I've heard that Puerto Rico finally changed its tax code to allow for health savings accounts. Anyone have any info on that? Is it true and, if so, what is the effective date? Thanks!

Assume you are using a standardized prototype - can you ever amend the eligibility to be more strict than it was at the outset without encountering 410(b) issues? The question has come up regarding the definition of dual eligibility. Having a document with two eligibility provisions written in, ie waiver at January 1 and one year for all others, seems to be a clear "dual" provision. Do the same rules apply to amendments?

Help!!

I have a plan that begins 6/30/08 and ends 6/29/09. According to the regs, the "lookback" AFTAP is due prior to the first day of the 4th month of the plan year. I am not sure how to interpret this for this plan.

Is the "4th Month" October 2008, so it is due prior to October 1, 2008? Or, is the 4th month in September, and it WAS due prior to September 1, 2008?

thanks

We have a client that had a defined benefit plan. Benefit accruals were frozen in 2007. Effective Jan 1 2008 the company elected to switch to a cash balance plan. They chose the A+B method where the PVAB of the DB Plan became the opening balance in the CBP.

The client now is considering distributing the initial balance/defined benefit plan portion of the plan to participants to avoid being responsible for interest credits on a go forward basis. Is this doable and if so, what is required on the employer and TPA's part?

Thanks,

RiskAdvisor

We have 2 DB plans in 1 trust

However, assets are not commingled; there are subaccounts setup for each plan. The plans have not merged.

Our attorney is saying we have a "master trust" . Our auditor is saying "no" since the assets are not commingled; each plan has separate accounting and it is not a % of commingled assets

Help!

Does one have a master trust if 2 DB plans are in 1 trust ? And if yes, does a separate Form 5500 have to be filed fo rmaster trust

What are the advantages of having a master trust?

Thanks

Lexy

What has been called a Conduit IRA allows you roll over a distribution from a 401(k) plan into an IRA and then preserve your right to then roll over that money back into another 401(k) plan. Now, you can roll over designated roth contributions from a 401(k) plan into a Roth IRA. But you can't make contributions to a Roth IRA and then roll over that money into a 401(k) Plan. However, is it possible to have a Roth conduit IRA? - make designated roth contributions in a 401(k), then rollover that balance into a new Roth IRA, then roll over only that money into a different 401(k) plan?

Does anyone have any insights on how lenient the IRS has been in waiving the 4980F excise tax for employers who have failed to provide a 204(h) notice on a timely basis?

I finally have a plan participant who wants to pay back her rollover distribution in order to restore the Profit Sharing balance she forfeited. Her rollover distribution consisted of 401k, Non-Elective Safe Harbor, and Profit Sharing balances.

This participant rolled over her distribution from the plan into a conduit IRA. This money in the conduit IRA, which has now gone down in value, is coming back into the plan. Wouldn't the participant have to contribute enough money for the loss in earnings so the actual distributed amount would be restored to the plan?

When the money comes back in, I assume it should be deposited back into the original sources of money, and not classified as a Rollover source.

Is there anything else I should be aware of?

I am to get 60% of my ex's 401K plan as of August 7, 2008. That amount is 388K. My ex and I wrote the QDRO and now they have a question I can't answer.

They want me to confirm whether or not the cost basis on the Employer Stock should be applied proportionately to the Alternate Payee's Distribution?

Thanks to all.

I have a plan where the definition of compensation excludes bonus and overtime. The plan is a Safe Harbor Plan with the 3% non-elective. The client has put in the 3% SHNEC on the based compensation during the year. The year has ended and the 414(s) compensation ratio test is run and it is failing. I am unsure of how this is resolved. I thought that the client would simply make the 3% SHNEC on a defition of comp that satisfies 414(s) (perhaps 415). My colleague states that the SHNEC cannot be corrected in this way and that the plan fails to be a safe harbor plan, still owes the 3% SHNEC on the base pay, and is subject to ADp/ACP testing. Comments?

Additionally, I would think it should be different if the SH was satisfied by the SH match, but I do not think that it is ACTUALLY different. Under this scenario, I think it would definately fail to be a SH plan b/c the participants did not have the opportunity to make the deferrals on the poriton of the compensation excluded from the definition. More comments?

We have a multiple employer plan, (8 separate employers) there is common ownership among them but not enough to be considered a controlled group. In 2007, we had one employer leave the plan and one employer join the plan. The question is for these employer, each wants to be tested under the plan for portion of the year that they were participating in the plan we recordkeep. Would the ADP/ACP test be considered a short plan year thus requiring the compensation be pro rated? What about the 415 limit? The employer that left joined another qualified plan and was tested for the time they were in that plan. The employer that joined was test during the time the participated in the other plan. I am not sure what the other recordkeepers did.

Any help/direction would be greatly appreciated!

Ok, I have a Roth IRA now that I fund fully $416.66 a month. My question is... Is it possible to open another Roth? I'm sking because I'd like to have a 2nd for the $ that i'm not putting into my savings account. Plus, it would be nice to have some extra savings that will grow tax free.

Thanks

It is my understanding that the IRS has finalized the IRS mortality table. Perhaps it is also referred to as the applicable mortality table.

It appears to me that this table is required for funding under 430, lump sums under 417e and maybe current liability purposes too.

I will review the regs.

What about 415?

That is, does the new mortality table apply to actuarial equivalence under 415 for benefits commencing before age 62? And for 415 lump sums? Or is it still GAR94?

Thanks.

The issue is that a 401(k) plan withheld 401(k) deferrals - and related match - on "compensation" that included bonuses, however the Plan's definition of compensation does not include bonuses. Therefore it withheld too much in 401(k) deferrals under the Plan's definition of compensation, and, accordingly, the match made was also incorrect. The amount of the bonuses is not very large, I don't think it would affect testing...but not 100% sure. This issue goes back a number of years. Example: withheld on $110,000 instead of $100,000, so 2% deferrals was $2200 instead of $2000, and 5% match was $110 instead of $100.

Has anyone dealt with this before? I was thinking to correct the 401(k) deferral should be treated as an overpayment in accordance with EPCRS's rules re overpayments in Section 6.06 (i.e., distribute excess amounts with notification that amounts are not eligible for rollover). What about the additional $10 in match? Should it become a forfeiture?

Thanks for your input.

If plan is currenly on cyle for a determination letter, and also must make corrections under a VCP submission, is it required to file a determination letter first, or can the determination letter be filed concurrently with the VCP? The correcitions under VCP do not require a plan amendment. Thanks.

A non-Profit client with a calendar year Money Purchase Plan contributes $1,000,000 during the first 6 months of the 2007 year to fund most of the 2007 expected contribution. But, then they provide a 204(h) notice and execute an amendment to freeze the plan June 30, 2007. We find out about the $1,000,000 being in the plan just recently.

The allocation conditions are 1000 hours only, no last day. So a bunch of people are eligible for allocations, but only about $450,000 worth. That leaves us with a $550,000 problem.

They are nonprofit, so I have no 404 problem. This is not a 415 limit issue either.

This appears to me that it is an operational error. They want to take the extra money out of the plan and put it into a new 401(k). We have told them that without going through EPCRS, we see no way that could be acceptable under the terms of the plan.

Q1. Could they take the money out of the plan somehow and use it in another plan?

Q2. Could they adopt a retroactve amendment, retro to 7/1/07 and only effective through 12/31/2007, to adopt a formula that is X% from 7-1-07 to 12-31-2007 and 0% thereafter? Or would the 204(h) notice requirement be violated by not giving it 15 or 45 days before 12/31/2007 (when the newly adopted formula is zero again)? Could one argue that the formula is currently zero, so no 204(h) notice would be needed to adopt a 6-month formula of X% with 0% thereafter (I think I am reaching for straws).

Q3. I am really stuck, what would you suggest to this plan sponsor?

A one person C corporation has a H&W plan.

The deductible limit under 419A for additions to accounts is computed to be $20,000.

The owner contributes $10,000 to the plan, thus it would be fully deductible.

The plan has income of $5,000 for the plan year.

So at the end of the plan year the plan has total assets of $15,000.

Is the $5,000 of investment income taxable to the corporation? Or since the total contributions and investment return is less than the 20k deductible limit, is none of the income taxable?

Thank you.

Does anyone have plans that base pre-PPA lump sums on a GATT minus interest rate?? If so, how are you calculating the PPA Funding Target as of 1/1/08??? Are you using assumptions to consider the value of the "GATT minus" rate that may turn into a "PPA minus" rate?? Even if employer decides to go with straight PPA rates how should the "GATT minus" be reflected in the Funding Target calculation?? Thanks.

Calendar year 2007 DB plan will have a funding deficiency.

Employer's fiscal year changes each year based upon how weekends fall; for 2006-2007 it was 12/31/2006-12/30/2007.

5330 and 4971 tax are due when? Either today or 7/31/2009. Anybody dealt with this ahem, time sensitive issue?

It seems like 7/31/2009 but that does not compute logically and I wonder if taking deductions for calendar year 07 on the prior fiscal year return would matter.

Thanks for any help. The 5330 instructions do not help.

I have a 403(b) plan which will now be subject to audit under the new rules. The plan has over 100 participants but uses a very liberal entry schedule of 90 days.

Are you able to apply the otherwise excludable employee rules in determining the number of participants which could bring it under the 100 participant requirement?