A person's 2007 RMS is based on her 12/31/2006 account balance. For argument's sake, let's say the RMD is $1,000. She never takes it.

When I calculate the 2008 RMD using the 12/31/2007 balance, I don't reduce the balance by$1,000 because of the previous year's RMD do I?

(Did it used to be done like that?)

Can we issue a seperate Black Out Notice to employees who seperated from service?

The Active Participants received the Blackout Notice in a Timely Manner.

I'm curious what others think about the impact, if any, of an employer getting a creditor to agree not to pursue "assets" in a rabbi trust in the event of the employer's insolvency. Would this separate agreement somehow make this a funded trust in the eyes of the IRS since the trust assets would no longer be subject to the employer's creditors?

For an ERISA 403b plan, participants and the employer are currently contributing money into annuities via 2 separate large annuity & insurnance companies. The plan sponsor/plan administrator would like to change that and only have the new money go into 1 annuity provider's product for, among other reasons, making it easier to track.

Can they make this change prospectively for new contributions?

Can they force participant's to move their existing account balances out of the one insurance company's product and into another insurnance company's product?

Thanks

Am I reading the bill that Congress passed correctly?

If a more than 5% owner is well past his required beginning date, we value the 401(k) plan as of 12/31/07 (assume calendar year) and then sell assets that are now worth 50% of what they were then (therefore selling twice as much as we would have had to had he had the forsight to take the distribution at the beginning of the year) and make the taxable distribution by 12/31/08 for him. But, he doesn't have to take a distribuion in 2009 (which would have been calculated on a very small balance as of 12/31/08)? This doesn't seem as helpful as I'd hoped.

If a more than 5% owner's RBD is 4/1/09, does this mean he doesn't have to take the first RMD (for the 2008 year but postponed to 4/1/09) or the second RMD (which would be for the 2009 year)???

Can a current 401(k) elect to start the EACA or QACA arrangement mid-year, provided the Notice is timely distributed?

I have a new client who wants to start a 401(k) in 2008 and make a profit sharing contribution for this year. He currently has a Simple IRA. He has one employee who made ONE contribution to the Simple for 2008 and that has been the only funding. My assumption is that this contribution will be enough to not allow him to have the 401(k) plan for 2008, but thought I would throw that out there and see if anyone else has come across this issue.

Thanks,

Tim

Suppose an employer with 40 employees leases 3 employees from an agency who are considered temporary. All 3 work for four months and then the employer hires them on as full time employees of its own company. The employer has a 401(k) plan that requires one year of service to be eligible. Must they count all hours from when they were leased employees?

I would think that hours as a leased employee are not counted until the employee works on a substantially full-time basis (1,500 hours). Then all hours would count.

Anyone know the answer to this?

Hi all - we have a two participant small plan (one owner, one non-owner executive employee, both trustees) that does not meet the small plan audit exemption, so for the last two years they have had an audit. Audits are time consuming and expensive, and becoming more so, so this year they started shopping for a bond to get out of the audit next year. But all of the brokers they have spoken to so far want 3 years of audited financials for the plan before they will provide the bond for the non-qualifying assets. And then it seems there may be an ongoing need to get an audit every 3 years to renew the bond. Is this normal? Sort of defeats the 100% bonding exemption from the small plan audit requirement if you need 3 years of audits to get the bond.

Any help would be appreciated....

See that attachment

My company recently processed a 401k distribution incorrectly.

We processed it as a cash distribution when it clearly should have been a rollover.

The check went out wrong. A stop-pay was placed on the check and it was later reissued correctly. The whole process took about 10-15 days.

The ex-employee is now complaining that we should make up lost interest for the 10-15 days it took for them to get a corrected check. The distribution itself only totaled around $5,500, so we aren't talking about alot of money.

Are we obligated to pay them any additional interest? ...is there are rule I can cite to this person to get them off my back?

a small company(ABC) has a 4 participant safe harbor 401. The owner of ABC is also a member of an LLC that currently has no employees other than the 2 members. The owner of ABC wants to see what he can do as far as a plan for the LLC. He is currently a participant in the ABC plan. Ultimately the employees of ABC will be employees of the LLC. my thinking is to add the LLC to the ABC plan as a participating employer via plan amendment. Next year ABC will no longer be a company and all ABC employees will be retained by the LLC. Would proper procedure be to amend/restate the plan showing the LLC as the new plan sponsor for plan document and annual filing purposes?

If the EGRRA determination letter for a cycle B plan is dated November 20, 2008, what is the last day to adopt the plan? The determination letter references section 401(b), but that doesn't make it any clearer. If this is a calendar year plan is the deadline 12/31/08?

My understanding is that a shareholder who is not an emloyee and who owns less than 50 percent of an employer is not a disqualfied person re: an ESOP sponsored by the employer. If such person sells his shares to the ESOP can such person take a note from the ESOP and can such loan be treated similar to a loan from a disqualified person (i.e., unallocated account, share release as loan is paid off, etc.).

We have an employee who transferred from one of our other companies in our controlled group

The company has a different EIN from ours

The other company has their own 401k plan and is a QSLOB arrangement.

Are we required to do a 401k refund?

thanks

Here's an executive comp feature I haven't come across, and it seems to violate 409A, but I can't put my finger on what's wrong with it.

The executive has been granted a 5-year option to purchase up to 1 million shares at $1/share under the company's stock option plan (which has provisions consistent with the exclusion from 409A for stock options). The option vests at the end of 2009.

However, the executive's individual employment agreement adds a wrinkle to his option holdings. For the month of February 2011, if he has not yet exercised the option, and if he is still employed by the company, he may surrender the option to the company in exchange for $500,000.

Part of me thinks that this agreement establishes a value for the stock options, so that at the time the option vests it becomes taxable to him under IRC 83 based on the present value, at that time, of $500,000 in 2/2011.

Part of me thinks that this is conditional deferred compensation that is subject to a substantial risk of forfeiture that becomes fully vested in Feb. 2011 -- and is taxable at that time, even if he does nothing (if he doesn't exercise the option).

Has anyone seen this kind of animal? Any ideas about how to approach this?

I have a Profit Sharing Plan with a pooled account that has an annual valuation.

Termination Distributions are to be paid after end of plan year in which participant terminates.

I have received a distribution form from a participant that terminated in 2007, do we need to pay out the participant based on 12/31/07 balance or can we force participant to wait till 12/31/08 annual valuation is complete?

The trustee of the plan is concerned that other participants would take the loss of this one participant if we pay out on 12/31/07 balance.

Employer's bargained employees are covered under a multiemployer plan 401(k) ("Plan A") pursuant to an area collective bargaining agreement. Plan A is terminating and Employer has no say in process b/c it is not a bargaining party. Bargaining parties decide to sign on to new area multiemployer 401(k) plan ("Plan B"), forcing Employer to allow collective bargaining employees to participate. Is Plan B a successor plan to Plan A as to the Employer? Is there an argument Employer has not established or maintained the plan under the (k) regs?

I have a question that has been talked around, but not exactly about. In our situation, the company wants to get rid of their Simple Plan and setup a 401k (making room for the possibility of an ESOP). The company has not contributed anything for 2008, but there is a possibility that employees have. If the company sets up the 401(k) in 2008, the Simple will be invalidated any all contributions will be considered excess (but, since nothing has been contributed by the employer this is not an issue). What happens if there has been employee contributions? Also, does this get around any notice and timing requirements that normally apply for a Simple termination? Are their any other concerns that I ought to be considering?

Thanks for any help & any citations would be greatly appriciated.