Husband and wife are each 100% owners of their own professional corporation. I am told that neither has any management responsibility for the other's company, they do not live in a community property state and do not have minor children. They claim this makes the controlled group rules not apply to their situation.

However, since both are physicians and could own the other's stock without violating any professional licensing or other legal requirements, I'm having a hard time agreeing with them. Am I overlooking something?

Is the Target Normal Cost prorated, especially for the Max, for short plan year?

I think not, because the TNC is the value of benefit accruing during the plan year, short or not!

I don't have the excuse that it is too late. Today my excuse is computers. Gosh!! I love them.

What is the equation to add up to the preliminary profit number for a sole proprietor?

Employee's contrib+Owner's contrib+owner's reduced comp+ 1/2 of SE income = preliminary profit

Is this right or am I missing something?

It is my understanding that an ER may make ineligible certain EE's from the company's QRP based on certain statatory limits relating to age (<21), length of service (<1yr), coverage under collective bargaining or foreign EE's when the company is located off-shore. The ER does not have to include these ineligible EE's in the plan's annual non-discrimination testing. In addition, the QRP document may exclude certain groups from plan participation, based on some job related criteria such as geographic location, hourly vs. salaried, job description, etc., but all of these EE's, excluded and non-excluded, are used in annual non-discrimination testing.

If my above assumptions are correct, may the ER also use these criteria in the FSA plan, whether day care, medical or adoption? Of course, the actual non-discrimination tests are entirely different...but I'm really more concerned here with who the FSA plan may consider ineligible, who may be excluded and who must be used in 'the denominator' in plan non-discrimination testing.

Thanks for any enlightenment :-)

BruceM

I have a one person DB plan that terminated during 2008. As of 1/1/2008, there was a minimum required contribution, which was not made prior to termination. The plan was underfunded and the participant waived benefits at termination.

Is there any way that the valuation date can be switched to the end of the year to allow for the waiver to be taken into consideration for the 2008 valuation? Would we need to apply for an approval for a change in funding method? Is it likely that this would be approved? The plan has always used a 1/1 valuation date. Can we automatically switch to any day of the plan year in 2008, or does it require approval?

Assuming we have to stay with the 1/1/2008 valuation date, can we use a 100% turnover assumption? Any other ideas?

Has anyone done a distribution where part of it was ROTH?

If they roll it over, (and presently have no where to roll it to)do they have to set up a traditional IRA and a Roth IRA?

Should the money be sent as two checks?

I remember that I am required to report basis to new IRA within a short time. Is there a specific IRS form for that?

What Am I missing?

I was on a conference call where they suggested that SPDs need to be updated to include language about the Subsidy. I re-read Title III - COBRA Premium Subsidy section and the only notices I can find reference to are the QB notices. Do we really have to update the SPD for this "short term" change to COBRA?

An existing Profit Sharing Plan is amended to a Safe Harbor 401(k) on 7/1/2008. Although the 401(k) deferrals start effective 7/1, the 3% Safe Harbor contribution is based on the full year compensation. A participant terminates employment on 2/28/2008. Is this participant eligible for the 3% Safe Harbor? The Plan defines eligibility for the Safe Harbor as "a Participant who is eligible to make Elective Deferrals under the Plan for any part of the Plan Year." Since the participant terminated prior to being able to make any Elective Deferrals, I'm thinking that the terminated participant may be excluded here. Any thoughts?

Thanks.

Employee dies in 2009, NQDC plan indicates his balance is to be paid to surviving spouse. Per 2009 IRS instructions, this now gets reported on a 1099-MISC. I think it goes in box 3 Other Income. Is the distribution subject to FICA, Medicare or SE (Self employment) tax?

Any assistance is appreciated.

a client makes a contribution in excess of its allocation formula but it is deductible and it is not in excess of 415. is there an excise tax if it is not allocated but left in a suspense account and applied to next years contribution?

I am middle aged and I have been able to achieve a good level of success in buying foreclosed properties over the years. Currently, I rent all the properties out to tenants, and maybe I will sell a few of the homes in a couple years when the market picks back up. But for now, I am most concerned about what would happen to these properties if I were to, heaven forbid, fall down with a heart attack, or get hit by a car.

I have three kids, and only one of them lives in California. So, I think I need to create some kind of living will and trust. My question is that if I create the living will and trust in California, will it govern my wishes in all other states? Will my kids be included?

My neighbor worked with James F. Sexton here in San Diego, has anyone heard of this Living Wills and Trust Attorney?

We have a New Comp/401(k) requiring Y/E employment for PS. ER making 3% SH contribution and PS of add'l 2% to EEs and max to owner. We have one person term'd in November, 2008 w/over 1,000 hrs and so he is eligible only for SH not for PS.

Because of this, the plan does not pass Minimum Allocation Gateway. Does this mean I have to give term'd EE an additional 2% even though he doesn't qualify for PS?

An HCE has elected lump sum payment under a plan that provides the pre-termination restrictions prescribed by 1.401(a)(4)-5(b). The plan funded ratio is 93% and the employer will not contribute to increase the percentage to 110%. The Plan also does not presently provide and will not be amended to provide for one of the alternatives (e.g., escrow arrangement) presented in IRS Rev. Rule 92-76.

(1) Is it correct that the life only payment is not elibigible to be rolled over to a Roth or Traditional IRA?

(2) If (1) is correct, is this payment subject to voluntary rather than mandatory FIT withholding?

(3) Presumbably, once the restriction is lifted, the balance may be rolled over? In such case, has the practice been to have the participant make the election to rollover at the annuity start date but then make an election at the time the restriction is lifted in regards to where monies should be invested?

The question is coming up about whether a "landscape architect" is a professional employer for purposes of exemption from PBGC coverage. Any thoughts? What, if anything, can we ask them to help clarify? We have been told that none of their employees "uses a shovel"....

Med

In determining a partial plan termination - do you count all eligible participants or just the participnats that are deferring and have a balance (terminated employees). I get confused in the rev ruling 2007-43 exactly what they mean by participating participants and the affected participants. Everyones determination of the wording is different.

Would I count up all the participants with a balance in the plan and then divide it by the participants that terminated within that year that had a balance (due to layoffs). Or do you count all eligible participants (deferring or not) and then divide it by the participants that terminated due to layoffs?

This could make a big difference when there is dual entry dates versus 401(k) - immediate eligibility, and profit sharing (1 year wait).

Thanks

Does anyone have any insight into the following situation:

An employee is fired from the employer and enrolls (for him and his spouse) and pays for COBRA coverage beginning 2/1/2009. The former QB passes away on 2/15/2009 which creates a 2nd QE and allows the spouse to elect COBRA (but for the additional time (total of 36 months). Is the spouse eligible for the subsidy since the original QE was involuntary termination of employment?

Hello all,

I have a contact that was advised that the employer must fund 25% of a deposit in a 457(f) Plan. They (advisor) further pointed my contact to IRS *NOTICE* 2007-62 to support what they were saying. I am trying to figure out what the misfire is here. My first instinct told me they were really referring to creating an amount with a SROF substantially greater than the pay the participant could have otherwise received , but I'm sure there may be something more. Any thoughts or comments?

Technically, what does "as soon as administratively feasible" mean?

Plan documents usually state that distributions will be made "as soon as administratively feasible".

We work with a calendar year plan and received information that the actuary wants to change the plan year to May 1 through April 30. It appears we would have a short plan year from January 1 through April 30 and would need to file a 5500 for this short year. Do we need some justification from the actuary as to why he wants to do this?

A plan covers both union and non-union employees. For testing purposes they are treated as separate plans and tested separately. Can the plan specify that the test for union employees use the current year method while the test for the non-union employees use the prior year method?