I've never dealt with a plan that hadn't contributed their Required Minimum by 9/15.

Is this true (basic example):

Required Minimum = 100

Contribution made on 9/16 = 100

Funding deficiency for 2007 = 100

Tax deductible contribution for 2007 = 0

if this is true, what is the reg for this?

Andrew

Is 412 minimum funding deadline (9/15/2008) extended for Ike victims?

Rev. Proc. 2007-56, 8(24). extends 404 but does not address 412 deadline.

"A contribution to a qualified retirement plan (other than an individual retirement account) shall be deemed to have been made by the taxpayer on the last day of the preceding taxable year if the contribution is made on account of such taxable year and is made not later than the time prescribed for filing the return for such taxable year. "

I have someone on military leave for approx. 6 months who has just returned. He had benefits continuation for the 1st 30 days of military leave and then was offered COBRA which he declined.

The employee would like to elect lower health & dependent care deductions upon return, is that ok?

I have an employee who has legal guardianship (joint with her live-in married boyfriend) Apparantly he cannot get a divorce since separated spouse is in & out of jail<gr>! The one child is the boyfriend's child and the other is his stepchild. Neither children are related to the employee. Altough the employee does jointly support the 2 children. The boyfiriend claims both children on his tax return as dependents; the employee does not.

We allow the employee to cover children if there is court ordered legal guardianship documentation as this employee has.

Is there a taxation issue of the value of the medical benefits provided for the children. Or is this covered under section 152 definition?

Lexy

If one is organized as a sole proprietor or is a General Partner of a partnership that offers a SIMPLE IRA, and the business has, say 10 eligible EE's who elect to defer a % of their salary within the 60 day period prior to the start of the plan year, and due to whatever circumstance, the proprietor/partnership does not generate net income for that plan year, does this mean that matching (or non-elective) contributions must be made to employees but cannot be made to the sole proprietor or partners because there is no net income for these individuals for that year?

BruceM

PPA includes expanded disclosure rules, which require the plan to give employers and unions that request them copies of actuarial valuation reports "including any sensitivity testing" - a term which is undefined. See ERISA section 101(k)(1). Some plans may do a significant number of different scenarios to examine sensitivity. Some plans may not. Does anyone have any insight as to what would be required to be disclosed?

I have a first year cash balance plan using Unit Credit with an end of year valuation starting in 2007. They put in $100,000 in during the year (2007) and was expected to earned $400 in interest. The actual gain was only $100.

Should a gain/loss amortization base be created in the first year?

What should my assets be on my schedule be for 1(b)(1 and 2)?

I have someone with a loan whose pay schedule is going from bi-weekly to monthly. Does she have to fill out a new agreement? Or is just furnishing a new amortization schedule good enough?

An employer has asked this question. If upon a plan audit, it was determined there was not sufficient proof attached to a hardship request, who is "liable"? The employee or employer? What are the consequences of allowing a hardship without proper proof?

Also, I'm getting this question alot. Participants are requesting hardships to prevent eviction and/or foreclosure, however, no notice to evict or foreclose exists. The participant simply wants to get "caught up" on their bills otherwise they will receive such notice. Would the unpaid bills be sufficient proof?

Thank you.

Linda Michals

A client uses a TPA that maintains a daily-valuation platform. The client's plan uses a calendar year plan year. For purposes of the 2007 plan year, the client elects to make a $250,000 profit sharing contribution. The client's tax return is due, on extension, September 15, 2008. In late August, the client mailed a check to the TPA in the amount of the profit sharing contribution. The TPA should have processed the check and allocated the contribution to eligible participants according to the participant investment elections. Instead, the TPA forgot about it and just realized that it never processed the check in response to the client's question--why hasn't the check cleared yet? Is this a defect/problem in need of correction?

It seems to me that there are multiple problems including at least the following:

1. The terms of the plan say that an allocation of any contribution other than 401(k) contributions will be made for a year no later than the client's tax return due date for that year (including extensions). The client's tax return due date for 2007, including extensions, was September 15, 2008 and the contribution for 2007 was arguably not allocated by that date.

Is there an operational defect here to be corrected (I'm not sure how to correct it if there is)?

2. Can the client deduct the $250,000 contribution on its 2007 tax return since the contribution was not actually deposited by September 15, 2008?

3. Is there any fiduciary exposure to the trustees for not having guaranteed that the TPA did its job and what changes should be made going forward, if any?

Schedule C, Service Provider Information, only calls for information about PLAN payments to service providers.

The sole source of funding for a self-funded health plan in the context of a cafeteria plan (per the DoL exemption to the trust requirement) is the employer's general assets. Service providers to the plan are also paid out of that same source, the employer's general assets.

Is a Schedule C to the F5500 for the plan required to report the payments to the service providers since they were made out of the same funding source as health claims, albeit the employer's general assets?

Or may a Schedule C be omitted from the F5500 filing taking the position that the employer, not the plan per se, paid those service providers?

When filing a 5330 reporting late deposits is there a minimum amount you would typically file the form? I have a very small plan and the taxable amount ends up being $0, so I was not going to file the 5330. I have read the instrucitons and do not see if there is a minimum amount required to file.

Any thoughts? Do you typically file a 5330 with a $0 tax due?

Thanks,

Are the segments applied from the valuation date or from the beginning of plan year. For example, for PY 2008 with EOY valuation date, does the first 5 year segment end 5 years from the valuation date or from BOY?

In general, for an annuity certain, value @ EOY should equal to value @ BOY increased by the first segment rate. But that will not be the case if the segment terms are measured from the EOY (val date).

How are you computing the effective interest rate, short of actually doing a separate valuation and determining a single rate by trial & error!?

Joe - an HCE puts $15,500 into 401(k) in first 3 months of 2008. Joe quits company April 1 and takes full distribution of his account on June 1. Joe rolls entire balance over into IRA.

February 1, 2009 - Plan runs 2008 ADP testing and fails - Joes is required to receive refund of $1000 for failed ADP but he no longer has money in plan.

Investment company has already sent Joe 2008 form 1099 showing full amount of distribution rollover to IRA.

Question - I can notify Joe of his failure & tell him the amount he has to have his IRA custodian pull out of his IRA account but what do I do about the 1099's?

Does origianal investment company have to issue an amended 1099 due to the change or does that original 1099 just remain the same? Does IRA provider have to issue a 1099 for the removal of the funds from the IRA and then just be sure to code it properly with a code P or D and it become the employoees responsibility to handle properly for tax purposes.

What if Joe took cash distribuiton?

Just wondering on what others do in this situation.

With all the recent Wall Street fireworks involving Lehman Brothers, MLynch, etc, a client called and asked if there is any kind of insurance that they can purhase to cover the plan assets in case of a failure involving the investment/brokerage house? The fidelity bond covers fraud and dishonesty, etc, so that would not apply here. I figure you can get insurance for just about anything, so why not this. But I have not heard of anything relating to this before. Plan is small, has about $250,000 and invests in about 6 mutual funds via a broker.

Thanks

Hello. I am 29 years old and recently resigned from my job. I am currently looking for a new FT job and am doing some freelance work for my former employer (just a few hours a week). I have about 20k in a 401k that I would like to rollover into a Roth IRA. Here are my questions:

1. Is a rollover into a Roth IRA the "right" thing to do? Let me add that my salary was 80k and my next job will be in the same range. I am getting married in July of 2009 and my fiance makes about 100k. Since I believe we will be over the Roth IRA salary limit once we are married, is it worth it for me to even open one now since I won't be able to contribute after I am married?

2. If I understand a Roth IRA correctly, you have to be earning money in order to open one and contribute. Since I am unemployed, am I even eligible to open one? What about the money I am earning from my freelance projects, does that count?

Thank you in advance for any advice you can give me. I have tried my best to educate myself reading articles online but came up empty regarding my question #2.

We recently took over a small DB plan (10 participants) that happens to have life insurance. The plan is not exclusively funded with life insurance. In fact total cash value represents about 15% of plan assets.

We noticed that the prior administrator (who sells a lot of insurance) did not include cash value of the policies on the schedule I for all past years.

Is there an exception to reporting the cash value of life insurance on the schedule I? I would think it must be part of plan assets like any other investment.

Plan document client terminated his plan and is attempting to roll the money over to an IRA. Current custodian is insisting that employer provide a copy of the IRS letter that assigned a trust ID number. His accountant prepared and filed the SS-4, but did not retain a copy of the IRS letter or any other documentation to "prove" that the TIN is valid. Is there a process for doing this, possibly similar to getting a copy of an IRS determination letter?

Thanks. Maverick

4 companies are, through ownership, in the same controlled group.

One company insists that it should not be considered a member of the controlled group because it is "just a sub-s corporation" and the company has never been used to control income or accumulate profits.

I have never before heard this type of argument. Is there merit to this argument for not being considered part of a controlled group of companies?

Any tax-gurus available to weigh in?

Thank you, thank you