Since church plans are not subject to IRC 430 i was curious to see how others are calculating the liability for the 110% test post-RPA. Also, are church plans subject to IRC 436?? Thanks.

For 2008 and earlier plan years, is there any place on the 5500 or any Schedule where the EIN of a mutual fund held as a plan asset might have to be identified? (No response relating to Schedule C reporting for 2009 and later is necessary, thank you.)

Hi all,

I am hoping someone could offer some insight to this question.

I have a plan that is looking to terminate in the next few years. Plan is currently frozen. Aftap is around 85% for plan year 2008. FSCOB stands at 100,000 for 2008. The MRC for the 2008 plan year is zero.

Say the employer decides they would not like to use any of the FSCOB in the 2008 year. They just want to let it ride. Are there any benefits to this?

I understand if the actual rate of return of the plan is positive, the FSCOB for the 2009 plan year will be increased. However, is there another angle that I am missing?

Also, say under a different scenario we tell the employer the maintain the FSCOB and to contribute excess contributions for the 2008 plan year...maybe 50,000. Of course this will not add to the FSCOB, but could be elected to be added to the PFB. Or they can just toss the 50,000 excess into the assets.

Good idea, bad idea? I am not very sure.

Help greatly appreciated.

Do the 415 limits apply to ancillary benefits from a multi-employer qualified DB pension plan, like a monthly disability?

At what point in time do you apply the 50% limit in a daily valued plan? My inclination (based on the DOL reg. and the effect of Section 72p) is that you apply 50% against the vested account balance as of the date the loan proceeds are distributed (rather than, for example, on the date the participant completes the loan application process)? Anyone agree or disagree? If you agree, is that the way loans are typically administered in a daily valuation environment? Is there any specific IRS or DOL authority on this issue which I may have overlooked?

Need some assistance in this complex area, with which I am not that familiar.

Facts:

Owner owns 100% of medical management company, which provides billing, management, etc services to 4 medical practices.

Owner owns 20% of medical practice #1, <5% in other 3 medical practices.

Medical Management Co's revenue evenly split - approximately 25% from each medical practice.

Is this an affiliated svc group, and which companies are included?

Thanks for any assistance.

We have been contacted about a type of VEBA being pitched to an employer. We're not sure if this type of VEBA will work or not. Here's how I understand the promotional materials for this VEBA--

This VEBA would be for retiree medical benefits. It works like a defined contribution plan. Each employee will have its own account. When an employee and spouse die without having used all of that employee's account, the remainder is reallocated to the VEBA accounts of the other employees. This reallocation is in proportion to the balances then in the other employees' VEBA accounts. On the other hand, no employee or spouse can receive retiree medical benefits in excess of the balance of the employee's VEBA account.

All contributions to the VEBA are made by the employer. The employer adopts a health reimbursement arrangement--HRA--that calls for employer contributions equal to the value of the retiring employee's earned but unused paid vacation time and sick leave. The retiring employee has no choice of a cash out or receiving anything else for that vacation time and sick leave.

All other HRA contributions the employer makes to the VEBA are made in the discretion of the employer, like profit sharing contributions to a 401k plan. The allocation of the employer's HRA contributions to the VEBA are not factored upon differences in the employees' compensations.

In the VEBA brochure refers to private letter rulings (200452013 9/14/04 and 200549008 9/16/05) in the claim that the IRS allows this. From my quick read, it looks like the IRS has allowed a design like this.

There is no ruling cited for the part of the VEBA that is most appealing to our client. While the allocation of the discretionary employer contributions do not depend in any way on differences in compensation among the eligible employees, different numbers of years to retirement are. It is explained that this is like new comparability for profit sharing contributions to a 401k plan. It gives an example of a situation with two employees, the owner at age 56 (9 years to age 65 retirement age) and the other employee at age 38 (27 years to age 65). If 8% earnings are assumed, then of a $100 contribution made by the employer, $20 can be allocated to the 38 year old and $80 to the 56 year old. Both will have $160 in benefits when they separately reach age 65.

The brochure explains that there is no IRS ruling allowing for this new comparability factor in the allocation of the discretionary employer contributions, but explains it makes more sense to compare the benefits of each employee at age 65 rather than when money is contributed since Code section 105(h)(2)(B) calls for nondiscrimination in "benefits provided". That makes sense to me, but I would feel more assured if the IRS had ruled on this.

Any comments on this type of 'new comparability' VEBA?

Client being advised to roll or terminate? existing DC SERP balances into new split dollar using loan regime. Can you convert an unvested DC balance into some type of split dollar? What would the accounting look like? How would move to split dollar work? Is this even possible, regardless ofbeing a good idea?

Thank You

A participant takes a nonqualified cash distribution from his Roth 401k account (plan terminated, age less than 59 1/2, less than 5 years participating). If income tax and early withdrawl penalties apply only to earnings on the deferrals, what happens when there is a loss on the basis?

Any resources would be helpful.

Thanks!

If I'm reading the regs correctly, this seems an unfortunate result, so I hope I'm missing something.

Client has matching formula of 50% of first 8%. Employees are 100% vested. The match for 2008 has not yet been contributed. When contributed, it will cause an ACP failure, necessitating a refund of some of the match.

According to 1.401(k)-2©(5)(i), if it isn't corrected within 2-1/2 months after the close of the year FOR WHICH the excess contributions are made, then employer is liable for the 10% excise tax under 4979. And 4979(f) provides no relief.

Is there something I'm missing, or is the employer just stuck? The way I read it, they are stuck. I've never happened to run into this situation before.

Thanks.

If a one-time loan administration fee of $300 comes out of the proceeds of a participant loan, and all of those loan fees add up to more than $5,000, is it reported as "service provider" income on Schedule C.

I think it is but the outside auditor doing the 5500 audit says it's an transaction outside of the plan between the borrower and the service provider and since the total amount borrowed will be repaid into the plan it should not be reported as fees coming out of the plan.

My feeling is that Schedule C is about service provider income and not necessarily the financial impact of fees to the plans overall assets.

Which way should I go? I'm thinking if I report it on Schedule C it would not tie to any numbers on Schedule H because it's not a fee that affects gains/losses in the plan. Maybe it's just a footnote on the audit report.

we are having an office dilemma.

For restatements distributions to terminated participants have several options, one being the distro can occur as soon as administratively feasible after the participant terminates. Another option is the distro may occur as soon as administratively feasible after the close of the plan year in which the participant terminates. The latter option allows for possible miscalculated matching funds to be deposited into the terminated part account and results in only one distro to the part rather than multiple under the former option. However, some of the plan administrators are going ahead and paying them out prior to the close of the plan year and not in accordance with the terms of the plan, which says "as soon as administratively feasible after the close of the plan year in which they terminate". For EGTRRA we are thinking of switching to as soon as administratively feasible after the participant terminates. That may allow the sponsor more flexibility. THOUGHTS?

A Plan Used $60,000 in forfeitures to Fund part of the Employer Contribution in 2008.

Where do I account for this on the 5500?

I have an employer that did not make their safe harbor match for 2008 regularly. They are just now funding most of it. Since it is due, latest, by the end of the quarter following payroll, it is a late deposit. What is the correction method for this?

thanks!

Two previously unrelated employers maintained 401k plans which are merged 6/1.

Plan X was merged into Plan Y effective 6/1.

If I plan on testing Plan X separately from 1/1 - 5/31, do I need to prorate my 415 compensation limit?

Additionally Plan X is audited, but there appears to be an exception to the audit requirement when a short plan year is created due to a merger which is less than 7 months. Is this true? I understand Plan Y will be audited for the full year.

Thanks

Our insurance carrier has just sent out student verification letters. The letter states that if the dependent is no longer a full-time student (fall quarter), that they will be retroactively terminated from coverage back to July 1st and any claims that were processed after July 1st will be backed out and the dependent responsible for payment. Under this scenario, the student has to be given the right to elect COBRA. So the termination date is July 1st, but the notification date is October 1st (date required the student notifiy the carrier whether or not they are a full-time student). I am telling the insurance carrier that they have to keep the dependent covered until they are notified of the COBRA election. They are telliing me since it's the participant's responsibility to notify someone that their child will no longer be a full-time student, they are allowed to do this. My contention is that the term date would be Sept. 1, not July 1, the date school would have started. Any comments?

The judge signed a QDRO directed to my ex's deferred compensation plan. The judge stated that the alternate payee's share is:

"fifty percent (50%) of the Participant's account value that accumulated between February 21, 1991 and September 30, 2005, together with earnings or losses, as determined by the Plan, until such time as the account is established for the alternate payee."

Since the judge used the word "accumulated", I took that to mean that he was including all interest earned between those 2 dates and that this also included the interest on my ex's pre-marital portion.

The fund disagreed and interepreted it to mean that my ex is entitled to have the interest/earnings/losses portion on his pre-marital share that was earned during the marriage. They also stated that they couldn't do calculations of interest from years 1991-1994.

The Fund had no statements for m ex's pre-marital amount so they said without that they couldn't implement the QDRO. I had a statement for the quarter ending 12/31/90 and asked them if it would help with calculations if I sent it. My ex did not have this statement. The only record the fund had of my ex's contributions was the actual amount he contributed for years 1989 through 1991, which was less than the amount on the statement I had.

I sent them the statement and the Fund said it would try to do calculations.

What should I do if I do not agree with their calculations?

Should I have just let the fund reject it and submit a new QDRO to the judge with similar language:

"fifty percent (50%) of the Participant's account value that accumulated between February 21, 1991 and September 30, 2005, minus the amount of the Particiant's actual contributions before Feb 21, 1991, together with earnings or losses, as determined by the Plan, until such time as the account is established for the alternate payee."

Does anyone have an opinion on this?

With the new PPA funding method, when a plan has been "around a while" you sometimes get a huge disparity between the minimum required and maximum permissible contribution. We have been running our valuations under say the "old school" individual aggregate just to get what we like to call a "suggested contribution" amount. It gets a bit tricky with sole props of course..lol

Just curious as to what others are doing on their vals?

Was there any input from the IRS at the ACOPA meeting regarding these questions? Should the carryover balance be subtracted in order to determine the FTAP and AFTAP?

A client had a payroll on 12/31/2008, but the check was paid on 1/2/09.

Does the employee deferrals counts towards the 2008 or 2009 402(g) limits and will they show up on the 2008 or 2009 W-2 for the Employee?