Owner (partnership) was contributing each payroll to her 401(k) deferrals. At the end of the year her contribuiton was $20,500.00

She just got her taxes done and the accountant says she over contributed and needs to get the money out of the plan. Her compensation ended up being only $1,000. I dont know why the accountant didnt use the deferrals as part of a deduction on her taxes.

Would you count this as an excess contribution and she has until 4/15/09 to get the money out?

An existing calendar year Profit Sharing Plan added a 401(k) provision and SHNEC 3% effective at 3/1/2008.

Client has provided compensation from 1/1/2008 - 12/31/2008 for the Profit Sharing contribution allocation.

Client has also provided compensation from 3/1/2008-12/31/2008 for the SHNEC 3% allocation.

Do we need to pro-rate the 2008 $230,000 comp limit for the SHNEC 3% calculation?

One owner earned $198,000 from 3/1 to 12/31/2008. If the $230,000 limit is pro-rated over 10 months, the owner would be capped at $191,667 for the 3% SHNEC calculation. Do you agree?

Thanks for your help!

An existing calendar year Profit Sharing Plan added a 401(k) provision and SHNEC 3% effective at 3/1/2008.

Client has provided compensation from 1/1/2008 - 12/31/2008 for the Profit Sharing contribution allocation.

Client has also provided compensation from 3/1/2008-12/31/2008 for the SHNEC 3% allocation.

Do we need to pro-rate the 2008 $230,000 comp limit for the SHNEC 3% calculation?

One owner earned $198,000 from 3/1 to 12/31/2008. If the $230,000 limit is pro-rated over 10 months, the owner would be capped at $191,667 for the 3% SHNEC calculation. Do you agree?

Thanks for your help!

The non-spouse beneficiary took a total distribution at the end of 2008 within the timeframes of the 5-year rule. However, the individual did not realize the he was able to take a non-spouse rollover under law, and I don't believe the TPA made this option clear to him. As I recall, QPs were requried to offer the non-spouse rollover option for PYs beginning on or after 1/1/08, despite lack of specific plan language per PPA. What can be done here, if anything?

Tough issue with significant tax ramifications for the client! Just looking for some ideas.

Thanks for any input.....

If I have a new plan.. for 2007 they filed a schedule I. For 2008 they break the threshhold of 100 participants makeing them eligible to file Schedule H. But reading about how to count participants and the IQPA audit requirement I came across this rule.. the 80-120 rule exception. It states:

Exceptions to the Audit Requirement

80 to 120 Participant Rule

If the number of participants reported in Part II, line 6, of Form 5500 is between 80 and 120 and a Form 5500 was filed in the prior year, the filer may elect to complete the current year’s Form 5500 in the same category (large or small Plan) as was filed in the previous year. For example, if the number of participants at the beginning of the Plan year is 110, and a Form 5500 was filed in the previous year as a small Plan (Schedule I was filed instead of Schedule H), the filer may elect to continue to file Schedule I and forego the audit requirement. However, if the participant count is 121, then regardless of what category of Plan was filed in the previous year, the current year’s form 5500 must include Schedule H and the Plan must be audited.

Since the audit requirement is solely dependent on the number of participants, an accurate participant count is critical. A Plan sponsor has the option of distributing participant account balances for inactive participants providing their vested account balance is $5,000 or less. Accordingly, if your participant count is such that you may be required to have the Plan audited, you may consider distributing inactive account balances under $5,000 to the participants prior to the end of the Plan year.

Does this work?

Can I file a schedule I continuously as long as I dont exceed the 120 participant number each year?

I have a deceased participant who had no beneficiary on file. We were presented with a Will done 2 days before the participant died. The will was not probated and left everythiing to the deceased girlfriend and brother. However, as is normally what we do, we printed a copy of the obituitary which listed a son and grandson as survivors. The plan states that if there is no beneficiary on file that the proceeds are paid to the children of the deceased per stirpes.

This happened last year and the son has never made any claim to the father's account balance in the plan. However, yesterday, we received two DRO's in the mail from family Court requesting payment from this account to the mothers of the son's two children (decesaed grandchildren) for unpaid child support. One child we knew about, the other we did not.

Talking with our document people, they are of the opinion that until a legitimate claim is made for the account by a beneficiary, we cannot do anything with the DRO's. The account must remain in the deceased name until a beneficiary makes a claim.

Any suggestions on what is right, Should we attempt to contact the son to request that he submit a claim or is the administrator's responsibility.

Thanks. Any advice would be greatly appreciated.

Does anyone have a link to a template with the subsidy language in there? I thought the DOL was supposed to release one?

A Wonka dollar to anyone who helps...thanks.

Is an employer required to offer COBRA to Non US Citizens working for the employer outside of the USA? If yes, can you explain why. Thank you very much.

If QRP's are protected from creditors, what happens to plan distributions?

For example, most know that O.J. Simpsons NFL Pension is protected from the damage awards from the civil suit brought by the Brown and Goldman families. But it also seems that plan distributions are also protected. Does this level of QRP distribution protection vary soley by state or is there a Federal statute? Are all distributions, even a lump sum distribution, equally protected or is it limited to dollar amounts or a percentage of the plan?

And if distributions are protected, would they remain protected indefinitely? And what about earnings on the distributions?

I Googled for this and could not find a complete answer.

Thanks

BruceM

Is a VEBA sponsored by a governmental unit exempt from filing a 5500? Having an audit by a CPA firm? filing a 990?

I just inherited a 403(b) plan that provides for ER match and profit sharing contributions. It is my understanding, since the plan has ER contributions; it is subject to Title I of ERISA. The ERISA Outline Guide states plans that are subject to Title I of ERISA cannot use the part-time exclusion. However, when I look at the document, the part-time EE exclusion was checked for all sources. Am I missing something?

Any thoughts would be greatly appreciated.

I'm relatively new to the industry, and I'm hoping to get some help from the members here. I've just joined a company that has created a new death audit solution which is very user friendly and much more reliable than other companies that are currently out there. I'd love to hear any suggestions from the members on how best to get the word out about our product (and I don't want to offend anyone by posting a blatant advertisement). I don't believe it is a process/audit companies look at changing often, which is some of the difficulty I am running into.

Thanks in advance for your replies.

Regarding late deferrals, has anyone put together a flowchart or checklist dealing with both the IRS and DOL requirements and any decisions to be made?

Late deferrals are such a pain!

If a 66 year old, who is not receiving SS retirement, and is enrolled in Medicare Part A, but not Part B, goes to Medicare and dis-enrolls from Part A, can they then make a contribution to an HSA account? Do you know is there is any negative in getting out of Medicare Part A, is there a penalty to get back in if they were employed and covered by group insurance.

If you have a failed conversion (Traditional IRA to Roth IRA), the amount of the failed conversion will be subject to income tax and excise tax. The excise tax is applied each year that the amount of the failed conversion remains in the Roth. If you are beyond the recharacterization deadline, how do you "stop the bleeding" with regard to the excise tax?

Do we have any exact details on how the provision works that states that accruals for HCEs within the past 2 years can't be taken into account for the maximum funding cushion.

For example, Plan is frozen 1/1/08 but is later unfrozen by 12/31/08 as client had better year than expected. This is a 1 person plan that has been in effect since 2006 and these are the first amendments to the plan (freeze and unfreeze)

Since the 12/31/07 AB was not impacted by an amendment within the past 2 years do we still get the (1.5)(Funding Target;past svc) but then DON'T add the 2008 normal cost component (due to recent unfreeze within past 2 years) to arrive at the maximum deductible contribution ?

Need to do a 2009 AFTAP for a calendar year plan by 3/31/2009. The 2008 AFTAP was 80.5%. If we do not prepare a 2009 AFTAP by 3/31, the 2008 AFTAP reduces to 70.5% and the client cannot pay out lump sums starting 4/1 (since under 80%). Assume that the client wants to pay out the lump sum benefits in 2009 for this example.

I believe we have until 12/31/2009 to have the client make an election to reduce some or all of the carryover balance as of 1/1/2009 to get to 80%. However the 2009 AFTAP has to be done by 3/31/09. Here are a few questions/thoughts on this issue:

Does the client have to make the election to reduce some or all of the carryover balance by 3/31/09 so that the 2009 AFTAP can show 80%?

If so, the amount to reduce the balance on the election could be different that what actually happens due to the discounting of the 2008 contributions (affecting the prefunding balance). What if the 2009 AFTAP then goes below 80% using the actual dates on the contributions? Can the election be redone and and effective retroactively?

This client should have his 2008 contributions completed in March. However, if not, I assume you can estimate what the client will put in for 2008. This would also affect the 2009 AFTAP.

The carryover balance has to be adjusted from 1/1/2008 to 1/1/2009 to reflect the actual rate of return in 2008 (obviously the carryover balance will be reduced in most, it not all, cases).

Can the client elect to reduce the carryover/prefunding balance so that it's, say, 83% to allow for some room for the different dates of the 2008 contributions? Or does it have to be at the exact threshold amount?

I appreciate any help on this.

Mr. X owns 100% of two companies. Both companies participate in one 401(k) plan that has equal benefits for employees of both companies. There are a total of 15 employees between the two companies.

Mr. X now is starting a 3rd business, in 2009, again he is the 100% owner. He would like to not have to provide retirement benefits for this group for a few years. There are to be 7 employees in this company, at least 1 will be an HCE.

I know that when a business is acquired, there is a transition rule that allows for the acquired company's employees to be excluded from testing in the controlled group for up to 2 years. Does that same exemption apply to a newly created company? If so, does that mean that these employees of the new company would not count in the 410(b) test until 2011?

Twist: It is expected that the seven employees of the new company will come from the employee pool of the other 2 companies. A tough sell for sure to any employees making that switch. But, does that change the above applicability of the transition rule? Would they still have until 2011 before counting them?

Thanks

1/1/2008 valuation. Minimum required contribution = $0. Maximum deductible contribution = $500,000. Also has a 401(k) Profit Sharing Plan. What can he contribute to the 401(k) Plan in addiiton to deferrals? Is it whatever DB contribution he decides on + deferrals + 6% of comp in profit sharing?

Sorry for the length of this post, but I wanted to try to give you all the info!

Background: A former employee elected COBRA in April 2008. We pay the insurance invoices and then request payment from the COBRA participant. In this case, the new employer is making the payments. Beginning the new year (and after the large insurance cost increases), they've been lax with payments and stopped paying her dental coverage entirely. Since we mail invoices to those employees on COBRA, we let her know on each invoice that payment was still due for Jan09, then Feb09 and Mar09 dental coverage. When we didn't hear anything from her or her current employer, on 2/27/09 I canceled her dental coverage effective 1/1/09 (we only have 60days to make retroactive changes.)

The employee called me once she received a letter from the insurance company saying that her coverage was canceled 1/1/09. She stated that she repeatedly talked to her employer when she received the COBRA invoices and they assured her that it had been taken care. We've allowed COBRA participants in the past to be late for months at a time because we knew they needed monthly meds, were having money problems, etc. So, going by what we've allowed in the past, I checked with our dental carrier and they stated that we could allow her coverage to be reinstated back to 1/1/09 as a special case. I let the former employee know that we could do this and she brought in payment and said that she would take care of paying from now on, just so she wouldn't run into this problem again.

Here's my issue: I told the former employee that the dental company would allow us to reinstate her effective 1/1/09 and accepted her payment. The head of the office found out and he doesn't want to allow her coverage to be reinstated, but we're unsure what we have to do legally. Can we cancel her even though I told her we could reinstate her and she gave us a check (though it remains uncashed)?