Client deferred more money than employee requested. When returning excess money should earnings be given?

Doesn't seem to be addressed in Rev. Proc. 2008-50.

My thoughts:

EPCRS attempts to make employee whole, as if error had never occurred. If earnings loss then return principal amount. If earnings gain, then include earnings.

Please provide citations.

Note: this is not a 402(g) or 415 issue. Company just didn't follow admin procedures.

Worker dies in late February. His name beneficiary, who is also his sole living relative, is a daughter. She then dies in early March. Her remaining relatives are two minor children (grandchildren of worker), who she defined as her beneficiaries in a will (not related to Plan). A court order has been issued that says pay to either (???) the estate or the minor children. If the latter, monies are to be sent to a "trust account" for the 2 children.

My thoughts are that the payment should be to the estate as the grandchildren were never named as beneficiary of the worker. Comments?

It seems as though companies not required to capitalize costs under IRC Section 263A can deduct IBNR as long as they accrue it without having to fund same. Service companies such as accounting and consulting firms come to mind.

What other firms can take advantage of this departure from the 1972 U.S. Supreme Court decision involving General Dynamics?

Jack, a 5% owner, was born 2/15/1939 so Jack turns 70 1/2 on 8/15/2009. His RBD is 4/1/2010. The defined benefit Plan covering Jack allows for inservice distribution after age 70. Jack elects to take a lump sum distribution in July 2009.

Q1: Is part of the lump sum considered to be a minimum required distribution and therefore not eligible for IRA rollover? In short, does taking a lump sum distribution nullify the ability to defer the minimum until the next April 1?

Q2: If the answer to Q1 is "yes," is it valid to determine the minimum distribution as his lump sum divided by the joint life multiple for Jack and his wife (Jill)?

If we elect to use the yield curve for a November 1, 2008 valuation (using the valuation month), are the rates 7.11%, 8.23% and 7.42%? These rates would definitely lower the Funding Target.

Are these rates used for all purposes of the valuation calculations (i.e. AFTAP, benefit restrictions under Section 436, PBGC). How long are we stuck with using the yield curve (versus the segment rates)?

When does the plan sponsor have to make this election to use the yield curve.

Any other comments?

I need some clarification regarding conversion of my traditional/ roll over IRA to Roth IRA and Required Minimum Distribution(RMD) from IRA and annuity with the following facts.

My date of birth is July 16th. 1939.

I file Income tax as married file jointly and my AGI is less than $100,000.

I will be 70-1/2 on January 16th. 2010.

What will be my required beginning date to receive distributions from my IRA. April, 1st. 2010 or 2011?

What is the maximum amount I can convert traditional Ira to Roth IRA?

What is the end date after which I can not convert my traditional IRA to Roth IRA?

What is the RMD for my Annuity?

How can I tell if a given EB plan is an H&W plan or fringe benefit plan?

I've been reading a lot of very informative posts about employees "sham" quitting to receive a distribution and then being rehired shortly thereafter, but I haven't seen an answer to the question that has come up for me...I'd love to get your thoughts.

A participant terminates employment from a 401(k) plan and elects to take her distributions in installments. Several months later, shortstaffed, the employer hires her back in a part time position. The TPA is not notified and payments from the account continue to the participant. (You may assume that the termination and rehire are bona fide.)

The Plan has a provision that suspends installment distributions of elective deferrals, QNECs, QMACs and Safe Harbor distributions upon rehire, but is silent on the issue of whether installment distributions of other amounts (such as Employer discretionary distributions) are also suspended. No in-service distributions are permitted under the Plan.

The TPA recently became aware of the situation and now claims that all distribution installments made to her were in violation of the plan terms and must be paid back. The participant is devistated as she's been using the money for her living expenses and can't possibly come up with the repayment.

What should have happened upon this participant's rehire? Are the amounts already provided to her really "overpayments" that must now be recontributed to the plan?

If a 401k plan is amended to add an In-Service distribution provision and the provision is utilized by at least one participant, can the plan later be amended to remove the In-Service distribution provision so that no other participants may receive an in-service distribution?

I'd heard that the 2009 waiver of the RMD from a 401(k) plan by the company's owner does not apply, and thus he MUST take the RMD in 2009???

I can't find a thing on the internet, or the IRS website, for that matter, that shows this as being fact.

Individual is involuntarily terminated in November 2008, begins COBRA for himself and his dependent child as of December 1, 2008.

Coverage for both is in place on February 17, 2009, but due to costs the individual drops his coverage before receiving COBRA subsidy notice. Dependent's coverage remains in place. Does the individual get a second chance election?

Does anyone know the amount of the Central States Pension Fund's UVB's ("unfunded vested benefits") for withdrawal liability purposes as of December 31, 2008? Does anyone have an insight as to how to estimate the withdrawal liability without a formal request to the Fund?

Someone asked a similar quetion a few years ago, and that person actually got an answer! So I'm hoping someone here can help me out!

Calendar year 401(k) profit sharing plan, PYE 12/31/2008. Owner was self-employed through 6/30 and then became an S-Corporation (owner was not paid W-2 wages from the S-Corp in 2008). The CPA just gave me the figures to calculate the employer contributions for the year and said that the client was paid $50,000 in "management fees" from a vineyard that are subject to self-employment tax; however, these management fees are not reported on the Schedule C (owner had Schedule C income of appx. $150,000). Do I include the $50,000 when calculating the owner's net earned income or do I ignore it and just use the Schedule C income?

Any assistance on this would be greatly appreciated.

Thanks!!

Wanted to doublecheck the IRS disclosure office to forward letters for under 50 participants

Went to irs.gov and it appears to now just be one address in Doraville, GA

In the past, I've sent to a local disclosure office

Can anyone confirm that it now the GA address

The 202 # in DC I called today does not answer

thanks

Lexy

Company X sponsors a 401(k) plan for its employees. Currently, the plan provides that participants may obtain an inservice distribution of matching contributions prior to age 59 1/2 if such contributions have been held in the plan at least 24 months or the employee has participated in the plan for at least 60 months. The distribution of the matching contribution results in a 6-month suspension of matching contributions. The same provisions apply to withdrawals of matching contributions after age 59 1/2. Company X would like to amend its 401(k) plan as follows: (1) with respect to pre-age 59 1/2 inservice distributions, by removing matching contributions as an eligible source for distribution; and (2) to remove the suspension period for post 59 1/2 in-service distributions.

With respect to (1), is such an amendment a cutback prohibited by Code Section 411(d)(6)? If so, is a viable alternative to simply amend the plan to state that matching contributions after a certain date will not be available for pre-59 1/2 in-service distributions? I looked at the IRS regs and thought there was more flexibility as applied to in-service distributions than appears to be the case.

Is there a minimum excise tax amount for filing a 5330?

I have a case where the client did not remit data until after the 2 1/2 month deadline. Of course, there turned out to be an ADP failure with a refund due of $62. The 10% excise tax would be $6.

Is this really necessary? I thought I saw a few years ago that anything under $10 need not be filed, but could be getting that mixed up with something entirely different.

If you missed a 2008 RMD for an employee that was due 4/1/09 and it is under $75 does it actually have to be made? Do they still expect me to file a VCP application if I am using this De Minimus rule? Obviously based on the amount, I would just pay the excise tax instead of filing VCP.

I would think this de minimus rule clearly relates to SCP situations but does it apply to situations where a VCP application is required?

Thanks

Plan has monthly entry dates.

Per all our discussions last year, the ADP test will be done using only 1 semi-annual entry date.

Plan allows ADP test to exclude compensation before employee/participant is eligible for the plan.

So when I get the compensation for the tester, do I get the compensation after the employee actually entered the plan according to the plan provisions, or do I get the compensation as though the employee did not enter the plan until the semi-annual date used for testing purposes?

I still do not fully understand what is allowed when I am "tweaking" the rules for maximum test benefit.

My questions concerns COBRA and AFLAC. My wife was recently laid off and we are now on COBRA insurance from her work. I have the oportunity to sign up for AFLAC with my company ( it is my own company and have 2 other employees, and we are in process of looking at AFLAC and currently do not offer any type of medical insurance ) I am worried that the AFLAC would be considered Group insurance and thus make us disqualified from taking COBRA. I know COBRA is negated if you become eligable to take a group plan elsewhere. I dont want to take the chance of losing the COBRA. I had read on this board the following link

http://benefitslink.com/boards/index.php?a...5610929e80e8d44

It sounds like it would be considered a group since I also am in TEXAS.

Please can someone give an acuurate determination or tell me how to find out.

Thanks,

This looks like a great board.....

I found the answer thanks