Client terminating Simple IRA Plan at year end. Prototype sponsor says elective deferrals and matching contributions need to run through 12/31. Pay period ends 12/21. Client's accountant is saying that compensation earned after 12/21 will not be included in 2008 W-2, instead included in 2009 W-2.

Prototype sponsor says Publication 560 addresses. I've read that publication, Notice 98-4, Form 5305, and Section 408(p). Of course, there are references to the Simple IRA running on the "calendar year" and termination at the end of the "calendar year." Nothing conclusively states that means all calculations running through 12/31 itself.

Anyone encountered?

My divorce became final august of 2007 and 2 months ago I finally got the QDRO signed by the judge and this is in regards to my ex husband ESOP. I agreed to 40 percent and the house. Well my amount is 219.000 and my ex told me I wont get it for 3 years. My house is in forclosure and am wondering if there is any possablity of getting the money earlier or can I draw off it , I dont understand this all very much, or how do I find out where the money is at , and how I can get a hold of the administrator. I thought I would have recieved some information by now, from them.

With a leveraged ESOP can a SH matching contribution be made to the ESOP and still meet the SH requirements even though only the principal will be the amount allocated to the participants? Plan uses an ehanced formula so it is possible that the amount that is allocated to the participants would exceed the basic match but would not be the entire match as stated in the enhanced formula. Any cites or references that could send me in the right direction would be GREAT!

Is there any guidance on if a trustee is required to give participants notice prior to charging TPA fees to participant accounts? I have a trustee who will be terminating their plan and wants to pass outstanding TPA fees onto remaining participants (less than 10) on a pro-rata basis. For example, one participant would be charged $900. The trustee doesn't want to give notice to the participants - he just wants to process the fees. It seems to be an ethical question at the very least.

Thanks

Company decides to run Biggest Loser contest as part of wellness initiatives. Program has "entry fee" of $X, which is used to pay for medical/nutritional consultation during the contest. At end of contest, if individual goals are met, participants are returned $X (paid by Employer). Additional reward offered to winner.

Would the payment of this "entry fee" be a qualified distribution from an HSA account?

Thanks!

If Dr.J rolls 100k into a db plan;can he have investment autonomy over the rollover;while the pooled DB money is managed separately?

If the segregated monies grow tenfold does it effect the valuation in any way?

If a prohibited transaction is discovered and it is determined that a Form 5330 must be filed, if the disqualified person fails to file a Form 5330 or fails to pay the applicable excise tax, is there any recourse against the Plan? The Plan had no knowledge or part in the prohibited transaction until the disqualified person identified to the Plan.

Page 1.397 of Sal's book notes that since IRC 414(N) does not cross-reference IRS 409(I), the IRS apparently is of the view that leased employees may not participate in an ESOP maintained by the recipient organization. Am I reading this correctly that leased employees are simply ignored regardless of any coverage failures that would occur if included as not benefiting?

Leased employees are specifically excluded in the ESOP plan document, but I'm not sure if I should show them in the 410(b) test as included and not benefiting and if so, would they be required to be included to the extent necessary to pass 410(b) if it failed.

In 1996 a small employer (actually he's not short ... he's about 6' 2') .... told his personal life insurance agent that he wanted to establish a retirement plan for his employees. The insurance agent, who of course knew nothing about rertirement plans, immediately smelled a commission. And before the small employer could say "who's looking out for me" ... the agent had hooked him up with an insurance company's prototype plan.

The agent loaded him down with all kind of forms to fill out, gave the employer the 800-phone number of the insurance company's customer service department ( located 2000 miles away) and then ran home and waited for his commission check to arive in the mail.

The insurance company was completely automated so the employer delat with them via phone and by visiting their website. Sometimes the would call the ins agent and ask him to explain things like .... "Buba quit yesterday and his wife is down here at the shop wanting to know about Buba's retirement plan .... what should I tell her?"

To make a long story short, the insurance company has performed all IRS & DOL compliance requirements for the plan except two things 1) no discrimination testing & 2) no 5500 preparation.

At the present time, the IRS & DOL do not know that the plan exists, because a 5500 has never been filed (not ever).

The lady, who prepares the employer's corp tax return , recently went to a tax seminar and accidently learned that a 5500 is required. Neither the employer nor ins agent knew what a 5500 was (although this 401k plan has existed for the past 12 years). The employer has contacted me (an outside accountant and preparer of small 5500's) to determine what needs to be done regarding 12 years of delinquent 5500s. I was recently told by the insurance company that ... the insurance company does not prepare 5500s and that the employer should have hired a TPA firm 12 years ago.

By the way, the insurance company does not have much in the way of plan records prior to 2004.

I'll bet all hell is going to break loose when IRS & DOL receives the 2007 Form 5500 that I just prepared that has a plan effective date of 01/01/96. No records exist prior to 2004 to prepare 5500 for plan years 1996- 2003.

Any suggestions on how to deal with penalty notices that are sure to come ?

My client has just informed me that they have amended their vesting schedule effective 1/1/2007. The previous schedule was a 3 year cliff and they have changed it to a 5 year graded (20% per year). This new schedule applies to all contributions made to the plan after 1/1/2007. Is this permitted? My concern is that it is possible for someone to be 100% vested (who has worked 3 years) by 1/1/2007 in all amounts made prior to that date and then be 60% vested going forward.

My client has failed both ADP and ACP testing for 2006 and is past the Correction Period. They will be responsible for funding a QNEC to all non-highly compensated participants as part of the correction method. The question I have is can they use forfeiture as the plan does not allocate and uses to reduce employer contributions. I have found other questions on the database that say yes to a QNEC regarding missed contributions and earnings but I want to be clear that in a testing failure situation this rule would still apply.

Say a plan provides for voluntary lump sum payment upon termination of employment and lump sums are calculated using the GAR94 and 4% [assume 415 does not apply]. So, in determining the FT, we calculate the lump sum and then discount using the appropriate single segment interest rate.

When we calculate the effective interest rate "i," it appears appropriate to calculate the lump sum as before using the plan rate and discount at "i." Under current segment scenarios, "i' might be 6%. Does anyone see this calculation any other way? For example, does anyone believe it is appropriate to recalculate the lump sum at "i" so that perhaps "i" then is closer to 4.75%?

Employer has option under employment agreement to not make deferred comp payments (payable in equal set amounts over 5 years) if, at time of payment, the payments violate any law or the corporate bylaws or cause the corporation to be insolvent. Any reason to think this violates 409A?

A plan fails ADP in year 1. There is one HCE making $115k that defers the max and upsets the apple cart.

For year 2 I want to have the plan adopt an administrative limit on HCEs.

What would be the deadline to adopt?

Can't find anything except Sal seems to say it can be during the year in talking about something else (catch up availabiltiy)

I think it would have to be before the person defers in excess of what will be the limit for the year - otherwise it is a cutback.

Sound right?

I'm having trouble finding this answer, so thought someone here might know.

An individual turns 70.5 in 2008 and dies prior to the RBD of 4/1/09. Is the RMD for 2008 required to be taken out by named IRA beneficiaries? I know this is the case on or after RMD date, but I think I've read that death prior to RMD does not require that the first RMD actually be taken, even though the decedent may have taken part or all of the RMD by the date of death.

Thanks

BruceM

Does anyone have any experience with requiring an employee to pay a surcharge if the employee's spouse is eligible for coverage under another plan (and waives that coverage and enrolls under the employee's plan)? Is the surcharge deducted on a pre-tax or post-tax basis? (I think it can be done either way but I am looking to see what common plan designs are.) Thanks.

Has a model notice been issued? How are your clients treating the requirement to distribution pension statements?

From : http://www.plansponsor.com/pi_type11/?RECORD_ID=43488

IRS’ Architect Dispels Myths about 403(b) Regs

October 17, 2008 (PLANSPONSOR.com) – Sponsors of and advisers to 403(b) plans recently got some clarification regarding compliance directly from one of the “architects” of the new regulations.

Information Sharing

The biggest sigh of relief came after Architect's response to those who think that if they do not have an information sharing agreement (ISA) in place with every vendor under the 403(b) plan by 1/1/2009, they will fall out of compliance. Architect told Symposium attendees that the regulations do not say that ISAs have to be in place by January 1.

Further, Architect pointed out, Chapter 10 of the new regulations, which replaces Revenue Ruling 90-24 on contract exchanges, says unless there will be new service contract exchanges between approved vendors and non-approved vendors going forward, sponsors will not need ISAs with the non-approved vendors. In addition, Chapter 3 of the new regulations says the plan sponsor and vendor may assign responsibility for monitoring 403(b) transactions and does not require a formal ISA, according to Architect.

All this is very good news to those sponsors worried that a vendor that will no longer be used going forward will not sign an ISA.

So why does almost everyone else and their mothers think that the ISA must be in place by 01/01/2009?

From what I gather from reading the regs and the Rev proc, an ISA must be in place by 01/01/2009- at least for runaway accounts. The rest I am still trying to figure out.

Hello

Wondering if someone might have an update on this.

Last April, the ASPPA announced proposed regulations for a 7 day safe harbor for employee salary deferrals beyond the normal wage payment date, for the deferral to be posted to the employee's account. This proposal would only affect employers with fewer than 100 EE plan participants.

Did the DOL ever publish a final reg on this? I can't seem to find anything on it. I've found a number of web sites outling the proposal, but can't find anything final

Thanks

BruceM

An employer maintains a pre-2005 deferred comp plan. The plan is currently grandfathered due to no material modification. The employer desires to terminate and liquidate the plan, but the document does not provide for distribution upon termination.

Can the employer amend the plan to provide for distribution upon plan termination, subject to the restrictions in 409A? This would be a material modification that would cause a loss of grandfathered status, but the employer is ok with that. As long as the distributions upon termination are made within the time period allowed under the regulations, this seems to work.

Similarly, it appears that the plan could be amended to allow participants to elect a new time and form of payment election. Participants could then elect to receive distribution as early as 2009. This would be a material modification but seems to work provided the plan otherwise complies with 409A.

I welcome any comments on these scenarios, particularly any problems that I am not recognizing. Thanks