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.

I have tried to find more clarification on this, but had no luck.

I understand that the 2009 Sch. I now has a line item for administrative expenses; does this mean only expenses paid by the plan (i.e. distribution fees, loan fees, pro-rata fees administration fees paid by participant)? Or does it mean the full administration cost of the plan?

A one=person plan has no assets, and never made any contributions to a plan. The employer/trustee did sign the adoption agreement to start the Plan. Must the Plan be terminated (i.e. amendment to doc, final 5500-EZ)??

Thanks

Please let me know if you think the following statement in Notice 2009-68 (the new 402(f) notice) is correct:

"If you do a direct rollover of only a portion of the amount paid from the Plan and a portion is paid to you, each of the payments will include an allocable portion of the after-tax contributions."

Does a mere QE change in status allow a participant to stop any remaining deferrals in the plan year or does the "consistency rule" have to be met? FSA doc doesn't exclude mid year election changes. Are the 10 examples found under paragraph © the only circumstances one can revoke an election mid year?

Scenario not found in examples: Participant A under Company Z's plan elects max $1000 as allowed under plan for plan year. Participant A marries person B mid year. Participant A wants to revoke last two payperiod deferrals and has not made any claims on account for plan year yet. In writing can A request payroll clerk at Z to stop any remaining payroll deferrals to FSA account due to status change?

I read Sec. 125-4 http://web.indstate.edu/humres/docs/Section125-4.pdf

I used changeofstatus.com and got the following results:

Your Plan: Health FSA

You can: Increase volume, dollar, or amount

But... • HIPAA special enrollment rights likely do not apply

• Must be consistent with change

You can: Decrease volume, dollar, or amount

But...

• Must be consistent with change

Again what's the " must be consistent with change" rule?

Any insight would be greatly appreciated. regards Mo'

In the past, employees who have been declared disabled whether by our LTD carrier or by SSDI have remained in our records as active and have been eligible for the same plans and subsidy as an active employee. We recently changed the criteria so that if you are only receiving SSDI, then you will be terminated and no longer have access to any of our health plans.

We have an employee who has been on LTD and SSDI for 2 years but his LTD benefits will end this March. At age 63, he is eligible to retiree from our company but obviously only eligible for Medicare due to his disability. He is also eligible to enroll in our retiree health care plan(s) until age 65. If he were to select our standard PPO plan, is Medicare primary and this PPO plan secondary just like as if he was over age 65?