I am looking at an individually designed plan which states that employee contributions to a SEP excludable from gross income under Code Section 408(k)(6) are not treated as annual additions.

Is this correct?

If so, could an employee receive the full 415 contribution in the employer's profit sharing plan AND defer $15,500 to the employer's SEP?

anyone heard when they are going to allow efiling of the comprehensive filing? The website says it will be available by 10/15/2008, but i was wondering if anyone had heard anything definite.

Hi. I am a DC administrator, and have a question about a SEP to help a colleague out. Is a SEP plan required to have a Fidelity Bond?

Thanks.

Good Morning! I was a non-traditional student and graduated from college in 2006. I have worked get-me-over jobs for the last two years while I interviewing intensely for the "Career" position, which I am proud to say I was just offered. I will begin my new position next week.

The position offers a very good starting salary $55,000 a year and benefits so I will be looking to start investing for my future. Unfortunately like I said I was a nontraditional student and am already 36 years of age with no savings so I feel I really need to "kick it into gear" and start saving a lot.

My company also offers three benefits that I have not received in the past and am not sure how to include these in my portfolio. First the ESOP (Employee Stock Ownership Plan) I will begin to receive this benefit after 1 year of employment and I will not have to pay for this at all. I would be fully vested after 6 years. The thing here is currently I do not know how much to expect from this benefit so it is difficult to add this into my calculations for the future. Also with these plans do I need to be fully vested in them before I move the asset into some other vehicle? Should I move them once I am? I know I don't want all of my eggs in one basket so I feel I might want to sell these stocks when I can and invest that in a retirement fund.

Second is Profit sharing. I will be eligible for this plan after 180 days and then the payout is based on the fiscal year financial performance. Is this taxed automatically or can it be automatically moved into an IRA or some other vehicle without being taxed?

Third is the Flexible spending account (not sure if I am even considered "qualified" under the IRS code section 125 or not. I am wondering if this is the same as the Health Saving Account I have seen here in other forums. They call it a Health care account and it has an annual maximum annual election of $5000 that would be deducted on a pre tax bi-weekly basis. If it is and I choose to participate can I use this money toward non-elective procedures such as corrective laser eye surgery? Is this money taxable at the time of use or will it have to be claimed as income at the end of the year when I do my taxes?

The company also offers a 401(k) program through the Principal Financial Group. The contributions are entirely employee-paid but the company pays all administrative and transaction fees associated with the individuals account. I want to put money into a Roth IRA as much as I can for the rest of this year probably about $200 bi-weekly which will not max out this year’s contribution but in the following years I will be maxing out the IRA and looking to save another $100 per check. First should I automatically choose to invest with the Principal Group because my company will pay for the Administrative costs for these transactions or is that not enough of a benefit to automatically choose that financial group for my investing?

Second, once I have "maxed" out the Roth IRA can I also open a traditional IRA and put the other $200 a month into that or am I limited to one or the other and if so what do I do with the extra $200.

Thank you in advance for any assistance you may have for me. I know that much of this will be explained next week when I begin the job and I will most likely ask many of the same questions at that point but I feel its best to get other opinions.

Have a good day!!

Chris

May an employer specify its own statute of limitations regarding retirement plans on a participant or beneficiary filing a claim for benefits?

Can a participant in a qualified plan that has been making regular deferrals into the plan and terminates roll his balance over to an IRA and

have it converted to Roth contributions? If so, what would he need to do? Pay taxes on the money immediately or claim as income at end of the year. This sounds a little strange to me.

Interesting decision on the subject at http://splitcircuits.blogspot.com/2008/06/...g-circuits.html

Are medical claims declined until the qualified beneficiary elects COBRA? Are the denials then approved retroactively? What are QBs' rights during the 60 day election period?

Hello, we are struggling with whether our definition of a disabled dependent has kept up with current benefits philosophy. Our policy allows dependent children to be covered to age 19, unless a full-time student in which they can be covered up until age 25. If the dependent child is disabled, the requirements are pretty straightforward with one exception - the plan requires that the disability occur before the maximum qualifying age - and the child needs to be covered under the plan at the time.

Example 1: Amy is a dependent child covered under the medical plan. She is going to turn 19 in 2 months. She has been physically disabled since birth. Her parents must seek certification of her disability before coverage would otherwise end for her on her 19th birthday.

Example 2: Derek is a dependent child covered under the medical plan. He is 22 years old and is also a full-time student as defined by the plan. He sustains a major injury and cannot continue with his studies for the forseeable future. He is no longer eligible to continue coverage under the plan unless his parents seek certification of his disability. If he is certified as a disabled dependent, and continues to meet the eligibility requirements, he may be covered under the plan indefinitely.

Example 3: Katie is a dependent child who is not covered under the medical plan because her father was just hired by the company. He wishes to add her to coverage. She is 27, she has always been disabled, and furthermore, she has been covered under his previous employer's plan for years. Under our plan, she is not eligible to be added to coverage, as she was not added to the plan prior to the limiting age (19 or 25).

Our question then concerns Example 3. Do your plans allow a new hire to add a disabled dependent if they exceed the maximum age at the time of enrollment?

I was looking at our prototype plan in regard to participants. I am confused about something.

There is a section for definitions.

Participant - means an Active Participant or an Inactive Participant.

Inactive Participant - means an Employee or former Employee who is not an Active Participant but who has a Benefit remaining under the plan.

Active Participant - means an Employee who has become an Active Participant in any Component pursuant to the terms of the Plan and who remains in Covered Employment with respect to such Component.

And then searching on the net, I found this for active participant as part of a response in a thread elsewhere:

An individual is an active participant in a defined

contribution plan if either employer contributions, employee

contributions, or forfeitures are allocated to the

individual's account with respect to a plan year that ends

with or within the individual's tax year. IRS Notice 87-16,

Section I.A.

So what is an employee who has entered the plan but is not deferring and has no money in their account?

Has anyone heard whether or when the IRS plans to issue final regulations under 125? When the proposed regs came out last year, it was anticipated that final regs would be issued in 2008, but I haven't heard anything recently...

Have a participant with a loan. Already took a hardship for foreclosure. Now want a hardship for educational expenses.

They want to included the room and board, but the student is living at home.

My take is that room and board has to be for living on campus etc. Also want to include books as educational fees, but I don't think books are a fee either and she cannot provide a bill for them.

Anyone have a source that would explain this more clearly that we can give to the participant?

Pat

I want to get in touch with Wendy Bicovny and can use some help finding her. She is an ERISA attorney who used to work for AccuDraft. I really would appreciate any information on how to get in touch with her. I am putting together a seminar in Orlando for January of 2009 and I want to talk to her about speaking or moderating one of the sessions. My email is swynn@qualifiedpensionconsulting.com and my phone number is 321-567-4044.

I write the Pension Protection Act Blog - http://www.qualifiedpensionconsulting.com/ppablog and she can also reach me there.

- Suzanne L. Wynn, Esq., LLM Tax.

Qualified Pension Consulting Inc.

http://www.qualifiedpensionconsulting.com

We have a potential client if he is not an affiled service group.

He is a real estate broker who has Schedule C income.

He also owns about 30% of a real estate broker dealer ship.

About 90% of his Schedule C income is from deals run though the broker dealer he has ownership in.

To me this sounds like an ASG but I'm not sure because real-estate agents often fall under some strange employement relationship rules.

They clearly don't meet the controlled group ownership tests.

In the past it was permissable to restate a money purchase plan "into" a profit sharing plan. My questions are: (1) is that still allowed, and (2) what special issues need to be addressed? I know that "accured benefit" under the MPP must be provided for, and a "204(h) Notice" must be done. Alternatively, a merger and consolidation can be done, but a "direct conversion" by restatement would be cleaner, cheaper, and easier. Comments? Thanks!

My organization is looking at using a Professional Employer Organization to handle all of our benefits, payroll etc., and doing so would essentially make them the employer of record for payroll, tax and benefit purposes. We currently have a 403b and would offer the PEO's 401k if we opt to go this route. My question is, can our employees roll their 403b monies into the new 401k plan since we would no longer be the employer of record and the 401k plan would not be "ours"? Is that a distributable event? Thanks in advance!

An employer who terminates a 401(k) plan is not eligible to establish a new one for 12 months. Before the 12 months are over, employer A is acquired by employer B, creating a controlled group. Employer B would like to add employer A to its 401(k) plan as a participating employer. Must they wait until 12 months after the termination of employer A's plan to do that?

Would the answer change if employer A "froze" its plan rather than terminating it?

Related question: does freezing the plan trigger 100% vesting since a profit sharing plan without substantial and ongoing contributions is deemed to be terminated?

A sole proprietor passes away and now the spouse is trying to get the finances in order. A question came up about setting up a SEP based on the income from the business before he died. I'm pretty sure that can't be done, but just in case, I thought I would get some back-up from other practitioners. Thanks for your help.

A client of mine asked if the new $250,000 FDIC limit applies to Qualified Plans. I see where it applies to IRA's and I found a referance to covering "...Keogh plans, self-directed 401(k) plans..." Does that mean it applies to all qualified plans? including my one person DB Plan?

A severance agreement I'm reviewing provides for two possible payouts upon a separation from service. (It's a private company, no chance of ever going public.)

Payout #1 is payment of a severance amount -- annual pay X specified multiple -- within 30 days of separation from service. [intended to be a short term deferral.]

Payout #2 is payment of a higher severance amount -- annual pay X specified multiple X extra change in control multiplier -- within 30 days of separation from service AND the separation from service occurs 90 days prior to or within 180 days after a change in control. This period is the "protection period."

Does the part of the protection period covering the 90 days prior to a change in control work?

I don't have an issue with the part covering the 180 days after a change in control -- it's still a short-term deferral because the payment trigger is the separation from service.

But I cannot get my hands around the pre-change in control protection period.

Is that part of the protection period an impermissible "toggle"? 1.409A-3©(1) provides for limited period (2 yrs. max) toggle FOLLOWING a change in control.

Does the pre-change in control protection period destroy the short-term deferral. Example: Executive separates from service on December 30, 2009. No change in control at that time. He's paid the regular severance on January 29, 2010. But, then there's a change in control on March 19, 2010. So, the company then pays him an additional severance amount using the change in control multiplier formula.