IRS proposed reg. 1.430 (august 31, 2007) described the requirements for waiving, and documenting, a credit balance. I saw nothing in the recent legisation (Worker, Reitree, and Employer Recovery Act of 2008) that would impact the possible waiver and documentation. Anyone agree or disagree?

Our nongovernmental 457(b) plan suffered an operational failure where one participant contributed in excess of $15,500.

This has been caught by the IRS on audit. The IRS is stating that the Plan will be disqualified for this small operational error.

Voluntary compliance is not available under EPCRS, do you guys know of any way to correct this error without disqualifying the plan?

I have a small law firm client that just made a guy a non-equity partner. All I can find is that he is treated as a self employed person (which coincides with what they are telling me that he will take draws).

Is this guy a Key EE?

Is he a 5% owner (of his own Schedule C?) making him a 5% owner and making it an affiliated service group somehow?

Is this guy an HCE? I can't figure how he is an owner but if he is he would be HCE regardless of income, which was not that much last year, and not part of top 20%.

Thanks for any comments.

I got a call from a participant who is trying to put together his election for the upcoming plan year. His chirporactor told him that if he provides the patient with a note of medical necessity, that it may be able to be run through his flex plan.

This sounded fine at first, but then I asked around the office and it became more complex. It was noted that maybe a home appraisal before and after the hot tub is put into the property may be required. I do not know if he owns or rents. Any thoughts on this?

Thanks

(We're a TPA)

The IRS model language for public school 403(b) plans includes an option for automatic enrollment for new employees. But won't they run into state wage withholding issues? Preemption of conflicting state regulation was added to ERISA section 514. But because the public school is a governmental employer, it is not subject to ERISA.

Facts:

* A 12-31 year end 401(k) plan is amended to cease accrual of benefits on 12-01-2007 - with the intent to terminate the plan.

* The final distributions for the plan occur on 07-01-2008.

Question:

Are employees who were considered participants but never had any balance in the plan becuase they elected not to participate and the employer never made contributions on their behalf - still active participants as of 12-31-2007? What about 01-01-2008?

Situation - plan had 650 participants in 401(k) but only 40 ever had a balance. So for the 5500, is an audit required or not for 2008 based on the definition of "Participant" in line 6 of the 5500 instructions. Should the 610 or so participants who never had a balance and would never have a balance be considered "Active" participants at 12-31-2007 or 01-01-2008?

Are they still covered by the plan after the amendment is signed on 12-17-2007?

Are they earning service under the plan?

Are they retaining service under the plan?

This is an expensive determination for the plan sponsor and one I cannot find clear guidance on. Any suggestions would be appreciated.

I wonder what people think of this. Document allows catchup contributions. Employer is thinking about simplifying his life by stopping everyone ate $16,500 in 2009. Is it ok to make this kind of administrative decision or should we amend the Document?

Hi all,

I apologize if this is not the appropriate location to ask this question. I am a soon to be graduate and will start work for an accounting firm next month. One of my directors will want me to work with him in comp and ben on a few assignments. My only experience with this kind of work is doing research for him on Section 83b elections, Black Scholes model, and some due dilligence work. I would not say I am proficient in those areas, but I am at least familiar with them in a relatively small capacity. My primary line of work will be in Tax(accounting). Would ERISA Basics and ERISA Facts 2008 from this page http://benefitslink.stores.yahoo.net/erisabasics2.html be a good place to get familiar with ERISA or does anyone have suggestions for other books that may be more comprehensive but not too overwhelming for a novice. Thanks in advance.

D.N

I need to complete Form 5307 to be filed with a Volume Submitter plan document. My question concerns line 3c, where the number of amendments is indicated for the submission. Since there were required amendments after the execution of the plan (e.g. EGTRRA, 401(a)(9), etc.), I would imagine I need to total these amendments, plus any other discretionary amendments and put this amount into 3c?

Now, if I was preparing a submission for a Standardized Adoption Agreement and if the regulatory amendments were prepared on a Sponsor Level, would I still be including these amendments in the line 3c?

Is an amendment an "amendment" for 5307 purposes regardless if Sponsor or Employer level? I appreciate any thoughts on this.

If someone files a 1040 with a schedule C, when discerning the limit of annual additions for the owner, must this person reduce earned income by half of the self-employment tax? What about the 20% limit?

Paired plans; if you have both a profit-sharing plan and a money purchase plan, even if you do not make any contributions to the profit-sharing plan, does a limit remain for the money purchase plan, and if so, what percentage does that limit stand at?

If not inconvenient, please give a specific reference for this.

Problem: Man and woman get married. During the marriage, man changes gender. The women get divorced. Now comes time to prepare the QDROs. Some plans are getting sticky about assuring that the QDRO is valid under federal law as a transfer between spouses/former spouses as those terms are defined by DOMA (specifically, that one party is a man and the other a woman.) Some administrtors (e.g., Fidelity) require that the parties make a sworn statement that they meet the DOMA requirements.

How do I finese this issue, given that the parties are no longer man and woman? Anybody with experience

We match on after-tax and matc on pre-tax up to 6%

We cap the pre-tax match to 5175 for 2008 due to someone hitting the Comp limit of 230K for 2008

But can we put in more than the 5175 for 2008 with the addition of the after-tax match?

We match each paroll which is weekly and we do not true-up at year-end

Please tell me if I am nuts but only after you read the referenced revenue ruling carefully. In Rev Rul 2007-65 the IRS was aiming at abusive welfare benefit plans and VEBAs that provided only pre-retirement death benefits. In a nutshell it prohibited the deduction for contributions to WBPs and VEBAs that provide death benefits funded with life insurance. It was concerned that certain abusive plans cropped up that took excessive deductions in inappropriate ways. The IRS got to its holding by applying sec 264(a)(1) that says no deduction is allowable for premiums on a life insurance policy if the employer paying the premium is directly or indirectly a beneificiary.

On its face, the ruling says this holding, based on sec 264, applies in the case of cash value life insurance; it also says it does not matter if the policy is held directly or in an irrevocable trust. But here is the rub. Nothing in sec 264 limits the application of sec 264 to cash value insurance. In other words, if the IRS is right--that sec 264 applies under those facts--then it applies to ALL life insurance, including group term held in an irrevocable trust, like a VEBA or a sec 79 plan. It does not have to be held for pre-retirement death benefits either.

So if I am right no company in the country--no matter the purpose of the plan or how small or large a company--can deduct the cost of life insurance for employees if it holds the policies directly or in a trust. Am I right? Did the IRS overshoot its target? Or is this a non-issue since companies are not taking this deduction anyway.

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?