Same owner as my other question wants to switch from the 3% of comp to the match method. Do we need an amendment to change or is it acceptable to do either?

Jimmy

An owner wants to go back to 2007 plan year and include HCEs in the receipt of the 3% of comp allocation. At the time only the NHCEs received an allocation. Is it possible to do this? Someone said the funds had to be deposited within 12 months of the plan year end? (didn't seem right to me though)

I sure appreciate any help.

Jimmy

The Flower Magnate Luther Burbank Washington Grumps grew up as the youngest child of depression parents. He doesn't trust the stock market or for that matter Banks. He has purchased Poppy's, Inc. which has a somewhat mature population but underfunded DB plan for its 499 participants. LB (as his friends call him) wants to continue the Plan and will manage his workforce so the Plan never covers 500 participants because the word "at-risk" annoys him. He only wants to invest in the surest of financial instruments which he believes are money markets and treasuries and he doesn't care what the pundits profess, he "ain't changing his mind -- ever." He will contribute the minimum amount the law allows and doesn't care particiular what the Plan costs as he must protect his little flowers at all cost. The Plan assets long-term yield projections would fall short of the segment rates. In short, basing contributions upon the segments rates should push far too much funding into the future and will do anything but protect all those little poppies.

What are the consequences of failing to make a distribution of pre-409A deferred compensation? It appears that the distribution should have been made in 2007. Would this failure be considered to be a subsequent deferral and thus a material modification which would then subject the benefit to 409A?

Plan's (custodial account) current vendor will no longer be administering/accepting 403(b) contributions starting 1/1/09 and the plan will not be set up with the new company until 2/1/09. What options would this plan have? Do they have to suspend deferrals until the new account is set up or can they hold the deferrals in some sort of cash mangement account and deposit into new account as soon as it is set up? Will the fact that there is no custodial account to deposit the assets into count towards making the deposit as soon as administrativly feasable?

Thanks

Client currently has a 125 Plan with Premium Conversion, Dependent Care and Medical FSA. One of the medical plans they offer is an HDHP. Employees who elect the HDHP are not eligible to participate in the Medical FSA.

Client wants to add a Limited-Use FSA for dental expenses only, that will be funded solely by Employer contributions ($300/yr for single, $500/yr for family). All employees would be eligible for this FSA, even those who are covered under the HDHP. In addition, they want to include the HSA contributions (both the employer and the employee contribute to the HSA) in the 125 Plan.

Questions:

1. Can the plan have two Medical FSAs – one full use with restricted eligibility funded solely by employee contributions, and one restricted use without restricted eligibility funded solely by employer contributions?

2. Can the employer sponsor two separate 125 Plans – in which case we could separate out the full use Medical FSA as a stand alone plan (I assume the Limited-Use FSA could not be a stand alone since it would be fully funded by the employer and therefore not provide an option between cash and benefits)?

3. Would it be better to have a Limited-Use HRA, instead of the Limited-Use FSA? If so, why?

4. Are there any problems/issues I need to be aware of?

Any help or suggestions will be GREATLY appreciated.

Defined benefit plan frozen 2005. employer let go of over 100 people over the past few years.

Actuary calculating new termination. Current salary would fall under the highly compensated. However, at the time of the freeze, this participant was no where near the HC level. recently paid out a participant who originally fell under the HC restriction, salary at 130. another at 125 another at 118k. Current person falling under the restrictions comp was only at 80 at the time the plan was frozen.

Actuary thinks should fall under restriction and ERISA attorney does not.

Plan is currently funded at 90.3%

Who is correct here?

just when you thought you knew the rules. wow, a novel idea in 1949.

Evolution of the rules of basketball

1895: The free throw line was officially placed 15 feet (4.6 m) from the basket. Before this, many gyms had the line 20 feet (6.1 m) from the basket.

1896: A field goal or basket was changed from counting as three points to two points. Free throws were changed from three points to one point.

1897: Backboards were installed in most arenas.

1901: A dribbler could not shoot the ball and could dribble it only one time, using both hands.

1909: The dribbler was finally permitted to shoot. In addition, the dribble was defined as the "continuous passage of the ball," which made the double-dribble illegal.

1911: Players were now disqualified after committing their fourth personal foul. No coaching at all was allowed during the game, even during timeouts.

1914: The bottom of the net was finally cut open so the ball could fall through.

1915: The college, YMCA, and AAU rules became the same for the first time.

1921: A player was allowed to re-enter the game once. Before that, once a player left he could not return. The backboards were moved 2 feet (610 mm) in from the wall of the court. Before that they were right on the wall and players could climb the padded wall to sink baskets.

1922: Running, or "traveling," with the ball was changed from a foul to a violation. In other words, instead of the other team getting a free throw, the team in violation simply lost the ball.

1924: The player who was fouled had to shoot his own free throws. Prior to that, there was usually one player who shot all his team's free throws.

1929: The charging foul by a dribbler was called for the first time.

1931: The "held ball" could be called when a closely guarded player withheld the ball from play for five seconds. The result was a jump ball. The ball was made smaller, with the maximum circumference reduced from 32 to 31 inches (813 to 787 mm).

1933: The ten-second center or midcourt line was introduced to cut down on stalling. That meant the team with the ball had to advance it over the center line within ten seconds of taking possession.

1934: A player could now leave and re-enter the game twice.

1935: The ball was made smaller once again. The maximum circumference was reduced to between 29 1/2 and 30 1/4 inches (749 and 768 mm).

1936: The three-second rule was introduced. No offensive player could remain in the free throw lane, with or without the ball, for more than three seconds.

1938: The center jump after every basket scored was eliminated. That led to more continuous play.

1940: The backboards were moved from 2 to 4 feet (0.6 to 1.2 m) from the end line to permit more movement under the basket.

1945: Defensive goaltending was banned. Big men could no longer swat the ball away once it started downward toward the basket. Five personal fouls now disqualified a player. An extra foul was not permitted in overtime games. Unlimited substitution of players was finally introduced.

1949: Coaches were finally allowed to speak to players during a timeout.

1954: The NBA adopts the shot clock. A team must attempt a shot within 24 seconds or lose possession. The shot clock is reset when the ball contacts the rim or when the defensive team gains control of the ball.

1957: The free throw lane was increased from 6 feet to 12 feet (1.8 to 3.7 m) wide.

1958: Offensive goaltending was banned. In other words, an offensive player could not tip a team-mate's shot into the basket while the ball was directly above the rim of the basket.

1985-1986: The NCAA adopted the 45-second shot clock.

1993-1994: The NCAA shot clock time was reduced from 45 to 35 seconds.

2001-2002: The NBA reduces the number of seconds for a team to advance the ball past half-court from 10 to 8. Illegal defense was also eliminated.

I am having one of those moments so this may seem like a stupid question. Does an FSA have to satisfy both the discrimination rules of 125 and the discrimination rules of 105(h)? For example, a person could be highly compensated under the new 125 proposed regs, but not under 105(h), and vice versa.

In determing the total number of rate groups using a prototype document with the IRS LRM language in it, what is an eligible HCE or nHCE? Eligible for plan, to make deferrals or to receive a profit sharing contributions? And when is this determination made? It would make sense that it is eligible to receive a PS contribution since it is not capitalized and that this decision would be made at the end of the plan year.

If a plan that has an HCE leave before meeting the hours requriement for profit sharing contribution but is still eligible to make deferrals and get match, can they end up loosing a rate group?

Thanks for any help

I realize there are special deferral rules for performance based compensation under 409A. Would these also apply to the short-term deferral exception?

For example, assume a bonus is based on an "employment year" not the calendar year or the employer's fiscal year. Can the bonus be paid out a short time after the end of the employment year (assume, for example it runs April 1 to March 31) and still be considered a short term deferral?.

It's been a while, but I'm back doing 1099Rs again. Does anyone know what should be put in Box 12 and Box 15? The IRS instructions say that these "boxes are provided for your convenience only and need nat be completed for the IRS." I was under the assumption that a distribution that is taxable at the state and local level should be in box 12 and 15. Thank you.

Question: For a bare-bones severance plan that provides severance that (1) qualifies for the separation pay plan exception and (2) includes a provision requiring that all amounts be paid out no later than March 15, 2009, would there be any problem in the plan giving participants a choice between (1) receiving a lump sum benefit in early 2009 (prior to March 15th) or (2) receiving 10 weeks of continued pay in weekly installments.

I suppose there might be some constructive receipt issues with providing that sort of choice but it is not clear to me that 409A would govern if the severance amounts would be exempt under either or both the separation pay and short term deferral rules.

This was from the Winter 2008 Employee Plan News (subscription is free from the IRS)

I know this issue has been raised before, here is the official word from the IRS, common Plan Language errors:

Defined contribution plans still include correction methods for excess annual additions in §1.415-6(b)(6) of the 1981 regulations. However, the final regulations issued in 2007 deleted the permitted correction methods in the 1981 regulations. Plans that include a correction method in the event a participant would exceed the annual additions should be amended to delete the language effective for limitation years beginning on or after July 1, 2007.

......

Thats because you correct the problem using EPCRS

The 2009 covered comp can be found here:

http://www.ifebp.org/Resources/News/Regula...009-02.htm?PF=1

though the rounded values have an error

1969-1972 values should be $105,000, and 1973 and later values at $106,800.

a while back I tried tinkering with a spreadsheet to calculate the numbers and this one actually seems to work - at least it produced the same numbers as were just released. you simply input the new taxable wage base every year.

now if someone can explain how I managed to throw the thing together...

Hey, Merry Christmas all! God bless your holidays.

A co-worker and I were discussing how to help a client in getting a delinquent 5500 filed. It is the final filing due for a plan that was merged after acquisition and apperantly everyone forgot about that final 5500 (oops!). I like the DFVCP approach because it is a fixed fee but my co-worker thought that doing a reasonable cause letter might work. I haven't done one of those in a long time and was wondering what type of experience people are having if they take that route. Is all forgiven and any penalties waived?

Perhaps a What-If analysis would help with this, but the situation that presents itself:

For retirement plans, usually a person must work one year of 1,000 hours before that person can enter into the retirement plan as a participant. However, plans usually have set dates of entry, usually twice during the year. Therefore, a person enters on one of those entry dates subsequent to his attainment of 1,000 hours worked during a one year period. So, for a plan that functions according to a calendar year (January 1st to December 31st), the dual entry dates amount to July 1st and January 1st (the day after the end of the six month of the year and the day after the twelfth month of the year).

So, a person hired on August 1, 2007 who works 1,000 hours would enter the plan on January 1, 2009 (since August 1, 2008 marks the one year anniversary of this person's date of hire, and provided that the person worked enough hours to attain entry into the plan between August 1, 2007 and August 1, 2008, January 1st would serve as the first entry date possible).

Some plans get set up sufficiently generous to allow for a slight retroactive admission (e.g., if a person hired on August 1st, 2007 works 1,000 hours from then to August 1, 2008, that person retroactively enters the plan on July 1st, 2008). I hope to receive responses with suggestions on how to set a file in Excel to automatically gauge both date of entry for plans with normal entry and slightly retroactive entry. What formulas or macros in Excel can anyone suggest to accomplish this?

____________________________________________________________________________

The person who created this file and asked me to work on it created this set of guide information.

Date of Hire plus one year nearest date of either July 1 or January 1

For example DOH Aug 1, 2007 Date of Enty will be January 1 2008*

*Though the person who gave me this file included this hypothetical case in his description, I feel that he may have erred here, since it seems to me that the person would enter the plan on January 1, 2009.

For example DOH June 1, 2007 Date of Entry will be July 1 2008

So dealing with a trust and both named successor trustees have declined trusteeship. How do I find a corporate trustee if the trust has complications? Trust was written under California law.

-CM

The Loan Policy indicates loans should be written with a rate of Prime +1%. A loan was accidentally written at a rate of Prime. This error was discovered 6 months later. What is the corrective procedure? I think the corrective action would be to deposit the missing peice of the payments (the difference in the payments to date if the loan rate was correct and the payments to date at the incorrect loan rate). If that is the case, who should make up these payments, the employee or employer or trustee?

Is anyone aware of formal guidance on an employer's ability to suspend non-elective (and non-discretionary) employer contributions mid year? Client has a July 1 plan year profit sharing plan (no deferrals; no matching contributions) that provides that the employer will make contributions based on a percentage of compensation for the plan year if the employee has been credited with at least 1,000 HOS during the plan year and is an active participant on the last day of the plan year. Even though the contribution is plan year basis and is based on plan year compensation, I think that we can suspend currently since no participant has reached the last day of the year allocation requirement. If the plan did not have this last day of the year requirement, however, I think we'd be out of luck. Some that I've consulting seem to think there may be a Rev. Proc. on this issue (maybe with regard to money purchase pension plans), but I cannot seem to locate.