Assuming a 401k plan passes coverage, are resident aliens excludable from the plan? Is there any possibility this would violate any federal non-discrimination laws regarding discrimination based on race or national origin?

A small business is ready to begin a new 401(k) retirement plan. The business is the manager of an SEC-registered publicly available mutual fund. The business wants to include this fund as a plan investment alternative. (In addition to the specified fund, the plan fiduciary will select prudently at least one fund in every recognized general investment category, other than the category of the settlor-named fund.) Instead of a typical discretion that allows a plan fiduciary to select the investment menu, the business will create the retirement plan only if the plan specifies the "inhouse" fund as a settlor act.

1) Does any documents provider offer a prototype or volume-submitter plan that allows a user to specify a plan investment alternative by name?

2) Would such a plan have language (whether in the base plan or an adoption agreement) that precludes every fiduciary from removing the settlor-named investment alternative?

3) Would such a plan have language that precludes the plan sponsor from amending the plan to remove the creation-named investment alternative?

Or would a lawyer be right to tell this business that implementing its purpose means paying for a custom plan document?

I hopefully have some basic questions that maybe someone could shed some light on.

A client sponsors a nongovernmental 457(b) plan which they have funded and established individual accounts for each of the plan's participants. The plan only allows employer contributions.

In general, how does vesting under a nongovernmental 457(b) plan work? Must it be specified in the plan's document? In this particular plan's document, there is no mention of vesting or forfeiture.

This is a new takeover for us. A participant is going to be terminated for "cause" and the sponsor is insisting that they can take back the money that has been funded and not pay anything to the participant.

Any input would be appreciated.

So, a company has a retirement plan that they institute, and add a reference to it in their Employee Handbook. The Handbook reads (in full):

YOU ARE ELIGIBLE TO PARTICIPATE IN THE [name] RETIREMENT PLAN. PLEASE CONSULT THE PLAN DOCUMENTS FOR SPECIFICS.

YOU WILL BE AUTOMATICALLY VESTED AFTER THREE YEARS OF CONTINUOUS SERVICE.

The next year, the company decides to offer a retirement bonus (unrelated to the retirement plan.) Another sentence is added to the Employee Handbook (between sentences 2 and 3, above):

AN EMPLOYEE WHO RETIRES IN GOOD STANDING WITH OVER 25 YEARS OF SERVICE WILL RECEIVE A BONUS EQUAL TO . . . [and then lists the benefit].

The only references to this plan are the board minutes approving it, and this sentence in the Employee Handbook. The company now wants to eliminate this benefit, but I am afraid that they have created a vested benefit for employees with three years of service by putting it on the same page of the handbook as the vesting language.

Thoughts? Disagreements?

Folks:

We had a discussion a while back regarding UBIT and tax-exempt income.

I did discover a Revenue Ruling, 76-337, in which a social club did not have to include in gross income interest on obligations of a State.

I have not found a revenue ruling regarding like insurance income as not being included in gross income.

Could this revenue ruling be used as a precedent?

Don Levit

A not-for-profit organization receives donations in December that are meant to be disbursed to employees as a holiday benefit. In the past these dollars have been going through payroll, but it seems like there should be another way to pass this money around without incurring payroll taxes. Most of these employees are in the lowest tax bracket, so income tax isn't the issue -- it's payroll tax we're trying to avoid. Is there a VEBA or Welfare Benefit Plan that would support this type of arrangement?

If minimum required contribtion (without regard to carryover/prefunding balance) = $100,000

and carryover balance = $20,000

and employer contributes $150,000 on a discounted basis

what is line 38, "interest-adjusted excess contributions"?

Is it $50,000, or $70,000? Or something else?

And wouldn't this be the same as 19c in many cases?

Thanks

A Company has two divisions one with 80 employees and the other with 20. They include in their Document that the second division's employees are excluded from the Plan. Therefore, they are not given the option to do their own deferrals either.

At the end of the year it is discovered that there were only 20 employees at the beginning of the year in each of the two companies (there are no HCEs in either). So we now discover that coverage and participation is NOT satisfied. We obviously need to include the 2nd division in ADP/ACP testing. But what about the fact that they were prohibited from deferring when, in reality, they needed to be included?

I know there is a corrective method if you accidentally prohibit someone from participating. But here it was actually in the Document.

Any advice? Thanks in advance.

It is clear that you can only roll distributions FROM a designated Roth account into a Roth IRA or a another designated Roth account. IRC §402©(8)(B) (flush language) and IRC §402A©(3).

But is there any situtation where you could roll monies INTO a designated Roth account from something other than another designated Roth account? The answer seems intuitively "no." But I'm wondering if there is Code or Reg. language to support that.

I'm just trying to get an idea of what people are doing with regards to certifying 2009 AFTAPS for calendar year plans in the absence of final regulations. Are they being certified and if so on what basis??? Thanks.

I am in this process of submitting our EGTRRA restatements for a favorable determination letter, as a newly designated ERPA i can now sign the 2848. What I want to do is add a CAF# to the 2848. What I intend to do is send in a EGTRRA submission for one of my clients and enter "none" on the 2848 next to the CAF#, and I will then receive a number in the mail.

My question is:

Is there any easier way to apply for a CAF number?

If not can I take the 2848 that I sending out with my first EGTRRA submission, fax it in to the CAF fax number that I found on the IRS website and then send it again with the EGTRRA submission. Maybe this would speed up the process.....(sorry for the stupid question but everytime I call the IRS I can't get an answer).

I want to have the CAF # as soon as possible so I can enter them on all of our 2848 that we send in with our EGTRRA submissions.

Assume the employer makes HSA contributions for those employees who participate in the employer's HDHP.

The penalty, as I see it, for not meeting the HSA comarability rules is an excise tax equal to 35% of the amounts the employer contributes to all HSAs for that calendar year.

If that's correct, why couldn't an employer exclude everyone from the HSA contribution program except the sole HCE? Rather than potentially paying mucho bucks to other employees' HSAs, the employer is simply stuck with a small penalty based on the HSA contributions made for the one HCE?

Is there something I'm missing?

I am working on a very small plan where there is a last day requirement in order to be eligible to receive a Profit Sharing Contribution.

The owner of the company was the only eligible employee at the end of 2008, and wants to allocate the entire $10,000 profit sharing contribution to herself.

Will I run into any coverage issues? What type of testing is required on the Profit Sharing Contribution.

Thanks in Advance for the assistance.

We have a participant in a DB plan who completed distribution forms for an annuity payout. The next day the payment was made. Four days later, participant requests a change to lump sum. Tax withholding has not yet been sent out, if amount is repaid, we could reverse the entry, but should we?

Are there any circumstances where a negative target normal cost is possible?? Should a participant be floored at zero or should the floor be at the plan level?

This goes back to the IRS position where they do not particularly care for negative costs.

One of our recession-hit plan was unable to put in the last $10,000 of the 2008 MRC, after electing to waive off the entire COB.

Can I recertify the 2008 valuation using WRERA provisions like asset smoothing ( hadn't done that earlier ) so that the funding deficiency disappears?

Has anyone done the same or faced a similar situation? Is there a deadline for this, I thought it was sometime in October.

Looking for all possible help! Thanks.

A plan Sponsor inadvertently deposited their DB contribution into their 401(k) plan (plans are with the same vendor). When we noticed we had them transfer the assets from the 401(k) Plan into the DB plan. Later on I was told that this in fact can disqualify the Plan. The money should have been pulled out of the 401(k) plan as a mistake of fact, and then redeposited into the DB plan. Is this true? And what's the difference? I could argue if we had them pull out the money from the 401(k) it looks like the assets reverted back to the employer, which is a no-no also. What would be the correct way to handle this, by law?

A company will add an HSA option mid year. I don't know yet if this will be inside or outside their 125 plan.

The main question being asked is can this trigger a change of election wherein and employee drops their FSA in favor of the HSA. I say it does not.

My own question is can (or what's the use of) an employee have both an HSA election and an FSA. election?

Hello:

We have an ESOP that is being reviewed under Cycle B and the IRS is asking for our amendment to the ESOP for the final regulations to 409(p). The IRS indicated that the final regs 409(p) amendment must have been adopted by the plan sponsor on or before December 31, 2006, because the final regulations were effective January 1, 2006.

I recognize that on the 2006 cumulative list (which covers Cycle B submissions) that the final regs to 409(p) are listed on there; however, I disagree that a final regs 409(p) amendment was required to be adopted by the ESOP on or before December 31, 2006.

I have three questions:

1. Is the IRS correct that an amendment required to the ESOP for final regulations 409(p) on or before December 31, 2006 (the ESOP is a calendar year)? (Please note that if the answer is yes, I find this hard to believe since the final regulations were only issued on December 19, 2006).

2. If the amendment was required, is it the same language as is in the model amendment issued by the IRS in 2008?

http://www.irs.gov/retirement/article/0,,id=184380,00.html

3. Does anyone think that the IRS is just mistaken and is confusing the triennial methodology discretionary amendment (which is only required if the plan decides to use the triennial method). http://www.irs.gov/retirement/article/0,,id=173372,00.html

I sincerely appreciate any input.

Elizabeth

We merged several plans, and unfortunately the largest was not the survivor. So we want to file SSA's that show about 15,000 participants who had been reported as A's in the old plan over history as D's for the old plan and C's to the successor plan. Our auditor (who's also doing the 5500) is saying that they can't get the EFast to load more than 9,999 records for the SSA.

Anyone out there who has been successful doing that?

To make it more interesting, we'd like to do a cleanup sweep of all the terms who have ben paid out, to make sure that they are deleted. But that would give us in excess of a quarter million records. I'm not optimistic about that one.