If an employer establishes a revocable rabbi trust, may the employer (as the settlor) use the assets in that trust for other general purposes without revoking and terminating the trust? Or is there some applicable general trust law principle that prohibits settlors from using the funds of a trust without revoking the trust completely? For example, would the trust be seen as 'illusory'? Would there be any negative accounting effect?

(this is, of course, putting aside the practical question of why the employer would want to set up the trust if it may want to use the funds anyway.)

Thanks for any advice/input.

If, for a variety of reasons, the TPA is just unable to collect all the information necessary to complete the 5500 forms and mail to the client for signature and filing prior to the due date, what is the best course of action, particularly if the missing information is the annual investment reporting? What do you do if you do have the information but you just dont have time or staff to analyse it and complete the forms sufficiently before the due date? Reason for my questions is not to make a new decision but to understand decisions made by a prior TPA.

I met with an investment professional working with several Conservation Districts in our state. They currently operate 403(b) plans and are considering the move to 401(k). These entities are identified as 170(b)1(A) organizations which receive government funding, but seem to fall under the category of a "public charity." I found the following information at the IRS website (http://www.irs.gov/irm/part7/irm_07-026-003.html), but it doesn't help me resolve the question of their ability to sponsor a 401(k) plan.

Has anyone had experience with this type of an entity? They were told by some type of state governing board that they were eligible to sponsor a 403(b) plan. Thanks in advance for any input or information.

Our doctor client owns a medical research clinic which is an LLC in which he is sole owner which I guess is treated the same as a sole proprietor. He has now joined a medical group (corporation w/5 Drs. and 20 EEs) in which he is a 20% shareholder. The research clinic and medical group are 2 separate businesses and have very limited common business dealings or patients (certainly less than 5%). I have concerns about 2 issues.

First, is the issue of "regularly performing services for the FSO or regularly be associated with the FSO in performing services for 3rd parties." It would seem that this is not the case since our client says there is very little common business or patients.

Second, I want to confirm that the Doctor's personal services for the corporation as an employee are separate and distinct from his LLC or sole proprietorship such that the LLC is not considered to be performing the services for the corporation. Since the LLC has 5 employees who are not associated with the medical group in any way, I think there is a clear business distinction, but want to be sure. I think it would be better if the research clinic were incorporated, but that is not the case.

What do you think?

Thanks,

HW

I am trying to find information on terminating a leveraged ESOP where the ESOP loan from the LLC has been "forgiven" and the stock has a FMV of zero. I think the shares still need to be distributed to the participants even though they have no monetary value; they still have voting rights associated with them. However, I cannot find any guidance on treating the "forgiveness" of the ESOP loan. Is it still treated as a leveraged ESOP? Presumably the loan was forgiven sometime in 2008 (still tracking that down). The 5500 for 2008 shows income to the plan in the amount of the loan balance that was forgiven. Any ideas?

Assuming the Plan Document allows for in service withdrawals and a participant meets the requirements for that withdrawal, are there any tax benefits for a participants who is using the proceeds to purchase a primary residence (first or otherwise?)???? Thanks.

Has anyone ever run into trouble with their auditor for having a non-qualified cash balance plan? A consultant infomred us that some sponsors of a qualfied cash balance plans hit snags with their auditors for having a non-qualifed cash balance plan that restores benefits lost because of the 401(a)(17) limit.

Has anyone run into this issue?

Thx.

Am i correct in thinking that under PPA valuations, assets for section 404 purposes are

always the same as section 430 assets. In other words ,we adjust for contributions made

for the current plan year prior to the valuation date at the effective rate,but there is

no adjustment for contributons made during prior plan years but not previously deducted?

A participant in a profit sharing plan cannot be located and the trustee has contacted the social security admin. to no avail. How much time is required to pass before the participant's account is forfeited assuming that is an option?

Any help is appreciated.

Our 401(k) plan states that the estate will be the default beneficiary of an unmarried participant. We have several very small balances (under $1000) payable to the estates of employees for whom we have very little information on family relationships -- although most have designated a beneficiary for their employer-paid insurance.

If I could find a family member I could get an Affidavit of Heirship completed but I have a couple of foreign nationals where this does not appear possible.

How has anyone else handled similar cases?

I would like to petition the probate court in the county of residence to either supply contact information for the personal administrator or, if the estate has not been filed with the court, to accept the life insurance beneficiary as the beneficiary of the estate comprised of the 401(k) balance. But it isn't worth the legal fees to hire an attorney in each jurisdiction. Eventually administrative fees will deplete the accounts.

A company is experiencing difficult economic times and is short on cash flow. It does, however, believe that in the next couple of years, it will sell either stock or assets to an unrelated purchaser. Effective January 1, 2010, the company wants executives to be able to defer receipt of 50% of their compensation. These amounts will only be paid if a change in control occurs. We will have a single distribution event. Is this permitted under 409A? Also, directors will also defer fees. Is this ok since the directors will have some control over when a change in control occurs. Thanks in advance for your consideration. Ed

Does anyone out there use the Blaze Proposal System? If so, any feedback you have would be appreciated!

An employer with a June 30 plan year end is mailing the Annual Funding Notice. Will the notice be on time if we mail the notice within 120 days of the last day of the plan year or does the Notice have to be mailed in time to reach the participant within 120 days.

Ahhh...to my Crystal friends out there...I know I'm behind but recently upgrade to ver 12. [What a nightmare on the dates issue, but that's another story....]

I used a lot of the old "FDP" reports especially for status pages as we always liked that setup. With the new codes (status/category, what have you) the employees on my status pages are basically Active, Ineligible or Inactive; including the terminees. I'd like to have at least the terminees showing as "terminated" on the Status pages (and not "inactive - employement status).

Any ideas? I tried editing an old formula with an "if, then" type deal so that if the employee was terminated they would show as such. I get no errors when I check the formula in Crystal. But then when I run the report in Relius (and it does run ok), that space on the report is simply blank no "category" for anyone.

I saw a previous post that stated that if the ACP test uses a safe harbor definition of compensation for the ACP testing that it is not necessary to perform 414(s) testing for the match. Is that correct? I have a plan that exempts overtime and bonuses from compensation for providing matching contributions. However, the ACP testing was completed based on total compensation and passes. Does that mean I don't have to test the compensation, even though the contributions are based on a non-safe harbor definition of compensation?

Thank you for your help!!

if you keep the odd items in your Plan Limitations tables updated, I have the following for 2010

Bend Point 1 761

bend point 2 4586

pbgc premium 35

Cafeteria HSA Sing Deduction limit 3050

Cafeteria HSA Family Deduction limit 6150

National Average Wage (2008) 41,334.97

Say a volume submitter for a small plan (less than 10 employees) plan has an NRA of 55 and it is left that way.

They then apply for a det. letter timely.

If the Service determines that the age should be 62 and 55 is not reasonable do they just advise that the NRA be amended prospectively and give 90 days from date of dl letter?

Thank you.

I really need help with this one!

Company A bought the stock of Company B 4 years ago and merged that company into itself (so no more Company B). Prior to the closing of the deal, Company B was to terminate their 401(k) plan. Just last month, Company A discovered that the former plan administrator for Company B was still trying to distribute the assets of its 401(k) plan and that there was a balance in the forfeiture account. Apparently, all 5500's have continued to be filed for the plan and the former plan administrator has even adopted a restatement of its prototype plan as of August of this year! (Not sure where he gets the authority to sign for a company that no longer exists!)

Here's my issue - since the assets were not distributed within one year, I assume Company A now "owns" the plan. Company A can continue to pay out the remaining balances of the participants. However, what can be done with the forfeiture account? The plan document says that forfeitures may be used to satisfy employer contributions or to pay plan expenses. At this point, no employer contributions have been made for 4 years and there are no plan expenses (the recordkeeper apparently is getting paid from the participant account balances).

Any help would be appreciated!

Suppose you have a client who wishes to adopt a DB plan in 2009. The client is a corporation with a December year end. Suppose they adopt a plan with a year beginning November 1, 2008 and ending October 31, 2009.

The deductible limit can be determined from the plan year that begins in the taxable year per reg. 1.404(a)-14©. So as of 11/1/2008 the minimum required contribution is $100,000. The corporation files its 2008 tax return by March 15, 2009 with a $0 deduction but makes the $100,000 contribution May 15, 2009. As such, the $100,000 is deductible in 2009. Then, suppose the 11/1/2009 minimum required contribution is $105,000 and is contributed by March 15, 2010. I would think the $205,000 would be deductible on the corporation's 2009 tax return.

Does anyone/everyone disagree with this?

If one participates in an employer sponsored retirement plan and have a personal IRA, how much must one prorate or reduce the contributions that one makes to the personal IRA? Does the phaseout occur if one has a certain level of income?