I have a takeover one person DB plan that has an end of year valuation date. The owner would like to terminate the DB plan (termination date of 12/01/2009)...but wishes to minimize the procedure as much as possible. The owner would like to make a minimum contribution for the 2009 plan year on 12/30/2009 (we plan to change the valuation date to beginning of year to accomplish this). Then all assets would be liquidated on 12/31/2009.

The 5500-EZ would reflect the contribution for the plan year and would also show the trust value of zero on 12/31/2009. However, the Schedule SB would show the valuation date and results as of 1/1/2009.

Can anyone see a problem with this approach? Does the mehod seem do-able?

Any and all help would be appreciated.

Thanks.

I work for a nonunion company that has recently been doing alot of work for the State of Ohio. PW laws require the employer to match wages and benefit dollar amounts. Currently we recieve our hour wage, benefits, and a hourly amount to cover the additional amount in benefits, ($7 to $13 an hour). We just received notice, as of 1/1/10, the company is creating a new 401(k) that all employees will be enrolled in. This is so whenever we are working a prevailing wage job they can contribute this additional money into it and avoid paying taxes on that amount.

First: can a 401(K) be a mandatory contribution?

Second: Can the contribution be tied only to the people working certain jobs?

Third: Can the contribution amount change depending on the job being worked?

Fourth: Can an employer determine the amount of contribution?

Hi,

Question regarding ADP: plan end 5/31, HCE, over 50, defers only $1,200 for plan year. ADP test fails, can the $1,200 be 'recharacterized' as catch up (or the failure amount)? There are only deferral contributions for this year so did not exceed any limit....

Thanks,

Jason

Our small company (less than 20 employees) administers our own 401k plan. The original provisions of the plan did not allow for participants to take a loan or borrow from their account. We are now considering changing this to allow for borrowing.

Could this be done by just amending the original plan?

Carl C.

Little trouble understanding the part-time/temporary exclusion -

Plan has a 6 month eligibility requirement (no specified # of hours required). The Plan also wants to exclude part-time employees and includes the QAB wording if complete 1000 hours within eligibility computation period will be included.

1. Is it correct to assume that if a p-t employee does complete 1000 hours they also have to be employed on the last day of the eligibility computation period - the way a typical year of service works?

2. Since "regular" non part-time employees only have to complete 6 months of service and yet those considered to be part-time employees must essentially complete a year of service, are there any compliance/coverage issues with that?

We have a 401(k) plan that failed their ADP test for 2008 and has only now elected to make the refunds to select HCEs to correct. The problem is that some of the HCEs were paid out during the 2008 calendar year.

How are 1099R's handled for participants that fully cashed out in 2008? Assuming they rolled over their accounts, I understand that distributions from their IRAs will be required, but do the IRAs issue the 2009 1099 or should the plan issue a 2009 1099?

Any input would be appreciated.

A client just notified us that 2 of her employees dropped their health insurance coverage because they couldn't afford the premiums anymore. They have a calendar year Cafeteria Plan and the change in elections were allowed in August.

How do we correct this mistake?? The employees no longer have the insurance and the withholdings were stopped in August.

A one-participant retirement plan intended as a 401-qualified plan has been in operation for 33 years. The employer filed a Form 5500 every year. Each year's contribution was within the 404 and 415© limits. No distribution. Every fact we can see shows that the employer operated the plan according to provisions that, had they been written, would have been a tax-qualified plan. But after a thorough search of the employer's records and the investment guy's records, we can find nothing that even suggests that the plan ever was committed to writing. What IRS correction program could one use to fix this? If none, is there any other hope?

The current owners of a firm purchased the firm about 5 years ago. At the time of purchase they took over and continued to maintain the firm’s existing PS/401 plan. The plan was originally established in the mid-70’s and maintains a single “pooled” investment account.

The current owners just received a call from the prior owner’s son who just “discovered” an investment account in the name of the plan which apparently has not been known about since the late 70’s. The “discovered” investment account only has about $14,000.

We’ve been administering the plan for roughly 10 years and have never accounted for the account.

The forensic accounting costs alone would significantly exceed the balance in this discovered account, and I don’t believe any records exist going back earlier than the mid-90’s.

Can we just allocate it as a gain today? The only problem is that the prior owner’s son is asking how much of this balance belongs to his father (the prior owner was fully paid out several years ago).

Any thoughts or ideas on how the client should proceed would be appreciated?

Background; employer who was not subject to federal COBRA in 2009 is now going to be subject to Federal COBRA beginning 2010 because they are now above 20ee's on over 50% of the business days in 2009.

An employee terminated in 2009 when the carrier is still responsible for administering mini-COBRA, and elected under the Mimi-COBRA during 2009.

Once 2010 rolls around, does this COBRA participant stay with the carrier under mini-COBRA or would they now become the responsibility of the employer under the Federal COBRA regs?

Thanks very much!

Jeremy Davis

We took over the administration of a 401(k) profit sharing plan with a 3% non-elective contribution for all eligibles. They also have a fixed match (50% up to 4% of pay) that has a last day & 1,000 hour requirement. Does the match have to be ACP tested because of the accrual requirements or is there some exception for a plan with a fixed match? I've seen different answers so now I'm confused. I was under the impression that you had to ACP test it because it imposes accrual requirements.

Any input would be greatly appreciated.

Thanks!

I have a large Plan that has 4 individual Trustees on the Plan Document. The Investment company has set up their own Trust Agreement since they are the directed Trustee. Does the Investment company need to be added to the Plan Document as a Trustee or do we just use the separate Trust Agreement that the Investment Company used? If the Investment Company is the Trustee would I even have the other 4 individuals as Trustees?

Employer A sponsors a 401(k) plan. They are in a controlled group with Employer B - who also sponsors a 401(k) plan.

Employer A has an EIN that falls under Cycle B, but they are using the exception in Rev Proc 2007-44 - 10.06 - which states they can use the remedial amendment cycle for the parent company (Employer B). Employer B has a cycle D, which has to be filed by 1/31/2010.

So - Employer A is filing a 5300 qualification for their plan using cycle D (the parent company's cycle).

How should Employer A complete the plan sponsor and EIN section of the 5300 for the employer that is filing with the Parent Company of the controlled group? Do they use the employers name and EIN on the 5300 or do they put the parent companies EIN and/or Name?

If an employer is challenging some (any) aspect of a trustee's withdrawal liability payment schedule, does failure to make scheduled payments waive the right to continue challenging the withdrawal liability?

Back in '05, a 401(k) plan adopted its 401(a)(31)(B) automatic distribution amendment to provide that on a pre-retirement termination of employment a benefit of $1,000 or less resulted in immediate distribution and anything above $1,000 could stay in the plan unless the participant elected otherwise. The plan sponsor is now thinking it wants to instead have anything over $1,000 and up to $5,000 paid out to an individual retirement plan if the participant doesn't elect distribution of the account. My question is, wouldn't the ability to remain in the plan with an account above $1,000 be a protected benefit, right or feature under 411(d)(6)? Thanks for your input.

If a client wants to suspend RMD's for 2009 (whcih is an optional amendment) is required to get union approval for that change?

Husband and Wife each own separate businesses that are not related to each other. No employees are shared. Both are sole props. They are about as separate as they can be.

Based on this alone, I would say that a controlled group does not exist. Would you agree? I am not certain if there are any children under age 21. If so, then technically a controlled group would exist. Is that correct?

Here's the twist. Both businesses are in Texas, a community property state. Given that, does it change the answer?

Thanks

I am posting this question as rookie and dont know much about the tax code.

I have a medical practice(formed as LLC single owner) and have no employees.

I share office space with another physician (call him physician B)

Physician B employs both the support staff(who do admin work for both of us)

End of the month i just pay the other physician an "overhead check".

I have my own accounting, revenue stream, pay my seperate taxes etc.

Physician B has no retirement plan and so does not provide one for his employees.

I was to contribute towards my retirement every years and I believe I can almost put in $49K (including profit sharing). But my CPA says that I cannot until we fun the retirement of the Physician B employees. I have tried talking to the other physician and he is not interested in getting into the mess of providing retirement etc.

What is the IRS code that is preventing me from contributing to my retirement. I believe something called code 414(m) about discrimination of employees.

I would people to provide me with some second opinion or ideas.

Thanks

First 401(k) with Roth contributions.

Must Roth contributions be held in a separate account? For example, suppose a participant has a brokerage account that contains pre-tax deferrals and employer contributions. Does he need to have a separate brokerage account to contain the Roth contributions or can they be deposited to the same brokerage account. We would, of course track each source of money separately within that one brokerage account.

We have several plans that are missing interim amendments since the GUST restatement and we're having them signed now and filing with VCP. All our documents are Corbel's prototype or VS docs. Do we need to also apply for a determination letter? I'm confused by what I read in EPCRS. It seems like it only addresses that issue for IDPs. I'm hoping that because these docs already have an opinion or advisory letter, we only need to do VCP.

Thanks.