what about executive physicals and high deductible health plans. Does an executive physical plan preclude the executive's participation in a high deductible health plan? Is the only option to provide the executive with taxable compensation to cover the cost of the physical?

There is no market for a bond in the trust and a sucessor trustee will not accept. The plan sponsor has instructed the prior trustee to "write off" the asset from the trust. This the prior trustee will not do, stating that it is impermissible.

Can anyone provide a specific reg section in support of Not writing the asset off? Or, is it permissible to write off the value of an asset in the trust, in which case, is there a specific reg section supporting that type of action?

Thank you

Guidance needed here!

Client has a participant who has died without a valid Designation of Beneficiary. The Participant was not married. the plan document calls for a beneficiary succession that includes his parent(s). The participant's mother resides and is a citizen of Mexico. The Plan Sponsor wants to pay the vested account balance (exceeds $5,000) to the participant's mother but is unsure as how to proceed with the assets going to a non-US resident. Is it as simple as getting the mother to make the election for the distribution and sending here a check less the 20%?

Situation: ER has a 401k plan. ER establishes a nonqualified deferred compensation plan calling for payments of $X each year for the year the particular EE retires and next 3 years. The $X payment in year of retirement will be reported on a Form W-2 along with the EE's earnings for that part of the year before retiring. (The 3 payments in future years will be reported on Forms 1099.)

Question: If EE before retiring this year elects and before the $X payment for this year becomes available, may that $X payment be electively deferred into the 401k plan?

Sorry if this is the wrong forum, but can someone tell me what is required if a money purchase plan is overfunded? Can the money stay in the contract to be allocated for next years contribution.

Are 401(k) deferrals and 403(b) contributions combined for 402(g) purposes? I have an employee who participated in a 403(b) plan with another employer before coming on board with my company in July 2008. Employee wants to participate in our 401(k) but I don't know if I need to limit deferrals into 401(k) for 2008 for 402(g) purposes, based upon what employee contributed to 403(b) already for 2008.

How are catch-up contributions affected?

Thanks!

Background:

Plan document holds that Compensation means Section 3401(a) Wages and all other payments employer must furnish statement under IRC 6041(d), 6051(a)(3) and 6052. In addition, Compensation is adjusted to include any deferrals under 125, 132(f)(4), 402(e)(3), 402(h)(1)(B), 403(b), 457(b) and 414(h)(2). Lastly, the Plan does allow testing (including ADP and ACP) to use 414(s) Compensation.

Potential Problem:

Compensation furnished by client is Medicare Wages (Box 5), increase by contributions for health insurance and disability (both presumed to be under 125), and reduce by the value of taxable (>50K coverage) group term life premium. Is this reduction a problem?

Circumstances:

Plan under audit and IRS Agent wants to know why Compensation used for Testing was not "Box 5 Value". I believe that the compensation used is fine under IRC 414(s), but is there a problem with other aspects of Plan (e.g. profit sharing allocation)?

Thanks for your input!

Sole practitioner is joining large medical group and bringing one employee. Group wants to amend plan to include service with the sole practitioner, making one doc plus one employee immediately eligible in the large group's plan.

Any problems?

Can a participant do a Rollover from an IRA into a Qualified Plan?

I took over a plan from an insurance company which had a prototype document. I had never dealt with this type of document before.

The original document was signed in 94, then in 02, they sent replacement pages for the gust restatement.... then the next amendment was in 05 and was the Automatic Rollover Amendment.

I asked the insurance company where the Egtrra amendment was and was told that they "sent a letter" to all plan sponsors in '01 saying they would be restating the plans with egtrra and since my client terminated service in 07 (yes, 07) they can't won't be restating it for egtrra. Which is fine, since the plan is terminating... but where is the egtrra amendment. Was it required?

A defined benefit plan permits a participant to designate a nonspouse beneficiary. The form of benefit is a life annuity. If the participant dies at age 45, the plan provides that the nonspouse beneficiary can wait until early retirement age (55) or normal retirement age(65) to commence receiving distribution. But the IRS model 401(a)(9) language appears to state that the benefit to a nonspouse beneficiary must commence by the end of the fifth year after the date of death. But I read reg. 1.401(a)(9)-6 q&a 10 to say that the five year rule can be ignored. Which is correct?

If a population of employees were acquired through an asset purchase, and the employees' service with the prior company was grandfathered for eligibility and vesting.....would the original date of hire with the previous employer be used for determining whether the employee falls into the excludable or non-excludable group for non-discrimination testing? My reasoning tells me that due to being an asset deal, the employer has changed, so the new employees would be considered "new employees" even though service is being grandfathered. Thoughts?

Have a client who is considering becoming a participating employer in the Teamsters National 401(k) Savings Plan.

Was just wondering if any of you fellow BenefitsLinkers have had any experience - good, bad or indifferent - with this particular plan that you'd be willing to share.

Thanks!

If you terminate and completely liquidate a DCP in a manner that complies with the Section 409A plan termination/liquidation rules in connection with a change in control (i.e., all amounts must be paid out within 12 months of the Board action to terminate the plan and Board action must occur within 12 months afterthe CIC or 30 days before). After the termination and liquidation, what is to stop the employer from simply starting up a new DCP plan and giving participants mid-year deferral and payment elections under the newly eliglbe particpant rule (i.e., within 30 days of first becoming eligible for the new plan)?

My client has asked me to research the scenario where if you make over X amount, you pay more towards the premium for medical coverage. For example, if you make over 75k, you will pay $200 toward the premium instead of $100 for employees who make under 75K. Will this work with the Contribution and Benefits portion of the 125 discrim testing? I have run the Key employee concentration test and it appears that it will pass. I am concerned about the contributions and benefits test however because it appears that the only differences in EE contributions are for different tier elections or geographical differences?

Does anyone have any plans like this and if so, how do you get around the C&B portion of the test?

Thanks in advance for your help.

We are a TPA in the process of re-vamping our service agreement we use with clients.

I am curious as to how many TPA's have arbitration clauses in their service agreements, and as to whether such arbitration is binding or nonbinding.

(I'm not entirely sure what the purpose of nonbinding arbitration would be, but perhaps someone can enlighten me?)

There are clear instructions on how to calculate the earnings on late deposits of 401(k) contributions. However, I have not seen anything which stipulates how these earnings are to be allocated. I am dealing with a plan that has assets invested in a pooled account. Would you agree that, if all participants would normally share in any investment earnings, these earnings should be allocated to all participants and not only to the specific participants affected by the late deferrals? Can you point me in the direction of anything that confirms this method?

Thanks!

We sent the forms to the plan sponsor twice (plan valued annually) and as it turns out, the ee did not get their RMD (a whopping $113). I am trying to make the correction by having her take it asap, along with her RMd for 2008, but I am going in circles about the correction. TAG Data says to fill out form 5329 and to see if the IRS will grant a waiver of the 50% excise tax, but I am confused. This form is dated 2007, but would this be the correct year for the form? The instructions I got were:

With regard to filing Form 5329 for exemption from the 50% excise tax,

the instructions to Form 5329 (2007) provide the following:

Waiver of tax. The IRS can waive part or all of this tax if you can show

that any shortfall in the amount of distributions was due to reasonable

error and you are taking appropriate steps to remedy the shortfall. If

you believe you qualify for this relief, attach a statement of

explanation and file Form 5329 as follows.

Complete lines 50 and 51 as instructed.

Enter “RC” and the amount you want waived in parentheses on the dotted

line next to line 52. Subtract this amount from the total shortfall you

figured without regard to the waiver, and enter the result on line 52.

Complete line 53 as instructed. You must pay any tax due that is reported

on line 53.

The IRS will review the information you provide and decide whether to

grant your request for a waiver.

The third paragraph throws me - I'm confused; I had incorrectly reported to TAG that the woman turned 70 1/2 in 2006, when it was actually in 2007. i put $113.26 on line 50 (amt required) and $0 on the next line (amt pd in 2007), so line 52 would be $113.26. 50% is 56.63, but the tax should be waved. I'll bet the form is still sitting in the valuation binder and the trustee never gave it to her (his mom). I emailed it to them again last fall, but who knows?

Thoughts?

The IRS issued final regulations on May 22, 2007 relating to the requirement for qualified retirement plans to include a definition for "normal retirement age" to mean more than years of service. The final regulations become effective for governmental plans the beginning of the first plan year on or after January 1, 2009. The IRS requested comments from governmental plan sponsors (see Notice 2007-69) relating to the normal retirement age requirements and its impact on governmental plans/employers. I am wondering if anyone is aware of the status of the IRS' review of the comments it received and whether the IRS intends to issue "new" proposed regulations or if the IRS plans to proceed with the final regulations in their current form.

A plan sponsor of a one participant plan distributed plan assets on 6/1/08. Plan was terminated 1/31/08.

Their plan year had been 2/1 to 1/31.

We prepared the pension return for the PYE 1/31/08.

We now have a final return as a result of the distribution of plan assets. No Schedule B required.

Can we use the 5500EZ for 2007 for the final return for the 2008 plan year or do we have to wait for the 2008 5500EZ, which may not be available until the spring of 2009 or so?