parent company's TPA from general assets of the company.

The questions are - do I now have to combine all of the parent company and acquired (now absorbed) company data, and get that audited for the 5500, just because there were run-off claims that were associated with the VEBA? Do I have to get an audit next year simply because that VEBA exists, even though then it won't be used at all? Will that go on until I officially terminate the VEBA?

Yes, I will be talking to the accounting firm about this, but I would like an objective opinion that isn't influence by potential audit fees (yes, that's cynical, I know).

Any insight would be most appreciated. My knowledge of VEBAs is solely based on what I can find to read about it.

Thanks in advance.

Donna

If someone wants to refinance for the max proceeds available, then generally they do not get a new5 year term. Btut there is an exception whereas the OLD loan balance can be repaid down to zero in the original 5 year term, and the new loan proceeds can be amortized over a full 5 year term. The number one complication here is that the payments need to DECREASE after the original balance is paid off.

Is any actually doing this? Or is this just being ignored?

Can anyone point me to a good article on what obligations an employer has upon a violation under 409A? Just for some reference, I am especially interested in this in the case of a stock purchase deal where the buyer figures out the violations post-closing? Looking for article discussing reporting, filing amended returns back to the date of the failure and any W-2 penalaties and penalities for not withholding or paying FICA taxes that might fall on the buyer.

Many thanks!

One of my clients has an old PS plan with 1.5 million in it that's been around for many years. Back in calendar 2007 he set up a DB plan and has accumulated about $350K in that plan. Client wants to terminate BOTH plans and roll the proceeds to a Roth IRA, then set up a NEW DB again for 2010 to continue with the big deductions. He's in his early 50's. I say OK for the PS plan, but to terminate the DB just to set up another seems silly.

Is this a wise move?

Thoughts?

Hypo:

HCE will have zero compensation for Plan Year.

415 limit will therefore be zero.

HCE wishes to make catch-up contribution.

Possible? Or impossible?

The Code and Regulations address catch-up in the context of elective deferrals. If a catch-up is an elective deferral, how can a catch-up contribution be made in this hypo when there is no compensation from which to make the elective deferral?

Form 5330 instructs a filer to calculate the excise tax for a PT using Schedule C FOrm 5330.

Schedule C has a column called "Amount involved in pt"

It seems this amount is based on the amount for the use of the money.

So for example say a employer or owner of company takes $20,000 out of his one participant pension plan. We'll assume it is all a PT since he already took a maximum loan of 50k.

Say he takes $20,000 from plan on 1/1/09.

When completing the Schedule C form 5330 what is "Amount involved in pt"?

It seems that it is not the $20,000 but the amount or value for the use of the $20,000 for the year. What would that be? What interest rate should be used? If an interest rate of 0 is used than there amount involved is $0.

Any comments?

Thanks.

I have the "opportunity" to take over a 401(k) plan using the safe harbor match. The issue is that the employees of another business owned 100% by the plan sponsor have not been offered the chance to participate in the 401(k) plan. No other employer contributions are made to the plan.

Looks like the employer is responsible for certain employee and corresponding matching contributions and a EPCRS filing, correct? Any way out?

A DB client of mine said he heard that the medical bill before Congress includes a provision to assess FICA taxes against "unearned income" (I presume that means passive income of some sort). Has anyone heard anything about this ?

He's beyond the NRA but under age 70.5 and is considering whether to start taking distributions from his plan and thinks this bill "might" assess FICA taxes on income (distributions) taken from his DB plan.

Anyone aware of such a provision and whether it would apply to retirement income ?

Not for profit has a deferral only 403(b) and a 401(a) with 'varying' contributions by person. Since 2002 even Not for Profits have had to pass discrimination testing. Oh by the way - we are taking the plans over for the 6/30/2010 year....

As I read 415, we aggregate the 403(b) deferral with the 401(a) contribution to test maximum annual additions. Indications are this was 'overlooked' in the past so I am asking for confirmation on this point first.

Since the 401(a) contributions are such that they cannot make any safe harbor formula, and they cannot pass general testing on a contributions basis, I now go to cross testing. IF (that is a big IF because I do not know the results yet) each rate group does not pass 70%, I will need to perform the Average Benefits Test. If I have to do the ABP, then again I include the deferrals into the 403(b) plan, correct?

My thoughts are yes and yes, but I am willing to listen to rebuttals.

Participant completes an enrollment form electing ROTH deferrals. Client withholds the deferrals from the paycheck for about one year as pre tax deferrals. Deferrals went into ROTH account in the 401k plan. What is the fix?

Are employees allowed to drop dependents midyear according to section 125? In this case, an employee wants to remove dependents however the dependents have not become eligible for health insurance under another plan and are not being forced out due to age, the employee just wants them removed. I've heard conflicting information regarding whether or not this is allowed. Can anyone clarify?

A Plan document currently excludes union employees. The employer has decided to change the Plan’s eligible employee definition to include union employees and has already begun submitting 401(k) contributions to the Plan on behalf of the union employees since the beginning of this year (2010). Question: If the Plan is amended no later than the end of this Plan Year (2010) to include union employees as an eligible classification, would this qualify as a timely adopted amendment under the “discretionary amendment” rules or did the amendment need to be in place prior to the employer’s implementation of this change? In other words, does the ECPRS correction method for the early inclusion of ineligible employees only apply if the Plan was not amended by year-end?

Hi all,

I've been trying to research this issue and just get a headache and more confused, the more I read about it......My twin boys just turned 1 and I have some savings in an ING account for them, but looking into transferring that to either a Roth IRA or my state's (north carolina) 529 plan. I can't figure out which would be the best bet. From what little I understand, with the 529 plan, I can have a state tax deduction, but the money MUST be used for education (either for my boys or it can be transferred to another relative)...with Roth, I can withdraw the money for college (only what I contributed, not the gain) at no penalty, but I get taxed on it now.....Am I correct? Is there anything else I should know? Any recommendations would be GREATLY appreciated!!

Michele

Hello, I am wondering if anyone has any data on what an average fee is paid to a third party investment advisor to our 401k plan. Our commitee asked me to determine if the fee we are paying is reasonable, and I have no idea how to find this information. I know it is probably based on the size of the plan, but any ranges or other information would be helpful. thanks!