I believe Section VI. A. of the preamble to the 409A regulations answers this, but I wanted to see if anyone else had any insight on this. If an employee makes a deferral election for 2009 by 12/31/08, can the company decide to freeze the plan and cancel this deferral election in March 2009 without causing a 409A problem? The preamble section I mentioned seems to suggest that it can not do so. The fact that the regulations specifically mention only disability and hardship as eligible for a change an election also seems to support this answer. Any thoughts?

We have an employee who is covered under his spouse's health plan along with a dependent. Apparently the dependent is no longer eligible under the spouse's plan - we are assuming that it is due to aging out but we don't not yet have all the details. We offer several self insured plans that allow coverage until age 25 without being a student. The employee would like to enroll himself and his dependent in one of these plans now. Is this considered a special enrollment? We think the dependent should just be offered COBRA. Thanks.

How do you de-trust the benefits of a 457b plan incident to its sponsor (a hospital) going from being an agency of a local governmental unit (457b benefits must be trusteed) to being a 501c3 non-profit (457b benefits must not be trusteed)?

What changes to 5500's have people heard of being done by FREEERISA?

Looking at 2005 form the date is handwritten, the signature is deleted (a good thing).

But here is the odd part. The box for amended is unchecked and my copy and the DOL show it checked. Has anyone seen anything like this before?

Any guesses as to why?

Do pick-up contributions have to be 100% vested when made or can they be made subject to a vesting schedule? Any insight would be appreciated. Thanks.

it is a true partnership. Can a partner who chooses not to participate in the firm's plan have his own SEP?

A TPA charges a $150 loan fee to the participants account to process a loan.

Can this $150 loan fee be included in the amortization schedule and paid back into the participants account?

For example:

Loan $10,000

Loan Fee: $150

Amount deducted from Partcipants Account in total : $10,150, but the participant only receives $10,000.

Should the loan amortization schedule be for $10,000 or $10,150?

Any help is greatly appreicated.

ALEX

An employer is giving everyone $600 up front for their medical fsa. How does this look/work on the payroll and should it go into a separate account?

Thanks

This isn't necessarily humorous, but may be interesting to some (I would think) . . .

A building in downtown Detroit (yes . . . there still are some!!), on one of its sides, used to have a painting of Barry Sanders, ex of the Lions (ouch!!), when he was actively running up his record 10-consecutive 1,000+ - yard seasons at the start of a career. In the painting was an arrow, labeled "Canton", pointing away from Canada. Detroit is, and always has been, north of Canton, the home of the Football Hall of Fame. What's wrong with the Barry Sanders painting? (By the way, Virginia, Mr. Sanders was, in fact, elected to the Hall of Fame about 5 years ago.)

I have a friend who has a Self-Directed Roth IRA. He needs a valuation from a CPA or an attorney by the 15th. Lucky me, I'm the attorney. But I have no idea what this valuation is supposed to look like. The IRS is not helpful. Is there some sort of boiler-plate that I can use which will satisfy this valuation requirement? Thanks.

I'm trying to figure out how to categorize the following split dollar agreement. The employee owns the policy and pays the premiums, but assigns a portion of the death benefit to the employer and the rest will belong to the employee's beneficiary. The employee is also an owner of the company. Is this key man insurance? Is this a non-equity collateral assignment? Is it even a split dollar agreement if the employee owns the policy and pays the premiums? Please help!

"Medicare beneficiaries are free to reject employer plan coverage, in which case they retain Medicare as their primary coverage. When Medicare is the primary payer, employers cannot offer such employees or their spouses a supplemental plan that pays for services covered by Medicare."

Is there a definitive list of ineligible "supplemental plans" out there? Would participation in an employer based POP plan be an "ineligible supplemental plan"? How about a medical FSA? How about a Medicare advantage plan which operates within the scope of "Medicare".

CMS is rather vague on this topic. Any links or clues to more information would be helpful. Thanks for any help.

Political subdivision allows unused vacation time to be converted into a contribution into a 457 plan at the end of each year. I believe this would be an employer contribution subject to FICA. Question: Assume $1,000 at issue. Would FICA be imposed in such a way so that the plan receives $1,000 minus FICA? Or does $1,000 go into the plan, with FICA on the 457 contribution effectively coming off of the employee's salary? Or can the employee have a choice (especially if there is a collectively-bargained agreement covering employees)? We foresee that if $1,000 goes into the plan, employees will gripe that FICA from the contribution will leave them short that pay period.

Circumstances

The taxpayer established a qualified ESOP plan under code section 401(a) exempt from tax under code section 501(a). The plan was terminated several years ago and the taxpayer took the distributions and treated them as a tax-free rollover into a qualified IRA account.

The IRS has audited the plan and has determined that the plan is disqualified. Consequently, the total distribution amount is being included in the taxpayers gross income in the year they were distributed, code section 402(b). Additionally, the distributions constitute an excess contribution under code section 4973.

Questions

Do the funds now have to come out of the IRA because they are no longer eligible? Please include citations/authority if possible.

If so, are they taxed again? Please include citations/authority if possible.

If not, how does the taxpayer "unwrap" the IRA characterization so that he is not taxed again when the IRA account manager issues a 1099R?

What are the administrative procedures between the taxpayer and the IRA account manager and the taxpayer and the IRS?

Suppose a small plan had a beginning of year valuation date for

calendar year 2007.

The 12/31/07 proposed regs permit a change to an end of year val date

for 2008.

Can the plan change the val date back to BOY for 2009? 2010?

Thanks for any help.

Could an employer set up a separate self-funded health insurance plan that covers only mental health benefits (with different financial and treatment limitations than its other health plan that covers medical benefits other than mental health/substance abuse), and avoid the new mental health parity rules?

My background has been life/health and would like some guidance on a general quesiton regarding retirment. It involves a relative who is now incapable of making decisions and needs 24 hour care. My wife and I have relocated from west coast to east coast to care for him, living in his home. Another sibling has power of attorny.

Background is a 80 year old male, widowed, health is somewhat fragile (but no immediate threat to death), has $130k for investments, a house worth about $180k (paid off), SS income of $1,100 per month, and life insurance of $32k. We do not the exact amount, but the $130k was substantially higher prior to the market crash. We do not know what types of investments were involved.

Current cash needs are about $2,000 per month, but could go down somewhat as we get a better understanding of his expenses and can trim some of them. Our guess is that the expenses could go down a few hundred per month, but no real figures yet.

Our concern is that the cash be preserved. We are looking for professional help from financial planners as what to do.

My question concerns the allocation mix that we are beginning to hear from these planners. Is there a certain type of mix we should be aiming for? One in particular proposed a mix of 25% cash, 30% fixed, and 45% equities. I was a little shocked to hear the mix contained equities at 45%.

Any thoughts or ideas would be greatly appreciated.

A sole proprietor had a SEP IRA plan. She died in 2008, at age 78. Her husband was the death beneficiary and about the first of December requested a payout equal to the 2008 required minimum distribution for his dead wife. The brokerage house refused, saying he must first set up rollover IRA in his name as surviving spouse and take the required distribution from the rollover IRA.

The surviving husband refused to do that, on advice of legal counsel that the 2008 required distribution for his dead wife was not eligible for rollover and if rolled over, would cause a 6% penalty. In addition, the withdrawal from the rollover IRA would not satisfy the 2008 required distribution for the dead wife.

The brokerage house held tight when this advice was explained to its technical compliance and then legal departments. December 31 passed with no distribution being taken, and now a 50% penalty applies.

Should the husband notify the IRS about this situation? Is the brokerage house that refused the withdrawal request responsible for paying the 50% penalty?

Liquidity:

When you look at your investments and wet your pants.

Which code section requires amending the plan for GUST, EGTRRA, 401(a)(9) and 401(a)(31)?