IDP Cash Balance, single employer (not a controlled group either) plan was established in 2007, the effective date was 01/01/2007, signed 12/31/2007. Calendar year plan, calendar year corporate sponsor. The Empoyer EIN ends in 9. I thought that put them into cycle D.

We submitted for a D letter in January 2008 because the end of cycle D was over 2 years away.

The IRS Determination letter recently arrived (favorable) and it says that the letter expires 01/31/2013. January 31, 2013 is cycle B, not D. Did the IRS goof and simply give a new plan 5 years for their first D letter?

Another employer (exact same scenario as above in every detail other than their plan name and name of the sponsor) - they got their D letter in Nov. 2008 and that letter says it expires January 31, 2010 (which we expected).

Do we trust the 2013 date, or restate for cycle D and submit on cycle now?

Does anyone know if these distributions can be made under 457b plans?

An individual was a 25% owner at the time he sold shares to the ESOP and took a 1042 election.

it is now 10 years later, and the individual is no longer a 25% owner.

is the person eligible to receive shares (the loan is now paid off), or does the nonallocaton period last forever because they were a 25% owner at the time of the sell.

I was opening up investment statements and included with the statement was a letter from the investment company. The letter started out, "The Economic Stabilization Act of 2008 contained a provision that extended the date by which Form 1099 must be mailed to February 15."

This is the first we have heard of this. I tried to find an answer at the IRS web site but was unsuccessful.

Does this apply to all 1099 filings, or does someone know if this is specific to brokerage firms?

Thank you.

Kate Smith

Hi,

Client has a number of participants that are laid off, through reading I understand that being laid off may or may not be a distributable event, depending on a number of items....(unemployment comp and such). Is there a certain time frame when you can consider termination.....

I was just wondering how others have dealt with 'laid off' participants.

Also, lets say the laid off participant is rehired before distribution has happened, I would think that you must stop the distribution?

Thanks for the help.

Are there any restrictions (e.g,. under the IRS proposed regulations) on a Company charging "old" employees one rate for heath coverage and employees hired on or after a certain date another rate (given that new employees, by defintion, are non-highly paid)?

I have a question regarding prohibited transactions and a Roth IRA, LLC. I have an owner of a building who wants to transfer the building to an LLC at fair market value. The owner of the building still wants to occupy the building and pay fair market value lease income to the LLC under a triple net lease.

The tentative plan is the members of the LLC will all be ROTH IRAs, including a ROTH owned by the original owner of the building. The ROTH IRA owned LLC may eventually own 10-20 buildings all structured as indicated above, meaning all the ROTH’s will be owned by the former owners of the commercial real estate.

This appears to be a series of prohibited transactions since the owner of the building is technically the LLC, the LLC is owned by ROTH’s which are owned by the buildings tenants and former owners. Do you agree or is there a way to structure the arrangements to not violate the prohibited transaction rules? Would the answer be different if the LLC was only owned by 2 ROTHs’? 50 Roth’s?

A law firm has 3 partners and one employee has been described as a "non-equity owner" that owns 10% of the business. His compensation is based on his ownership percentage.

For qualified plan purposes, is there any difference between an "non-equity owner" and an "equity owner"?

From what I've read, non-equity owner sounds like a title more than actual ownership in the firm. There is no buy in, and their authority is limited, so I'm not sure if this is a true owner or not?

A 457b governmental (non ERISA) plan has a loan program that allows one loan. A participant sent in an ACH payoff of the first loan and a second loan was issued. However, the payoff had insufficient funds and did not go thru. Now the first loan has been reinstated resulting in two loans, a loan program violation. Participant refuses to payoff first loan. What is the remedy - default the first loan, but then technically the second loan should be payroll deduction and it is not. Also two loans are not allowed, but I do not think the IRS or ERISA Prohibited Transaction rules apply to these plans.

I'm filing a request for determination for an individually designed 401(k) plan. Its a 12/31 year-end. In reviewing, the restatement effective date says 1/1/2008, but it wasn't signed until 10/10/09. The plan is a Cycle D filer with a required submission to IRS by 1/31 to stay on-cycle. I basically understand the rules of discretionary amendments needing to be signed by end of plan year and required by due date of tax return plus extensions. I also remember the old GUST restatements where you could go back several years as long as operational. There were no changes requiring a restatement as of 1/1/08. Not sure why it wasn't 1/1/09, but in any case do I have to do an amendment to the plan?

I have been reading past posting in hope of finding a way to collect compensation and deferrals for a multiemployer plans. I know that one pratice is to multiply the hours worked during the year by the participant by the negotiated hourly wage under the current collective bargaining agreement covering that participant. Another source of information is the contribution remittance reports filed by each employer with the plan. However, the Service does not permit ADP testing using data that is not accurate with regard to each participant. Does anyone have a solution to this nightmare.

Thanks

I have a participant who took out a loan in 2003. No payments were ever made for whatever reason. So far, not tax forms were issued for it. So I am going to have one issued. What code does it get? P for 2004 (the loan defaulted Jan 1, 2004)? Or is it a 2010 form?

Also, because the person is still employed, the loan is still considered outstanding, correct? And if he decides to pay it back (a big if), would those payments come in as after-tax payments, creating a basis, since he'll already have the tax burden of the money?

We have a plan that only allows for one loan to be outstanding. Somehow, the plan granted a second loan to a participant in error. How do we correct this? Plan refuses to permit two loans. This appears to be a prohibited transaction and an operational error because the plan does not permit in service distributions. ERISA Outline states that in order to correct the prohib transaction you have to cancel the loan and repay the plan. Does the plan sponsor have to repay the distribution to the participant's account if we cannot collect the unauthorized loan back from the participant? Does it then become a loan between the employer and the participant? Do we issue a 1099R to the participant? Any guidance would be helpful!

Is it still the case that a change in control of a partnership, or an LLC taxed as a partnership, is an allowable payment event under 409A, or has something changed in that regard? If nothing has changed does anyone remember where the most recent IRS statement confirming that can be found? Preamble to final regs? Preamble to proposed regs? Something earlier?

I am preparing Demos for a Schedule Q filing for an Age+Service based Profit Sharing Plan that counts prior service from affiliated employers to be counted for eligibility, vesting and allocation. I have not done many of these for DC plans, but i have not seen any Demo 7s done for any of our DC clients and was wondernig if the past service issue pertains to DC plans or not. Any help would be appreciated. Thanks.

We have an ERISA 403b plan that issued a second loan to a participant while only one loan is authorized under the terms of the plan. How do we correct this defect? I do not believe 403b plans are subject to the Code's prohibited transaction rules and excise tax penalties under 4975, but ERISA prohibited transaction rules apply. However, what does ERISA violation do, other than make plan vulnerable if there is a DOL audit? But there has been an unauthorized distribution under the terms of the plan which could cause plan disqualification and ERISA prohib. transaction violation too. So to correct you try to recoup money from participant, and if no success, can plan sponsor repay the amount to a forfeiture account to make the plan whole and undo the prohib. transaction? And then 1099 the participant for the distribution? Thanks for any comments you may have!

A tax exempt entity was a participating employer in a 403b plan, and now wishes to no longer participate and establish a new plan. Prior plan is funded with individual contracts. There has not been a termination of employment, only a termination of the employer's participation in a plan. How can participants move their prior contracts to the new plan - ie via a plan to plan transfer but only if permitted by both plans -what if prior plan will not allow? Can a rollover be done? There is technically no separation from service. Thanks

An individual has self-employment income, but also works as an employee for a separate, unrelated company. The individual has set up a SEP to make contributions out of earned income from the self-employment business and also participates in the separate, unrelated company's 401(k) plan. In this situation, does the section 415©(1) limit apply to the individual or to each of the defined contribution plans?

In other words, does the $49,000 annual addition limit for 2010 apply to the SEP and the 401(k) separately (for maximum potential across both plans of $98,000) or is the individual limited to $49,000 in total (for both the SEP and the 401(k))?

I understand that the elective deferral limit of $16,500 applies across all DC plans, but I'm not sure if the section 415©(1) annual addition limit applies to each DC plan (regardless of how many plans in which an individual participates).

Any guidance would be greatly appreciated.

Best regards,

Bob

I have a DB plan with a sole proprietor. He earned way over the max. comp. limits for the year. He contributed much of his income into the stock market this year and wants to take the money he contributed (paying taxes on any gains) and contribute it to his defined benefit plan. Any issues with this? I know if it was money contributed from prior years you would have issues, but this is money he earned duing the year and instead of putting hit into a bank account he invested the money. I have an actuary telling me it is ok....I'm not sure.

Don't know much about 401(a)'s but was wondering why a company would want to move from a 401a to a 401k? Any advantages?

Also, if they adopt a 401k plan, can they transfer the 401a money into the newly established 401k? Could that be done like a provider-to-provider transfer, or would the company have to cancel the 401a plan, establish the K plan, and then each participant would have the opportunity to roll their money into the new 401k plan or an IRA?

Thanks in advance!

On another note- If a company moves from a 403b to a 401k plan, can that work like a provider-to-provider transfer, or does the company have to cancel their B plan and establish a start-up K plan, with the participants having the option to roll their money into the K plan or an IRA?