Does the owner of a business who is a sponsor of his own Solo K plan need to be bonded? At one point, his son was also employed and participated in the plan, but the son has now terminated and taken a distribution of his account balance.

Parent acquires 2 separate corporations (A & B) in late 2007. Parent causes Corporation A's 401(k)/PSP to merge into B's 401(k)/PSP on 1/1/08.

On 1/1/09, Parent intends to merge B's Plan into Parent's Plan. in early 2009, Parent intends to terminate Corporation A's business and all of its employees.

If A's business was terminated prior to merger of B's Plan into Parent's Plan, the terminating population is large enough for it to be a partial termination. However, once B's Plan is merged into Parents, the temination of all A's employees would not be large enough to be a partial termination if the relevant Plan and date are the Parent Plan and the date of the termination of A's business.

Question:

Is this a partial termination? What's the analysis?

Parent promised when it purchased A that A's employees would be fully vested in their Plan accounts, but never did so. The TPA suggests that the amendment should relate back to the date when the A Plan merged into the B Plan, 1/1/08.

What do you think about that?

A small defined benefit plan has a greater than 5% owner who turns 70 1/2 this year.

His beneficiary designation indicates that a family trust is the beneficiary. As such, could his RMD be based on a period certain annuity?

Just out of curiosity, what would happen if a greater than 5% owner turned 70 1/2 and refused to sign a beneficiary designation? My guess is that if he were married, the RMD would automatically be based on a J & S annuity.

A participant purchased a primary residence with his girlfriend. They each owned 50%. Now, six months later, he is acquiring the other 50% from his girlfriend and wishes to borrow from the plan for that purpose.

Does that qualify as a loan used to "acquire a primary residence" which would allow for a greater than 5 year repayment period?

A 501©(5) corporation is designated as the Plan Sponsor of an Insured Group Medicare Supplement Plan & a Group Medicare Part D Plan.

A 501©(9) Veba Trust is established as the Employer and Policy Holder ( Application of Coverage Terms)

Prior Employer contributes a portion of the Group Medicare Supplement Plan & Medicare Part D Prescription Plan cost.

Plans are not considered an ERISA Plan.

I understand that the employer usually sets up the Veba Trust which is not the case in this example.

1. Why wouldn't the 501©(5) Corporation apply for the insurance coverage and also be the plan sponsor/applicant for insurance coverage and (2) why is the VEBA even necessary if the 501©(5) Corporation also contracts with a Third Party Administrator to coordinate the billing & collection of premiums from the prior employer and the retiree's and pays each insurance plan the premiums due?

All comments are appreciated. This just looks out of the norm and maybe non-compliant.

We have a client who holds property/mortgages in his profit sharing plan. His wife accidently paid a bill related to one of these properties with personal funds.

The owner wants to reimburse his wife from the Plan assets. This is a one person plan.

Is prohibited transaction? If so is it correctable under one of the IRS programs or can they just self-correct and document the error.

I believe that I am tossing a meatball question here and I suspect the answer is no. However, is there a need to provide language in a 401(k) plan document that a non-spouse beneficiary can roll over amounts into an IRA? Corbel EGTRRA restatement language does not mention it. Thanks. Ed

A question from the perspective of a firm that processes 403(b) distributions and prepares the 1099-R reporting:

If a participant wishes to take a distribution from his 403(b) and would like to take advantage of the tax-free benefits that apply to parsonage payments, how should we handle this from a processing standpoint?

Would we just process this as a normal distribution (code 7) and leave it to the participant to claim an exemption when filing his taxes? And if so, what about withholding? Under normal circumstances, we would be required to withhold 20% if the distribution were eligible to be rolled over; would the participant be able to opt out of this for a parsonage payment?

Has anyone had any experience with this?

THANKS!

I haven't discovered anything that would prevent a participant from voluntarily defaulting on a loan and paying the taxes. Am I missing anything other than it would affect the amount he could have on any future loans?

thanks

Can an employer require an employee to work 1000 hours AND have a service requirement of 6 months?

Is there anything out there pending that is going to give us some guidance for our 10/1/08 AFTAPs for EOY-valuation clients ? Any pending bills that will authorize the IRS to give us some guidance and/or relief ?

A potential client has a SIMPLE IRA. In July 2005, 2 newly eligible employees enrolled. Financial Advisor gave the employer the new account numbers to make deposits. The account #'s got switched (employer doesn't know if Financial Advisor gave them wrong or she mixed them up). The error was discovered in January 2008, but the deposits for these 2 employees have gone in switched since July 2005. Total contributions of $9,000.00 (less than 3% of plan assets).

The employer has attempted to correct problem with the investment company since dicovering it in January 2008. The investment company has the capability to go back and "redo" the deposits in both accounts so that gain/loss would be correct. They told the employer the correction would be made. They asked for and were given signed letters from the participants involved and a breakdown of the contributions. They have been stalling for 6 months and have now sent the employer a letter from their compliance department stating that the employer needs to go through the VCP and that they will not process any corrections without a compliance letter from the IRS stating that the correction is allowed.

1. Can the investment company require that to make a correction?

2. Couldn't the employer use self correction since this is an administrative error that can be corrected to the penny?

Thanks in advance for any help on this.

a client, who in the past tried to have his ex wife's account balance distributed to HIM, is now wanting to go back and reduce the employer match from 100% up to 3 to 100% up to 2% of comp deferred for several plan years. What is a gentle way of saying, "sorry you can't do this?" He claims he told us this in the past, but it just was not the case.

May an employer operating two qualified separate lines of business (QSLOBs) offer a 401(k) plan to employees in one QSLOB while offering no 401(k) plan (or other qualified plan) to the other QSLOB? If yes, does the answer change if the employer adds additional QSLOBs and offers separate 401(k) plans to each QSLOB except for one?

Client is under audit by the IRS. As part of the process, the auditor sent a letter requiring the client to prepare, file and pay am excise tax on testing refunds that were not made timely. The client prepared and filed the forms using the auditor's numbers. However, the auditor's numbers are about $5,000 higher than the actual test results.

Is anyone aware of a way to file an amended return using the correct numbers and receive a refund of the overpayment? Does the instruction from the auditor overrule the correction?

A payroll firm just informed one of my clients that total compensation for SIMPLE IRA contributions do not include an employee's contribution to a Section 125 plan. They are saying that only compensation subject to Soc Sec taxes are included. Is this true?

The Model form 5304 does seem to be silent on this in the Definition of Compensation in Article V.

I know it's bad business either way, but it must be done. I am not working at either of the places where these plans originated. I have one of each plan and was wondering if someone knows which one would be better to cash in.

Also...Am I right in thinking that the 401A is earning more interest..it's through a school district I used to work for in Michigan and earned 9.8% last year. Thanks!

A calendar year fiscal year credit union client must complete and file year end financial reporting in the first week of January. Thus, for example, 12/31/2008 FASB 158 disclosures must be completed by say January 5, 2009. We can wink and determine the discount rate a week or so before 12/31 so can have the FASB 158 spreadsheet ready for completion once year-end assets are known.

The assets that are traded on the usual markets can be easily evaluated. But, what about limited partnerships, real-estate trusts, etc. whose evaluations may have a 30+ day lag?

Is anyone able to shed light as to what major accounting firms have commented? For example, if evaluations have a 30-day lag, would it be acceptable to use an October 31 valuation for such investments?

The dilemma here is that if you're not going to comply with FASB 158 to the letter, why not simply continue to measure assets/liabilities as of an earlier date or use a hybrid, such as assets as of 9/30, liabilities as of 9/30 but valued using a 12/31 discount rate? What are the repercussions of the auditor commenting that FASB 158 has been applied in a way that complies with the statement?

What have you kids in the peanut gallery worked out with your clients and their auditors?

A employee was let go on July 18 (last day of work) but the official employment termination date is August 1. Within these 2 weeks the employee used all available FSA balance spending $1200 more than total contributions made. Can the employer be reimbursed for that money one way or another? Does plan participation end on the last day of work or on termination date? Was the employee even eligible?

Forgive my simplicity, but I am not trained in welfare plans so I just want to run a couple of novice level points by the link.

Say a small company with five employees (all in the same family), thus all HCEs and no other employees. So company only has HCEs.

The plan sponsor wants to funud for post retirement medical expenses and they want a simple formula.

1. Can a post retirement medical benefit be simply a target amount say 100k or 300k to be accumulated at normal retirement to pay post retirement health benefits for a participant?

2. And as a deduction to the plan (where plan assets are in a VEBA trust), the amount is the actuarial level funding to reach the targeted amount using an interest rate of 5% per annum to determine level funding.

Is the above fairly straight forward and acceptable or are there much more complex rules that need to be evaluated and accounted for?

The calculations are intneded to comply with the 419 annual addition limits requirement.

Thank you.