Can anyone tell me if a KSOP is required to prepare a 1099Misc for an expense paid from the plan?

457(f) Plan states that payments will be made over a period of years. As of 2009, there is no longer a substantial risk of forfeiture, and we will report the full amount of the deferred compensation. First payment is due this year.

Former CEO is upset that he must pay tax on full amount now, but only receive payments to which he is entitled per the agreement.

Regs permit acceleration in 457(f) arrangments for purposes of paying taxes. Can we add this provision now? While I cannot find anything that specifically permits this, I cannot find anything that prohibits it. The new correction procedure released this month contemplates fixing a plan with an impermissable acceleration by converting it to a permissible type.

What I am trying to figure out is if I can just add a provision that is permitted by the regs at this point.

A small business owner has a DB Plan that she set up back in 2005 with about 3 other NHCEs. Prior to the implementation of the DB Plan she had a SEP, which she stopped contributing to in 2005 and has not contributed to since 2004. The DB plan is now frozen but she would like to contribute to the SEP again as opposed to making a contribution to the DB Plan. Trying to figure out the testing implications for this. Wouldn't the SEP need to be tested for 401(a)(4) combined with the DB Plan?

Everything I've found seems to make clear that salary reductions to a Health FSA are plan assets when they can be reasonably segregated from the employer's general plan assets, even if they are not actually segregated.

Employer holds salary reductions in a large general account and uses the funds to reimburse a TPA who pays the actual claims.

Anyone see and leeway here to avoid calling these plan assets since they are held in large generally named account??

any help/cites are appreciated.

We are planning on terminating a DB plan. A question came up that I can not pin down. I get that if we have an "eligible rollover distribution" that it must be allowed to be rolled over. however the plan does not allow for lump sum distributions other than for small annuity amounts. Currently only annuitys (QJSA etc) are permitted - no lump sums - all not eligible rollover distributions as they are "series of substantially equal periodic payments over a period specified". We don't want to give everyone the option of getting a lump sum. We do want to allow people to rollover if they wish. Are we REQUIRED to allow people to rollover the lump sum "value" of their annuity? Can we allow them to? Would we have to do an "elective transfer" to permit them to rollover?

Any thoughts...

We just got a call from a client with a Profit Sharing Plan. Contribution for 06/30/08 plan year end was about $300K. Contribution for 06/30/09 plan year end was $0. IRS auditor said that the profit sharing plan was being audited since the corporate tax returns showed a large deduction for 06/30/08, and zero deduction for 06/30/09. IRS was auditing the profit sharing plan to make sure there are no problems with the plan.

We've never heard of this from any other client or plan, where the corporate tax returns were reviewed to look for possible plan audits based on contribution deductions. Maybe a defined benefit pension plan, but why a profit sharing plan. But the basis of the plan audit was a review of corporate tax returns. Anyone hear of this?

I need confirmation that under the following set of facts, the ACP test would be run using 0% for the NHCEs and there would be a guaranteed fail for the HCEs

1. prior year testing selected (not a new plan)

2. not amended to switch to current year prior to the end of the current year

3. no match was made in the prior year

If my statement above is not correct, I would appreciate any authority for any other options. Thanks

8a on the 5300 asks "Do you maintain any other qualified plan(s) under section 401(a)?"

Does it matter if the plans cover the same group of employee's or not? Or should this be answered "yes", regardless of whether the plans cover the same employee's?

Facts:

Company A purchases 80% of stock in Company B in 2007. Both A & B have existing 401(k) Plans with 12/31 Plan Year End. Transition period ends on 12/31/2008. Company B terminates their 401(k) plan on 12/31/2008 and distributes all assets during 2009. Neither A or B is a participating employer in the other companies plan. Prior to stock acquisition neither company had any ownership interest in the other. Company A has 10,000 employees while Company B has less than 50 employees.

Questions:

1. When do companies A & B become related control group members--on the acquisition date in 2007 or after 12/31/2008 when transition period ends?

2. Does 401(k)(10) prevent Company B's terminated plan from distributing deferral assets in 2009 because Company A maintains a 401(k) plan?

3. Does the fact that no employees in Company B are allowed to participate in Company A 401(k) plan either before or after acquisition entitle Company B's terminated plan to distribute deferrals because Company A plan would not be considered an alternative defined contribution plan?

Thanks.

401(k) Plan Terminations in control group

We issued a distribution check to a participant in November 2009, however the check has not yet been cashed. Do we issue a 2009 Form 1099R for this participant?

My understanding is a 1099R is issued when the check is issued to the participant - not when it is cashed.

Any guidance would be appreciated.

I have just been reading the long thread regarding Otherwise Excludable Employees. I have not been able to find the answer to this question. For ADP testing, are we able to use compensation based on the statutory exclusion limit?

We have a plan that has immediate eligibility for deferrals but has a year of service with semi-annual entry dates for the profit sharing. If I have a participant who was hired on 3/17/08 and terminated on 7/10/09, could I use the compensation from 7/1/09-7/10/09 for ADP purposes although the participant had deferred from the beginning?

I have calendar year plan (BOY VAL.)with COB of 23000 from 2007 schedule B line 9 o. This was reported on the 2008 Schedule SB.

No contribution was required for 2008 plan year so no reduction is COB was needed.

With the 2009 valuation, the plan has now had a minimum requirement. If the sponsor wishes to elect to use the COB toward the Min. Req. Contr., they will due so as of 1/1/2009 (plan valuation date).

My question is, is it correct that I adjust the 23000 by the Plan's Actual Rate of return for the 2008 plan year BEFORE it is used to offset contribution?

In other words, if Plan's 2008 ROR was -10%. Is the amount available to be used on 1/1/2009 20,700 (23000 x .9)?

I appreciate your help.

In my final 401(k) amendment, it referecnes section 1.401(k)-1(d)(2)(iv)(A). However, I cannot find that section. I found 1.401(k)-1(d)(2), but I do not see any subsections.

Can anyone point me to this reg?

This is where I was looking: http://edocket.access.gpo.gov/cfr_2005/apr...01%28k%29-1.pdf

(it is on p. 303, or p. 10 of the pdf)

Participant had the option of participating in Employer's group health plan. The employer pays half of the employee's premium and the employee pays the other half, plus dependent coverage.

The Participant obtained individual coverage and has elected not to participate in the group health plan.

May the Participant still participate in the flexible spending account, i.e., pay co-pays, prescriptions, etc. through the plan?

Here is the situation:

3 plans are members of the controlled group. 2 of the plans are 10/31 PYE- 1 12/31 PYE. Effective 11/1/07, the plan froze their DB contributions to new employees and added a profit sharing contribution that is a point based allocation formula. For the 2007 plan year there are no HCEs receiving this contribution. The other 2 plans have profit sharing as well however they are a % of compensation allocation. Since one of the contributions is not a uniform rate, we feel general testing is required. The question is how to run the general test or is it even required for the 07 time period since there are no HCEs. If testing is required, and this contribution passes on its own, would you only use that population in the general test and treat all others as nonexcludable not benefiting? Which actually brings up another question...Can each profit sharing contribution be treated separately if it passes coverage separately? For example, Group A treats only group A employees as benefiting, but treats Group B & C employees as non excludable not benifiting.

Any thoughtw would be greatly appreciated...

Sounds simple, I know.

Assume the following:

DC plan with 5-year graded vesting.

Vesting service is defined as calendar year with 1,000 hours.

Following 2009 plan year, participant is 60% vesting.

Participant completes 1,000th hour in April, 2010.

Under this scenario, the participant will certainly get his additional 20% vesting for 2010 and will be 80% vested following the 2010 year. Nothing (not death, termination of employment, or burning the office down) will change that. Having completed a year of service for 2010, the participant will receive vesting credit for the year. But WHEN?

Specifically, if the participant wishes to take an in-service distribution in May, 2010, he obviously cannot take a distribution of the unvested portion. But how vested is he at that moment in May? Is he 80% vested because he's already completed 2010's 1,000 hours? Is he 60% because 2010's not over yet?

Sal's got an example on page 4.73 that's implying that either approach is permissible (although recommending crediting of the additional 20% immediately upon completion of the 1,000 for the sake of administrative hassle), but I was hoping for something more authoritative. Surely this is an issue that somebody's had to deal with on a practical level, before!

Any thoughts?

Have a plan sponsor that just changed their broker on their Fund Specific Platform 401k (not related to employer at all) to an employee that is in the Plan. I can't find anything that says that the employee is a disqualifed person, but they are a party in interest. Assuming no ownership, trustee status, etc., can the employee be the broker and/or financial advisor on a plan that he is participating in? I've never had this exact scenario before.

A physician in a practice retires in June, 2009. He had maxed out his 401(k) by 6/30/09 and retired with $100,000 in compensation. The practice is paying him as they collect his receivables and he gets paid another $100,000 in the last six months of 2009. The plan is a safe harbor 401(k) plan. Is his SHNEC 3% of $100,000 or 3% of $200,000?

I would argue that he earned the $100,000 of deferred compensation and it is compensation for hours worked and this is not "severance" pay.

If a person who lives abroad is granted an extension to file taxes beyond 6 months, do they still have until their extened due date- to recharacterize an IRA contribution, even if it is past October 15?

Without getting into a technical discussion about commutation factors and the way the 3 segment rates parce the lump sum, I ask the question about a person Age 40 so that the calculation is a normal lump sum calculation like.

Accrued Ben x v^25 x a65

Question: For a participant who is not impacted by 415(b), is the lump sum the greater of the Actuarial Equivalence defined in a plan document and the lump sum based on the new mortality table in 08' and the Segment 3 applicable rate i.e. 417(e)(3)?

Question 2: For a participant who is impacted by 415(b) is the lump sum the smaller of the Actuarial Equivalence and the Lump Sum using the segment rates [417(e)(3)]

Our plans have less than 100 participants so I thought there was a 105% of some rate to use, but is not applicable for the work I do. I wanted to know the 3rd possible calculation for my own curiousity.

Please someone advise me.

DBDude