Plan goes top heavy in 2006 triggering a TH contribution for 2007. TPA does not provide information to client until 6 weeks ago. Client did not extend tax return so corporate tax return due date was March 15th. TPA provides an allocation for the TH 3% contribution and also provides an allocation for a match contribution of 25% up to 4% of pay with the additional contribution due to satisfy the TH requirement so the client can make a choice.

It is my understanding that the due date of the TH contribution is vague. Based on the ERISA books one should use the deduction deadline (March 15th in this case) or the 415 deadline (April 15th in this case).

It is my belief that the contribution is late and that the client should contribute lost earnings on the deposit. The contribution would be deducted on their 2008 return, not the 2007 return because it was not timely deposited for that deduction. It is also my belief that the client should just do the 3% contribution and not the match with the additional amount to satisfy the TH requirement. Correct me if I am wrong but I believe that because the match does have a definite due date and they did not deposit the match by that date they should just do the straight 3% contribution. It would have been a different story had they already deposited the match and just had to make up the difference for the TH requirement because match can be used to satisfy TH requirements.

I recently spoke with someone who is dealing with an ESOP plan document that has not been updated since 1995. Surely there must be some amendments that have been required since that time (and no, the plan is not terminated although I don't know if there are current allocations). I am familar with the IRS cummulative list but this goes back so far and sometimes there are exceptions for what ESOP's must do, does anyone know where I can find a good list for ESOP amendments only?

Hello:

I have two plans that are aggregated for coverage and ADP/ACP testing.

The question I cannot seem to answer is whether the Top Heavy test can/must be done in the aggregate, or must it be done for each plan separately?

Thanks in advance for any feedback that might clarify the top-heavy application whne plans are aggregated.

Andmik

I am reviewing a plan that provides that certain employees are entitled to a bonus payment if there is a change in control of the corporation. I have 3 questions regarding this plan.

1. When are the amounts taxable to the 2 individuals? When a change in control occurs? Or is there any reason that the individuals would have to pay taxes (based on a valuation of the company) prior to an actual change in control?

2. Change in control is defined as a "sale, exchange or other disposition of all of the stock of the Company, a merger or consolidation of Company, or a sale of all or substantially all of the assets of the Company such that the Company is not controlled, directly or indirectly, by those persons who were shareholders before the transaction" Does this definition comply with the treasury regs so that the plan conforms to 409A?

3. Assuming the plan does not meet the 409A requirements, and a change in control does eventually occur, how would the individuals be taxes? Would the tax owed be considered when the Plan was implemented (which is when they had a vested right to payment)? In my scenario, the plan was adopted in 2000, so would the 2 guys have to amend their 2000 return, pay interest from that date, plus the 20% excise tax?

Can anyone assist? Thanks.

The employer/plan year are 6/30. Is the limit (i see references to calendar year?) of 15,500 based on the participant's year or the employer's year?

Can a company owner with 6 employees invest with a different financial instiution than his employees do.

Right now they all invest (employees and employer) through a popular mutual fund company and he would like to invest in another popular insurance company. He wants to roll or transfer his current SAR SEP money here and make new contributions at this insurance company as well.

Can he go elsewhere with his SAR SEP and does he need to notify the employees if he does so?

I figured that this would be OK since SAR SEP's are basically glorified IRA's.

Thanks.

What are TPAs charging for EGTRRA restatements? --We have mostly Vol. Submitter 401k docs. Thanks!

The maximum election amount for Dependent Care is $5000.

I will spend $5000 on daycare in about 4 months.

Our FSA plan provider says that I still have to make the contributions spread out over our regular 26-week pay schedule.

This means that I will have to deduct approximately $192 per pay check for the entire year and have to wait the year to fully reimburse myself for the expenses.

While this is not such a big deal (I can get reimbursements throughout the year), I would rather take more out of my paycheck early on ($625 per paycheck for 8 pay periods) so I can get it out of the way. I am on hold now with the IRS to see what they have to say about it.

Is this something that is a regulation for everyone, or is it our plan provider's rule?

Any thoughts?

Thanks.

Any insight on whether an extension is on the way. My clients are being bombarded with form documents (many of which are outdated and incorrectly drafted - one actually refers to the "exclusion allowance" and the 402(g)(8) limitation - these documents are being distributed by national consulting companies, REALLY!!). The employers are not being advised of the obligation to make deferrals available to union employees, and those that are, cannot comply in a timely fashion. Small non-profits do not have the manpower or budgets to hire fancy law fims to interpret these documents. I think that the purpose of the regulations was a good idea, but the implementation requires more time and education. An extension was granted for 409A - which was much more complex. It goes without saying that an extension is necessary. Bob Architect, are you reading this?? Also, for those of you who missed the videos, Bob's videos on You Tube are great!!

If plan termination date is 8-1-08(cal yr plan)how does one file with IRS at this point.

Dont we have to do an 2008 val first;since there will be accrual for 2008?

existing 401k/ps plan(top heavy)with all people included

we want to install a new p/s plan(new comp);where partners and some rank and file are included.

new plan passes 410b on it's own;likewise 401a4.

we are being told 401k MUST provide thvy to non keys.

we argue plans are not aggregated so top heavy not issue in 401k unless keys defer in 401k;which they are not.

Please advise

ty

I have a new-comp plan (everyone in their own subgroup) with a SHNE. Doc says SHNE should be 'at least 3%'. There is one key/HCE and everyone else is NHCE. We calculated that to give the owner the max PS, we would need to give 1.42% PS to everyone else (plus the 3% SHNCE) which happens to be the minimum required for the MCG test (4.42%).

One of the NHCEs terminated before year-end and is not entitled to a PS per the Doc. Therefore, they would only get the 3% SHNE but everyone else would get the 3 + 1.42 = 4.42%. Can you guess my problem yet ?

The MCG fails because of this one person. She is included in the MCG because she is entitled to an SHNE but, because she is terminated, doesn't get a PS. What do I do?

I can make the SHNE 4.42% for everyone since the language says 'at least', right? The problem is that it makes that extra 4.42% 100% vested. Do you agree with that?

But, do you think I can give that one NHCE a 4.42% SHNE and everyone else gets the 3% SHNE and the 1.42% PS? That would mean a different SHNE for different people.

Thanks in advance for any advice.

I have a 401k that includes after tax contributions (post 1986). I am considering rolling the plan over to a traditional IRA. The plan adminstrator said I will receive a check for the after tax amount in the 401k.

Can I rollover the after tax amount contributions to an existing Roth IRA?

Thanks In Advance.

Pete

Back in 1998, my client, a small school district, permitted an insurance company to pitch its 403(b) product to employees, and a few signed up and began making elective deferrals. A handful of those employees continue to be employed, and continue to make the salary deferrals. However, the company has not asked for any additional meetings with employees since then, and no other vendors have approached the school to pitch their products. In other words, the only time 403(b) showed up on the school's radar was one day ten years ago.

The district would like to terminate the "plan," but I am concerned that because the school district did not proactively go out and seek vendors to provide annuities, it may be saddled with exhorbitant penalties or compliance expenses.

Any thoughts on an appropriate approach?

I am tasked with finding out if using employer stock as a funding vehicle for matching contributions is a common practice. I am in a corporation now after spending many years in partnerships. They had no stock so it was never an issue. Some higher-ups here want to use company stock instead of real money (cash) to make their matching contributions. Any opinions, experience, or advice is welcome!

Thank you!

Plan provides the standard SH match - 100% match on first 3% and 50% of next 2%. The plan currently has a discretionary match formula that has a last day and 1,000 hours requirement. The plan is top heavy.

The goal is to provide additional matching contributions and not blow the TH exemption or the ADP or ACP test exemptions.

It seems as if the plan could be amended before the end of the plan year to remove the allocation conditions for the discretionary match, to cap the discretionary match at 4% of pay and to only match deferrals up to 6% of pay. As far as I can tell, I just need to spell out the caps and not necessarily the formula. I plan on the discretionary match being 2/3 of first 6%. The end result between the SH match and the discretionary match would be 166 2/3% of the first 3% and 116 2/3 % of the next 2% and 66 2/3% of the next 1%.

Does anyone (Tom Poje) see a problem with this? This is not my forte.

Has anyone seen a plan that allows participants to make a new time and form of payment election for each year of deferrals? In other words, participant elects a lump sum for deferrals made in 2010 and then for 2011 elects installment payments. Assume the new elections are made prior to the year in question, at the same time as the deferral election.

I think this works as long as the election is made before any deferrals are made pursuant to that election. It would be an administrative nightmare, but seems permissible. Any thoughts or experience with this?

When ranking employees based on compensation, do you cap the compensation at the comp limit ($225,000 for 2007) or do you use actual compensation (i.e. use $310,000 if someone made that amount)? Thanks in advance.

Milliman's newly updated help site for small public employers that qualify to use the Alternative Measurement Method (AMM), known as the streamlined or simplified approach, to GASB Statements 43 & 45 is now available. The site includes a free tool on the site to learn if your public entity is eligible for the GASB 45 AMM (and to use Milliman GASBhelp™ tool).

The site also includes educational information about GASB Statements 43 & 45: articles, an online glossary, and FAQs that answers questions, such as:

* What does GASB 45 require employers to disclose on their financial statements?

* Do I have GASB 45 liability -- OPEB liability?

* What are potential consequences of not following GASB 45?

* Does GASB 45 require OPEB prefunding?

Visit the site at www.gasb45help.com »

Are HSA accounts similar to retirement accounts in that they are protected from creditors? What about a tax levy? Can you point me to something in the regs?