A client in an unusual situation wants to be certain of bankruptcy protection and wants the added protection of having a a determination letter. No body has the first document from the 80's. Will the IRS issue determination letter if you do not give them all of the documents for the Plan?

I received a K-1 for a stock I have in an IRA at Fidelity Investments. It is an LP which I do understand has tax possibilities in an IRA. My understanding was that if UBTI exceeds $1000, it is taxable. Is that correct? Probobly not the smartest thing I did buy in this in an IRA but did not expect the UBTI to exceed $1000 and my dsitributions for 2008 was 978.00. The K-1 form I was sent by the company shows Ordinary Business Income of 1009. Does this mean I must file a return with IRS and that I have exceeded the UBTI by $9.00?

A participant requested her distribution be split 50/50 between a rollover to her new 401k and a cash payment to her. Through nothing but sheer "OOPS" by the TPA when requesting the distribution, a check for 100% of her balance was issued payable to her new 401k plan but mailed to her home address so that she could submit it with her investment election form for the new plan. She took the check to the bank and they cashed it. The payor of the funds (Nationwide) will be issuing a corrected 1099-R showing a code of "1" and no tax withheld and the participant will be claiming the entire distribution on her income tax return. But, what is the penalty for not withholding? Who is responsible for paying it? (enough blame to go around on this one... TPA,participant, bank that cashed the check). How does it get paid? Is there a form that must be filed?

We will be purchasing annuities for just retirees in a DB plan. In adjusting the AFTAP, do we look at all retirees to determine if they were an HCE at retirement, or does the HCE/non-HCE status apply to active participants only and therefore there would be no adjustment to AFTAP as retirees and whether they were HCE/non-HCE not considered here?

Also, if there is an adjustment to AFTAP, we would assume the adjustment to assets is the purchase price. Is the adjustment to liabilities the purchase price or the funding liability released?

Here's one I haven't seen before.

Client installed a new 401(k)/PS plan for 2008. clearly indicated on plan "set-up" papers that they wanted to allow up to 100% deferrals, catch-up, and Roth.

However, document was completed by TPA, and signed by client, not allowing deferrals.

Client deferred anyway.

Can this be fixed by retroactive amendment under VCP? There's no specific fixmin Appendix B. However, plan loans or hardship withdrawals that were allowed where document does not allow them are eligible for correction, so it seems reasonable to attempt this. Anyone ever run into this? Success or failure with a fix? Other fixes? Perhaps consider an excess deferral?

Are annual royalties from a previously published book automatically excluded as earned income for SEP contribution purposes? Does it matter whether the person is currently an author by profession? Where would I find the references?

Thanks!!

What limited due diligence do you TPAs out there accept as sufficient to cause you to believe that the rollover $$ are coming from a qualified plan? A recent statement showing sufficient assets in the partcipant's account? A statement actually showing the distribution which is resulting in the rollover? A check which mentions the name of the plan? A signed statement by the Trustee of the plan from which the assets are coming?

Once the DOL has granted an exemption from the prohibited transaction provisions, how long after does the applicant have to complete the transaction? For example, let's say the DOL approves the proposed sale of property from the Plan to a participant for all cash. As a condition of the exemption, the applicant agrees that the purchase price will be updated to fair market value as of the date of the sale. Once the exemption has been granted, can the applicant in a sense sit on the exemption for some period of time (say, 2 years) before consumating the transaction -- provided of course that none of the facts described in the application have changed?

We have company that is reducing everyone's hours 20%. My understanding is that a reduction in pay such as this is not in and of itself a qualifying event for a (status) change of election. Rather, the change must be based on a change in eligibility for benefits (such as full time to part time) or a change in cost of benefits. It is unlikely that a company has written into their plan document that a pay cut constitutes a change in eligibility.

If true, then is this written in the tax code somewhere (the client wants to know) or is it by implication; the fact that a change must be based on eligibility or cost and nothing else is mentioned?

Perhaps is there something I'm missing and these employees can change their elections under circumstances I'm not aware of?

Thanks

Edit: I forgot to ask: What about contributions the company is making to these elections? Are there any circumstances such as this one under which the company can change these amounts?

2 separate plans of a Controlled Group - Plan A (I am TPA): Only union employees excluded and the 401(k) portion has immediate eligibility. Plan B (another TPA): Excludes Japanese employees on temporary assignment at Plan B's Company, and has a 3 month wait for 401(k) eligibility.

For the coverage and ADP/ACP testing, I have used the lowest service requirement. However, can I include the Japanese employees that have met eligibility (immediate) in my ADP/ACP tests? Plan A does not exclude Japanese employees from Plan A.

Are there any cites to either a yes or no answer?

If a plan was subject to Title IV will it always be subject to Title IV even if it happens to meet one of the exceptions in Section 4021 in later years? For example, what if the number of active participants in a plan maintained by a professional service employer falls below 25?

A plan that excludes employees who customarily work less than 20 hours per week but contains language which states if hours exceed 1000 in any computation period the employee is eligible follows the participation rules under 410(a).

However, what happens if the plan has dual eligibility (immediate for deferrals and 1000 hours for employer contributions). When an employee is hired it is estimated (based on the job title) that they would work greater than 20 hours per week and are allowed to start deferrals. In the first employment computation period they actually work less than 1000 hours and continue to work less than 1000 hours in each subsequent plan year.

After the first 12 month employment computation period, when it was discovered they never worked 1000 hours, were you suppose to stop the deferrals and consider them excludable or since they were allowed into the plan do you continue to allow deferrals.

Any thoughts would be appreciated.

Employer wants to enhance benefits to long-service participants.

They provide (a) 3% safe harbor contribution.

(b) 4% discretionary contribution and

© wants to provide an additional 1% of comp each year once the employee has reached 20 years of service.

Testing part © is the issue. Should (b) and © be tested together or is disaggregation permitted here? Does it matter?

Does this reporting only apply to large plans? That is, a certain size or asset value or amount of underfunding?

I know it references AFTAP under 80%.

Thanks.

The Form 990 includes a section where Officers, Directors, Trustees, Key EEs and HCEs need to be listed disclosing compensation amounts. One of the items includes "The annual increase in actuarial value of a qualified defined benefit plan, whether or not funded or vested". Has anyone seen this and does anyone know what actually needs to be reported?? Thanks.

An owner of a company has two common law employees. Neither employee met the 21 & 1 requirement to enter the plan on 1/1/08.

The wife was hired 1/1/08.

Can the DB plan include the wife for 2008 and exclude the employees? That is, liberal entry for wife, but still exclude employees due to the statutory requirement.

Thanks.

A plan sponsor is looking for ways to cut costs. they currently maintain a calendar year pension plan. Active participants receive an allocation as long as they are employed on the last day of the plan year regardless of the number of hours of service. Terminated participants get an allocation if they work over 500 hours.

My question is could the pension plan be restated and avoid required funding for the current plan year which started January 1?

I have a QDRO that is almost approved for a 403(b) Plan. The 402(f) rules indicate that the PAYOR has to send a 402(f) notice (rollover notice) of tax consquences of a distribution . Does this notcie have to go to an alternate payee 30 days before distribution?

Any cites would be appreciated.

thanks

Could a plan document require that a claim for benefits (after exhaustion of remedies) be filed in state court rather than federal court?

I've been reading about a letter sent from the DOL's Boston office to a pension plan on July 1, 2008, directing the plan to independently value their alternative investments. Does anyone here know if/where I might be able to get a copy of the letter?