I have a plan that does an annual safe harbor match. They always file an extension for the plan.

If they dont fund the safe harbor match by 9/15/08 (they are an S-Corp) what are the remifications? Is there any sort of penalty since it is a required contribution? Does the plan have to be tested. They will probably make the contribution in October. What about their corporate taxes - they did use it for a deduction. Thanks

Attached is an article from today's IRS EP Newsletter which states that the IRS will not challenge a 2008 AFTAP certification based on something other than an end of year val if the resulting final aftap based on the end of year valuation does not result in a material change. Not perfect relief since we cannot absolutely rely on numbers at the end of last year or the beginning of this year to coincide with our final year end numbers...but for overfunded plans it removes the pressure a little bit

IRS_EP_Newsletter_0908.pdf

SIMPLE IRA 100 person rule - plan has less than 100 ees in 2005, more than 100 in 2006 and all subsequent years. Plan is eligible in 2006 because of the look-back rule, does the 2-year grace period include 2006 or start with 2007?

Guy has a PS Plan Trust and put almost all of the money in a Mortgage Pool.

Pool is now in Chapter 11 and assets are frozen.

He does not have enough accessable money to meet RMD. What to do?

Only things I can think of are:

1. Take what cash he can, 1099 on full RMD, take rest of money when pool is unfrozen. (If it unfreezes at $0, amend the 1099 to the actual amount taken? But required amount didn't change...)

2. Take what cash he can, 1099 that amount.

Thanks for any ideas on this.

are COLA's allowed to be cutback?

what about if there is an unreduced pension at age 62 with 30 years of service -- can we eliminate that if we have an unreduced pension at age 55 with 10 years of service?

The 5300 instructions (which haven't been updated for years) require that if there have been 4 or more amendments, a restated document is required. The 5307 doesn't have this requirement - merely asks you to list the number of amendments, and if more than 4 you attach a separate sheet.

In the old days, when we used to file for determination letters for every plan, we routinely restated after 4 amendments, but I see no need for anything like that now. Anyone have any other thoughts on this?

Hello. I am new to VEBA's so if you can please bear with me...

1. Are there different codes to exclude the interest income, dividend income, gains/(losses) but the income is still not taxable - it doens't seem like it is excluded under Section 512? VEBA's do not have to pay tax on this do they? If they do, how do they report it?

2. You are supposed to report the information from all of the plans, correct - so each 5500 that is filed?

Thank you very much!

A profit sharing plan will maintain two vesting schedules - the old 5-year cliff schedule for pre-2007 contributions and a 2/20 schedule for PPA on contributions for years after 2006. For the 2007 year no contributions were made, however, a forfeiture was reallocated. Section 904©(1) of PPA says that the accelerated vesting requirement is effective for contributions made for plan years beginning after December 31, 2006 and doesn't specifically mention forfeitures. Also, the forfeitures that were reallocated in 2007 were derived from pre-PPA contributions. I'm not entirely sure whether the PPA vesting schedule should be applied but am leaning towards doing so, erring on the side of caution - interpreting sec. 904 to also apply to forfeitures no matter what year the contributions they came from were for. Is this the correct way to handle this situation? All help is greatly appreciated.

I was talking to a not-for-profit prospect whose always-under-100 participant pension plan (effective in 1986) has consistently been audited and filed Schedules C & H. The Plan is turnkey (pure 3rd party administration) through a reputable life insurance company. I noted from the Schedule C the auditor was socking them close to $11K. The reason they say they undergo the audit is because they thought someday they might have 100 participants and thought it would simply be easier if the plan was always audited.

Yes, Beulah, this is hard to fathom.

My question is would it be considered an incomplete or untimely 5500 filing not to file the required schedules? I.e., is there jeopardy for filing the wrong forms even though this is all in good faith. The instructions to Schedule I indicate, "Schedule I (Form 5500) must be attached to a Form 5500 filed for pension benefit plans and welfare benefit plans that covered fewer than 100 participants as of the beginning of the plan year."

How many people still do EOY valuations for DB plans? What are you doing for the 2008 plan year on EOY vals? What about the AFTAP's that have to be done by 4/1/09?

It is a real headache to switch them to BOY. Is that something you see we will be having to do? All of our plans are under 100 participants.

Just wanted other peoples comments on this. I hear so much about BOY valuations - and I dont know how other TPA's or firms are handling EOY valuations. Thanks

When a Roth IRA accepts a rollover of non-Roth money from a 401(k) plan is there any special recordkeeping requirements (e.g., special source to house the non-Roth 401(k) plan rollover)?

Are there any special rules for the non-exclusion period? It is my understanding if designated Roth 401(k) contributions are directly rolled over to a Roth IRA that has not met the 5-year non-exclusion period, the non-exclusion periods is redetermined.

Example 1:

Roth IRA opened in 2003 (end of 5-year period is 12/31/2007)

Roth 401(k) rolled over to Roth IRA in 2008.

Roth IRA owner is age 59-1/2 or older, can take a qualified distribution anytime

Example 2:

Roth IRA opened in 2006 (end of 5-year period is 12/31/2010

Roth 401(k) rolled over in 2008 (end of 5-year period is 12/31/2012)

Roth IRA owner is age 59-1/2 or older, can take a qualified distribution beginning in 2013

Are my examples correct? Do these same rules apply to the rollover of non-Roth 401(k) money? Thanks!

A plan has a QACA feature with a minimum 1% default deferral percentage and a maximum of 6%. If an employee is automatically enrolled into a plan on 7/1/2008, under the regulations the participant must be increased to 2% on 1/1/2010 (unless elects otherwise). Can the plan be drafted to increase the participant on 1/1/2009?

Thanks!

Can an ERISA 403(b) plan use entry dates so long as they comply with the 410(b)(4) rules on service? For example, can they have a 90 day waiting period for all employees, and then let all employees in on the first day of the quarter following 90 days of service?

Thanks in advance

Plan fails both the ADP and the ACP. Client processes refunds for the ADP failure. After the refunds are processed, the test is deemed to pass. (However, due to the leveling method, if the test is rerun, it would show a failing result.) Now in order to correct the ACP failure, deferrals will be shifted from the ADP to the ACP. Now, we know that the ADP is passing by virtue of the deemed passage because of the refunds. After we shift, we are required to pass the ADP. Do we actually run the ADP test again? If so, there is a great chance that the plan will fail (again because the leveling doesn’t “actually” correct the issues. Am I correct? Or do we simply take the ADP post corrections and utilize that in the aggregate and not recalc the actual tests. (I hope that this makes sense.) Any comments would be greatly appreciated.

an ESOP that had a 7 year graded schedule, the new restated draft doc states that any participant who has an hour of service after 2006 will now be on a 6 year graded schedule. Is this now the case for all ESOPs who had 7 year graded?

We have a takeover plan for an employer (sole proprietor) filing a 5500EZ.

There are no employees and the employer is the sole participant.

It was noticed that the EIN used for earlier filings was the SSNo. of the employer.

For the 2007 filing we tried to file the form electronically, but were unable to do so since the software (DATAIR) does not accept the data and returns an Error message.

Any advice as to how we should go about. Surely we would have to amend the earlier years filings using the appropriate EIN.

We are an employer located in MA with a fully insured dental plan that is issued in NY. Does anyone know whether or not we are required to provide dependent coverage until age 25 for non-students? We have placed a call to our acct mgr but he is unavailable for several days so I thought I would try this venue. Thanks.

One man DB plan. The client has made contributions exceeding the 404 maximum deductible contribution by $80k+. The client wishes to terminate the plan. The plan appears to be overfunded on a termination basis as well.

I understand what happens to the excess assets in an overfunded plan, but I'm not sure how to deal with the undeducted contributions. He can't jsut take them out. There was no mistake in fact which could give him a basis for applying to disallow the deduction.

Somewhere I thought I recalled amortizing them over an extended period and deducting them as an ordinary business expense, but I'm not sure where I got that from.

Anyone have any insight?

Thanks!

Employer hires an individual who produces a Social Security card. Individual works long enough to meet 401(k) plan entry requirements, but declines to make salary deferrals. Employer learns, when uniformed officials appear at their door to deport him, that the individual is an illegal alien.

Do we include him as a zero in the ADP/ACP test?

He was still employed on the last day of the plan year. Is he due a top heavy minimum contribution?

Looking for a source that explains what should be included in a Plan Document beyond what is is the SPD.