I have a 401(k) plan and 3 of the participants have life insurance polices in the plan. Do I report the premiums in Part II, 5 a & b or in Part III, 9a? I always reported them in Part II, but we recently took over some new plans and the prior RK reported them in Part III and in part II, 5 a. Would just like to verify how to report them. Thanks

We want to terminate a 403(b) plan that has an existing plan document. The final regs allow for a termination and distribution prior to 1/1/09 as long as all contracts have been updated in conformance with the final regulations. The contract provider has updated the contracts. My question is whether the plan document must be brought into compliance with the final regulations or may we simply adopt a termination amendment.

In a Section 125 plan the full amount of a participants insurance premium, both employee and employer paid, must be included as part of the total benefit when performing discrimination testing. If an employee decides to opt-out of the plan, as is their right (though not very smart), their deduction for insurance premium must then be done on an after-tax basis and would not be included in the discrimination testing. What about the employer paid portion? Can it continue to be paid by the employer and non-taxable to the employee? Would it still need to be included in any testing of the 125 plan?

The reason I'm asking is I have an employer with several Highly-Compensated and Key employees. The insurance premiums assoiated withe these employees is causing the 25% Concentration and the Contribution and Benefits tests to fail. If they could opt-out of the premium part of the plan and pay the taxes on their portion of the premium (which is relatively small) the tests would pass with flying color.

Creating a seperate plan for just the pop would still fail the safe-harbor test so I'm not sure that would help.

Would a company that has mostly seasonal workers ever be required to have their 401k plan audited if their peak employment is in the summer. I know in order to have a audit you must have over 100 eligible participants at the beginning of the plan year. This plan has a calander plan year so the number of participants they have in January is usually well below 100 but during the summer they employ over 300 people and eligibility for the plan is 18 years of age and 1 hour of service so almost everyone is eligible.

I was hoping someone could walk me through the following situation.

Plan sponsor wants to add an integrated profit sharing component to his 401(k) safe harbor plan (we looked at many other options such as New Comp., but didn't work with ages, etc.) The integration level will be the TWB which would make it 5.7%.

So, if you have 4 owners, 2 in their 20's, how would the scenario work to get them to 46000

Owner 1 (age 51) 230,000 Comp. - Elective Deferrals - 15,500 Catch-up - 5,000 3% SH - 6,900 Excess (5.7%?) Base (Remaining to get to 46,000?)

Owner 2 (age 56) 230 Comp. Elective Deferrals - 15,500 Catch-up 5,000 Excess (is it 5.7% of Comp?), Base?

Owner 3 (age 24) 230K Comp. Elective Deferrals - 15,500, Safe Harbor 6,900 Excess (?), Base (??

Owner 4 (age 28) 230K Comp. Elective Deferrals - 15,500 Safe Harbor 6,900, Excess (?), Base (?)

Sample NHCE (60) 48,000 Comp. Elective Deferrals - 15,500 Safe Harbor - 1,400 Excess (?) Base (?)

There are many other NHCE's, but want to see how that is factored in as well.

Thank you!!!

In this plan employees have the option of having a separate investment account within the plan or being part of a pooled account. The owner wants to pay the management fees on his account rather than having them deducted from the investment. This allows him to effectively leave more money in the plan. Is this allowed. Would it be discriminatory as long as all participants had the option? Where could I look this up?

I appreciate any help.

Thanks

Jimmy

Line 14 asks if the business has any employees other than the owner, spouse, partner, partner's spouse. This sole proprietor does employ one individual that is not a spouse or partner or partner's spouse, so the answer to 14a is yes.

Where it asks for the total number of employees, including the business owner, do you include him in the count since he is a sole-prop and not an "employee"?

Thanks.

I am drafting a QDRO based on a separation agreement that describes the amount to be distributed to the alternate payee (Wife) as follows: Wife's IRA balance as of Date X is added to Husband's plan balance as of date X. The sum is divided by 2. Half of the combined balance is further decreased by various debts of Wife and finally by one-half of Wife's IRA balance as of date X. The description of how the amount is to be determined is actually pretty clear.

My question is: are plan administrators comfortable having to determine the QDRO amount by reference to a plan other than the plan they administer? Is this unusual? How have other handled this? I would rather get it taken care of before submitting the draft QDRO to the plan administrator.

Thanks.

I'm trying to get a handle on what tack on amendments I need when I restate from Gust to EGTRRA.

I think Robert Richter in Chicago said the following were needed. Please correct me if I'm wrong on the list.

415

PPA '06

402(g) Gap period

Heart

There are some provisions in the checklist that seems to deal with 415 and PPA.

Are these sufficient or do we need the tack on amendment?

If we need a tack on amendment, are you using the old ones we received years ago?

It is my understanding that if a taxpayer adopts the model rabbi trust and wants to obtain a ruling on the tax consequences of the underlying nonqualified deferred compensation plan, then the taxpayer must follow the guidelines of Rev Proc 92-65 which require, among other things, that the trustee be an independent third party that may be granted corporate trustee powers under state law, such as a bank trust department.

Is there any other rule or requirement out there regarding who can or can not serve as Trustee of such a trust?

What has people's experience been as to who is actually serving as trustee of rabbi trusts? I am particularly curious as to small employers where there are only one or two participants in the deferred comp plan.

A client has informed me that their 2006 match contributions were not deposited timely. The match for the employees (plus earnings) was finally deposited in April, 2008, while the match for the owner and his wife still have not been deposited. It is my understanding that all deferrals are deposited every pay period.

Questions:

1. What is the penalty for late deposit of match contributions to a SIMPLE IRA?

2. Does the 2006 corporate tax return need to be amended to remove the deduction for the employer match?

3. Can match contributions for prior years be deducted on the 2008 corporate tax return?

4. Does the client still have a SIMPLE IRA plan?

Thanks!

We are converting a plan that will map all participants to Target Retirement Funds (QDIA). We are providing a 30 day window to allow participants to choose a different allocation if they would like to. This "window" will close 2 weeks prior to the date assets are received and invested.

The plan also has automatic enrollment.

I have two questions:

1. Will closing the "window" two weeks prior to assets being mapped to the Target Retirement Fund still qualify the plan for 404 © protection.

2. If someone is automatically enrolled in the plan at the prior recordkeeper during the 30 day window (meaning this person will not be on our companies systems). How does the 404 © protection apply since these individuals may not have a full 30 days depending on when they are automatically enrolled at the prior recordkeeper I'd like to know what the options are for this scenario? Will a communication to all individuals who are to become eligible during this time outlining the process suffice or are there special issues that may need to be considered around this?

I am trying to determine if a first year 401k plan requires an audit. The plan has an effective date of 1/1/07 but was not adopted/executed until 7/9/07. I know you would normally determine if a plan needs an audit based on the number of participants at the beginning of the plan year but in the initial year is the beginning of the plan year the effective date or is it the date that the plan really began operating?

This PS-only plan has a trustee-directed pooled account and trustee-directed individual accounts that are updated as if they were truly daily (up until last week it was fully pooled trustee-directed). The participants are unaware that the accounts are split like this; they only get an annual statement that gives them their total balance as of the anniversary date.

Leaving aside how ridiculous this whole set-up is...

The plan's written document says that distributions are made as soon as adminstratively feasible after the anniversary date, but in practice they've paid out most of the participant's balance right after DOT (usually ~75%) so the participants didn't whine at them and then the rest after the annual valuation was complete. Now with this new set up, we're looking to make the document/SPD match what they do (and they're willing to change what they do a little to work with the document, how nice). They also want all associated distribution fees to be paid by the participant (since this is new, I know I've got to provide some kind of disclosure to the participants).

So here are my problems:

1. I believe I need to change the document to allow for certain assets to be valued daily (as opposed to all annual), and then I can make the distribution date to be as soon as feasible after the valuation date - this allows the individual account portion to be paid right after termination, which is sort of what they've been doing (the individual accounts are about 2/3 of the total account balance). If this is "material" enough to warrant an SMM, what would it say? The whole idea in the client's mind is that since the participant's don't control 'their' accounts, they shouldn't even know about them, but wouldn't anything in say in the SMM kind of tip them off that something was up?

2. I'm going to end up with two distributions for each person: one from the individual account in the year after they terminate, and one from the pooled account within a month after termination. That means two sets of distribution fees (since there will be separate 1099-R's). Is that unreasonable? Luckily, the plan has a YOS/last day requirement for a contribution and passes 410(b) easily, so a third distribution is extremely unlikely.

Thanks for your assistance.

This may be a familiar tune -- but I have not heard it before. Employer is an electric shop and has mainly union employees. The owner and his brother have the option of electing to receive union pension benefits but their pay and other issues are otherwise not subject to CBA. (I am told they have this election because they don't work with tools). All other employees are definitely union and have no options.

The owner would like to elect out of union benefits and adopt a 401(k). The brother, who is not highly compensated (no ownership and lower pay) may or may not want to be part of the plan. My problem hinges on not being sure whether the brother is considered a union employee subject to CBA and so can be excluded. If merely opting into the union benefits makes him union then would opting out of them make him not union? Or is he never considered to be union and is merely a person who is allowed to "buy" (or have his employer buy) benefits under the union plan.?

Worse possibility -- are both the owner and his brother considered union because they have the option to elect the union negotiated plan? If so, can I cover some, but not all of the union employees of an employer under a non-union plan? Would I then have to test coverage including all union employees?

I would appreciate any information from people who may have encountered this situation. As a side question -- is this a common scenario?

thanks to any and all.

Sheila

A 403(b) plan provides for salary deferral, after-tax voluntary, and matching contributions. In a 401(k), the after-tax and match are subject to the ACP test. Are after tax also subject to the ACP in a 403(b)? Since salary deferrals in a 403(b) are not subject to the ACP test, I thought there might be a way to not test the after-tax voluntary.

Hello group, I've got an employer with 20-25 ees working in Iraq on 1 yr assignments. These ees work in secure base and are mostly doing IT work, so there's no signifcant risk.

Nonetheless, standard carriers are not willing to write the group life/ad&d business. I received a quote from a Lloyd's of London affiliate, but they were wanting $15K per person annually for a $100K AD&D policy. That's a bit steep.

Any other suggestions?

Thanks!

Since preparers of 5500's & 5330's may now be subject to tax return preparer penalties, does anyone have any thoughts about potential preparer liability for understating the amount of late 401(k) deposits? For instance, if the preparer is not counting deposits late that were remitted within 20 days of the payroll date, but based on guidance we know that generally deposits should be remitted within 7 days or sooner, is their potential preparer liability?

Company has a nonqualified DB plan. Company is thinking of converting to a nonqualified DC plan by treating the lump sum equivalent as of 12/31/2008 as the opening balance for the DC plan. Distribution elections will be solicited and will be effective 1/1/2009. No one sees any problem with this under transition guidance (in some way, conversion is similar to changing the investment options).

However, the company asked whether they can solicit elections on whether the participant wishes to have their plan moved from the DB to the DC? As an alternative, the company wants to know whether they can mandate this only for those currently under a specified age. I can't figure out any way to accelerate distributions to 2008, but something about either option bothers me.

Any thoughts?

I am with an on-line TPA and we are reviewing our security policies and practises. I am interested in identifying a source of information that provides industry standards or best practices regarding things such as: how to best keep personal private information (SSN's, ...) private, what types of standard account verification practices are used for call center personnel to identify/verify callers, ...

I appreciate any assistance you can provide.